HSC Business Studies: Influences on operations management (B)

What are the main influences on operations management?

(The Queen Gives Gummy Lollies Every Christmas)

T - Technology

Q - Quality expectations

G - Government

G - Globalisation

L - Legal

E - Environmental sustanability and CSR

C - Cost-based competition

Define 'globalisation'

The removal of barriers if trade between nations.

What is a changing pattern of large businesses in reaction to globalisation?

Large businesses increasingly focusing practices on global market, with a view of meeting needs of global consumers; Global consumers seek global brands and tend to seek standardised goods.

What are two main components of globalisation as an influence?

1. Supply chain management and the global web

2. Imitation, innovation and the supply chain

Define 'supply chain'

Range of suppliers business has and nature of the relationships with those suppliers. Business must have predictable and reliable suppliers.

Define 'global web'

Network of suppliers a business has chosen on the basis of lowest overall cost, lowest risk and maximum certainty in quality and timing of supplies.

How do businesses that imitate operate?

A business that imitates will tend to create products similar to those that already exist, but will aim to do so at a lower cost e.g. through reverse engineering.

Define 'innovation'

When a business creates novel (new) products, ∴ leading the market.

How does imitation and innovation (globalisation) impact operations?

Influences operations because supply chain needs to be shaped around need for innovation. A business may seek supply chains that do not provide similar products to competitors.

Define 'technology'

Can be defined as the design, construction and/or application of innovative devices, methods and machinery upon operations processes.

How is technology used in operations?

Technologies is used in administration and in operations processes,

What are some examples of technology in administration?

Planning technology e.g. Gantt charts, Critical Path Analysis (CPA); Office technologies e.g. computers, integrated telephone systems; Software e.g. word processing, spreadsheet programs.

What are some examples of technology in operations processes?

Large machines in manufacturing, robotics; Rapid Manufacturing (RM) and tooling technology; Computer Aided Design (CAD), Manufacturing (CAM); Computer Integrated Manufacturing (CIM).

Define 'quality'

Specific reference to how well designed, made and functional goods are, and the degree of competence with which services are organised and delivered.

What are quality expectations for goods?

Quality of design and durability; Fitness for purpose.

What are quality expectations for services?

Professionalism and reliability of service provider; Level of customisation

What is cost-based competition?

Methods of achieving a competitive price derived from determining break even point and then applying strategies to create cost-advantages over competitors.

How does cost-based competition impact operations management? Business that reduce costs:

Achieve economies of scale; Bulk buy inputs and produce high volume outputs; Eliminate waste; Use automated production systems; Produce standardised products for a larger market.

How do government policies impact operations management?

Since policies can inform law-making (possible business opportunities or threats), operations managers need to be aware of contemporary govt. Policies. e.g. Carbon Tax, OH&S.

Define 'compliance' and 'compliance costs'

Compliance: range of laws with which a business must comply.

Compliance costs: expenses associated with meeting requirements of legal regulations.

What are the main categories of laws that impact operations management?

Occupational Health and Safety (OH&S); Training and development; Fair Work and Anti-Discrimination laws. E.g. Racial Discrimination Act 1975 (Cwlth); Environmental protection; Rules related to public safety.

Define 'environmental sustainability'

Business operations that are shaped around practices that consume resources sustainably and ethically, whilst maintaining a healthy environment so as not to disadvantage future generations.

How does environmental sustainability impact operations?

Involves sustainable use of renewable resources + reduction of use of non-renewable resources.

Operations management is significantly affected by rise in climate change awareness and the need to integrate long-term, sustainable view of resource management into business operations.

What is a 'carbon footprint'?

Amount of carbon produced that enters the environment from business operations.

What are the two main components of corporate social responsibility?

1. Legal compliance and business behaviour (ethical responsibility)

2. Environmental sustainability and social responsibility

Define 'outsourcing'

Use of outside specialists to undertake the activities of one or more key business functions. Reduces compliance costs (can be onshore or offshore)

How can businesses ensure ethical outsourcing?

Use of Service Level Agreements (SLAs) can be an ethical way to ensure the outsourcing provider adheres to high standards of conduct.

How can businesses remain ethical in a variety of business situations?

Businesses may guide decisions after consulting with special interest groups or following guidelines set down by international bodies; Businesses may choose to follow international labour standards set by the International Labour Organisation (ILO).

Why is it important for businesses to be environmentally sustainable?

By producing innovative products in an ecologically sustainable manner, business focus coincides with stakeholder expectations.

How can a business conduct environmentally friendly business practices?

Adopt greenhouse abatement (reduction) measures; encourage development of long-term sustainable practices.

Why is social responsibility important to corporate social responsibility?

Social responsibility is good business - customers eventually find out which businesses are responsible are which are not. Socially responsible business behaviour costs money in the short-term but it is in the company's best interest in the long-term.