Blog: HRM624 GDB

Assessing Power among Disputants

In many situations, a smaller company wants to form a partnership with a large organization to expand their business objectives. On October 3, 1987, The Free Trade Agreement (FTA) was signed by representatives of Canada and the United States after two exhausting years of intense efforts.Canada is a medium sized economy and population is 1/10^th of the size of the U.S (which is an economic superpower in comparison). Canada is economically dependent on the United States. The main reason is its small domestic market, scattered over a vast geographical locale. More than 75% of total is exported to the U.S and making the U.S. Canada’s prime trading partner. By contrast, the U.S. was exporting less than 20% of its total exports to Canada. In the 1970’s, Canada’s economic health rose and fell like the proverbial yo-yo. It was too resource based and needed to add something more to its manufacturing industry to stabilize the economy. A Royal Commission concluded that Canada’s only way to achieve this stability was to engage in an open free trade partnership with the United States. The problem was that the United States wasn’t especially interested in such a free trade partnership agreement. The U.S. was also becoming increasingly protectionist during this same time period. In the result, Canada was facing a whole host of penalties and countervailing actions against Canadian goods. Canada clearly needed a plan. 1. What will you suggest in this situation, which technique is the most appropriate way to get out of this situation while considering the this scenario?Note: Just mention the name of the technique and one line justification.

Solution:

Technique: Reward / Exchange Power

Justification: As the United States is not interested in a free-trade partnership & Canada is in the need of getting cooperation form them they (USA) must be offer a better business deal like a future business agreement which will give more profit to USA and more stability & surety of business to Canada. 
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Technique: Exchange Power

Justification:

USA gets more profit to offer a better business while Canada gets more solidity and indemnity by doing this business deal .