Foundation of Management Report

Q1. The difficulties faced by Air Canada primarily lies on the mistakes made by the top management compared to the company's unions. For instance, the decision by the management to lay off a large number of employees, reduce their benefits and increase work hours cannot be termed as a move to save the rate at which the company was losing money but rather to worsen the problem. It is factual that the reduction in the number of workers implied more labor thus overworking employees. In this case, the workers remaining in the company have to work extra hard to provide the labor force needed to meet the daily requirements of the customers. To meet the needs the company expects of them, they are forced to work more as slaves as opposed to employees given the fact that they are overworked and have no benefits apart from the salary. Therefore, this becomes an issue when the union comes in and defends the rights of the workers, an action that is negatively received by CEO Robert Milton who blames the union first for the problems the company was facing. To him, if the union could have listened to him on the need to reduce labor costs, then the company could not be facing the current situation (Ronald, 2018). However, what Milton had forgotten was that reduction in labor force implied a decrease in company outputs in that limited services would be produced. Furthermore, the management failed to understand that the best way to reduce labor costs was only through voluntary or attrition buyouts and not via layoffs since this is the key reason for the company's chaos. On the other hand, despite the union being right on the need to defend the employees' rights, organizing strikes only lamed the company's profits when 60 flights were delayed. If for instance, the union had embarked on other measures apart from confrontational, the issue could have been worked out without any loss being incurred. Therefore it is convenient to say that the top management caused a major role in the difficulties faced by Air Canada with little actions being added on by the company's union.

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Q2. Air Canada and the union has a role of sitting together and negotiating on labor management to ensure that the company survives the challenges that arise from a troubled economy to ensure that as much as they limit the company resources in all possible ways, the employees still enjoy their rights. Collective bargaining aims to ensure that the limited resources are well distributed for customer satisfaction as well as employees, therefore the creation of company profits. In this bargaining exercise, Air Canada seeks to minimize expenditure while the union tries to enhance an economy that best fits its members in that the workers' services are improved to a favorable level despite their unwillingness to support higher taxes. It's also a fact that both the management and the union work in a collaborative manner to air out concerns they both acknowledge as being problematic and a hindrance to the company's progress. This can be pressure from the government regarding the increase in tax on their goods and services (Ronald, 2018). In such a case, both parties should not argue but look for a solution on how to satisfy the customers, the employees, and government needs. This can include making notable changes in the company after both the union and the management have agreed. During contract negotiations, both the management and the union should have an equal number of representatives to allow worker participation and fair views for the well-being of the company and its workers. Furthermore, the union and the management should make decisions affecting the company and its workers after they both have agreed to consider the past, present, and future of the organization to avoid reoccurrence of problems. If for instance, Air Canada and the union could have sat together and evaluated the outcome of laying off employees, their benefits and increasing working hours, the situation in the company could have been different since they could have both come up with a reliable decision instead.

Q3. Job cuts do not affect the choice of workers in Canada or anywhere in joining unions but rather provide more pressure to have the union protecting them from such hard times in the organizations. The fact is so given that unions play a significant role in maintaining as well as improving worker's conditions and terms through collective bargaining with the employers. Arguably, the success of the union largely depends on the ability to successfully restrict labor supply to the employer as well as the employer's ability to concede to wages that are above market. In this case, workers joining or belonging to a labor union is advantageous since the union represents them through a bargaining strength that results in an increased union wage premium. With the fact that union's successful bargaining on wage raise less impacts the competing employers, the Canadian employees have no fear in times of job cuts as the union will negotiate on their behalf. It is customarily assumed that unions create a premium wage through having a direct impact on workers who are covered through pay bargaining. Therefore, the union has the ability and power to limit all downward wage flexibilities in times of company challenges that might lead to job cuts. However, in certain circumstances where the union induces wage hikes, the worker can be limited to join the union sector for work protection since he or she might not be able to meet these demands. Furthermore, during such times when price elasticity of services or product demand in the company is low, and the employers have pressure to meet additional costs, the union ensures that workers are not laid off, or their benefits are not reduced at any cost. Thus ensures that the employer makes a favorable decision to solve the problem without laying off workers.

Q4. It is unfair for the management to change the initial agreements with the union due financial or any issue that might erupt in the company. The union has an impact on the company as framed in two dynamic processes such as the formation of underlying preferences of both the parties as well as the interaction between the two sides in the process of pursuing goals. When unions are involved in making agreements, they first organize workers as well as control wages thus creating a social workplace where workers feel free to deliver their best because their earning is fair and considerable. Ostensibly, such actions will harm the ability of the union in that the management would not have taken the union seriously. In such a case, the possibility of a detrimental union arising is high just like what happened in Air Canada. Furthermore, despite the challenges the company may face, the agreements should be maintained to create a positive union that is respected by the employees, create seniority-based rewards, employee-employer communications as well as better job production standards. Research shows that a union can have a negative impact on the company if not handled with respect and allowed to make long-lasting decisions for the well-being of the company. On the other hand, unions can positively improve the efficiency by pressuring the management to create and even tighten job production standards to preserve profits in times of higher wages. However, when the management develops or changes policies that have been initially created through collaborative decisions such as working hours, subcontracting, wage incentives and even promotions, the union becomes an enemy of the management. Hence it embarks on playing a voice role that restrains efficiency like for instance calling for strikes, actions that negatively affect the company's efficiencies. Therefore it is factual to argue that no matter the circumstances the agreements have been made, the management should not decide to change these agreements without sitting together with the union to discuss the reasons behind this need and the expectations from the new implementations.

Further discussion on proposed solutions in # 2 basing on the economic category of PEST

The need for Air Canada and the union to collaborate in discussing the issues that affect the company is to make favorable decisions that align with the economic factor that has an impact on the company either positively or negatively. For instance, looking back at the issues affecting the company, we realize that Air Canada is facing a threat of running bankrupt, a problem that the management blames the union for causing. Struggling to save the company to raise on its feet, the management makes decisions that are not favorable either to the employees, the company or the union. Significant reduction of employee privileges as well as laying off a majority of them is against the union's contract rights, an action that the union leaders feel they are forced to either surrender or put the company in the bankruptcy protection. From these challenges evident in Air Canada, it is clear that the key root of the problems is the economic factor that negatively impacted the business. In PEST analysis, economic factor is considered a bread and butter technique vital in business development and analysis under the connection of money, goods, and services. These factors directly affect a business in the sense that the state of the company's economic impacts on the operations and topics such as asset value, taxes and even consumer demand (Jurevicius, 2013). When Air Canada experiences an economic threat, the management runs into making a decision that further leads to more enormous problems in the company after the rise of multiple confrontations with the union. After the bankruptcy proceedings in 2004, the union decided on making a series of encounters, strikes, and even fake sickouts, actions that negatively affected the business even further after 60 flights were grounded. When the company decided to increase labor and working hours to tailor the economy that was putting the Air Canada at stake, the organization was decreasing the labor power of its employees laming any possible opportunities of growth and development.

Notably, collective bargaining between the union and the company implies that the needs of Air Canada would have been met after the two parties coming to a conclusion that is favorable to the business environment. For instance, the management would not have laid off a majority of the workers bearing in mind that these actions affected the up gradation as well as the finances of these people and others that depended on them in the society. In the PEST analysis of the external business environment, economic factors affecting a business include income rates and employment varsity of the people in the community. The density of employment determines the demand rate of company products as well as individual purchasing power. In this case, collaborative practices between the union and the management as earlier on suggested could have implied other measures such as training the workers to be more competent, coming up with offers that could pull more customers to the company services as well as developing business strategies that best fit the economy. From these suggestions, Air Canada could have raised to its fit and served the globe without many challenges thus creating more opportunities for work. In return, the people would be in a better position to generate more income and therefore a stronger purchasing power for Air Canada services leading to more profits. The fact that employee efficiency, customer willingness to purchase the company product and even availability of resources being few of environmental factors that affect a business, the management laying off employees puts Air Canada at risk of having a bad image in the market thus reduce the willingness o...