2.

[20 marks] (HSC 2003 Q28)

Question 28
Describe the nature and sources of change in business, and evaluate their impact on employment
relations.

Executive Summary
All businesses face change. It can come from external and or internal sources presenting business's with
opportunities and threats that need to be effectively and efficiently managed ensuring the business
achieves its goals and objectives.
These changes can affect a business's employment relations. This maybe expressed in terms of changes in
the levels of disputation, absenteeism, quality, labour turnover and benchmarks
External change comes from outside the business and brings with it opportunities and threats. It is
unpredictable in nature and it is out of direct control of the business or its management and therefore
requires businesses to be monitor for such changes.

Change in Business
The major sources of external change are the following:
Technological influences. The application of robotics and microelectronic technology to the workplace
has revolutionised how a business sources and produces goods and services.The development and
speed of adaptation has changed the nature of how work is undertaken. It has increased labour
productvity, reduced costs and increased profitability. The motor vehicle assembly industry is a
good illustration of examples of the application of such technology. The use of robotic technology in
producing motor vehicle has changed the way cars were assembled.
Social influences. This relates to the changing nature of tastes, fashion, values and the environment.
The best illustration of this refers to society's greater awareness of resources and production methods
being ecological sustainable.This has given rise to business's using biodegradable packaging or
recycling waste products such as water.
Political influences. Governments at local, state and federal level can introduce changes that may
present serious threats as well as opportunities for business. At the federal level from 1996 to 2007, the
Liberal government established bilateral trade agreements with many Asia Pacific countries.This has
meant Australian businesses had access to these countries markets.
Geographical influences. Changes in climatic conditions particularly relating to prolonged drought
in Australia have influenced the very existence of farmers and the consequent ability to continue to
export to countries. For example, the drought has affected wheat product in the late 1990's through to
2007.
Financial influences. Changes in the availability of credit and interest rates present businesses with
opportunities and threats. In the mid 2004, interest rates where increasing. Companies like Swagmen
wines were affected greatly, being highly geared and relying on debt for funding its operations
increasing interest rates decreased its financial efficiency as well as its net profits.
The changing nature of markets.The process of globalisation has meant businesses can access inputs
and outputs from many more countries. For example, Woolworths source fruit and grocery items from
overseas sources where their availability is high and their prices are low.
Economic influences. Changes in the economic conditions where the economy is in a boom and or
a recession creates a set of conditions will affect a business's profitability. In the case of a recession,
the economy is experiencing low demand for goods and services and consequently low demand for
workers. Australian businesses in 2008 are experiencing low demand for products and services as
consumers reduce their expenditure. Consequently businesses such as Macquarie Bank are reducing
its staff as is Ford and General Motors Holden.
Legal influences. Changes in laws affect a business's operations, marketing and employment relations
strategies and policies. The introduction of new occupational, health and safety regulations in 2000
meant for businesses like Coles, Bunnings and BMP Billition greater focus on issues of training, a
greater workplace safety and the provision of formal grievance procedures in the workplace.

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 Internal influences.
Change also comes from within side the business. Such changes are usually management conceived,
planned and led with the overall aim to improve the business's ability to achieve its strategic goals i.e.
profitability.
The sources of such change are centred on the effects of accelerating technological change. The use of
information and production technology has significantly affected the way businesses communicate, source
to produce goods, and services. As mentioned above, the likes of General Motors, Ford, Volvo and Toyota
are all using robotic technology in their respective production plants.
Electronic technology has sponsored the development of e commerce i.e. the buying and selling of goods
and services using the internet. It is the basis for trade from domestic and international markets.
Other effects of new technology have prompted the development of new systems and procedures and
new cultures. For example, grocers such as Woolworths, Coles and IGA all order and monitor their stock
using the likes of electronic scanning devices and then downloading the information to suppliers. From a
cultural point of view, businesses are allowing employees to work from home because of new technology
allowing for tele conferencing, the use of email and mobile phone technology.

Impact on Employment Relations

Change requires a response if businesses are going to remain competitive and profitable. Therefore, if
management is to make changes there are bound to impact upon stakeholders of the business.
In the case of employment relations, internal and external changes made have create consequences
such as fostering industrial deputation, changes to communications, rewards, the use of training and
development and changes in working conditions for all employees.
Alliance Tin PlateMakers Pty Ltd manufactures and supplies tinplate for the paint industry.
The industry was under pressure from imported tinplate makers particularly from Malaysia, the Philippines
and Thailand. Such competitive pressure is the outcome of the Federal Government relaxing tariffs and
quotas on imported tinplate.
The raw material used in the tinplate manufacturing process comes from BHP.
Out dated use of technology.
Unproductive and costly work practices used

The outcome to these influences by management was one of inertia, deciding to continue with the existing
work practices, acknowledging things would return to normal in the future.
The workers reply to such non-action saw the level of absenteeism, labour turnover and disputation
increase by 25% while quality fell by 70%.
Upon seeing these employment relations outcomes, the management at Alliance responded by
introducing new systems and a new workplace place culture centred on:
Better communications with the use of teams, and regular meetings
Increase wages and improved working conditions
More training
The introduction of family flexible work environment
The impact of these changes was to sell the level of absenteeism, labour turnover and disputation decrease
by 35% while quality increased by 50%.

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