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7.3 Labor Negotiations

Labor negotiations are entered on the Human Resources spreadsheet. Negotiations can be viewed as exception events– sudden changes in the operating environment. Labor opens the contract offers from all of the companies, picks the most favorable terms, and uses them as a standard for negotiation with every company. This creates an opportunity for a low labor-cost company (due to automation and other investments) to impose higher labor costs upon other firms.

Labor and management negotiate over four separate categories:

  • Hourly Wage
  • Benefits
  • Profit Sharing Percent
  • Annual Raise

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