Influences on operations: globalisation, technology, quality, cost, government, law, sustainability and CSR (HSC Business Studies)

What this dot point is asking

The syllabus lists these influences under "influences" in Topic 1, and the related "students learn to" point asks you to "examine contemporary business issues to explain the influences on operations management" and to "discuss the influence of government policies, legal regulation and environmental sustainability" on operations. Questions range from a 2-mark outline of one influence to an 8-mark analysis of several influences on a stem business, and in Section III the influences are often the "situation" you must diagnose before recommending strategies.

The skill being tested is cause and effect: influence, then the operations decision it forces, then the result for the business. A list of eight definitions earns little.

A framework for any influence question

Use the same three-step chain every time:

1. Name and define the influence in one sentence.
2. Link it to a specific part of operations: inputs (materials, labour, technology), the transformation process (layout, scheduling, quality, technology), or outputs (customer service, warranties, product range).
3. Show the consequence for the business (cost, quality, speed, flexibility, legal exposure or reputation), using a real or stem example, and say whether it is an opportunity, a threat or both.

1. Globalisation

Definition. Globalisation is the increasing integration of the world's economies through trade in goods and services, flows of capital, technology and labour, and global supply chains.

How it influences operations.

• Inputs can be sourced from the cheapest or best supplier anywhere, widening choice and lowering cost.
• Scale increases when a business sells to global markets, spreading fixed costs over more output.
• Risk increases: long supply chains are exposed to freight disruption, geopolitical events, tariffs and exchange-rate movements.
• Compliance becomes more complex, because products must meet each market's standards.

Australian example: Cochlear. Cochlear, headquartered on the Macquarie University campus in Sydney, makes implantable hearing devices at sites in Australia and overseas, including Kuala Lumpur, where it announced an expansion of more than RM30 million in 2022 to serve demand in Malaysia and more than 180 other countries. Operating across many countries means its operations function must manage multi-country manufacturing, medical-device approvals in each market and currency exposure on most of its revenue.

The detail of global sourcing, economies of scale, scanning and learning, and research and development is covered in global factors of operations.

2. Technology

Definition. Technology is the application of knowledge, equipment and systems to the transformation process. It includes leading-edge technology such as robotics and automation, and established technology such as barcodes and point-of-sale systems.

How it influences operations.

• Automation lowers the labour cost per unit and increases consistency and speed.
• Information systems give real-time data on stock, demand and quality, supporting just-in-time inventory and faster decisions.
• Customer-facing technology (apps, self-service, online ordering) changes the service process and shifts some work to the customer.
• Costs and risks: high capital cost, staff retraining, obsolescence, and exposure to system failures and cyber attack.

Australian example: Coles' automated supply chain. Coles opened automated distribution centres built with the German firm Witron at Redbank (Queensland, 2023) and Kemps Creek (NSW, 2024), and automated customer fulfilment centres built with Ocado for online orders at Truganina and Wetherill Park in 2024. The operations effect is a lower cost per carton handled and more accurate orders (see role of operations management for the sources).

Australian example: the risk side. In July 2025 Qantas disclosed that attackers had accessed a third-party customer servicing platform used by one of its contact centres, exposing data on 5.7 million unique customers (for about 4 million, only names, email addresses and frequent flyer details). No payment card or passport details were held on that system. Technology dependence, including on outside providers, is now an operations risk that must be managed.

3. Quality expectations

Definition. Quality expectations are the standard of performance customers expect from a good or service: fitness for purpose, durability, reliability, appearance and, for services, responsiveness and courtesy.

How it influences operations.

• Rising expectations force investment in quality control, quality assurance (for example ISO 9001 certification) and continuous improvement.
• Quality becomes a performance objective in its own right and a basis for differentiation.
• In Australia, the consumer guarantees in the Australian Consumer Law set a legal minimum: goods must be of acceptable quality and fit for purpose, which links quality expectations to legal regulation.
• Failure is expensive: recalls, warranty claims, returns, complaints and lost reputation.

Example: the Toyota Production System. Toyota's reputation for reliability rests on the Toyota Production System, which combines standardised work, jidoka (stopping production when a defect is detected) and kaizen (continuous improvement). Toyota stopped manufacturing cars in Australia in October 2017 but its operations philosophy remains the standard textbook model of quality built into the process. See quality management.

4. Cost-based competition

Definition. Cost-based competition is competition in which businesses compete mainly on price, so they must keep their costs lower than rivals to stay profitable.

How it influences operations.

• Pressure to lower inputs cost: bulk buying, global sourcing, private-label products.
• Pressure on the transformation process: standardisation, automation, lean inventory, outsourcing.
• Pressure on outputs: narrow ranges, fewer frills, self-service.
• The risk is cutting costs that customers value, such as quality or service, or squeezing suppliers.

Australian example: Aldi. At a public hearing of the ACCC's supermarkets inquiry on 11 November 2024, Aldi explained that its business model is built for efficiency: smaller stores, "around 1,800 core range items in comparison to our competitors, which may have 20 to 25 thousand lines", mainly exclusive brands it develops itself, and fewer staff per store. It also said about 97 per cent of the fresh fruit and vegetables it buys come from Australian suppliers. Each of these is an operations decision driven by cost-based competition, and Aldi's prices in turn intensify the cost pressure on Coles and Woolworths.

5. Government policies

Definition. Government policies are the decisions of federal, state and local governments on taxation, spending, trade, industry assistance, interest rates (through the Reserve Bank) and the environment that change the conditions businesses operate in.

How it influences operations.

• Trade policy. Free trade agreements lower tariffs on inputs and exports. The Australia-United Kingdom Free Trade Agreement entered into force on 31 May 2023, removing tariffs on most Australian goods exported to the UK, which changes sourcing and export decisions.
• Industry policy. The Future Made in Australia agenda offers production incentives for renewable hydrogen and processed critical minerals, influencing where and what businesses produce.
• Environmental policy. The reformed Safeguard Mechanism, which since 1 July 2023 requires Australia's largest industrial emitters to reduce their emissions baselines each year, changes the cost of emissions-intensive operations.
• Monetary policy. Higher interest rates raise the cost of borrowing to fund new equipment and facilities, which can delay capital investment in operations.

6. Legal regulation

Definition. Legal regulation is the body of compulsory laws, regulations and mandatory codes that operations must comply with, backed by penalties.

Key laws affecting operations (current to September 2026).

Australian example: Optus. In August 2025 the Australian Information Commissioner started civil penalty proceedings in the Federal Court against Optus over its September 2022 data breach, alleging it failed to take reasonable steps to protect the personal information of about 9.5 million Australians, in breach of the Privacy Act 1988. Because the alleged conduct happened before the December 2022 penalty increase, the maximum penalty sought is $2.22 million per contravention. The case shows that information security is part of operations and that legal regulation can reach deep into how a business designs and runs its systems.

7. Environmental sustainability

Definition. Environmental sustainability means operating in a way that meets present needs without compromising the ability of future generations to meet theirs: reducing emissions, waste, water use and pollution across the transformation process.

How it influences operations.

• Inputs: switching to renewable electricity, recycled materials and lower-emission suppliers.
• Transformation: energy-efficient equipment, waste reduction and recycling, redesigning products and packaging.
• Outputs: product stewardship, take-back schemes, lower-carbon products.
• Reporting: large companies now disclose Scope 1 and 2 emissions, and Scope 3 (supply chain) emissions from their second reporting year, under the mandatory climate reporting regime.

Australian example: Woolworths Group. In 2020 Woolworths set a goal of 100 per cent renewable electricity by 2025. The group announced in 2026 that it reached the milestone at the end of 2025, sourcing more than two-thirds of its electricity through wind and solar contracts across Australia and New Zealand and generating the rest from its own network of more than 320 on-site solar systems. Woolworths expects this to cut its operational emissions by more than 74 per cent, towards its target of an 80 per cent reduction by 2030.

Australian example: Qantas Group. Qantas's Climate Action Plan commits to net zero emissions by 2050, an interim 25 per cent cut in net emissions by 2030 and 10 per cent sustainable aviation fuel in its fuel mix by 2030. The operations consequences are fleet renewal towards more fuel-efficient aircraft, fuel-efficient flight planning and long-term fuel supply contracts.

8. Corporate social responsibility and the legal/ethical distinction

Definition. Corporate social responsibility is a business's commitment to act ethically and consider the interests of all stakeholders (employees, suppliers, customers, communities and the environment) and not only shareholders.

The distinction the syllabus asks for.

Worked contrast: supermarket supplier payments. Coles introduced a 14-day payment policy for small suppliers (those supplying up to $1 million a year) from 1 July 2017, when its average payment time was about 30 days. Woolworths committed to 14-day terms for small suppliers and aligned terms across the group at no more than 14 days from 31 March 2020. No law required these terms, so they are ethical responsibility. The legal floor now includes the mandatory Food and Grocery Code of Conduct, which requires written supply agreements, good-faith dealing and no retribution against suppliers who complain, and applies to grocery businesses with more than $5 billion in annual revenue.

Why ethical responsibility matters for operations. CSR often adds short-term cost (faster supplier payments, higher-standard inputs, supplier audits) but strengthens supplier relationships, reduces supply risk, supports the brand and keeps the business ahead of future regulation. Much of today's law (modern slavery reporting, climate disclosure, the mandatory grocery code) began as voluntary practice that regulators later made compulsory.

Opportunity or threat? Evaluating influences

Every influence can help or hurt. Strong answers make a judgement:

How this dot point appears in the HSC

• Section I multiple choice asks you to classify a scenario (for example, a new tariff is a government policy; recycling packaging is sustainability; paying above the award is ethical responsibility).
• Section II short answers ask you to outline or explain one or two influences on a stem business (2 to 5 marks), or to distinguish legal compliance from ethical responsibility.
• Section III business reports often describe a business facing several influences at once (a new competitor, rising costs, new regulation); diagnose them before recommending strategies.
• Section IV extended responses may ask how influences affect operations strategies. Link influences to operations strategies and back them with a researched case study.