2. The degree of competitiveness being intense, increases in product prices would correspond to lowering of revenues, if undertaken. Thus most judicious producers would adopt a wait-and -watch attitude rather than take up indiscreet steps of hiking prices to serve short-term monetary interests
Finally, coming to organizational structure, it is believed that whether the business is labour or capital intensive, technology driven or market driven- all contribute towards the kind of wage or compensation strategy that would be enforced. As a usual practice, firms that are reputed, technology driven and well entrenched pay higher than start ups and growing business houses.
In the sphere of external competitiveness, that is wage bargaining, there are several factors which make their mark. The “comparing of compensation rates of one organization with that of its competitors” is what determines compensation strategy.
The relevant compensation strategy that needs to be pursued. It is believed that “the organization’s plan for how compensation decisions on the types and amount of pay are made, based on the interests of the employees and keeping with the organization’s mission and competitive position in the market.” (Compensation and internal & external equity, 2008, para.3).
Besides this, the level at which compensation is payable to staff, executive or top management level is also important as is the kind of individual contributions made by employees at these levels. Quality and quantity of performance, work commitment, loyalty for the cause of the organization and the ability to work harmoniously in a
Compensation and internal & external equity. (2008).One step Compensation Framework. Retrieved June 17, 2010, from