Operations Management

Why is operations management important in all types of

organisation and how has globalisation made an impact?

Over the past decades, operation management (OM) has become an issue of broad
interest. In the following essay, justification for the objective of OM's importance in all
kinds of organizations; positive and negative side of globalization impact OM.

Firstly, it is noteworthy that every business is managed through three primary business
functions: marketing, operations, finance by human resources; each function is
responsible for managing certain business aspects (Nada Sanders,2014). It can say
that OM has a solid foundation in both areas, namely supply chain management and
logistics (Tim Dhoul,2019). OM involves the systematic control of the transformation
of resources (laboratories, materials, real estate) into finished goods to satisfy
customers' needs and increase profits (Subramanian and Ramanathan,2012).

Secondly, when it comes to OM, the costs, effective, efficient are the critical metrics
measuring business success. The primary element that all managers focused on is to
minimize operating costs. Chris B Murphy(2020) has said managers often choose to
cut costs because it is an easily accessible way of increasing profits. The other
element but no less critical is that OM maximizes efficiency in waste reduction while
producing goods that effectively fulfill customer needs (Boundless Business). Besides,
thanks to the lean manufacturing system help businesses effectively reduce waste,
manage inventory better, eliminate unnecessary costs, and improve production
operation. The final is the quality management process to improve effective product
and service quality, ensuring durable products that consumers can trust
(Planettoghet,2018).

It can say that OM is the management activity aimed at creating the highest level of
efficiency to maximize profits. The OM departments try to strike the right balance
between cost and revenue to get the highest net operating profit possible
(Kenton,2020)

Globalization has a positive and negative effect on OM. There are three main models
in OM that is input, output, transformation. Firstly, the input raw material handling is
required to achieve product efficacy. When productivity increases, product costs
decline, and produce prices can reduce. Similarly, the better production methods, the
quality, and variety may increase (Economics).

An excellent telling example is Apple, a significant beneficiary of globalization when it

comes to globalization. Initially, Apple was primarily a US company, but globalization
made it a multinational company. According to the annual report, Apple has a third of
its profits from the Americas, and the rest can be derived globally (Bartleby). Besides,
globalization has a significant impact on Apple's supply chain of parts manufacturing
and assembly in China because of its low labor costs. The example illustrates that
Apple is highly profitable, thanks to globalization (Sonnenfeld,Schotzko and
Jussaume, 1998).

Secondly, globalization opens up new opportunities for businesses to introduce their

goods and services to larger markets, increasing potential sales and bringing in more
significant profits. Depend on corporation size may open up different distribution
opportunities, logistics, marketing, and turning products and services into global
products (Caroline Duncan,2018).

Thirdly, successful transformation by the useful resources geared towards the

globalized economic system. Also, improving communications technology and
financial transparency is an advantage to achieve globalization. The global market is
setting new expectations for the world standard product (ukessays,2017).

The first problem that plays an important is the potential for IP theft often occurs when
a company based in another country and products are built overseas in factories on
behalf (Yves Belanger and Yves Leclerc,2013). The article has pointed out that
intellectual property and design can be copied and even stolen, replicated, and sold
at lower prices elsewhere, which has become a threat to organizations (Caroline
Duncan,2018).

Another problem is that the immigrants growing population is a challenge for the local
job shortage (velocityglobal,2020). The telling example is the trade deficit in the US
due to the enormous impact of Chinese imports. Robert (2017) has shown that
Americans lost 3.4 million jobs in different areas between 2001 and 2015. The
example indicates that workers and communities have been affected for a long time,
and the labor market correction (Magyari,2017).

Another reason can lead to increased competition that is related to service cost and
price, target market. This is a warning sign for village and small scale industries
because they can not withstand the competition from well-organized multinationals
(Vidya Sethy). A company must prepare for the price, diversified products, and
services consistent with customer preferences that are the essential factors that
contribute to increase market share and reduce competitors (Bookboon,2011).

In light of the facts mentioned above, OM Is significant to the agency's operation.

Word Count: 736 words

Reference List:

Bartleby (no date) Apple Case Study: Globalization and Technology Change |
Bartleby. Available at: https://www.bartleby.com/essay/Apple-Case-Study-
Globalization-and-Technology-Change-FKVGD6PMZRFS (Accessed: 26 December
2020).

Bookboon (2011) How globalization affects business - Bookboon. Available at:

https://bookboon.com/blog/2011/10/how-globalization-affects-business/ (Accessed:
15 December 2020).

Boundless Business (no date) Introduction to Operations Management | Boundless

Business. Available at: https://courses.lumenlearning.com/boundless-
business/chapter/introduction-to-operations-management/ (Accessed: 14 December
2020).

Caroline Duncan (2018) The Advantages and Disadvantages of Globalization for the
Workplace. Available at: https://www.alert-software.com/blog/the-advantages-and-
disadvantages-of-globalization-for-the-workplace (Accessed: 15 December 2020).

Chris B Murphy (2020) Operating Cost Definition. Available at:

https://www.investopedia.com/terms/o/operating-cost.asp (Accessed: 15 December
2020).

Economics, B. (no date) Productivity | Boundless Economics. Available at:

https://courses.lumenlearning.com/boundless-economics/chapter/productivity/
(Accessed: 16 December 2020).

Kenton, W. (2020) Operations Management Definition. Available at:

https://www.investopedia.com/terms/o/operations-management.asp (Accessed: 14
December 2020).

Magyari, I. (2017) ‘Firm Reorganization , Chinese Imports, and US Manufacturing

Employment’, Firm Reorganization, Chinese Imports, and US Manufacturing
Employment, pp. 1–90. Available at:
http://www.columbia.edu/~im2348/JMP_Magyari.pdf.

Nada Sanders (2014) Operations Management Defined | Defining Operations

Management | InformIT. Available at:
https://www.informit.com/articles/article.aspx?p=2167438 (Accessed: 14 December
2020).

Planettoghet (2018) Importance of Effective Operations Management (OM). Available

at: https://www.planettogether.com/blog/importance-of-effective-operations-
management (Accessed: 14 December 2020).

Robert E. Scott (2017) Growth in U.S.–China trade deficit between 2001 and 2015
cost 3.4 million jobs: Here’s how to rebalance trade and rebuild American
manufacturing | Economic Policy Institute. Available at:
https://www.epi.org/publication/growth-in-u-s-china-trade-deficit-between-2001-and-
2015-cost-3-4-million-jobs-heres-how-to-rebalance-trade-and-rebuild-american-
manufacturing/ (Accessed: 16 December 2020).

Sonnenfeld, D. A., Schotzko, T., and Jussaume, R. A. (1998) ‘Globalization of the

Washington Apple Industry : Its Evolution and Impacts’, International Journal of
Sociology of Agriculture and Food, 7(May), pp. 151–180. Available at:
http://www.ijsaf.org/contents/7/sonnenfeld/index.html.

Subramanian, N. and Ramanathan, R. (2012) ‘A review of applications of Analytic

Hierarchy Process in operations management’, International Journal of Production
Economics, 138(2), pp. 215–241. doi: 10.1016/j.ijpe.2012.03.036.

Tim Dhoul (2019) What is Operations Management? | TopMBA.com. Available at:

https://www.topmba.com/mba-programs/what-operations-management (Accessed:
14 December 2020).

ukessays (2017) Effects of Globalisation on Operations Management. Available at:

https://www.ukessays.com/essays/business/effect-of-operations-management-in-a-
globalised-environment-business-essay.php (Accessed: 16 December 2020).

velocityglobal (2020) Globalization Benefits and Challenges. Available at:

https://velocityglobal.com/blog/globalization-benefits-and-challenges/#section-2
(Accessed: 16 December 2020).

Vidya Sethy (no date) Globalization: Meaning, Advantages and Disadvantages.

Available at: https://www.yourarticlelibrary.com/globalization/globalization-meaning-
advantages-and-disadvantages/63041 (Accessed: 15 December 2020).

Yves Belanger and Yves Leclerc (2013) Globalization Brings New Risks into the
Supply Chain | IndustryWeek. Available at: https://www.industryweek.com/supply-
chain/logistics/article/21962290/globalization-brings-new-risks-into-the-supply-chain
(Accessed: 15 December 2020).