Let's assume that the fast food restaurant you have opened in Killeen, TX, has flourished. The business has grown by having ten restaurants throughout the Central Texas area. You hear that your employees are preparing to form a company-wide labor union. The primary motivation of employees for forming a union is to receive X% of pay raise. The employees feel that the company's overall pay level is too low compared to other companies in the same industry that are similar in size. After running a simulation, you find that X% in company-wide pay raise will make the net profit level just above zero, assuming that the productivity and all the other conditions remain the same. With the above case in mind, answer the following four questions.

Q1. What could be some advantages of having this labor union in your company? List at least two.

Q2. Other than the disadvantage of potentially damaging your company's profitability, what could be some disadvantages of having this labor union in your company? List at least two.

Q3. Considering the advantages and disadvantages you have identified, will you let the union be formed? Or will you take measures to prevent the formation of this labor union in your company? Why?

Q4. Answer either Option 1 or Option 2, depending on the choice that you have made in Q3.

Option 1. If you have decided to let the union be formed, the union will demand an X% increase in pay raise. It is also likely that the company will have to implement a company-wide pay raise close to X%. In this case, what methods can the company and the union work out to maintain the current profit level (or to minimize the loss in profitability)? Assume that lowering the pay increase amount is not an option.

Option 2. If you have decided to prevent the formation of this labor union in your company, what are some actions that you will take? But your actions have to be within the legal boundary. For example, firing employees trying to form a union should not be your option.