Baskin Robbins relies on the skills and professionalism of its employees. A variety of factors affects the demand for labor in the ice-cream industry, including changes in the price of the good, new technologies, and changes in the number of firms selling similar products. The significance of the price-labor demand relationship is difficult to estimate.
However, whether an increase in the market price of ice-cream raises or reduces the demand for labor will depend on a wide range of factors and circumstances. Skilled employees are the key element of Baskin Robbins’ continued success. They guarantee high quality of its products and increase the marginal revenue product of labor, which improves cost-effectiveness of ice-cream products.
Labor markets are being governed by the forces of demand and supply (Mankiw, 2008). However, labor markets are different from other markets in the sense that the demand for labor is a derived demand (Mankiw, 2008). Simply stated, labor is not the final product sold to consumers but merely a factor of production (Mankiw, 2008).
Numerous factors affect labor demand, including new technologies, changes in demand for goods and services, and changes in the number of firms (Rittenberg & Tregarthen, 2011). In the context of Baskin Robbins, changes in product demand and the number of firms may shift the balance in the labor market.
As Baskin Robbins’ products are becoming more popular, the firm will need sufficient human resources to cope with the growing demand for goods. Baskin Robbins will have to produce more ice-cream and, consequentially, hire additional personnel to provide customers with high-quality ice-cream products. As a result of increased popularity, the demand for labor in the context of Baskin Robbins will increase, too: the firm will have to devise complex strategies to hire additional workers.
The growing number of firms producing ice-cream products will shift the labor demand curve to the right. More firms will need more skilled personnel. Baskin Robbins will have to fight hard to retain its leadership position in the ice-cream market. As a result of increased competition, wages for the workers in the ice-cream industry will increase, too (Rittenberg & Tregarthen, 2011). In this situation, Baskin Robbins will need to balance the costs of labor with the price of its ice-cream products in short and long run.
How an increase in ice-cream prices changes the demand for labor depends on a number of factors. The demand for labor is derived demand. Changes in labor demand reflect the processes and changes in the market and industry situation. An increase in ice-cream prices that follows an increase in the demand for products will also increase Baskin Robbins’ demand for labor.
The more popular the product, the more Baskin Robbins will need to produce, which is impossible without hiring additional staff. However, when the market price of ice-cream increases because Baskin Robbins can no longer cope with its production costs, the demand for its products may fall; consequentially, the firm may have to lay off some of its talented employees.
Despite recession, firms need skilled employees to improve their performance. This is particularly the case of technical professions, like welders (Uchitelle, 2009). Manufacturing industries lack qualified personnel and, therefore, cannot cope with increased industry competition (Costello, 2010).
Baskin Robbins employees must possess superior communication skills and have an ability to learn fast. Any experience in the ice-cream industry is welcome. Skilled employees are the main source of the firm’s competitive advantage. Skilled labor is important, since it increases the marginal revenue product of labor, making each project financially feasible and cost-effective.
Conclusion
Skilled personnel are the source of competitive advantage for Baskin Robbins. Any change in the market price for products, number of firms, or technologies will shifts the balance in the labor market for ice-cream. Despite recession, firms need skilled employees to improve their performance. Skilled labor is important, since it increases the marginal revenue product of labor, making each project financially feasible and cost-effective.
References
Costello, C. (2010). Skilled labor in high demand, short supply. CNN. Web.
Mankiw, G. (2008). Principles of economics. Boston: Cengage Learning.
Rittenberg, L. & Tregarten, T. (2011). Principles of microeconomics. Web.
Uchitelle, L. (2009). Despite recession, high demand for skilled labor. The New York Times. Web.