Operations Review

Resource Description

A short summary from the “Operation Influences”

The operations function is affected by external influences. The business can’t control these, but can monitor the external environment and adapt the changing business environment.

Globalisation

The removal of trade barriers between nations, characterised by integration between national economies and high degree of transfer on capital, labour, resources and tech

Provides a source of market opportunities

Can act as a threat, as businesses who apply cost leadership strategies could dominate the market.

Global sourcing is where business purchase inputs domestically or internationally, based off quality/price.  Managers should employ a global market strategy to reduce the cost of production, with low risk and max quality.

Technology

Businesses must source the latest tech to compete.

Long term perks include the production process will be cheaper and more efficient.

The personal computer is the main technological application. Recent technologies that have been employed include robotics, computerised assembly lines, computer aided design (CAD) and computer aided manufacture (CAM)

Tech is costly, as it needs to be upgraded and maintained regularly, and staff need to be retrained.

Quality Expectations

These are procedures within a business to maintain or improve all aspects of quality in the production process.  Basically the expectations customers have for the products they are buying, and the businesses expectations for the products they manufacture

Some quality management approaches used in businesses include;

• Inspection of outputs
• Quality circles
• Kaizen

Quality circles are groups brought together to identify a product or services potential improvements.  They meet during paid time, from similar areas in a business and present solutions/improvements that could be made

Kaizen, also known as continuous improvement is the policy of constantly introducing small changes to improve quality, rather than a big change. Assume employees are the best people to ask to identify room for improvement

Cost Based Competition

It is based on determining the break-even point and then applying cost advantage strategies over competition

Recognises that prices cannot keep increasing, reducing costs the only way to maximise profits when revenues are fixed

This can be done by developing a scale of operation which generates economies of scale, using up to date tech, controlling production cost and R&D and selling costs like advertisement

A conflict here is the need to operate at the lowest cost and offering a high quality product that achieves customer satisfaction

Striving for quality means fewer mistakes, and a reduction costs.

Government Policies

Business must adhere to government policies in regards to production.

Reasons include:

• Governments need to assure safety and quality standards
• Manufacturers must comply with standards or face penalties
• Goods produced must meet certain standards

Policies exist in Australia at local level (Zoning), state level (WHS), and federal level (Taxation)

Legal Regulations

The range of laws that a business must comply with are collectively termed compliance. Compliance costs are the expenses that a business experiences in meeting legal regulations. EXAMPLE: WHS requirements such as wearing protective gear like gloves and safety glasses in certain workplaces.

Environmental Sustainability

Businesses are encouraged to minimise and reduce waste, recycle water, glass, paper and metals and to reduce use of non-renewable resources.

Businesses are encouraged to adapt environmentally sustainable practices.