Stonewall Industries Limited
Assignment 2
Nicole Lee
038236154
HRM822
Peter MacKellar
May 11, 2015
1. In 1982 it seems the company will have to downsize. What are the factors that are forcing the company to make that decision? (10 marks) Downsizing is a strategy to improve an organization’s efficiency by reducing the workforce or changing and restructuring the systems of the organization (Belcourt & McBey, p. 260). There are multiple factors that are forcing Stonewall Industries to make the ultimate decision to downsize. Environmental factors play a vital role in effective Human Resources Management, impacting the strategy of any organization, including the decision to downsize. If Human Resource Planning is not adaptive to relevant environmental factors and change, then the organization can seriously suffer. One of the major factors that forced Stone wall Industries to make the decision to downsize was the economic climate. In 1982, Canada experienced inflated interest rates, too high for consumers to make any investments. In addition, there was overall high levels of unemployment across the nation. These factors adversely affected consumer demand for product which created a mass labour surplus in the firm’s operations. Because of the decline in housing starts and high interest rates, the market for construction materials severely declined which posed a threat to Stonewall Industries as there was little consumer demand for their goods. Even though the Plastics Division was supposed to decrease the vulnerability of this decline in the marketplace, the demand for this new product was similarly affected and impacted by economic downfall. As labour is a derived demand, Stonewall Industries experienced over-capacity and was put in the position of having to downsize their operations. Another major environmental factor that may have affected the decision for Stonewall Industries to downsize is demographic and labour market forces. Out of Stonewall Industries’ five plants, the
Nicole Lee
038236154
HRM822
Peter MacKellar
May 11, 2015
1. In 1982 it seems the company will have to downsize. What are the factors that are forcing the company to make that decision? (10 marks) Downsizing is a strategy to improve an organization’s efficiency by reducing the workforce or changing and restructuring the systems of the organization (Belcourt & McBey, p. 260). There are multiple factors that are forcing Stonewall Industries to make the ultimate decision to downsize. Environmental factors play a vital role in effective Human Resources Management, impacting the strategy of any organization, including the decision to downsize. If Human Resource Planning is not adaptive to relevant environmental factors and change, then the organization can seriously suffer. One of the major factors that forced Stone wall Industries to make the decision to downsize was the economic climate. In 1982, Canada experienced inflated interest rates, too high for consumers to make any investments. In addition, there was overall high levels of unemployment across the nation. These factors adversely affected consumer demand for product which created a mass labour surplus in the firm’s operations. Because of the decline in housing starts and high interest rates, the market for construction materials severely declined which posed a threat to Stonewall Industries as there was little consumer demand for their goods. Even though the Plastics Division was supposed to decrease the vulnerability of this decline in the marketplace, the demand for this new product was similarly affected and impacted by economic downfall. As labour is a derived demand, Stonewall Industries experienced over-capacity and was put in the position of having to downsize their operations. Another major environmental factor that may have affected the decision for Stonewall Industries to downsize is demographic and labour market forces. Out of Stonewall Industries’ five plants, the