How can organized labor influence strategic choices in international business?
A firm's ability to integrate and consolidate its global operations to realize experience curve and location economies can be limited by organized labor, thus constraining the pursuit of a transnational or global standardization strategy.
Concerns of organized labor
Labor unions generally try to get better pay, greater job security, and better working conditions for their members through collective bargaining with management. Can refuse to go to work if they don't get their way.
Another concern of organized labor is that an international business will keep highly-skilled tasks in its home country and farm out only those low-skilled tasks to foreign lands. The Bargaining power of organized labor is reduced.
When an international business attempts to import Employment Practices in contractual agreements from its home country, these practices are alien to the host country, organized labor fears the change will reduce its influence and power.
Strategy of organized labor
Organized labor has responded to the increased bargaining power of multinational corporations by taking three actions:
1. Trying to establish international labor organizations.
2. Lobbying for national legislation to restrict multinationals..
3. Trying to achieve international regulations on multinationals through such organizations as the US.
These efforts have not proven any success.
Approaches to labor relations
The main differences in approaches between international businesses is the degree to which labor relations activities are centralized or decentralized. There is now a trend towards more centralized activities, although historically they have always been decentralized. Firms are beginning to understand that much of the competitive advantage can be found in the organization of a plant.