Chapter 1 Case Study

Topics: Economics, Employment, Stock market Pages: 1 (295 words) Published: October 19, 2014
1. To what extent can individual business decisions (as opposed to economic forces) explain deterioration in working conditions for many workers? First, as mentioned in the Case, a concentration on cost reduction to maintain competitiveness has led to offshore job placement, automation, and other decisions to reduce costs to keep products in price competition with foreign imports. The average wage in the U.S. created a tremendous cost addition to American products. Second, an increase in technology to perform repetitive and sometimes original work has reduced the number of jobs, or changed them to technical support, thereby reducing employment. Third, a focus on short-term performance for bonus pay for executives means that some decisions are made for profitability in the short run that may not be appropriate for the organization in the long run.

2. Do business organizations have a responsibility to ensure that employees have secure jobs with good working conditions, or is their primary responsibility to shareholders? This answer will depend on your viewpoint. If you have ethics similar to that proposed by economist Adam Smith, then the responsibility is to the owner or shareholder. The responsibility to the worker is in relation to the profitability and success of the firm. If, on the other hand, you are a proponent of labor unions, then your view will be more in favor of permanent jobs and high wages for employees, no matter what.

3. What alternative measures of organizational performance, besides share prices, do you think might change the focus of business leaders? If management changes its accounting measures from one-year or short-term to long-term performance, then a major shift would occur in decision outcomes. Other measures might include employee rewards for exceptional customer service, supporting innovative ideas from stakeholders, etc.
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