Essay 3- Analyse the effects of globalisation on operations management
Introduction
Globalisation is the breaking down of trade barriers, thus allowing businesses to sell their products and transfer resources around the world. Operations management is an area of management focused on the operations of a business which includes resource allocation and utilisation of product differentiation and cost leadership. Operations management is affected by globalisation as it effects operations management’s ability to achieve cost leadership and enables outsourcing for a business. McDonalds the world’s leading food service organisation demonstrates the effects of globalisation has on operations management.
Cost Leadership
Cost leadership is achieving the lowest cost in production than competitors in a market. Globalisation effects operations management’s ability to achieve cost leadership as by businesses being able to sell anywhere it can lead to production costs decreasing or increasing depending on where a business is situated. As well as there being more competitors in the market. The implications of this is that depending on where a business is situated globally and what are its current competitors it can effect operations management’s ability to achieve cost leadership. Furthermore, it effects resource allocation for operations management as production costs for a business depends on their location, which leads to a fluctuation in resources for a business.
McDonald’s demonstrates how operations management is effected by globalisation as it has 39000 restaurants in over 100 countries. Hence can shift their capital and resources such as staff and equipment to any location needed. As a result, this effects the operations management for McDonald’s as they have more resources and locations. Which effects their resource allocation. Therefore McDonald’s demonstrates how globalisation effects operations management through how it effects their ability to achieve cost leadership and resource allocation.
Outsourcing
Outsourcing is where a business allocates a task or business function to a different business. Outsourcing can either be onshore or offshore meaning within a business’s country or outside of a business’s country. Globalisation can enhance outsourcing due to businesses being able to function a global scale. Hence this effects operations management’s ability to achieve cost leadership and influences their resource allocation. The reason is that outsourcing can lead to cheaper production costs for operations management as well as effect the availability of resources and locations for operations management to allocate. This implies that through outsourcing it can reduce the production costs and staff for operations management. As a result this would lead to less resources being allocated which in turn effects operations management’s ability to achieve cost leadership.
This is demonstrated by how McDonald’s outsources the delivery of their products through delivery companies such as Uber Eats. Hence results in a reduction of production costs and staff that would have been needed for delivery. Which in turn effects McDonald’s operation management’s ability to achieve cost leadership as well as effecting their resource allocation. As a result of their being less resources needed but conserving other resources such as money and staff. Therefore, the implications of globalisation through outsourcing are that it can affect resource allocation and ability to achieve cost leadership for operations management as made evident by McDonald’s.
Conclusion
In conclusion, the implications of globalisation effecting operations management is that it can effect operations management’s ability to achieve cost leadership and resource allocation through cost leadership and outsourcing. As made evident by McDonald’s resources and ability to achieve cost leadership being effected due to globalisation.
Introduction
Globalisation is the breaking down of trade barriers, thus allowing businesses to sell their products and transfer resources around the world. Operations management is an area of management focused on the operations of a business which includes resource allocation and utilisation of product differentiation and cost leadership. Operations management is affected by globalisation as it effects operations management’s ability to achieve cost leadership and enables outsourcing for a business. McDonalds the world’s leading food service organisation demonstrates the effects of globalisation has on operations management.
Cost Leadership
Cost leadership is achieving the lowest cost in production than competitors in a market. Globalisation effects operations management’s ability to achieve cost leadership as by businesses being able to sell anywhere it can lead to production costs decreasing or increasing depending on where a business is situated. As well as there being more competitors in the market. The implications of this is that depending on where a business is situated globally and what are its current competitors it can effect operations management’s ability to achieve cost leadership. Furthermore, it effects resource allocation for operations management as production costs for a business depends on their location, which leads to a fluctuation in resources for a business.
McDonald’s demonstrates how operations management is effected by globalisation as it has 39000 restaurants in over 100 countries. Hence can shift their capital and resources such as staff and equipment to any location needed. As a result, this effects the operations management for McDonald’s as they have more resources and locations. Which effects their resource allocation. Therefore McDonald’s demonstrates how globalisation effects operations management through how it effects their ability to achieve cost leadership and resource allocation.
Outsourcing
Outsourcing is where a business allocates a task or business function to a different business. Outsourcing can either be onshore or offshore meaning within a business’s country or outside of a business’s country. Globalisation can enhance outsourcing due to businesses being able to function a global scale. Hence this effects operations management’s ability to achieve cost leadership and influences their resource allocation. The reason is that outsourcing can lead to cheaper production costs for operations management as well as effect the availability of resources and locations for operations management to allocate. This implies that through outsourcing it can reduce the production costs and staff for operations management. As a result this would lead to less resources being allocated which in turn effects operations management’s ability to achieve cost leadership.
This is demonstrated by how McDonald’s outsources the delivery of their products through delivery companies such as Uber Eats. Hence results in a reduction of production costs and staff that would have been needed for delivery. Which in turn effects McDonald’s operation management’s ability to achieve cost leadership as well as effecting their resource allocation. As a result of their being less resources needed but conserving other resources such as money and staff. Therefore, the implications of globalisation through outsourcing are that it can affect resource allocation and ability to achieve cost leadership for operations management as made evident by McDonald’s.
Conclusion
In conclusion, the implications of globalisation effecting operations management is that it can effect operations management’s ability to achieve cost leadership and resource allocation through cost leadership and outsourcing. As made evident by McDonald’s resources and ability to achieve cost leadership being effected due to globalisation.