Sample Paper on Operations Strategy in the Global Environment

Operations Strategy in the Global Environment
Operations strategy underlies overall business strategy, and they are both essential for a company to gain a competitive advantage over other firms in the ever-changing global business environment. Many companies around the world are responding to the competitive nature within the global business environment by adopting effective operations strategies. For instance, Italy’s Benneton firm has been able to move from inventory to stores faster than its competitors by building flexibility into its design, production, and distribution. Many domestic firms across the United States are deciding to change to some form of international business operations due to various reasons, such as the need to improve their supply chain, learn about various opportunities for their goods and services, benefit from tangible opportunities to reduce their costs of operations, and attract global talent. For every firm to compete with other organizations in the global environment, they ought to put in place an effective operations management system, which should include; mission, strategy, and strategy development. An organization’s success is a result of it identifying its mission to satisfy a specific group of customers’ needs and wants. Therefore, the mission is the rationale for an organization’s existence including its purpose and what it contributes to society. A strategy is an essential aspect of every firm’s operations as it outlines an action plan to achieve its mission. Furthermore, strategy development is the process through which a firm conducts research and identifies strategic operational options, selects the most promising, and decides how resources would be allocated to each functional area to ensure that an organization achieves its objectives. Effective operation strategy can be of great importance to a firm by enabling the organization to address various issues, such as cultural challenges, stiff competition, and outsourcing of business operations and processes.
Cultural and Ethical Issues
Although various forces drive firms towards expanding their operations into the global business environment, United States’ local firms are faced with various challenges. One of the challenges is related to cultural and ethical dilemmas. Cultural and ethical dilemmas result from differences in social and cultural behavior in various communities and countries. With issues ranging from bribery to child labor, organizational managers ought to know how to respond to various cultural and ethical aspects when operating in different cultures. Every country has its own cultural and ethical practices, and what one nation deems acceptable might be considered as unacceptable in another country (Westney, 2011). For instance, child labor may be deemed acceptable in one country due to the high unemployment rate, yet in another, the practice may be regarded as illegal. In the last decade, changes in international laws, agreements, and codes of conduct have been applied to define ethical behavior for all businesses around the world. The World Trade Organization (WTO), for example, has helped to ensure cultural uniformity in various aspects across the world. Even on issues whereby significant cultural differences exist, such as bribery or the protection of intellectual property, global uniformity on such aspects is slowly being embraced by many nations. Expanding operations into the global business environment poses various benefits and challenges, and therefore, organizations need to develop missions and strategies to help them survive in a competitive environment.
Competitive Advantage
An organization’s ability to gain a competitive advantage within the global business environment is determined by three strategies: ability to differentiate itself from other firms; focusing on the distribution of valuable products at low cost; and adopting a quick, flexible, and reliable response to consumers’ needs. Competitive advantage is regarded as the adoption of an operational management system that makes an organization unique from its competitors, thus enabling it to achieve high profitability in the global business environment. The idea of competitive advantage is to ensure that creates the best value for the consumers to ensure its survival in the marketplace.
The differentiation strategy is one of the approaches that help organizations to achieve a competitive advantage in the global business environment. Differentiation focuses on an organization’s ability to offer new and unique products that other firms do not provide to the consumers (Motohashi, 2015). A firm’s opportunity for creating uniqueness is not only located within a particular function or activity that the organization undertakes, but it can also arise virtually from all the operations it undertakes. Differentiation refers to going beyond both physical characteristics and service attributes to encompass various elements about a product or service that influences the value that the customer derives from it. Therefore, adopting an effective operations strategy may enable a firm to define every aspect of a product or service that might influence the potential value to the customer. The aspects may include the convenience of a broad product line, product features, or a service related to the product. Such services can manifest themselves through convenience, that is, location of distribution centers and stores, and product delivery, installation, maintenance, and repair. In the service sector, product differentiation can be done by improving the consumer experience.
Experience differentiation focuses on engaging customers in the distribution of a product. Among the firms that have adopted experience differentiation strategy to enable it to achieve a competitive advantage over other organizations is Hard Rock Café. The restaurant differentiates itself from others by engaging its customers with classic rock music and memorabilia; it also hires staff who tell stories to clients. The advantage of adopting differentiation competition is that it is highly profitable. However, the approach also poses various drawbacks. For instance, the approach is hard to sustain, vulnerable to competitive emulation, and the global market may drive out non-essential differentiation over time.
Another approach that can help an organization achieve a competitive advantage in the global business environment is the adoption of a low-cost strategy. This strategy entails achieving maximum value as defined by the customer. For an organization to achieve a low-cost leadership in the competitive global business environment, it ought to effectively assess the ten-operational management decisions in a relentless effort to drive down its products’ costs while meeting customers’ value expectations (Gong, 2013). Notably, adopting this strategy does not imply that a firm has to offer low-quality products to its customers, rather it means that the organization has to constantly improve on the quality of its products and distribute them at low costs. Walmart is an example of a firm that incorporates a low-cost strategy into its operations. The company has become a low-cost leader in the global business environment due to driving down its warehousing and product delivery costs by ensuring that products are shipped directly from the manufacturers. The advantage of adopting the low-cost strategy is that a firm can survive and become profitable across a wide range of conditions, such as economic downturns and industry price wars (Rausch, 2006). Despite the associated advantages, the adoption of the low-cost strategy poses numerous drawbacks. Notably, the strategy can be emulated by low-cost products and tends to be unsustainable to firms that encounter high-production costs. Furthermore, a company that has incorporated the strategy into its operations may take a long period to become profitable.
Adoption of a quick, flexible, and reliable response can also help a firm to achieve a competitive advantage in the global business environment. The strategy involves an organization incorporating three aspects into its operations including flexible performance, reliable scheduling, and quickness. Flexible performance refers to the ability of a firm to keep up with the changes that are encountered in the global marketplace where innovations and volume of production fluctuate substantially. An example in regard to a company that has incorporated flexibility performance into its operations is Hewlett-Packard (HP). The company has incorporated the flexible performance strategy both in its design and volume of production. Besides, reliable scheduling is the efficiency through which an organization meets up the schedules communicated to the customers, such as product development or delivery schedule (Allon, 2011). HP has maintained a competitive advantage in the global business environment due to its reliable response to its customers. The company often communicates to its customers regarding the schedule of a product’s development or delivery, and it often ensures that it meets the customers’ expectations by distributing or delivering a product within a given timeline. Quickness is also an essential aspect of the response strategy. Quickness entails the speed of design, production, and delivery. Customers desire to associate with firms that meet their needs within the shortest time possible. The advantage of competing in response is that a firm may be able to attract more customers thus becoming profitable. However, the disadvantage of this approach is that it is vulnerable to competitive emulation.
Strategy Implementation
Organizations can achieve a competitive advantage in the global business environment related to the three aspects of differentiation, low-cost, and response when they make effective decisions on the ten areas of operations management including goods and service design; quality; process and capacity design; location selection; layout design; human resources, and job design; supply-chain management; inventory; scheduling and maintenance. The design of goods and services often defines most of the transformation process that a particular product undergoes. The design of a product is of significant importance in the decision-making process as it allows an organization to determine the right pricing strategy for a given good or service. Besides, the quality of a product is an essential aspect that ought to be considered while an organization makes operation management decisions (Chambers, 2011). Therefore, before processing and distributing a product, an organization ought to understand the quality expectations of customers and then come up with effective policies and procedures to ensure that the consumers’ need or want is satisfied. Furthermore, process and capacity design are also essential aspects that organizations ought to consider while making operation-management decisions. Process decisions allow organizations to identify the most appropriate resources that can help them to achieve their goals (Chambers, 2011). Location selection is also another area that organizations should consider while making operation management decisions. Facility location selection help to determine a company’s success as it entails aspects such as the ease of access to the firm’s products by the consumers.
Additional areas that organizations must consider in operation management decisions are layout design, human resources, and job design, supply chain, and inventory. The layout design is a critical area that organizations should focus on during decision-making processes related to operations. The aspects help to outline material flows, capacity needs, and organizational structure. Besides, human resources and job design help to determine the kind of talent that an organization should hire to achieve its objectives and how much it might cost them to compensate its recruits in terms of wage pays. Furthermore, supply chain management decisions are of significance to every organization across the world as they help to determine what products are to be made and what volume of goods and services is to be distributed to the consumers. Another area that organizations ought to consider in operations management is inventory. The aim of making inventory decisions is to allow a firm to effectively allocate its financial resources to various organizational resources.
Other areas that organizations ought to consider in the operation management decision-making process include scheduling and maintenance. Organizations should develop feasible and efficient product development and delivery schedules to enable them to compete in the global business environment where consumers desire to associate with brands that process and distribute goods within the shortest time possible. Organizations also ought to consider the aspect of maintenance when making operations management decisions. Maintenance decisions help to determine how a firm addresses any arising system problems to keep up with the competitive nature of the global business environment.
Outsourcing
Outsourcing of business processes and operations to third-party providers is associated with various advantages, disadvantages, and ethical issues. The advantage of outsourcing operations and processes is that it enhances the focus on core business activities. The aspect of outsourcing can enable a firm to focus on its strengths and identify market opportunities that can ensure its survival in the future. Besides, outsourcing helps to improve the efficiency of business operations and processes (Weidenbaum, 2005). Furthermore, outsourcing also helps organizations to achieve a greater competitive advantage in the global business environment. Handing over direct control of business processes and operations to a third party also presents various risks. The disadvantage of outsourcing is that service delivery may fall behind schedule or below expectations, security or organizational data may be at risk, and organizational operations might be unstable in the event that the outsourcing company goes out of business (Weidenbaum, 2005). Outsourcing of business operations and processes is associated with various ethical issues, such as a fall in service quality. However, the ethical concern is rife concerning outsourcing as it might lead to a fall in service quality. Therefore, before firms outsource, they should evaluate the track record of the vendor and their technical competencies.
Outsourcing of operations and processes is also associated with various benefits and risks. The benefits include that it lowers investments on internal infrastructure, increases a firm’s flexibility to meet changing business and commercial conditions, lowers business or operational costs due to lower labor rates, and enables an organization to access various skills and resources. The risks of outsourcing include a lack of business or domain knowledge and a fall in service quality.
During the selection of outsourcing providers, companies ought to consider various aspects, such as the reliability of the vendors, access to communication technology, and their financial stability. Regarding the aspect of reliability, a company ought to assess the history and experience of the outsourced provider in the business world. Besides, a company ought to assess whether an outsource provider has an effective communication system in place that enables it to market the firm’s products and meet the consumers’ needs. Furthermore, a firm should also assess an outsourced provider’s financial stability to determine whether the provider can survive in the long run.
Issues with Operation Strategy
Operational strategy is associated with various issues during a product’s lifecycle stages from introduction to growth, as well as maturity to decline. During the introduction stage, operations outline the product design and changes, quality, and production costs. In the growth stage, the operation strategy helps organizations to assess product and process reliability, as well as evaluate competitive product improvement options. In the maturity stage, operation strategy helps to increase the stability of process and cost-cutting. In the decline stage, operation strategy helps in cost minimization.
Every firm’s operations are guided by various aspects such as mission statement and business strategy. Effective operations strategy management enables organizations to address various issues in the global business environment, such as cultural, competition, and process outsourcing aspects. An effective operations strategy can help an organization identify some of the cultural challenges it might experience by expanding its operation into the global business environment. Besides, operations strategy can enable a firm to determine how a firm would deal with its competition in the global business environment. Moreover, the strategy can help a company to properly select outsourced providers, as well as identify how it can address various issues in a product’s lifecycle from introduction to decline.

References
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Chambers, C. (2011). Quality and Pricing Decisions. Wiley Encyclopedia of Operations Research and Management Science. https://doi.org/10.1002/9780470400531.eorms1030
Gong, Y. (2013). Basic Concepts of Global Operations Strategy. Global Operations Strategy Springer Texts in Business and Economics, 3-42. https://doi.org/10.1007/978-3-642-36708-3_1
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