Global Strategies (HSC SSCE Business Studies): Revision Notes

Global Strategies

Introduction to global strategies in HRM

Globalisation and technological advances (internet, HR applications, telecommunications) have dramatically increased business competition and made human resource management more complex. Australian businesses now face strategic challenges relating to labour costs, skills shortages, and worker supply.

Global costs

Understanding Australia's high labour costs

Australia's higher living standards mean workers expect better wages and salaries compared to many other countries. Employers also face significant on-costs such as superannuation contributions, which increase the total expense of employing local staff.

Many businesses find these higher labour costs reduce their competitiveness in global markets. This has led to workforce restructuring, including:

• Outsourcing functions to lower labour cost countries
• Establishing subsidiaries offshore to reduce production costs and access new markets

Offshoring manufacturing

Countries like China can produce goods at highly competitive prices due to lower labour costs. This has attracted Australian businesses to relocate production overseas, though often at the cost of domestic jobs.

Outsourcing services

It's not just manufacturing that moves offshore. Many service activities are now outsourced to countries with educated, English-speaking workforces at lower wage rates.

Global skills

The skills shortage challenge

Australian businesses face a significant mismatch between the skills workers possess and those required by industry. Many managers believe the education system has not adequately developed workers' numeracy and literacy skills.

The skills shortage is blamed on:

• Inadequacies in the education system
• Employers importing cheaper labour rather than investing in training
• Outsourcing and overseas recruitment practices

Temporary Skill Shortage (TSS) visa

Introduced in March 2018, the TSS visa replaced the 457 visa as a short-term solution to skills shortages.

Benefits of temporary visas:

• Effective during periods of economic growth
• Attracts skilled workers to remote areas Australians avoid
• Particularly useful for medical services, engineering, and skilled trades

Sourcing skills internationally

Australian businesses are looking globally to fill skill gaps:

European workers:

• Economic problems in Europe have created pool of long-term unemployed but highly skilled workers
• Attractive to Australian businesses seeking experienced workers

Senior management:

• Europe, South Africa, United States, and United Kingdom provide highly experienced senior managers

Asian workers:

• Skilled workers from China and India migrate to Australia
• Particularly for difficult-to-fill occupations like IT
• Helps replace the $100,000$ workers Australia loses to business migration annually

Global supply

Australia's worker supply problem

With a population of only $25$ million people, Australia struggles to supply sufficient workers for business needs.

Advantages of large population countries:

• China and India have huge populations
• Abundant workers seeking well-paid overseas employment
• Australia allows skilled migration from these countries for hard-to-fill occupations

Challenges with overseas labour supply

While lower labour costs appear attractive, businesses must consider several complications when sourcing labour from overseas markets.

Worker rights and ethical concerns in China

The complexity of China's legal and labour environment creates significant ethical challenges for businesses operating there.

Market economy transition:

• Inconsistencies in workplace laws
• Some laws appear to support unscrupulous management practices
• Multinational businesses have been criticised for exploiting:
  • Lack of legal structure
  • Low-cost labour supply
  • Situations requiring relatively low skill levels

Ethical considerations: modern slavery in global supply chains

The modern slavery problem

There is growing concern that global supply chains profit from exploiting vulnerable workers in countries with poor labour protections. Some workers produce goods for Australian consumers in conditions described as modern-day slavery.

Case study: Four Corners exposé on Uyghur forced labour

Australia's Modern Slavery Act 2018

To address modern slavery in supply chains, Australia passed legislation requiring businesses to report their efforts.

Consumer responsibility

Each purchasing decision can be an ethical choice. Consumers have the power to drive change through their actions and choices.

Actions consumers can take:

• Become informed about supply chain risks
• Challenge companies through social media
• Demand better practices from businesses and government
• Consider social and environmental credentials, not just price

Exam guidance

When answering questions on global strategies:

For "outline" or "describe" questions:

• Identify the three key areas: costs, skills, supply
• Provide brief examples of each strategy
• Link to globalisation and technological change

For "explain" questions:

• Show cause-and-effect relationships (e.g. high Australian labour costs → offshoring)
• Use specific examples with figures where possible
• Explain both benefits and challenges of each strategy

For "analyse" questions:

• Examine interconnections between costs, skills, and supply
• Consider short-term vs long-term implications
• Compare different strategic approaches (e.g. outsourcing vs training)
• Use data to support analysis

For "evaluate" or "assess" questions:

• Make judgements about effectiveness of strategies
• Consider ethical dimensions (worker rights, modern slavery)
• Balance business competitiveness against social responsibility
• Include case study evidence
• Reach a supported conclusion about best approach

Strong case studies to use:

• Pacific Brands ($1800$ jobs lost to China)
• Qantas ($1550$ jobs lost since 2014)
• India for service outsourcing
• TSS visa program (replaced 457 visa in 2018)
• Uyghur forced labour in Xinjiang
• Modern Slavery Act 2018