Question

what is organized labor? what impact does organized labor have on an international business?

Answer 1

Organized Labour also called as Unions is an association of the workers in the organisation which is formed by uniting the worker members as a single entity which represents through collective bargaining to the management on various issues covering welfare of workers, economic benefits to the workers, working conditions, etc.  

For orgaisations which have expanded business operations offshore and are present in multiple countries, the organised labour has a bigger impact. The local members demand the same benefits as those applicable in the host country. This puts additional pressure on the management for the cost and also defeats the purpose if the business expansion was to seek cheap labour from other countries.

Further, if the new plant abroad is the latest one and provides all the latest technology and amenities then the labour in other plants also push the management to get similar kind of setup which calls for additional investment for the renovation purpose.

Further, due to the different currencies, local job market scenario and prevalent wages, if the wages in the new setup are high, the labour in the existing setup also ask for higher wages.

In short, organised labour gets easy access to information and then tries to equalise the wages, benefits, etc which puts additional strain. The actions of the labour union often applies brakes and constrains the effectiveness of the global strategy of the organisation.