The outcome of contract negotiations can have a major impact on the ability of a company to meet its competitive challenges

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The outcome of contract negotiations can have a major impact on the ability of a company to meet its competitive challenges. Labor costs, productivity, flexibility, and many other outcomes are determined in large measure by what happens during negotiations. Therefore, the company must carefully prepare along a number of dimensions. Fossum defined a sequence of management preparations for negotiations, establishing seven steps management should take.

LBSC, Inc., operates a milk processing plant in Kenosha, Wisconsin. Its union, the Brotherhood of Food Processing Workers (BFPW), represents all non-supervisory production employees in the facility. The contract between LBSC and BFPW expires in six months, so LBSC must start to prepare for the negotiations. LBSC’s HR department plans to conduct a number of management meetings asking for feedback on the appropriate goals of bargaining, and to ask the finance department to estimate the acceptable cost profile for the term of the next contract. It will gather information on plant average seniority and inventory levels, and forecast customer demand. It will analyze grievances and find out what it can do about the course of other recent negotiations for the BFPW. Its finance department will estimate the costs of one additional holiday and a 401(k) plan. Finally, it will decide how much latitude it will have to make concessions and what will have to be referred to the corporate office before it can be approved.

Identify the steps LBSC Inc. should take as it prepares for negotiations with its union. LBSC's preparation steps conform to the preparation process as laid out by Fossum. Demonstrate your knowledge of the process by ordering the steps in proper sequence.