GM`s Downsizing and Labor Union Costs (TCO 3 Fixed and Variable Cost Chart)

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: GM`s Downsizing and Labor Union Costs (TCO 3 Fixed and Variable Cost Chart

Introduction

This is seeks to write a four-paragraph minimum essay related to Terminal Course Objective (TCO 3 . An article entitled GM , Delphi , US autoworkers ' union agree to massive job-cutting program ' is selected , which is related to the business costs , or the cost curves , or market structure . The is to stay focused on the economic issues of the TCO . This dwells mainly on the relevance

of Fixed and Variable Cost in business decision making and in the economy

Analysis and Discussion

The General Motors was reported to be facing a downsizing of its world force to as to minimize its Labor Union cost which has affected every the company forcing to report a loss in its 2005 income statement as contrasted to pre-2005 levels . One of the strategies that would bring back the company to where is shine in performance is to address to labor cost problem

The concept of Fixed and Cost and Variable cost is a that is much discussed in accounting and business management subjects and which has a significant effect also on the health of the economy . From the point of view of a corporate executive earning profit is known objectives . Earning profit for the corporation bears much to the very purpose of financial management in corporations . Business entities use resources or assets to run the business and by employing assets costs are incurred . Cost incurred is factored in for profitability computation since they should be deducted from revenues to arrive at profit . Talking about fixed cost and variable cost in business entails segregation of variable costs from fixed costs . Fixed does not vary with production while varies with production . see appendix A for the graphical relationship of fixed cost to variable cost

To apply the concepts with the General Motors , it would mean that Labor Unions costs for the company have become a burden since as the employees get older in the company their claims for benefits become higher and the only high labor costs of General Motors has an inevitable effect on its profitability . These labor cost has become in a sense a fixed cost for General Motors since whether the company produces a big volume or not for sale , it will still have to face the reality of having to pay the labor cost to big number of employees who have become big and strong in number because of unionism making GM less competitive with its Japanese counterparts like Honda and Toyota which have manifested better profitability

Realizing therefore that labor costs have become burdensome reduction of number employees which could mean reduction of fixed cost for General Motors is a requirement if the company wants to bounce back and have the chance of facing up its competitors which are more flexible . White said ' The United Auto Workers (UAW ) union has concluded a deal with...