Grocery-Right: Potential Consequences of Strike and Inputs Affecting Bargaining Power

Company A

Grocery- Right is headed for negotiations with the union in regards to its employees’ wages. The store is wary of the fact that if the union demands for an increase in the employees’ wages the store’s financial status will be affected. The store is also afraid that in case the union decides to strike, their customers will start shopping at their competitors, and it would be difficult to regain them back. They have taken notice of the fact that even if they employ other employees, the picketing outside the grocery’s store would still affect the customer flow as customers would not like to be caught in between the picketing when there are alternatives stores where they can shop.

In this case, the union has greater bargaining power than Grocery right store since the store has more to lose than the union. Several external and internal inputs are affecting Grocery Right’s bargaining power. In this instance, if the employees decide to strike, their customer flow will decrease, and in turn, their sale volumes will be affected. The union’s decision to strike is an external input (Penn Foster Inc., 2017).  Section 84 of the Labour Relations Code stipulates that picketing and striking are legal under the Act (Ibrahim, 2018). Grocery-Right will, therefore, be expected to prevent the strike from happening as a measure of safeguarding their business.

On the other hand, if they decide to increase their employee’s wages, it will create a ripple effect as the products prices will have to be raised. As a result, consumers will be prompted to shop in their competitor stores in a bid to avoid the high rates. Consumers in the Alberta area are known to discriminate on a price basis. This means that if Grocery- Right was to increase the prices, they would lose most of their customer to their competitors. If they choose not to increase the prices of the products but still increase the wages, their financial status will be affected gravely since the profit margin will be very minimal. This will destabilize the store’s economic position in the market as they will not be able to compete with their competitors adequately. They will be subjected to suffer losses due to the loss of customer flow and large volume sales

The sociocultural input of the customers in the Edmonton area is that they usually have difficulty in changing their shopping habits, but in the case, they do change, the effects will be long-lasting. Consequently, this means that if the union was to strike, the consumer would prefer shopping at other stores and as a result, Grocery-Right will lose its consumers. Since the consumers have difficulty in changing their shopping habits, Grocery-Right will have a hard time trying to win its customers back.

PowerCo: Positive Experiences with Unions through Horizontal Integration and Consistent Wage and Benefits Policies

Grocery-Right had formed the notion that since their employment was low skill; they could hire new employees and train them since unions do not usually have much control on low skilled workers (Davey, 1972). Unluckily for them, the consumers in the area are known to be reluctant to crossing the picketing line as it is hectic and will, in turn, prefer shopping at the other stores. This situation will still be a predicament for Grocery-Right even if they decide to hire other employees as the customer flow will still be affected. Moreover, the current market job in Alberta is very competitive which will affect Grocery-Right’s probability of finding workers to employ. This means if they fail to agree to negotiate and decide to utilize their strategy to find new workers, they might have a hard time finding workers to employ and their business will still be affected.

Company B

PowerCo, a manufacturing company, is heading to another round of negotiations with the union in the Edmonton region. In this case scenario, the company will possess the greater bargaining power. This is because the company has twelve plants where each plant is unionized. The company conducts negotiations with the unions separately and as a result different collective bargaining agreements are made.

The company also does not suffer high competition from other manufacturers since most of its products are customized to fit its client’s needs. The fact that the company customizes its products means that it has a client base of its own. This would mean that their economic position in the market is secured since it does not have high competition for consumers from other manufacturers. The consumers will always engage PowerCo when seeking to purchase certain products due to the customization benefit offered by the company.

Hyman defines power as the ability of a person to control their physical environment and the skill to ensure that the decision made by other people is in their favor (Hyman, 1975). In this instance, PowerCo has ensured that each of the company’s twelve plants has twelve unions which they always negotiate with at different times. The collective agreement reached by the company and the unions are always different due to the multiple unions. This fact puts the company in a greater bargaining position since it has multiple unions that are decentralized. If the unions representing the different plant came together and formed one union, then they would possess the greater bargaining power (Pettinger, 2012).

ChemicalCorp: History of Unionization and Increase Pressure to Establish Wage Parity

In the instance the workers decided to go on a strike, PowerCo will not suffer losses due to the fact that it is horizontally integrated. The other plants will be able to compensate for the lost production. The compensation of lost production puts PowerCo in a position of power since it will not be desperate for it employees to return to work as their output will be covered. The compensation also ensures that PowerCo will secure a steady flow of income since their operations will not be profoundly affected.  Consequently, it would be difficult for the union to possess a higher bargaining power since the union’s strike will not affect the company. This is because the company will still be able to compensate its losses by using the other plants.

The company’s plants have an estimate of one hundred and fifty to two hundred employees in each plant. This means if one of the plants decides to go on a strike, the company will be able to replace the workers easily even though it is considered as an unfair labor practice (Farrell, 2008). The number of employees in each firm is minimal which consequently ensures their easy replacement. The facts of the case have also stipulated that one plant’s lost production can easily be compensated by the other plants. This means that in the instance the company decides to replace the employees with new employees, their production will not be affected as it will be covered by the other plants.  

The company has adopted the policy on wage parity meaning their workers’ pay in all the plants is standard. Even though the collective agreements reached upon by the unions are usually different, the company has ensured that the pay and benefits to its workers are consistent throughout the country (Richardson, 2003). The workers cannot, therefore, complain that they are being subjected to low pay in comparison to their colleagues in the other plants across the country. By doing so, Power Co has ensured it has possession of the bargaining power as the unions will be obstructed from complaining of discrimination in their workers’ pay (Adams, 1983).

Company C

ChemicalCorp a large capital-intensive industrial chemical is a subsidiary to a multinational chemical company which owns other subsidiaries worldwide. Chemical Corp has numerous plants across the country which have employed from fifty employees to six hundred employees per plant. The holding company of Chemical Corp has dominated the industry throughout the years however competition has increased in the recent years. This means that the company is facing active competition which it cannot afford to ignore. Previously ChemicalCorp was 100% unionized, but that decreased to 2/3rds of the company since it started following the policy of union avoidance (Lynk, 2009). The company started following the said policy with the intention of closing down the unionized plants and relocate to Mexico.

 In this case scenario, Chemical Corp has possession of the greater bargaining power. This is because it is still one of the dominating companies in the market (Mishel, 1986). Even though the company has started to face recent competition it has already secured its position in the industry by ensuring it is one of the leading companies in that particular industry. Chemical Corp is also owned by a multi-national company which has subsidiaries all over the world. This is a benefit to the company as it guarantees security since it has a wide client base.

The company which has recently started to follow the union avoidance policy is planning to close all the unionized plants and relocate. This means that the company will not suffer huge losses in relocating, but instead, the workers will become jobless and incur losses. A worker that is faced with being jobless at any moment cannot have possession of a greater bargaining power. The company’s strategy is to avoid unionization and close the plants down is an internal input which seeks to ensure that the company’s operations are not disrupted by the many strikes conducted by the unionized workers (Adams, 1983)

Chemical Corp has been signing over twenty five different contracts with different unions. This shows that it has separate collective agreements with the various unions. An employer who deals with different unions usually has a higher bargaining power since the unions have different needs thus making them divided. If one of the unions instructs their workers to go on strike, the other workers belonging to the other unions will still go to work since their needs are not affected. The multiple unions mean that the workers do not have one voice to represent them, unlike the employer whose interest is the same across all it various plants spread out through the country.

Chemical Corp had previously considered establishing the wage parity and increasing the worker’s wages, but in the recent years, it became impossible. Due to the company’s high level of capital intensity, it considers the strikes to be extremely costly. This means that the when the numerous strikes take place, the company incurs a lot of loss. If the unions were to agree to strike at the same time, then the company will not have any bargaining power (Adams, 1995). Regardless of that fact, the company can still be able to manage the strikes even if they are costly since it has many plants in the country and has the option of closing the unionized plant and relocate to Mexico.

The current workers in the company’s plant do not exceed six hundred employees.  In the case the union decides to call for a strike, the company has the option of hiring new workers if they are unable to meet the union’s demands. Since only one plant will be affected, the company will be able to hire new employees who are not unionized.  The bargaining power in this setup will not be favorable to the union since if they do not agree, the union risks its workers losing jobs as the plant may be closed down and relocated to Mexico.

References:

Statutes

The Labor Relations Code of 1988

Online Sources

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Richardson, J.H. (2003). An introduction to the study of industrial relations, (5th ed.). Psychology Press.