From the previous assignments, I can see that some of you have difficulty with multiple choice questions. I'm not sure why; there isn't a pattern for mistakes. So let's try something different just for the second exam. Below is Part B of Exam #2 for Week 6. You will need to file your own decision about the answer to each question on your own Answer Sheet. Before you do, however, we'll treat this as a group project in the sense that you are permitted to discuss the questions with each other prior to making your own decision. The grade will be yours, not a group grade. So, you need to evaluate each person's contribution to the discussion to determine whether he/she is correct. The final answer is yours, just as if you arrived at it on your own. I will not be monitoring or contributing to the discussion since that would violate testing methodology. It is still fine to ask me administrative questions about the Part B section.

This discussion forum contains all five questions for Part B. If you are not comfortable with your own understanding and think that talking to your classmates might be useful, you can post a question about the test question. Participation is optional. Only this time, we'll consider an exchange in this forum to be part of a legitimate group discussion vs. an infraction of the university's academic integrity policy. If the administration has a problem with that, I will take responsibility for the matter. Discussing the questions outside of this forum or discussing any other test questions would be a violation, so please don't jeopardize your standing in the program by doing that.

Hope this helps...

Part B (This is worth 10% of the exam. Each item is worth 2 points.)
Management in a small company has recently realized a $100,000 increase in profits. This has occurred after two years of poor economic performance due to expensive storm damage in two of its facilities. It needs to stabilize its costs and conserve some of the funds for future shortfalls. It has designated $30,000 for labor in this year's budget. This represents a 5% increase in the hourly wage for employees. If it delays the development of two technology upgrades, it could provide an 8% wage increase but customers might then gravitate to a competitor. Managers will receive an 8% salary increase plus bonuses of 10%.

The union was able to avoid a wage concession in the last two years, but employees did not have an increase. During that time, the industry standard for wage increases was 3%. This year it is 5%. The election of union officers occurs next year. This year the union hopes to secure a 10% hourly wage increase without losing any other financial benefits.

It estimates that it could get a 6% increase ratified but anything less would not be supported.
1. The ZOPA is:
a. 0 - 10%
b. 5 - 10%
c. 6 - 8%
d. 5 - 8%

2. In a distributive strategy, if the union makes the opening proposal, its initial offer should be:

a. 20%
b. 15%
c. 12%
d. 10%

3. In a distributive strategy, if the company opens the negotiation with an initial offer of 0%, the union should counter-propose:

a. 20%
b. 15%
c. 12%
d. 10%

4. After several discussions, both parties offer their target points. If the parties use the equality norm on that combination, the agreement will be:
a. 9%
b. 7.5%
c. 7%
d. 5.5%

5. The union's BATNA would be used if an impasse occurred at:
a. 5%
b. 6%
c. 7%
d. 8%