Global – Costs, Skills, Supply

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  • Australian businesses compete in a rapidly changing environment
  • Australia continues to experience a shortage in skilled labour. This can be targeted through the skilled migration program, such as the Temporary Skills Shortage visas (subclass 482).
  • Global businesses have to balance the cost of cheaper labour with the cost of training labour with the required skills.
  • Companies enter international markets by:
    • Exporting products overseas
    • Building production facilities in another country
    • Using foreign labour to increases expertise or minimise costs

There are three approaches to overseas staffing:

  • Ethnocentric – uses only parent-country staffing, as this better enables the policies of the company to be carried out. Favoured by Japanese companies.
  • Polycentric – use of host country staffing, as it allows for the advantage of local knowledge. Favoured by European companies.
  • Geocentric – this model is becoming more popular and emphasises hiring the best person for the position, allowing for greater flexibility.

Extract from Business Studies Stage 6 Syllabus. © 2010 Board of Studies NSW.