bargaining power

Examples of bargaining power in the following topics:

• Porter's Five Forces

  • ., low buy power, low rivalry, low risk of new entrants, etc.).
  • Bargaining power of buyers: The bargaining power of customers is also described as the market of outputs.
  • Picture a supply and demand curve: if the supply greatly outstrips the demand, the buyers have more power than the suppliers.
  • Bargaining power of suppliers: The bargaining power of suppliers is also described as the market of inputs.
  • Similar to power of buyers, this bargaining power relies on scarcity and basic economics of supply and demand.

• Porter’s 5 forces and the analysis of competitors

  • For example, a firm that has many competitors offering a similar product will have customers with significant bargaining power.
  • For this to be a powerful bargaining tool for the customer, the switch from one firm to another must be cost-efficient and easy.
  • Conversely, if a firm has desirable products and competing products are perceived as less desirable, customers will have reduced bargaining power.
  • If it is expensive or burdensome to switch products, customers will also lose bargaining power.
  • In many industries it is common for buyers to form cooperatives in order to increase their bargaining power relative to suppliers.

• Limitations of the Five-Forces View

  • This diagram represents the components of Porter's Five Forces model: (1) threat of new entrants, (2) threat of established rivals, (3) threat of substitute products, (4) bargaining power of buyers, and (5) bargaining power of suppliers.

• Conducting a Situational Analysis

  • The bargaining power of customers is also described as the market of outputs: the ability of customers to put the company under pressure, which also affects the customer's sensitivity to price changes (e.g. firm can implement loyalty program to reduce customers' buying power).
  • The bargaining power of suppliers is also described as the market of inputs.
  • Suppliers of raw materials, components, labor, and services (such as expertise) to the company can be a source of power over the firm when there are few substitutes.

• Labor Unions

  • Labor unions provide members with the power of collective bargaining over and fight for workers rights.
  • Labor union's activism centers on collective bargaining over wages, benefits, and working conditions for their membership, and on representing their members in disputes with management over violations of contract provisions.
  • To join a traditional labor union, workers must either be given voluntary recognition from their employer or have a majority of workers in a bargaining unit vote for union representation.
  • To fight employer anti-union programs, unions are currently advocating new "card check" federal legislation that would require employers to bargain with a union if more than 50% of workers signed forms, or "cards," stating they wish to be represented by that union, rather than waiting 45 to 90 days for a federally-supervised a secret ballot election during which time employers can fire, harass and generally make life miserable for pro-union employees.

• A Brief Definition

  • Through collective bargaining, employers and employees negotiate the conditions of employment.
  • The so-called monopoly union model (Dunlop, 1944) states that the monopoly union has the power to maximize the wage rate; the firm then chooses the level of employment.
  • The right-to-manage model, developed by the British school during the 1980s (Nickell), views the labor union and the firm bargaining over the wage rate according to a typical Nash Bargaining Maximin.
  • The efficient bargaining model (McDonald and Solow, 1981) sees the union and the firm bargaining over both wages and employment (or, more realistically, hours of work).
  • Define the monopoly union model, the right-to-manage model, and the efficient bargaining model as theories of collective bargaining

• The Evolution of Labor Relations

  • Unionization is hotly debated, as unions employ collective bargaining on behalf of employees independently from company human resource (HR) policies.
  • Whether this loss of interest in collective bargaining is a good thing or a bad thing is up for debate, and the power of trade unions is integral to this discussion.
  • Whether this loss of interest in collective bargaining is a good thing or a bad thing is up for debate, and the power of trade unions is integral to this discussion.
  • As you can see, the 1930s, during the Great Depression, is when unions began to grow in prominence and power.

• Introduction: The several faces of power

  • An individual does not have power in the abstract, they have power because they can dominate others -- ego's power is alter's dependence.
  • Because power is a consequence of patterns of relations, the amount of power in social structures can vary.
  • If a system is very loosely coupled (low density) not much power can be exerted; in high density systems there is the potential for greater power.
  • Having a favored position means that an actor may extract better bargains in exchanges, have greater influence, and that the actor will be a focus for deference and attention from those in less favored positions.
  • Power can be exerted by direct bargaining and exchange.

• National Labor Relations Act

  • The National Labor Relations Act (NLRA) is a 1935 United States federal law that limits the means with which employers may react to workers in the private sector who create labor unions, engage in collective bargaining, and take part in strikes and other forms of concerted activity in support of their demands.
  • Encouraging the practice and procedure of collective bargaining by protecting the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing.
  • Protecting a wide range of activities, whether a union is involved or not, in order to promote organization and collective bargaining.
  • Refusing to bargain collectively with the representative of the employer's employees.
  • The Taft-Hartley Amendment of 1947 is a United States federal law that monitors the activities and power of labor unions.

• Sources of Power

  • Power is the ability to get things done.
  • Although people sometimes regard power as evil or corrupt, power is a fact of organizational life and in itself is neither good nor bad.
  • Power comes from several sources, each of which has different effects on the targets of that power.
  • Also called "positional power," this is the power individuals have from their role and status within an organization.
  • Examples of each include bargaining and persuasion (rational) and evasion and put downs (nonrational).