Global Management Operations
Global Management Operations
Expanding a company’s operations is essential as it illustrates the company’s growth development, which is the ultimate goal for every business entity. According to Reid & Sanders (2019), global operations management is regarded as administrating business undertakings to develop a high production level in and outside the organization. It virtually focuses on the optimization of resources to maximize profit margins. When a company seeks to expand its operations, managers should be aware of certain aspects. They include prospective market share, location, suppliers, prospective financiers, and competitors. In implementing the global business strategies, it is imperative to know the benefits and disadvantages of integrating processes in foreign nations, merits, and demerits of just-in-time production, the strategic alliances, and lessons learned.
Benefits and downsides of creating manufacturing operations outside the United States
Business proprietors seeking to expand their operations or reduce costs may contemplate the option of instituting a manufacturing facility in a foreign nation. In most instances, production in a foreign nation may present several advantages, such as low labor cost and access to untapped markets. Nonetheless, the decision necessitates careful contemplations as overseas growth also comes with a significant risk, such as instability and probable criticism.
One of the major benefits is the low cost of labor. The advantage of operating in a foreign nation is that most nations present low cost of operations, especially reduced labor costs. According to Reid and Sanders (2019), most corporations record significant savings of approximately 50% in salary expenses. For corporations that experience loss of business due to an influx of rivals, relocating to other nations may significantly differ. This may perhaps avert a business from ultimately collapsing.
The other major benefit is access to the untapped markets. Opening other production facilities overseas aids the company reach a new market segment where the demand for products and services is high, and rivalry is minimal. This also helps the corporation strengthen its brand acknowledgment globally. In a progressively universal economy, a great awareness of a brand is vital for corporations that may seek to continue expanding their operations. Particularly, if the existing market has stretched to the point of saturation.
On the flipside, initiating manufacturing facilities overseas presents an aspect of instability. Corporations originating from America used to a comparatively stable administration may be disadvantaged if they opt to operate in nations that frequently alter their political leadership. An unexpected change may also result in an economic upheaval that is likely to threaten an entity’s long-term success. A booming economy may, in the future, quickly crumple if radical changes in the form of administration transpire.
The other major downside is a possible backlash. When a United States corporation institutes an overseas facility, it may not augur well with the host nation. The corporation is likely to terminate American employments to exploit cheap labor in the host nation. This may mean that numerous valuable members of staff are likely to lose their jobs. Besides, it may lead to damage from a public relations point of view. If the firm preserves an efficient manufacturing facility in the United States and foreign operations, prospective clients may comprehend the company’s drive as only generating high profits.
Advantages and disadvantages of Just-in-time Manufacturing
According to Li Wang and Sun (2015), numerous production facilities grapple with being capable to appropriately align their raw material supplies with their manufacturing timeline. This results in inadequacies within the manufacturing operations and eventually leads to loss of income and a rise in costs. This, therefore, led to the integration of just in time production. In several cases, integrating just in time manufacturing presents several advantages. While there are several advantages attributed to the mechanism, several downsides also exist.
One of the major advantages is reducing the space required. By incorporating the method, there is a quicker turnaround of the stock. Therefore, the manufacturer does not require a bigger space for storage. This will eventually reduce the storage space a corporation may require to rent or acquire, therefore freeing up funding for other business prospects. The other benefit of just in time manufacturing is smaller investments. JIT manufacture is an idyllic mechanism for small manufacturing corporations that may not have the funds required to acquire large amounts of stock. Procurement of stock, when required, enables companies to maintain a healthy and smooth flow of cash.
One of the major disadvantages is the risk of stock insufficiency. With Just In time manufacturing, companies fail to store a huge amount of stock. This is as a result of basing the stock off of demand estimate, and if they are improper, the company may not have the adequate quantity of stock promptly accessible for the clients. This is considered as one of the most recurrent challenges with production that utilizes the JIT mechanism. The other key challenge is that more planning is needed. JIT production necessitates a significant amount of planning to comprehend the trends in sales and inconsistencies in close details. Most corporations have seasonal retailing periods. This means that most products may require a greater amount of stock to combat consumer demand (Li Wang & Sun 2015). Therefore, it is important to make prior plans and guarantee that the contractors can fulfill the requirements.
According to Gong (2015), for any corporation in the United States to flourish in establishing a production facility overseas, a well-established strategic alliance plan is required to guide the entire process. A well-developed strategic alliance plan ought to incorporate certain aspects. They include business goals and objectives, maintaining a competitive edge, maintaining or creating strategic choices, and mitigating threats.
One of the strategic plans includes business objectives. It is important for the corporation to clearly state its aims and objectives. Universal operations may only be accomplished if the company works towards the achievement of the targets. The company must develop awareness of the personnel to guarantee that they are aware of the importance of business expansion, universally, and what is required to be done. The next strategic plan involves maintaining a competitive advantage. Maintaining a competitive edge is an essential aspect for a company seeking to expand operations in foreign nations. Even when establishing production in another nation, it ought to maintain its competitive edge to attract consumers and maintain business stability. The other plan is maintaining or creating strategic choices. Each company should strive to enhance its operations based on specific aspects. Therefore, a company must make well-informed pronouncements to guarantee effective management of global operations. Also, making sure no conflicting information arises as a result of poor decisions. The next plan is the mitigation of risks. Well-established alliances are duty-bound to ascertain probable threats likely to transpire when the business institutes a production facility overseas. The association must additionally highpoint numerous methods of mitigating the risks.
Advancements in technology play a crucial role in global operations management. The advancements enhance production efficiency, leading to the optimization of resources and eventually maximization of profits (Schiavone & Sprenger 2017). Technology will advance a company’s ability to use resources outside the United States to expand operations, therefore generating an enormous profit margin for the company. Technological advancements can also help the business to identify the number of products requested. This minimizes wastage of resources, over and under manufacture. Utilization of technology contributes to enhancing easier manufacture of products, consequently reducing manufacturing faults. Technology plays a critical part in establishing production plants outside the United States.
Companies that have used OUS manufacturing abilities
Regarding OUS, Ford and General Motors are significant examples of corporations that have thrived in the establishment of business operations overseas. Such advancements may not have been attained success by only relying on the United States market segment. The corporations have spread by initiating other branches globally. The corporations’ success is attributed to a well-crafted operation plan and the set targets and objectives. The corporations enlarged the market share outside the United States, resulting in the growth of the business. Also, the companies generated high-quality products and affordable to a wide range of consumers, thus attracting numerous clients. Both General Motors and Ford selected Europe and the UK market as a result of the high purchasing capability and availability of skilled labor and technological advancements (Fetzer, 2017). The nations were likewise chosen due to the high demand for products that failed to attract consumers, as the nation’s economies slumped, increasing the cost of raw materials and the cost of supply.
Companies where the OUS Process Failed
Despite various companies successfully establishing operations outside the United States, several corporations failed in their quest to establish production systems outside the country. For instance, Walmart and Tesco are significant examples of corporations that failed outside the United States. In Walmart’s case, the company’s failure is attributed to certain factors. They include poor planning and cultural diversities. For instance, in South Korea, Walmart failed to comprehend the nation’s preference in purchasing small packages at local shopping stores. Similar challenges led to the closure of Walmart’s operations in Germany (Yoder Visich & Rustambekov, 2016). In Tesco’s case, one of the key aspects attributed to Tesco’s botch in China is a result of a relatively late launch in 2004, as compared to competitors such as Wal-Mart. Tesco unsuccessful made substantial advancement in alluring Chinese consumers. The firm only managed to appeal to a small portion of the grocery market in China.
There are several lessons learned for any company to be successful in a global market. Foremost, a company needs to strategize to set the goals and identify a suitable location for the establishment of a facility. Moreover, it is crucial to ascertain probable market share and potential threats before establishing a business. From the OUS collapse od companies, I discovered that it’s not cost-effective to manage a business when the income earned is less than the variable operational charges.
- Does the company’s supply chain handle the operational capacity in the overseas nation
- How does the United States profit from the setting up of manufacturing plants in a foreign nation?
- How does the strategic alliance benefit the company that establishes a facility in a foreign nation?
Global operation management is generally involved with customs and systems engaged in regulating and guiding global companies. Global Management manages concerns that frequently result from universal business policies. For effective global operations, the business should institute strategic alliances that guide the achievement of global goals. Several corporations have flourished in the management of global operations, while other companies have been unsuccessful owing to poor strategic associations. Leaders need to comprehend the concerns when handling international facilities.
Fetzer, T. (2017). German and British trade unions at Ford and General Motors: The local and national contexts. In Paradoxes of internationalization. Manchester University Press.
Gong, Y. (2015). Global operations strategy. Springer.
Li, W. S., Wang, H., & Sun, G. (2015). U.S. Patent No. 9,224,121. Washington, DC: U.S. Patent and Trademark Office.
Reid, R. D., & Sanders, N. R. (2019). Operations management: an integrated approach. John Wiley & Sons.
Schiavone, F., & Sprenger, S. (2017). Operations management and digital technologies.
Yoder, S., Visich, J. K., & Rustambekov, E. (2016). Lessons learned from international expansion failures and successes. Business Horizons, 59(2), 233-243.