U3.21 — Managing Diversity as a Strategy for Business Growth
Overview
Dotpoint 21: managing diversity as a strategy for business growth.
Businesses operating in a global environment often work with employees, customers, suppliers, partners and managers from many different backgrounds. This means businesses must understand and manage diversity carefully.
Diversity refers to the differences between people in a workforce or market. These differences may include culture, language, gender, age, religion, disability, education, skills, work experience, values and ways of communicating.
Managing diversity means using leadership, human resource policies, training and communication strategies to ensure different people can work together effectively and contribute to business growth.
When diversity is managed well, it can help a business understand global customers, improve decision-making, increase innovation and build a stronger international reputation.
🌏 Diversity in a global business and why it matters
Diversity in a global business occurs when a business has employees, managers, customers, suppliers or partners from different demographic, cultural, social and professional backgrounds.
In a global environment, diversity is not just a workplace issue. It can become a source of business growth because different people can help the business understand different markets, cultures and customer needs.
Why diversity needs to be managed
Diversity can create growth opportunities, but it does not automatically improve business performance. A diverse workforce needs to be managed so people can communicate effectively, feel respected and contribute their knowledge.
If diversity is poorly managed, the business may experience misunderstandings, conflict, discrimination, low morale or poor cooperation between teams. This can make global expansion harder.
If diversity is managed well, the business can use different ideas, languages, cultural knowledge and skills to improve products, services and customer relationships in global markets.
Why managing diversity supports business growth
Better understanding of global customers
A diverse workforce can help a business understand the needs, values and expectations of customers in different countries. Employees with different cultural or language backgrounds may provide insights that help the business adapt products, services and communication.
This can support business growth because customers are more likely to respond positively when the business understands their needs.
Improved communication in international markets
Global businesses often deal with overseas suppliers, employees, customers and strategic partners. Managing diversity can improve communication by helping employees understand different languages, customs, protocols and business expectations.
This can reduce misunderstandings and improve relationships with international stakeholders.
More innovation and better decision-making
Diverse teams can bring different ideas, experiences and problem-solving approaches. This can help a business identify opportunities, avoid narrow thinking and develop more creative products or strategies.
This supports growth because innovation can help the business compete more effectively in global markets.
Access to a wider talent pool
A business that values diversity can attract employees from a wider range of backgrounds. This can help the business access more skills, languages, qualifications and international experience.
This is especially important for businesses expanding overseas or managing global partnerships.
Stronger reputation and employer brand
Businesses that manage diversity well may be seen as fair, inclusive and globally aware. This can strengthen their reputation with employees, customers, investors and business partners.
A stronger reputation can support growth by helping the business attract talent and build trust in new markets.
Reduced conflict and resistance
Managing diversity can reduce conflict by helping employees understand each other’s communication styles, values and expectations. This is important when teams are changing, merging or working across borders.
Less conflict can improve morale, productivity and cooperation.
Australian case study — CSL and global inclusion
CSL is an Australian-founded global biotechnology business that operates across many countries and serves communities with different healthcare needs. In this type of global business, managing diversity matters because employees, patients, donors, suppliers and communities may have different cultural backgrounds, languages and expectations.
CSL identifies many dimensions of diversity, including gender, nationality, ethnicity, disability, age, language, professional background and cultural experience. This shows that diversity is broader than one characteristic and must be managed through an inclusive culture.
By valuing different viewpoints, lived experiences and ideas, CSL can improve collaboration, attract talent and better understand the communities it serves. This supports business growth because a global healthcare business needs people who can work effectively across different markets and communities.
Example of how to write this in an exam
Managing diversity is important as a strategy for business growth because it helps a business use the different skills, cultures and experiences of its workforce to operate more effectively in global markets. For example, a global business with employees from different language and cultural backgrounds may be better able to understand overseas customers and work effectively with international suppliers or partners. If this diversity is managed well, employees can contribute different ideas and help the business communicate more effectively across markets. As a result, managing diversity can support business growth by improving innovation, customer understanding and global communication.
🧭 Strategies to manage diversity for business growth
Strategies to manage diversity are the actions a business uses to ensure people from different backgrounds can work together effectively, feel included and contribute to business growth.
These strategies are usually linked to human resource management, leadership, communication, training and workplace culture.
Strategy summary
Managing diversity requires more than simply hiring people from different backgrounds. The business must create systems that allow different employees to participate, communicate and progress fairly.
This means managers need to recruit fairly, train employees, support inclusive leadership, communicate expectations clearly and prevent discrimination or exclusion.
In a global business, these strategies can help employees work across cultures, manage international partnerships and serve diverse customer groups more effectively.
Key strategies to manage diversity
Inclusive recruitment and selection
The business can use recruitment processes that attract applicants from different backgrounds and reduce bias in hiring decisions.
This may involve diverse interview panels, clear selection criteria and advertising roles through a range of channels.
Diversity and cultural awareness training
Training can help employees understand cultural differences, communication styles, unconscious bias and respectful workplace behaviour.
This is useful when employees work with global teams, overseas customers or international business partners.
Inclusive leadership
Managers can encourage participation from all employees, listen to different perspectives and make sure quieter or less experienced staff are not ignored.
This helps the business benefit from diverse ideas rather than allowing only the loudest or most senior voices to dominate.
Clear communication protocols
Global teams may need clear expectations about language, meeting behaviour, decision-making, feedback and conflict resolution.
This can reduce misunderstandings when employees come from different cultural or professional backgrounds.
Fair promotion and development opportunities
The business can make sure training, mentoring and promotion opportunities are available fairly to employees from different backgrounds.
This helps build a diverse leadership pipeline and reduces resentment if employees believe opportunities are unfair.
Employee resource groups and mentoring
Employee networks and mentoring programs can help employees feel supported and connected. They can also give managers feedback about barriers experienced by different groups.
This can improve inclusion and help the business retain skilled employees.
Anti-discrimination policies and conflict resolution
Clear policies can set expectations for respectful behaviour and explain how complaints or conflicts will be managed.
This helps create a safe workplace where employees are more willing to contribute.
Local knowledge in global decisions
A business expanding overseas can involve employees or partners with local cultural and market knowledge in decision-making.
This can help the business avoid cultural mistakes and adapt its products, services or marketing to suit local customers.
Strategic alliances with diverse partners
A global strategic alliance can help a business access local expertise, different skills, diverse labour and new market knowledge.
However, the alliance must be managed carefully so different communication protocols, ethical practices and cultural beliefs do not create conflict.
Australian case study — Woolworths and inclusion programs
Woolworths Group provides an Australian example of managing diversity across a large workforce. The business recognises the value that team diversity brings to its customers and business.
Woolworths uses inclusion programs and networks across areas such as gender equity, LGBTQ+ inclusion, disability, First Nations inclusion and cultural inclusion.
This shows how a business can manage diversity through structured programs, policies and employee support networks. For a large business serving diverse communities, these strategies can help employees feel included and improve customer understanding.
Example of how to write this in an exam
One strategy to manage diversity is to provide cultural awareness and communication training. This can help employees understand different communication protocols, cultural beliefs and workplace expectations when working in a global business. For example, if an Australian business forms a strategic alliance with an overseas business, training can help employees avoid misunderstandings and work more effectively with international partners. As a result, managing diversity through training can support business growth because employees are more likely to cooperate, share ideas and build strong relationships in global markets.
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🃏 Flashcards
Card 1 of 13
🎮 Revision Games
💰 BME Millionaire
Climb the prize ladder by mastering diversity and strategies for business growth.
👔 Business Boss
Make 10 diversity-management decisions. Balance inclusion, communication, talent, customer understanding and growth.
⚡ 60 Second Showdown
A varied 60-second challenge covering diversity benefits and management strategies.
Biz Fact: Microsoft has employee communities and inclusion programs aimed at helping people with different backgrounds and identities contribute their ideas.
Past Exam Questions
Use these past exam questions to see how this dotpoint has been assessed. Pay close attention to the command term, the number of marks and whether the question is Section 1 or Section 2.
Section 1 Questions
2016 — Section 1 — Question 6(a) — 4 marks
Context
‘The management of any workforce requires effective leadership and the ability to continuously change and adapt. To operate in an international setting, organisations need human resource and management strategies that value and recognise their demographically and culturally diverse workforces.’ (SCSA, 2016: 4)
6(a): Explain the importance of managing diversity as a strategy for business growth. (4 marks)
Command term focus: Explain
Explain: show cause and effect from managing diversity to improved business performance and growth.
See the full command term guide here: Command Terms.
6(a) Sample answer
Managing diversity is important as a strategy for business growth because it helps a business use the different skills, cultures and experiences of its workforce. In an international setting, employees may understand different languages, customer expectations and cultural practices. This can help the business communicate more effectively with overseas customers and adapt products or services to suit different markets.
Managing diversity also reduces the risk of conflict and exclusion in the workplace. If employees feel respected and included, they are more likely to contribute ideas and support change. As a result, managing diversity can support business growth by improving innovation, customer understanding and employee performance in global markets.
2018 — Section 1 — Question 2(c) — 3 marks
Context
Uber has collaborated strategically with many international businesses in countries such as Russia, Australia and the United States. Volvo, a Swedish vehicle manufacturer, and Uber recently announced a $300 million joint venture to develop self-driving cars.
2(c): Explain why it is important to manage diversity as a strategy for business growth. (3 marks)
Command term focus: Explain
Explain: show cause and effect from managing diversity to improved global collaboration, innovation or growth.
See the full command term guide here: Command Terms.
2(c) Sample answer
It is important to manage diversity because global businesses often work with partners, employees and customers from different countries and cultures. For example, Uber and Volvo would need to manage different communication styles, technical knowledge, legal expectations and business practices in their joint venture. If diversity is managed well, both businesses can use their different skills and perspectives to develop self-driving technology more effectively. As a result, managing diversity can support business growth by improving cooperation, innovation and global market opportunities.
Section 2 Questions
2017 — Section 2 — Question 9(b) — 3 marks
Case study / context
Amy Wong plans to grow her business by importing quality silk products from China. Silk is used to manufacture a wide range of products. Amy has undertaken market research and identified the silk-bedding market, including silk quilts and pillows, as having significant growth potential. While popular for centuries in China, her research shows that silk-bedding products are now becoming better known in Western markets.
The increasing popularity of silk and its associated reputation has developed due to a combination of factors, including its excellent thermal properties, light weight, resistance to insects and natural hypoallergenic properties.
Amy thinks that growth in Western markets, customer demand for natural products, introduction of free trade agreements (FTAs) and the increase in production of quality silk products from China provides the basis for a successful global business. Given the scope of potential changes to her current business, Amy may need to review her strategic plan.
Prepare a short report or essay for Amy, addressing the following points:
9(b): Explain why managing diversity should be included in Amy’s strategy for business growth. (3 marks)
Command term focus: Explain
Explain: show cause and effect and link diversity directly to Amy’s Chinese suppliers, Western customers and growth strategy.
See the full command term guide here: Command Terms.
9(b) Sample answer
Managing diversity should be included in Amy’s strategy because her business will need to work across Chinese and Western markets. Amy may need to understand Chinese suppliers, production standards, communication practices and cultural expectations, while also understanding Western customers who are becoming more interested in silk-bedding products. If she manages this diversity well, she can build stronger supplier relationships and market the products in a way that suits Western customer needs. As a result, managing diversity can support business growth by helping Amy operate effectively across both the importing and customer sides of the business.
2020 — Section 2 — Question 8(d) — 5 marks
Case study / context
Joho and Pez are entrepreneurs and partners in a successful broadcast media business, specialising in the production of podcasts. Beginning as a small independent outlet with a handful of programs made in-house, it has now grown to be a business with more than 20 employees.
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By entering into a global strategic alliance, Joho and Pez will continue to grow their business. It will provide the opportunity to increase profits and gain access to more resources, expertise and funding. There is also potential in a global strategic alliance to have access to a diverse labour force and reduce marketing, research and development costs.
In a global strategic alliance, Joho and Pez and their employees will need to respond to different communication protocols, ethical practices, cultural beliefs and levels of education. It is anticipated that the workplace will be far more diverse in a global strategic alliance.
Joho and Pez are acutely aware of how any change to the structure of their business will have an impact on their employees. They pride themselves on maintaining a positive staff culture and seek to continually improve the work environment. They are aware staff may be resistant to the change at first; therefore, Joho and Pez will need to provide structure, information and guidance to prepare their employees for this change.
Referring to the source information and your own knowledge, prepare a report or essay in which you answer the question parts below.
8(d): Evaluate the following statement: ‘Global strategic alliances can be used as a means to manage diversity as a strategy for business growth’. (5 marks)
Command term focus: Evaluate
Evaluate: consider strengths and limitations of using a global strategic alliance to manage diversity, then make a supported judgement.
See the full command term guide here: Command Terms.
8(d) Sample answer
A global strategic alliance can be used to manage diversity as a strategy for business growth because it gives Joho and Pez access to a more diverse labour force, resources, expertise and funding. This can help the podcast business learn from people with different communication protocols, ethical practices, cultural beliefs and levels of education. If these differences are managed well, the alliance could help the business create content for wider audiences and improve its ability to grow globally.
However, a global strategic alliance can also make diversity harder to manage. Employees may resist if they feel confused by different workplace expectations or if the positive staff culture is threatened. Different communication protocols and cultural beliefs could create conflict if Joho and Pez do not provide structure, information and guidance.
Overall, the statement is valid, but only if the alliance is managed carefully. A strategic alliance can help manage diversity and support growth, but without training, communication and clear expectations, diversity may create resistance rather than business growth.
2023 — Section 2 — Question 9(c) — 4 marks
Case study / context
Wendy is the CEO of an Australian-owned hotel chain, Wunderers’ Hotels Pty Ltd, that has been operating for 25 years. Wendy has hotels in Australia and the Asia-Pacific area. The hotels have a strong loyalty rewards program, with over 50,000 members. Their goal in the next five years is to double their membership base and increase sales now that international regulations and legislation have decreased between countries. Wendy has seen an increase in room bookings in the last six months and believes people now have the confidence to travel once again internationally. Another accrediting factor to increased sales is due to popular events being rescheduled, such as the Australian Open and the Formula 1 Grand Prix.
Wunderers’ Hotels’ head office is in Melbourne. However, Wendy would like to move the office to the Asia Pacific region. This would allow her to focus on increasing memberships and customer service within that region and enable the hotel to be recognised as an international hotel chain. Wendy has chosen to establish the new head office in Singapore.
Currently, Wendy has 40 employees working in the Melbourne office in a range of roles in accounting, strategic business development, marketing, sales and human resource management. To train new employees in the Singapore office, she has requested a team member from each department to apply for a new role: Training and Development Coordinator. This will involve travel to Singapore four times a year. The role is an opportunity for leadership within the company and comes with an increase in salary and an annual bonus. Everyone within each team can apply if interested, no matter how long they have worked for the organisation or their experience. One of her main reasons for this is to create a team of leaders with diversity. Wendy strongly believes diversity within teams is a driving force for change and growth.
Some more experienced employees within the company have expressed disappointment and frustration that junior members of staff can apply for this promotional position. This has created arguments within the teams. Some staff members are also unhappy with the change of head office to Singapore. Implementing change within a business can be difficult and it is often met with resistance, so Wendy is keen to use Kotter’s 8 Steps to implement her changes successfully.
Refer to the case study and your own knowledge to answer the questions below.
9(c): Discuss one way in which Wendy can implement managing diversity as a strategy for business growth. (4 marks)
Command term focus: Discuss
Discuss: explain one strategy, then consider two advantages and two disadvantages in Wendy’s situation.
See the full command term guide here: Command Terms.
9(c) Sample answer
One way Wendy can implement managing diversity is by using the new Training and Development Coordinator role to build diverse leadership across the business. Wendy could encourage employees from different departments, experience levels and backgrounds to apply, then provide training in Singapore to help them understand Asia-Pacific customer service and cultural expectations.
One advantage is that this could help Wunderers’ Hotels develop leaders who understand different markets and customers, supporting the goal of increasing memberships and becoming recognised as an international hotel chain.
A second advantage is that giving employees from different backgrounds the opportunity to apply may increase inclusion and allow the business to benefit from a wider range of perspectives and leadership styles.
One disadvantage is that more experienced employees may feel frustrated if junior staff are given the same opportunity, which could create conflict and resistance.
A second disadvantage is that if the selection process or training expectations are not communicated clearly, some employees may see the strategy as unfair or disruptive, which could lower morale during the change.