Operations Influences

What is the acronym for Operations influences?

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Define globalisation

Globalisation refers to the removal of barriers of trade between nations, and is characterised by an increasing integration between individual economies through increased transfer of capital, labour, intellectual capital, finance and technology. 

• Is both a source into foreign markets and a threat on cost-leadership principles

Define technology

Technology refers to the design, construction and/or application of innovative devices, methods and machinery upon the operations processes.

How can technology be used in the administration of operations and the range of operations processes?

Define Quality (for quality expectations)

Quality refers to how well designed, well made and functional goods are, and the overall degree of competence with which services are organised and delivered. Consumers have an inherent belief in the quality standards of the products they purchase and their level of satisfaction indicates whether that expectation has been fulfilled.

What are the 3 factors (each) within quality expectations of goods and quality expectations with services?

Define cost-based competition

Cost based competition is derived from determining the breakeven points, ( the level at which the firms total revenue is equal to total costs) and applying strategies to create cost-advantages over competitors.

Firms can recognise that opportunities for price increases are limited and thus focus on lowering costs to maximise profits.

Distinguish between fixed costs and variable costs

Fixed costs costs that are not dependent on the level of operating

activity in a business. Fixed costs do not change when the level of activity changes — they must be paid regardless of what happens in the business.

Variable costs costs that vary in direct relationship to the levels of operating activity or production in a

business. Such costs include labour costs and costs of energy.

How do government policies influence operations management?

Government policies influence operations management by impacting business rules and regulations. Government policies change due to change in governments or social expectations, thus influencing operations management.

Some examples of government policies include: taxation rates, required materials handling practices, WHS standards and so forth.

How do legal regulations influence operations management?

Legal Regulation:

Firms must follow laws, which is deemed as ‘compliance’, and non-compliance can lead to financial penalty. Compliance costs refers to the expenses associated with meeting the requirements of legal regulations. Laws include:

What are the main types of legal regulations that firms have to comply with?

Work Health and Safety → the use of machinery and in interacting with the business environment. Safe and healthy working conditions require that employees be given appropriate safety training, use of protective equipment, and work with machines that abide by noise, pollution and safety standards

Training and development → in the use and application of technology and in the appropriate methods

required to work effectively

Fair work and anti-discrimination laws → requiring that employees be treated with dignity and respect.

 

Environmental protection → minimising pollution, eliminating and safely disposing of any toxic residues.

Public health rules → including any fair trading rules which influence product safety standards and fitness for the purpose of products.

What is environment and ecological sustainability, and how does it influence operations management?

Environmental/Ecological Sustainability refers to the shaping of business operations around the practices that consume resources today without compromising access to those resources for future generations. Three principles; 

1. Sustainable use of renewable resources 

2. Reduction in use of non-renewable assets

3. Application of the precautionary principle → requires that, where environmental impacts are uncertain, a business undertakes actions that are most likely to cause the least environmental impact 

Firms must reduce their carbon footprint, which is the amount of carbon produced and entering

the environment from operations processes.

Define CSR

Corporate Social Responsibility refers to the open and accountable business actions based on respect for people, community and the broader environment. Formerly known as ‘Triple Bottom Line’, CSR places importance on financial returns alongside social responsibility and environmental sustainability.

What is the difference between legal compliance and ethical responsibility

Ethical responsibility involves businesses going beyond the law and taking into account broader social, community and environmental concerns. 

Ethical responsibility involves firms going past simply following the ‘letter of the law’ - the minimum requirements  - and instead embody the ‘spirit of the law’ and instead follow the intentions behind the law. 

By displaying ethical responsibility, management indicates it values something greater than maximising profits as it demonstrates its commitment to act beyond expectations for the benefit of

society, both now and in the future. 

Define outsourcing

outsourcing (or contracting out business functions) involves the use of third-party specialist businesses; for example, recruitment firms. It aims to take advantage of the specialist skills provided by them and to achieve a reduction in labour costs.

Distinguish between onshore and offshore outsourcing

onshore outsourcing involves the use of domestic businesses as the outsourcing provider

offshore outsourcing involves taking the activities to a provider in another country

What are the issues with offshore outsourcing

Offshore Outsourcing – Regulatory/Ethical Issues

• Offshore outsourcing exploits differences in regulation between nations (compliance requirements vary by country)

• Businesses gain cost savings from: lower taxation rates, lower labour standards, weaker environmental regulations, weaker IP regulations

• Raises ethical issues about business behaviour, e.g. operating in nations with loose WHS laws to cut costs at the expense of employee welfare

What are the issues in using third party contractors?

• Businesses can outsource to a third party who takes on responsibility for compliance

• This can act as a "screen" - compliance breaches overseas get passed onto the contractor, with the outsourcing business avoiding legal responsibility

• Result: Australian businesses now more careful when selecting overseas contractors

• Some businesses have been exposed for being complicit - i.e. know contractors are breaching local labour laws but fail to "call it out"

what is the difference between social responsibility and environmental sustainability

Ecological sustainability requires businesses to evaluate the full environmental effects of their operations, balancing economic growth with conservation of resources (conservation, recycling, restoration policies), driven by both business ethics and government legislation. Growing consumer expectation for "clean, green and safe" products, plus community pressure around climate change, is pushing businesses to adopt greenhouse abatement measures and long-term sustainable strategies. Corporate social responsibility (CSR) refers to a business's management of the social, environmental, political and human consequences of its actions, aiming simultaneously to expand the business and provide for the greater good of society. Social responsibility is considered good business practice long-term: consumers reward responsible businesses with purchases and punish irresponsible ones (e.g. exploiting employees, bribery, pollution - direct or via contractors) by withdrawing custom; while CSR costs money short-term, it typically benefits the business long-term and can even become a marketing strength.