Define and explain the significance of the term ‘derived demand’ as it applies to Strategic Human Resources Planning. (5 marks) The indirect demand for something that has value based on other goods that can be derived or made from it: such as raw materials or other inputs to a process of production. Derived demand for a material is driven by changes in demand for the end product whose creation or production requires that material.  Strategic Human Resource planning is the process of anticipating and providing for the movement of people with the skills and experience, into, within, and out of an organization to meet the long term strategic needs of the organization.  Derived demand applies to strategic human resources planning particularly through labour. Human resources is one of the key resources that is deployed in a corporate for producing and providing the products and services that enable the corporate to generate revenue through responding to the needs of the market. That is to say, the demand for human resources is derived from the demand for the products and services. 2.
Explain ‘derived demand’ as it applies specifically to Stonewall Industries. (5 marks) Two major external environmental factors affect derived demand in the Stonewall case: - The number of housing starts in a given year
- Interest rates
When the need for housing increases, it drives up the demands for the gypsum wallboard which is the major product of Stonewall. However, when the housing and construction industry experiences a downturn, the demand for gypsum wallboard and vinyl siding (another product of Stonewall) in the market will decrease accordingly. Interest rate is another factor that has significant impact on demand side of the housing and construction raw materials. Once the interest rate raises, funds available for investment decrease, which means people will be more reluctant to invest in real estates. It would hence result in the shrinkage of housing and construction industry that eventually leads to the decrease of demand for Stonewall’s products. In 1982, the construction materials industry in Canada was in shambles since the housing start had stagnated and the interest rates were too high to stimulate investment. Additionally consumer demand was stalled because inflation levels and unemployment was high. Stonewall also experienced severe difficulties in terms of sales - demands were no longer there. Demand for human resources is also considered as derived demand. During the downturns, with the decreasing demands of its products, Stonewall was in a position of significant labour over-capacity and had to lay off workers. 3.
The Senior Executive Team at Stonewall has to consider a number of environmental factors that impact on its Human Resources Planning activities. Describe these environmental factors and explain their impact. (10 marks) There are a number of external and internal factors that significantly affect Stonewall’s human resources strategy planning. These factors include the economic environment, industry and competitive trends, technology, political and regulatory factors, demographics, labour market trends and social values.  Economic factors, such as economic trend and interest rate affect its HR planning. Usually when economic trend goes up, people are more willing to make investment on housing, which in turn drives up the demands for Stonewall products. More human resources would be needed for productions to meet the increasing needs of the markets. However, economic downturn, high interest rates, or less personal disposable income resulted from high unemployment rate would adversely impact the demands for Stonewall products in the market and hence decreases the needs for labour. The competition in the market also affects the demand of Stonewall products. As the Gypsum wallboard is viewed as a ‘commodity’, it indicates little difference among competitors’ products. Since only price would make...
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