Essay about The Australian Automotive Manufacturing Industry

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The Australian automotive manufacturing industry has experienced substantial structural change (“Productivity Commission”, 2014). This has been in response to changing market and competitive conditions overseas and in Australia, and reduced levels of assistance from governments (“Productivity Commission”, 2014). Following similar decisions by Holden and Ford, these factors have led to Toyota’s decision to abandon manufacturing in Australia by 2017. AMWU National Vehicles Secretary Dave Smith said “the decision would cost thousands of jobs, not only at Toyota but all the way down the supply chain” (“Devastating day”, 2014) and represents the “collapse of the automotive industry in Australia” (Novak, 2014). The purpose of this report is to…show more content…
The difference is that according to stakeholder theory, a wide view is taken in that businesses have a responsibility to all of their stakeholder groups not just to shareholders (Freeman, Harrison &Wicks, 2007). Broadly, a stakeholder is anyone that can affect or be affected by the activities of an organisation. EMPLOYEES A major consequence of Toyota ceasing their manufacturing in Australia by 2017 is that 2400 Australian Toyota employees will lose their jobs (Novak, 2014), and for some employees, retrenchment can lead to prolonged unemployment (“Productivity Commission”, 2014). In line with shareholder theory, businesses don’t have a responsibility to provide employment to a country as it is not a responsibility of business (Friedman, 1970). Therefore, Toyota doesn’t have a responsibility to provide employment to Australia as their only responsibility is to their shareholders and manufacturing in Australia simply isn’t viable, thus their decision cease their manufacturing in Australia is in accordance with shareholder theory. However according to stakeholder theory, Toyota needs work with the Auto Manufacturing Workers Union in defining the provision redundancy payments and retraining to their retrenched automotive manufacturing employees. Redundancy payments help displaced employees with immediate financial pressures
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