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HRM822 Assignment 1
The Environment, Labour Demand and Supply, Downsizing

4/6/2014
Coretta Jacobs
Student number

1. Define and explain the significance of the term ‘derived demand’ as it applies to Strategic Human Resources Planning.
Derived demand is the demand for a product/services occurs as a result of a demand for another immediate good or service. When apply this concept on labour demand, the more a company's product or service the market wants, the higher the demand for labour to involve in the production process. The essence of strategic human resources planning is to align human resources planning organization's business strategy. This means company cannot perform their personnel forecast solely based on the product demand because there is some other factor that will affect the product demand. Thus, company need to have a thorough analysis of the external environment and examine potential factor that will affect the overall demand of product/service, then examine how these factors will affect the overall big picture. HR professionals will then be required to view how these factors will affect the business objectives in terms of operations and tried to look for different flexible interventions in order to support the corporate values.

Derived demand is defined as a requirement for one product that is created due to the purchase of another product. It occurs for consumers who purchase goods for further production, because their purchases are based on the demand for their final product.[1] For example, when the demand for automobiles is high, the derived demand for steel, and all other products used to make automobiles, is also high. Should the demand for automobiles drop, so will the demand for the products used to make the automobiles.
Derived demand applies particularly to strategic human resources planning

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