An operation within organizations usually deals with the transformation of different inputs to desirable outcomes. It is done by maintaining the standard quality criteria. Whereas the process of management incorporates and transfers the available resources used within the subsystem of an organizational system into value added services in a controlled way complying with the company policies. Management activities that are interrelated and are involved in products manufacture is commonly known as production management. This concept when gets protracted to services management, then the management activities is termed as operations management (Gunasekaran and Ngai 2012).
1. The global economy is identified as service economy mainly because of its growing relevance and share in the economy of a country. Over the years service industry’s growth indicates the economic development of a country (Beuren, et al. 2013). Researchers suggest that developing countries like India, Bangladesh, Brazil, Cuba etc. to name a few have first focused on making agriculture the economic backbone. This was later shifted to industrial and then to the service sector brining revolution in products and services (Buera and Kaboski 2012). Service industry which includes airlines, banking, insurance, telecommunications, hotels, restaurants, laundries, optometrists etc. are gaining more importance. As a result of shift from primary sector to secondary the industry is providing improved facilities of infrastructure and economic growth. Eventually this is creating more opportunities of employment. Around 50% of GDP of lower income nations are contributed through service industry (Ghani and O’Connell 2014). The key reasons behind the growth of service sector revolve around the rise in urbanization and privatization. Apart from increase in demand for quick customer services economic prosperity depends on the availability of quality services. Service sector has emerged as the new frontier for both developing countries and under developed countries to make their presence felt in international trade and gain development in return (Cunningham 2011).
Operation management in service industry are not well-understood in the context of designing adequate service delivery systems. Most researches on service operation management focuses on as financial services. However, with services becoming comprehensive, it is essential to develop a better understanding of the strategies revolving around service operational management. It also influences the management of customer experience in terms of quality and satisfaction (Prajogo and Goh 2014).
2. There are both negative and positive impacts of globalization on the operational strategies where the factors comprise of global sourcing, economies of scale, scanning, development and research. Global sourcing helps organizations to create a vast skill base because of its ability to access and reach more talents and skills which might not be available in local (Lee, et al. 2012). Use of global sourcing might also bring a business at the verge of risks to lose data, which is the negative aspect of globalization. Specialization is the key advantage of economies of scale. Organizations aiming for business expansions inclined towards subdividing the operational processes to enhance employees and products productivity (Gereffi and Fernandez-Stark, 2016). However, over expansion of the management levels within organizations will result into complex communication further negatively affecting the business productivity. Organizations can seek insight and flexibility in case a problem arises through scanning and learning (Gunasekaran and Ngai 2012). Moreover, developing an understanding from others experiences stuck into similar situations helps a company to know how to react in unforeseen situations. However, choosing to learn from faulty strategies of certain organizations might make the business repeat the same mistakes leading to profit reduction, affecting negatively. Organizations can seek competitive advantage through research and development and fulfil customers’ needs through unique products and services enabling them to improve sales (Urbancova 2013). The negative effect of this factor is rise in costs involved in research and development. Coco Cola, which bottled in 44 countries at the beginning of world war, is the perfect example of how globalization affected its business eventually making it the biggest beverage company globally. A vast network of over 84,000 products and services suppliers is managed by the company enabling it to expand from an SME to an MNC (Eren, et al. 2015).
3. A small workshop which operates from Shanghai can be considered as the perfect example of global manufacturing engaged into the production of stoves for a Philippines company. Integrated Micro-Electronics which operates globally but reaps maximum revenue from China. Availability of cheap labour in China has helped IMI to reduce the costs incurred in operations. The global manufacturing output of China accounts to 46.5% in 2013 which means that currently the country accounts for half of Asia’s output (Nahm and Steinfeld 2014). Although the hourly wages in China has increased to an average of 12% annually, it is expected that the country’s position are doomed (Moran 2012). The strengths of manufacturing operations are under-appreciated and hence, the future of Chinese manufacturing is radiant. A minimal of 3.6% is contributed by the Chinese workers in the costs of Apple iPhone. China is promoting its manufacturing competitiveness thereby, attracting investment by being host to global organizations allowing them to manufacture their products in China. Despite of lower wages and worker turnover in Philippines, IMI prefers manufacturing in China (Chan, et al. 2016). This is because when the shipping and tax is included, China is comparatively cheaper because of the availability of more suppliers and customers. China’s factories are cheaper when compared to other richer countries despite of minimum wage hike. Paying a worker $270 a month in China is quarterly less than that in US. Taiwanese firm Foxconn, has over 1 million employees in China and has expanded into the provinces of Henan and Sichuan apart from building a factory in Guiyang (Chan, et al. 2013).The interior provinces of China attract foreign investors like Hewlett-Packard by offering cheaper lands and tax breaks which has relocated from Shanghai to Chongqing. China is highly competitive in low-end production. For example, the country’s share in global clothing export market has risen to 43.1% in 2013. Hence, it is evident that in future all manufacturing operations will be performed in countries with low labour cost (Yangon and Jiaxing 2014).
4. UK’s decision to move out from European Union has sent ripples globally giving rise to questions revolving around how operations management will get influenced with this decision. Organizations operating globally are bound to face interruptions in the supply chain and manufacturing until the trade contracts and regulations are amended (Springford and Whyte 2014). Organizations are figuring out the consequence of Brexit as it is yet to confirm that whether UK will stop doing business with EU. For example, soon after the Brexit referendum, the shares of XPO Logistics Inc. whose 12% of total revenue is reaped from UK had seen a decline of 15% (Wood and Jang 2017). Brexit has enforced surrounding countries to depend on US, Japan or China because of the complications in the process of product shipments and distribution. However, most organizations mutually agree that despite of Brexit, a few years might be taken to get it implemented hence, the impact would not be immediate (SupplyChain247 2016).
US President Donald Trump’s order to ban refugees from getting entry to America has slowly cut-off the county from rest of the world. Isolationism policies will negatively influence businesses in the long run (Hastedt 2017). US attract many global talents to work with Apple, eBay, Oracle etc. The new policies will dissuade qualified and skilled talents to return back to the country or travel aboard apart from hitting hard the tourism industry and bigger names like Goldman Sachs which has advised its customers to make investments into smaller companies. The business of a global company like Apple which has around 200 suppliers globally will get hampered in the absence of products distribution. The President’s isolationist policies have thrown up uncertainties over the business arena. It is predicted that the President who considers the Foreign Corrupt Practices Act contradictory can take a step back because of his perception over the global war against commercial lawlessness. Implementation of US’s isolationist policy will become an obstacle to numerous exiting and potential business alliances with global functioning. Apart from opposing to free trade, it will also support autocracy. Experts suggest that this policy will further move away US from its flexible international order which was formed after World War II. However, the supporters of this isolationist policy argue that it will help US to concentrate on money laundering. The country’s isolationist policies will be effective or not is yet not confirmed. Citing US’s commitment with OECD anti-bribery convention many advocates that the measures taken by the new administration will fail tremendously. This will be mainly because of its innumerable unknown leaving a cloud on the future. The higher extent of unforeseen outcome casts risks on the global operations management (Young 2014).
References
Beuren, F.H., Ferreira, M.G.G. and Miguel, P.A.C., 2013. Product-service systems: a literature review on integrated products and services. Journal of Cleaner Production, 47, pp.222-231.
Buera, F.J. and Kaboski, J., 2012. The rise of the service economy. The American Economic Review, 102(6), pp.2540-2569.
Chan, J., Pun, N. and Selden, M., 2013. The politics of global production: Apple, Foxconn and China’s new working class. New Technology, Work and Employment, 28(2), pp.100-115.
Chan, J., Pun, N. and Selden, M., 2016. Apple, Foxconn, and China’s new working class. ILR Press, an imprint of Cornell University Press.
Cunningham, S., 2011. The role of the service sector in economic development. (Online). Available at: https://shawncunningham.wordpress.com/2011/09/02/role_services/ (Accessed on 8/6/2017)
Eren, E., Alpkan, L and Sengul, M., 2015. Effect of Globalization on the Operational Performance: A Survey on SMEs in the Turkish Electric Industry. (Online). Available at: https://www.ccsenet.org/journal/index.php/ibr/article/viewFile/48826/27007 (Accessed on 8/6/2017)
Gereffi, G. and Fernandez-Stark, K., 2016. Global value chain analysis: a primer.
Ghani, S.E. and O’Connell, S.D., 2014. Can service be a growth escalator in low-income countries?.
Gunasekaran, A. and Ngai, E.W., 2012. The future of operations management: an outlook and analysis. International Journal of Production Economics, 135(2), pp.687-701.
Gunasekaran, A. and Ngai, E.W., 2012. The future of operations management: an outlook and analysis. International Journal of Production Economics, 135(2), pp.687-701.
Hastedt, G.P., 2017. American Foreign Policy: Past, Present, and Future. Rowman & Littlefield.
Lee, Y., Shin, J. and Park, Y., 2012. The changing pattern of SME’s innovativeness through business model globalization. Technological Forecasting and Social Change, 79(5), pp.832-842.
Moran, T.H., 2012. Foreign Direct Investment. The Wiley-Blackwell Encyclopedia of Globalization.
Nahm, J. and Steinfeld, E.S., 2014. Scale-up nation: China’s specialization in innovative manufacturing. World Development, 54, pp.288-300.
Prajogo, D and Goh, M., 2014. Impact of Operations Management Activities on Operational Performance in Service Organizations.
Springford, J. and Whyte, P., 2014. The consequences of Brexit for the City of London. Centre for European Reform.
SupplyChain 247 2016 . What Does the Impact of Brexit Mean for Supply Chain and Logistics Organizations? (Online). Available at: https://www.supplychain247.com/article/what_does_brexit_mean_for_supply_chain_and_logistics_organizations (Accessed on 8/6/2017)
Urbancova, H., 2013. Competitive advantage achievement through innovation and knowledge. Journal of Competitiveness, 5(1).
Wood, J. and Jang, H., 2017. Brexit: The Economic and Political Implications for Asia. Social Sciences, 6(2), p.41.
Yangon and Jiaxing., 2014. A tightening grip. (Online). Available at: https://www.economist.com/news/briefing/21646180-rising-chinese-wages-will-only-strengthen-asias-hold-manufacturing-tightening-grip Accessed on 8/6/2017)
Young, C., 2014. The Problem with the New Isolationism. (Online). Available at: https://time.com/68293/the-problem-with-the-new-isolationism/ (Accessed on 8/6/2017)
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