IB Business Management HL 2.7 Industrial/employee relations Question Bank

If RDM builds a new production facility in Europe, an immediate consequence will be an increase in capacity. At current levels of output this would lead to a reduction in capacity utilization. The current output of RDM's factory is 20000 units a year, with a productive capacity of 21000 units a year before the new facility is built. If the new production facility is built, the greater capacity for the whole business will, at current levels of output, result in the capacity utilization falling to 50 % until production at the new facility starts.

Xi, the marketing manager, suggests that this increased capacity provides the opportunity for market development to be achieved by entering the United States (US) market.

The US market has similarities with Europe, with an aging population and low birth rate. Demand for customized healthcare devices is high. However, the healthcare system in the US is very different, with a much greater role for private sector healthcare compared to Europe, where much of the healthcare is state funded. In the US, 18 % of gross domestic product (GDP) is spent on healthcare compared with an average of 11 % in Europe. Advertising spend in the US is very high for the typical healthcare equipment business, which uses TV and the internet to reach individuals, whereas in Europe healthcare equipment businesses typically negotiate with government organizations. Average incomes in the US are higher than in Europe. Competition in the US is very high, although some major healthcare equipment businesses dominate the market. Industrial/ employee relations in the US are generally more decentralized than in Europe, with a lower level of unionization.

To assess the best way to enter the US market, some senior managers may have to move to the US and Xi may need to recruit some new staff in the US with specialized knowledge of US laws and regulations, as well as some additional marketing employees. Xi is aware that industrial/ employee relations are different in the US.

Existing staff will have to get used to new ways of working and are concerned about having to work with new staff in the US.

3. Chan Manufacturing (CM)
20 years ago, Chi Chan set up Chan Manufacturing (CM) to produce electrical components on a just-in-time (JIT) basis for car manufacturers.
High quality and quick delivery have increased CM's market share and profit. CM's manual-skilled employees are loyal, productive, motivated and feel secure in their jobs. Employees admire Chi as a leader. Labour turnover at CM is low. Chi is paternalistic. He believes in a top-down approach to management. He cares for the financial welfare of his employees. Employees are paid a basic wage and receive additional financial rewards for working overtime. Proud of CM, employees regularly work harder than expected so that CM always meets client demand, which changes often. Chi and union representatives successfully negotiate pay and work conditions through collective bargaining.
Mei, Chi's daughter, joined CM as Chief Operations Manager. She relies on new business theory to guide her management decisions. Many current workers are approaching retirement age. She wants to restructure CM and use job enlargement, job enrichment and empowerment. Individual employment contracts are to be determined annually based on individual performance appraisal. Some employees do not like the proposal and speed of the change and are becoming demotivated. For the first time, they are considering industrial action (industrial/employee relations methods).
Mei insists that these changes are required, but wants to avoid conflict. She is considering approaches to conflict resolution.

4. The Warriors
The Warriors are a soccer* club who perform well but have not won any trophies. Recently, The Warriors have had above average turnover of managers, increasing time spent on recruitment. Player turnover has also been higher than that of other clubs.
Dave Atkinson, owner and former player, is an autocratic leader who denies blame for the high manager and player turnover. He publicly criticizes players. However, fans adore Dave. He was a successful player, supports the fans and is committed to corporate social responsibility (CSR). He has:
- reduced ticket prices to the lowest in the league
- provided free, healthy snacks for junior supporters
- donated 20 % of The Warriors' profits to local schools to encourage young people to play sport.
After a recent poor performance, Dave demanded that all players donate 50 % of their pay for that match to good causes. Two new players used social media to complain. In response, Dave threatened to cancel their contracts. The other players refused to turn up for training to show solidarity. Dave then locked the players out of the stadium.
This controversy comes at a critical time for The Warriors. With a dynamic new manager, they have their first chance to win an important final and with it significant financial gain, which is needed to support corporate social responsibility (CSR) and upgrade spectator facilities. On social media, the fans have asked Dave not to enforce the lock-out.
Dave wants to resolve the conflict and privately regrets the lock-out. He is angry with the team but wants to increase The Warriors' corporate social responsibility (CSR). Without wishing to appear as a weak leader, he asked another popular former player for advice.
\footnotetext{
* soccer: football
}

All employees at T M receive a letter from the head office of T M. The letter states that:
- working hours will be increased
- due to increased employee theft, all employees will be searched each day before leaving work
- new working procedures for customer service will be implemented that will reinforce the lack of employee empowerment and further limit their authority to make their own decisions
- TM want to restrict the powers of the union but also set up alternative ways for employee representation.

In return, employees will be offered annual bonuses in the form of employees' shares and wages will increase. There will be greater employment opportunities and better job security.

Henri attends a meeting called by the union at T M. The union members are hostile to the changes and strike action is proposed. Henri thinks he could use this situation for his next piece of MBA work, which is based on conflict resolution.

Using the case study and the additional information above, recommend possible approaches that TM's management could take to prevent the potential conflict from negatively affecting TM in France.

4. Motuoro High School (MHS)
Motuoro High School (MHS) is a new residential (boarding) school for 16-18 year olds. It is a public-private partnership funded 60 % by the state and 40 % by the private sector.
The school has two managers:
- Charles Ledger, a government official, who is responsible for finance.
- Julian Santiago, a successful businessman, who manages the daily operations.
Julian was asked to help set up M H S as a new innovative and flexible school. He interviews all new students. They can choose to attend classes or telework from their rooms. MHS has an up-to-date Internet system to provide communication and educational resources. It has a flat organizational structure. Teachers and students are at the same level of hierarchy, but below Charles and Julian.
The teachers were selected by Julian and did not sign contracts. Julian and the students meet to decide together on the appraisal process for teachers. The teachers themselves are not present at these meetings.
MHS provides teachers with free accommodation, food and a generous salary. 12 months ago a television series about the opening of the school gave it enormous publicity. This lead to many applications from potential students and teachers.
However, a number of problems have now emerged. New student applications are decreasing. Government funding has been reduced. A number of students are missing classes or not submitting work. Teachers are insisting that MHS provide contracts. They are also concerned that the informal organization within the school is having too much influence on Julian's decision making. One frustrated teacher complained to Charles without Julian knowing. This caused an issue between Charles and Julian. Julian wanted to dismiss the teacher, but Charles was concerned that dismissing the teacher would have lead to strike action. This would have created unwelcome publicity at a time when student numbers were falling. Julian suggested that a no-strike agreement should be put in place and that teachers should consider working at M H S as a privilege. The meeting finished without a resolution.

5. Taxi-M (TM)
Taxi-M (TM) operates 2500 taxis in a developing country. All drivers are full-time employees and have a professional taxi license. Although not compulsory, TM regularly conducts safety inspections of the taxis. Though safe, most of TM's taxis are old and TM charges high prices. Many customers complain.
However, a multinational company, R E, with offices around the world, has started to offer a mobile application (app) called Best-Taxi (BT). Using their mobile phones, passengers can use B T to book and pay for a car journey. Any car owner can offer journeys through BT. For security reasons, the B T app registers passengers' and drivers' personal details.
TM's sales are falling and profits are down. A number of TM's drivers are becoming demotivated. Facing lower incomes, poor management and rumours of redundancies, many loyal drivers have left to offer taxi services using their own cars and the B T app. Some of these drivers are earning considerably higher wages than before.
The situation for TM appeared critical. However, local media have reported a higher rate of road accidents by B T drivers than licensed taxi drivers. Several of its drivers have assaulted and robbed customers. In response, TM's management decided to downsize and differentiate itself from B T by positioning its service as a high-price, high-quality traditional taxi service. TM will:
- sell older cars and lease new luxury cars
- develop a unique selling point/proposition (USP) emphasizing comfort and safety.
Customers can book taxis by telephone and by stopping them in the street. TM's target market will be business people, higher income families and passengers concerned about safety.