The three step problem solving approach in this case involves the following:

Identification of problem.

Establishing alternatives.

Selecting the best solution.

Identification of problem: the problem in this case is that the entire furniture industry is facing problems as a result of which employees of arrow have started to put pressure on its company to get increased pay & also get assured of their job because of increased competition. The company is also going to face threat from a global manufacturer who would attract the employees of arrow with good salaries & sufficient training for the roles to be performed. The company also faces the problem of low motivation.

Establishing alternatives: the company arrow can go for various alternatives to motivate & retain its employees. Following are some of the alternatives available for the company:

A supportive leadership & management: the company can try to interact & discuss with its employees & stop them for unionizing telling their wishes would be fulfilled without unions.

Creating a positive environment: the company can create a happy & productive & workforce for its employees. They can give new & challenging assignments, provide some off the job training, can allow the employees to admit their mistakes without any fear etc.

Recognition & reward: this is the most important thing that employees of any organization would expect. They can provide employees with attractive incentives, gifts for festivals, shopping coupons for their best performances may be starting something like performer of the week, performer of the month, family get to gethers, team lunch etc.

Avoiding boredom: this would reduce the employees$$ motivation. Hence the company can allow the employees to explore & be inventive. They can be allowed to make new spin on old tasks, give some short coffee breaks etc.

Selecting the best solution: the best solution from the above alternatives would be a supportive leadership & management. If this is done, the rest of the other alternatives would automatically follow the path. The management first must give sufficient time to discuss & communicate with their employees, make them the promises mentioned above & ensure that all the promises would be fulfilled one by one. This can stop the employees from leaving & changing the company.