HR practices in price war industries

Abstract

This project addresses the issues faced by employees who work in firms that are competing in price war industries. The first part of the project entails a detailed literature review in our attempt to understand why competition has burgeoned in the past decade, the concept and execution mechanisms of price wars, and how it affects employee practices by extrapolating from data for two industries. We studied the retail industry and airline industry in great detail due to availability of better information and relative intensity of price wars in them. We also noted that the literature review did not yield many results linking price wars and HR strategy. Research on price war effects in focussed primarily on customer issues, company strategy etc. Therefore, we decided to conduct some primary research by visiting 2 different retail chains in a mall and interviewing front-line employees as well as managers. We also interviewed delivery agents of Zomato, Swiggy and UberEats to determine the extent of HR practices in this industry. From the observations, it became clear to us that price wars have rendered employment in both these sectors unsustainable for these employees. They face several issues in terms of wages, benefits, job security, career progression and so on. In fact, in the food services industry, delivery agents are not even considered employees, therefore causing comprehensive HR policies to become unnecessary. Our overall objective was to catalogue the effects of price wars on HR practices, and whether this is sustainable/profitable for companies in the long run. While companies in such industries focus primarily on curtailing employee costs to manage their earnings, we believe that such practices will hamper the employer’s brand and ultimately prove to be unsuccessful.