For any business to survive and beat its competition, it has to ensure that a proper set of targets is met that will ensure maximum profitability along with ensuring that modern techniques of productions. In order to ensure that these major goals of an organization are identified and followed, operations management comes into place.
Operations management involves the management of the working operations of an organization in such a manner that the goals of efficiency with the organization are met effectively and consequently, maximizing returns for the company and reducing the costs to as much as possible while employing the best combination of all the factors of production (CFI, 2020, Hayes, 2021).
In the modern times, there have been many changes in the way an organization has been trying to meet its goals. This can be mostly attributed to to the changes and improvements in technology and telecommunications that have ensured that not only the whole world is connected but due to increased competition, individuals and organizations find ways that will guarantee the success of a company with the help of achieving efficiency.
Keeping the efficiency and competition level in mind, three of the most important topics in operations management will be discussed in this paper. These concepts have taken over how the business should be run given the advancements in technology and research and development and as the aim of these strategies is to ensure that the objectives of the organization are met while keeping the competition behind with the help of employing ethical means, these concepts globalization, sustainability and ethical conduct within and out of the organization.
As these concepts have taken over the operations management of an organization by a storm, it is necessary that these are understood in detail.
The advancements in technology and communication has led to the whole world being connected to each other at every time. This has made the world a global village and this concept is known as globalization. With the help of globalization, ideas, goods and services reach to every corner of the world (Lutkewich, 2019). In the modern times, globalization has been made possible due to the advancements in technology and invention of the internet that has enabled people to know about the world from a small devise in the palm of their hand.
There are many types of globalization that has ensured economic growth along with improvements in operations management and business activities. These types include the following:
- Economic globalization.“This type focuses on the unification and integration of international financial markets, as well as multinational corporations that have a significant influence on international markets.” (Lutkewich, 2019). The impact of economic globalization can be positive or negative on the economy of a country depending on a number of factors.
- Political globalization.“This type deals mainly with policies designed to facilitate international trade and commerce. It also deals with the institutions that implement these policies, which can include national governments as well as international institutions, such as the International Monetary Fund and the World Trade Organization.” (Lutkewich, 2019). This type of globalization also has an impact on the business operations and investment strategies because of the policies formulated by the governments all over the world.
- Cultural globalization.“This type focuses on the social factors that cause cultures to converge — such as increased ease of communication and transportation, brought about by technology.” (Lutkewich, 2019). This can also occur due to the international trade being carried out that leads to people learning about various cultures and people’s lifestyles.
Globalization has a significant impact on the operations management because it helps in deciding a number of things such as location of a manufacturing unit, economies of scale, costs involved in production, how the government policies will impact the revenues and taxes etc. There are many case study and researches carried out to identify, analyze and evaluate the effect of globalization on the business management and operations. For example, a paper by Stropper (2000) “presents the results of a statistical investigation of the trade-location relationship, using the OECD-STAN database, from 1970 to 1995. This investigation shows that in spite of rapidly rising trade, only in a very few industries has the spatial distribution changed substantially over the period studied” (Stropper, 2000).
The impact of globalization and importance is discussed in the following parts of this paper.
The changes in the way businesses are carried out has given way to sustainable businesses. According to this concept of sustainability, business operations are carried out in such a manner that there is no compromise on the available resources for the future generations. This means that these activities ensure that future generations will be able to meet their needs easily (Grant, 2020).
Awareness about a large number of things has led to ensure that all kinds of business operations are sustainable. This sustainability can be of three types as well; economic, environmental and social which is also known as “profits, planet and people” (Grant, 2020). Investors and other share holders and stake holders want to ensure that the operations management department has been carrying out the activities in a way that is not harmful to anyone.
The impact of sustainable decisions are also thought to be long term, instead of short term. There are many ways in which a company can achieve sustainability with the help of setting goals to this. For example, sustainability can be achieved by cutting emission as they pollute the air, using renewable energy resources, proper disposal of waste products and carrying out fair trade with others. All these will help businesses to become up to date with the competition as well. Stake holders want to ensure that the product being made and sold is produced from an eco-friendly process as it will help them contribute in it as well.
A large number of studies have been conducted in this regard as well in order to find out ways to make business operations more sustainable and even though, significant has been done, there is still a need to understand the concept deeper (Opersnic, 2015).
Ethics plays an important role not only in the business sector but overall. It is gaining importance in operations management especially because it tries to explain how a behavior of an individual, team or the whole organization will have an impact on the business management as well the goals set by the company because achievement of goals ethically is one of the main aims of any organization. It also ensures that businesses can identify what is right and what is wrong in carrying out the business tasks. People also expect that business perform their functions in an ethical manner and try to meet competition in the right way.
A number of decision can be made by organizations which need to keep ethics in mind. These “include customer safety, employee safety, materials recyclability, waste disposal, pollutions, repetitive tasks, stress in workplace, restrictive company cultures, employment policies, fluctuations in working hours, consumption of energy, energy efficiency, implications of plant location, closure, and vertical integration on employment, impact of process location on environment, and exploitation of resources” (UKessays, 2018).
This shows that there
Importance of Globalization, Sustainability & Ethical Conduct
Globalization is a recognized part of the modern world, consequently we do not know the importance of it in our daily lives – such as the easy accessibility to a variety of different restaurants or new technologies developed by countries that can be part of the world. Although globalization makes our lives better, it comes with some challenges as companies begin to grow and expand beyond borders. Cultural diversity around the world is undisputable. These differences create barriers to businesses entry and exit the foreign markets and necessitate changes in their day-to-day business operations, whether hiring staff in a new region or transferring their product value to new audiences (velocity global, 2020). These advantages and disadvantages of globalization are discussed in detail further.
- Access to New Cultures
With globalization we can learn about various cultures and how they live and have access to a number of things from abroad such as food, education, art, music etc.
- The Spread of Technology and Innovation
Advancements in telecommunications and invention of the internet and other means of communication, the whole world is connected and the people from the Far East can easily know what is happening in Europe and much more. travel has become easy as well and the spread of knowledge has raised the level of awareness of the people.
- Lower Costs for Products
Globalization allows companies to find lower-cost ways to produce their product in an attempt to beat competition as the markets are expanding all over the globe and people from Pakistan can buy and import things from the USA and therefore, it is important that business reduce their cost.
- Higher Standards of Living Across the Globe
The advancements in technology has led to improvements in the living standards of the people around the world as well economic development and economic growth has helped rude extreme poverty by at least 33% since 1990 even though there have been recessionary periods along the way which had their impact on the growth and development but according to the World Bank, there has been an overall fall in extreme poverty (velocity global, 2020). Across the globe, nearly 1.1 billion people have moved out of extreme poverty since that time.
- Access to New Markets
Markets have also expanded due to globalization and businesses are able to expand their target customers. Availability of products to the foreigners has been made possible due to globalization. Companies have also become multinationals as they are able to set up their offices and production units in other countries as well and that not only has a positive impact on the host nation but it also ensures that the company is able to save a number of costs such as the cost of labor as local labor is cheap. However, as companies are also carrying out research and development in order to innovate, and as a result, a huge number of companies are able to work from their own country and that has saved them millions in profit.
- Access to New Talent
New takent is accessed when companies advertise about their vacancies and people from all the globe can apply. This shows that innovation has not only helped improve the level of education but the standard of education that is provided to people is not too different. As a result, globalization makes it possible for the specialized people to come forward and work in the market where ever their talents are recognized and earn a handsome amount from it. Again, International PEO allows companies to compliantly employ workers overseas, without having to establish a legal entity, making global hiring easier than ever.
What are the Challenges of Globalization?
Even though globalization has many positive iimpacts and it has helped the whole world grow and learn, there are some negative effects as well which have been observed all over the globe in many sectors including economy, social and cultural. Some of the negative points of globalization are discussed below.
- International Recruiting
One of the main problems operations management teams and HR department face is in terms of hiring international labor force. This is because, companies have to devise a plan that will ensure that all the requirements are being fulfilled before the hired employees can join. Moreover, all the barriers also have to be overcome before efficient work can be started including the cultural and language barrier.
- Managing Employee Immigration
Globalization has provided access to easy travel and therefore, many people move abroad looking for work. They become immigrants and therefore, different policies apply to them. If the influx of immigrants is high, governments have to take immediate and appropriate steps.
- Incurring Tariffs and Export Fees
Before expanding, the operations management team has to consider the tariffs and export fees of a country as well. If they are low, only then, expansion will be appropriate.
- Payroll and Compliance Challenges
Another common global expansion problem is handling overseas staff and maintaining passivity with fluctuating employment and tax laws. This becomes difficult when the management has to take a look at the operations in more than one market.This management task gets even more difficult if you’re trying to manage operations in multiple markets.
- Loss of Cultural Identity
Due to globalization, some countries and societies have become so overwhelmed with foreign cultures that their own cultures seemed to have disappear. This is not a positive impact of globalization. There is a need to ensure that no one loses their identity as it makes them unique. Even though, globalization has many positives, its negatives have to be controlled as well because it will have a major impact on the diversity.
- Foreign Worker Exploitation
Some companies may exploit their workers. In order to earn maximum, companies may not follow the rules set up by the government and make the labor work hard and long hours which will have a negative effect on their physical and emotional health. Some big names have been found to ship their production units to countries like China, Malaysia where the labor is cheap and as a result, they are able to get more work by paying them the bare minimum. These companies have been found to avoid tax as well.
- Global Expansion Difficulties
With the help of globalization, companies have been able to expand their business operations to new markets which has helped them increase their market share as well as profit margins. However, setting up a business overseas is quite challenging. There are many factors that need to be considered before production can be started. The governmental policies play a significant role in setting up the business abroad and therefore, the operations management team has to identify all the pros and cons of setting up the new business. In addition to this, the cost of labor and setting up the manufacturing unit is also important. A huge amount of capital is required to set up a physical facility to carry out the business. Moreover, all the legal and financial procedures should also be followed to ensure that no further problems occur that will hinder the business operations.
- Immigration Challenges and Local Job Loss
As globalization has provided means for people to move to one place to another, it has caused a lot of challenge for the host countries. As the number of immigrants rise, the policies of the governments relating to them become tighter and as a result, they are unable to find jobs sometimes. In some countries political reasons are also visible behind the loss of jobs. According to the locals, the immigrants who may even be more qualified are taking their jobs and consequently, the domestic labor force is out of work. Keeping this in mind as well, the rules and regulations are tightened for the foreigners. “For example, the Economic Policy Institute reports that the U.S. trade deficit with China (or the amount by which our imports exceed our exports) cost Americans 3.4 million jobs since 2001.” (velocity global, 2020).
In addition to this, there are many advantages of sustainability as well. With improvements in technology and research and development, it has become necessary that businesses ensure a sustainable work environment and business operations. Sustainability is usually seen to environmental. This is because the way industries had been growing and the use of non-renewable resources, the environment and the climate has been severe affected. In the recent decades, people have started to realize the importance of ensuring a sustainable business and therefore, policy formulation and implementation to guarantee that there are no negative impact on the environment because it will consequently, affect the health of the people.
Sustainability has gained a lot of significance due to other reasons as well. it helps portray a positive image of the company, showing people that the company is doing whatever it can to contribute towards saving the environment and is also working towards helping people and ensuring its corporate social responsibility towards the community and the atmosphere. In addition to this, investors also realize the importance of the matter and therefore, want to invest in those companies that are carrying out sustainable business activities or at least trying to innovate in order to contribute positively towards the society as a whole.
Furthermore, sustainability also attracts labor and as a result, the operations management team can offer the pay rate that will be feasible for both parties. Moreover, it helps companies reduce costs in the long run, for example, with the use of solar energy, the cost of electricity can be saved substantially, decreasing the bill and saving money. Even though, the initial investments are high, the long term benefits and the rate of return will be appropriate as well. There are many companies that are using these renewable energy resources and innovating in order to bring down the costs and make these available for all. For example, Tesla has been innovating in electric cars which not only save money on fuel consumption but also on emission in the environment.
Thirdly, ethical conduct is very important for a company as well. This is because, businesses are becoming diverse in every way and in order to keep the employees motivated and happy, it is important that operations management team and the Human Resources department formulate policies to ensure that no faces any problems and the work is carried out ethically. Realizing the ethical responsibility also shows how committed the management is towards the betterment of the employees. However, there are always challenges that need to be taken care of because everything is not perfect.
Usefulness of the main methods to support operations management
In order to identify the usefulness of the methods used by the operations management team, it is important that they recognize the impact and advantages and disadvantages of the three concepts being discussed in this paper.
Globalization will ensure that with the changing trends, all over the globe, companies can adjust accordingly. These adjustment will come in the forms of investments in new and improved projects that will also be sustainable and ensure that the rate of return from these investments will be high. However, projects with high rates of return usually have high risks involved as well and therefore, before starting the project, all factors have to be carefully considered.
Sustainability has also gained importance in the modern world and therefore, share holders and stake holders want to ensure that the business they are becoming a part of, will have a positive impact on the environment and the society as well the business environment will also ensure that the employees are working to their best ability and in a comfortable environment. Ethics are also being followed not only because of morality but also because now people are more aware of their rights and duties and therefore any wrong doings will be caught right at the start.
Quantitative Analytical Techniques
In order to look at the feasibility of any project undertaken, it is necessary that quantitative methods are also employed to review the proposal. For investment to be beneficial for the company as well as the stake holders, operations management department has to ensure that all the qualitative and quantitative factors are identified, analyzed and evaluated before any final decision is made by the executive management on the recommendation of the operations management team. In an attempt to carry out the quantitative research, there are many methods which are employed by the team in order to assess the feasibility of the proposed investment project.
One of the ways in which data is collected is the primary research. With this, data is collected through questionnaires, interviews, telecommunications etc. This means that fresh data is collected to be analyzed.
In the wake of globalization and as businesses are expanding worldwide, new research is necessary and vital for the businesses to survive and therefore, in an attempt to beat the competition, the operations management has to properly analyze the data collected through these means. With the help of these data collection methods, a business will be able to identify the needs of the market and a large number of consumers can be reached due various means such as social media, online shopping trends and many more. With the help of globalization, companies can now try to evaluate the needs of the consumers.
In addition to this, the operations management team uses model based quantitative methods that help to differentiate between various methods including “empirical and axiomatic research, and furthermore between descriptive and normative research” (Fransoo & Bertrend, 2002). There are many studies conducted which have been providing operations management with guidelines and plans of action for further quantitative research. “In constructing arguments, builds on learnings from operations research and operations management research from the past decades and on research from a selected number of other academic disciplines” (Fransoo & Bertrend, 2002).
Furthermore, as stake holders want to ensure that businesses are becoming sustainable, the operations management team has to collect data regarding costs and benefits and to ensure how much will need to be spent in order to guarantee that the business is not going in a loss when choosing sustainable methods because the initial investment in these are costly with a mixed rate of return. Various methods are employed in this as well which help the team to evaluate the success of the investment and consequently, the business. A study by Brendenburg et al., (2015) tried to use models to identify the advantage of becoming sustainable for supply chain management. “The application of operations research methods and related models, i.e. formal modeling, for closed-loop SCM and reverse logistics has been effectively reviewed……. analysis of 134 carefully identified papers on quantitative, formal models that address sustainability aspects in the forward SC. It was found that a preponderance of the publications and models appeared in a limited set of six journals, and most were analytically based with a focus on multiple criteria decision making. The tools most often used comprise the analytical hierarchy process or its close relative, the analytical network process, as well as life cycle analysis” (Brendenburg et al., 2014).
In addition to this, descriptive and experimental methods are also employed by companies to evaluate the ethical conduct of the companies. As busiensses are becoming diverse and people from mixed backgrounds are working together, it is important that the operations management team and the HR department identifies any conflicts and work quickly in order to overcome the problems as they will have an adverse impact on the performance of the employees as well the image of the company as a whole in the market. Therefore, the company and its operations management team has to guarantee that everyone in the business is provided with equal opportunities and they are able to enjoy equal fruits of their labor.
Thus, from the above study and analysis, it can be said that in order to ensure the success of a business, only the financials are not necessary now. There are a number of other factors as well that determine the success of the business and for that purpose, the operations management team should ensure that it has set its goals and targets while keeping in view the three factors discussed in detail above, namely, globalization, sustainability and ethical conduct.
With changing time and diversities, these three components have become especially significant and any business that is able to understand the importance, will be able to effectively and efficiently meet its goals and generate a substantial revenue.
Globalization is important even though it has some negative points along with the positive ones but it helps the company expand the market and consequently, increase the market share and profit margins.
Ethical conduct will help the workforce of any organization to know that the work they are doing is not only legal but the operations management team can also formulate policies that will help them identify any wrong doings and therefore, proper action can be taken.
Lastly, sustainability has become necessary due to the harmful effect that has already been experienced by the environment and as a result, a lot of damage has been done alone with changes in the climate worldwide. Therefore, ensuring the practices which will help bring about a positive change in the environment. This will also be considered a progressive act by the people involved and the operations management will be able to identify fruitful results.
Even though there are many challenges that companies and their teams have to face when identifying these factors and their impact, it has become vital that such policies are formulated which will assist companies in portraying a positive image of themselves all over the world.