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In this chapter we address major problems the expansion of international business creates for both the multinational companies (MNCs) and national labor unions. The chapter opens with a discussion on how MNCs divide international industrial decisions between the headquarters and subsidiaries. One of the major issues of international industrial relations is the power and flexibility of the MNCs. Because of the power and flexibility of MNCs, workers are handicapped when dealing with them. Often, national labor unions face a dilemma in negotiating with MNCs because the unions cannot cross national borders, but the MNCs are not restricted to a particular location. This puts labor unions at a disadvantage against the MNCs. Labor unions complain that while they are forced to negotiate with the local subsidiary, the real decision-maker is the headquarters. There is some truth in this contention. While the subsidiary is assigned most operational decision-making for local industrial relations, strategic decisions such as locating a plant and increasing employment levels at various sites are made from headquarters.
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