Many businesses now have established a global web strategy where different elements of the key business functions are conducted. This form of outsourcing not only minimizes costs but also Increases efficiency. An example of this global web strategy is the 'Apple Pod', which obtains its hard-drive from Japan, 16 internal parts from US suppliers, 400 components from Asian suppliers and the final assembly in China. Some factors that have driven globalization include the deregulation of financial markets, removal of barriers to trade, advancements in transportations and communications.
Globalization affects the management of operations function as It has created many opportunities for Australian businesses to expand their overseas markets and allowed us to Import ND export raw materials which reduces costs and is ultimately more cheaper on operations which increases efficiency as they have more profit to increase the quality of their goods. It has resulted in a rapid increase in the volume of trade, capital, financial resources and labor that flows between countries.
Technology can be defined as the design, construction and/ or application of innovative devices, methods and machinery upon operations processes. This influence plays a very important role in the application of the operations function. Technologies such as mobile phones, laptops, computer and security devices enable people to communicate more easily and enable improved processes. In this way, technology can be seen to be both a range of devices as well as a range of enabling processes. Technology affects operations management at both an administrative and processing level.
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At an administrative level, technologies Like office technologies and software assist with organization, planning and decision-making and are in control of operations processes. However, at a processing level, technologies are used in manufacturing, logistics and distribution, quality management, all aspects of inventory management, supply change management and sourcing. Technology can increase the efficiency of a business for example In the Academy Factory. All workers were replaced with robots; not only does this form of technology provide better etc.
This ultimately generates greater profit for the business. Quality is how well designed, made and functional goods are and the degree of competence with which services are organized and delivered. Quality expectations are one of the key goals of the operations function of a business. Many people have determined expectation that they have of the way products of a business are designed, created and delivered to customers. This has a direct influence on operations management, as they must alter their processes to follow particular standards.
These quality expectations vary depending on whether it is a good or service. For a good, the quality expectations include the quality of the design, fitness for purpose and the durability. However, for a service, the quality expectations include the professionalism of the service provider, the reliability of the service and the levels of customization. Cost based competition is a feature of the operations management that brings a cost leadership approach to the operations functions. A cost leadership approach is a type that is used by many businesses to enhance their positions within the marketplace.
This can be done reducing costs through 6 different ways. These include achieve economies of scale, bulk buy inputs, eliminate waste, produce standardized products for large markets, produce high volume output and use automated production systems. All businesses operate in a political- legal environment. This influence directly affects the management of various key business functions as government policies change form time to time, most notably due to a change in government or a change in social expectations.
Therefore, government policies are a notable source of change a significant influence on business operations. One recent political issue is the affect of climate change; this has been seen by the introduction of the carbon tax. Since policies can inform law making, also lead to many business opportunities, operations managers need to be fully aware of the contemporary government policies and what they comprise. Legal regulations shape the businesses practices/ procedure that must be followed. Compliance costs are the expenses associated with meeting the requirements of legal regulations.
Australia is a country that has countless legal regulations that protect the welfare and fair trading of human resources such as 'Racial Discrimination Act 1975', 'Sex Discrimination Act 1984' and 'Fair work and Discrimination'. However, not all countries have these laws. In Bangladesh, it is easily seen by the collapse of Razz Plaza (garment exporting factory). Due to the low amount of legal regulations, the owner of Razz Plaza was able to get away with harassing workers, locking them inside to work and giving extremely small wages.
Environmental sustainability or ecological sustainability means that business operations should be shaped around practices that consume resources today main aspects of this include sustainable use of renewable resources and the reduction in the use of non-renewable resources. Operations management is significantly affected by the rise in climate change awareness and the need to integrate a long-term sustainable view of resource management into business planning and practice.
Many businesses must tailor their practices to reduce and minimize waste and reduce their carbon footprint. This refers to the amount of carbon produces and entering the environment form operations processes. Corporate social responsibility refers to the open and accountable business actions based on respect for people, community/ society and boarder environment. It also involves businesses doing more than Just complying with the laws and regulations. Triple bottom line places value on the financial returns as well as social responsibility and environmental sustainability.
This means that the corporate decision-making is not Just simply about profitability but rather something that reflects on the community concerns and social expectations. Many businesses in Australia go out of heir way to ensure the safety and welfare of their employees; as human resources are the most important business function. However, in Bangladesh, businesses very rarely meet the legal regulations let alone go beyond them. This resulted in the collapse of Razz Plaza.
This saw more than 100 fatalities, 1000 injured and more than 100 employee had limbs amputated. Legal compliance is when the business decides to go further than the requirements of legislation, however this often much more expensive for the business. This is where compliance costs come from. Compliance cost is the costs involved to comply with legislation. Given that the main goal of business is to generate maximum profit, it is easy to see why many businesses opt for the lowest level of compliance permissible, therefore pay he lowest costs possible.
Areas of the business affected by legal compliance include; labor law compliance, business licensing rules, environmental & public health, taxation, trade practices & fair market dealing, migration & rules around the use of offshore skilled labor, intellectual property, human rights and financial *accounting regulations and corporations law. Ethical responsibility sees businesses meeting all of their legal obligations and taking t further by following the intention and 'spirit' of law.
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