Reasons to globalize in operation management. 15 Reasons Why Globalization Is Important? 2022-12-14
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Globalization refers to the process of increasing interconnectedness and interdependence among countries through the exchange of goods, services, information, and ideas. In operation management, globalization can bring a number of benefits that can help companies to improve efficiency, reduce costs, and increase profits. Here are some reasons why companies may choose to globalize in operation management:
Access to new markets: Globalization allows companies to enter new markets and sell their products or services to a wider customer base. This can help them to increase their revenue and market share.
Lower costs: Companies can benefit from globalization by accessing lower-cost labor, raw materials, and other inputs. For example, a company may choose to manufacture its products in a country where labor costs are lower, allowing it to reduce production costs and increase competitiveness.
Improved efficiency: Globalization can also lead to increased efficiency in operation management by enabling companies to specialize in certain areas of production and take advantage of economies of scale. For example, a company may choose to focus on producing high-volume, low-cost products in one location and specialized, high-value products in another.
Innovation and technology transfer: Globalization can also facilitate the transfer of technology and knowledge between countries, leading to increased innovation and productivity. Companies can access new technologies and ideas from other countries, allowing them to improve their products and processes.
Risk management: Globalization can also help companies to diversify their operations and reduce their exposure to risk. By spreading their operations across multiple countries, companies can reduce the impact of economic, political, or natural disasters on their business.
In summary, globalization can bring a number of benefits to operation management, including access to new markets, lower costs, improved efficiency, innovation and technology transfer, and risk management. While globalization can also pose challenges, such as cultural differences and language barriers, careful planning and strategic decision-making can help companies to effectively navigate these challenges and realize the benefits of globalization.
Operations Management: Concept and Globalization
Thanks to advances in technology and the rise of e-commerce, it has become more feasible to expand operations in new markets. Activities which are particularly suitable for off-shore sourcing are discussed as follows: ADVERTISEMENTS: i. Increased competition Most companies in the past faced local competition. The organization is headquartered in Arkansas from which operations of 11,000 stores are spread in over 27 countries. Most companies' home government may have regulations and restrictions that are so inconvenient and expensive, thus limiting the expansion, encroaching in the companies' profits, and making their costs uncontrollable.
Mergers, acquisitions, and new office locations, in particular, are opportunities you can capitalize on to move forward internationally. It also shapes political systems and the environment and cultures of societies worldwide. Globalization Makes Us More Productive Globalization makes us more productive by enabling us to use resources from around the world, which allows us to produce better results without having to increase our efforts or 10. Globalization is a complex process in which organizations have to deal with different cultures, business environments, government regulations, etc. Page and Brin did not only find an alternative, but also drove a market with innovation and leadership.
It allowed their domestic companies to expand into overseas markets. Globalization of Operations Management : ADVERTISEMENTS: The forces of globalization, such as reduction in trade barriers, cheaper and easier means of international transportation and communication, wage differential, and market saturation in the home markets on one hand and rapidly growing marketing opportunities overseas, especially in emerging economies on the other, have led to expansion of operations on a global scale. Without logistics solutions to the problems that the market puts forward, it will be difficult for an enterprise to achieve leadership positions, so you need to pay serious attention to logistics problems. When designing something or services, it should fit the culture. Explained How does Globalization work? In addition to his work in the United States, his focus is also on developing countries in the continent of Africa, their leadership, culture, economic and market structure, community planning and development, and his coined the phrase; "AFRICAN PIES", which stands for: poverty, instability, ethnicity, and sectarianism in Africa.
Reasons to Globalize Operations Tangible Reasons Reasons to Globalize Reduce
A sound set of foreign expansion strategies gives your business the structure it needs to become sustainable in a new market. Concept of Operations Management 2. Some of the reactive or defensive reasons for going global are: 1 Trade Barriers 2 Customer Demands 3 Globalization of Competitors 4 Regulations and Restrictions In the case of trade barriers, companies move from exporting their products to manufacturing them overseas in order to avoid the burden of tariffs, quotas, the policy of buy-local and other restrictions that make export too expensive to foreign markets. The ratio of the value of the output achieved to the inputs used is also used to express productivity, which is a measure of how efficiently the resources are used. The operational function facilitates this process. Increased requirements for the quality of product distribution processes Increased requirements for the quality of the processes of selling finished products, caused by tough competition, led to the same requirements from manufacturers to suppliers of raw materials, materials, components, and semi-finished products. While it can benefit consumers, it also promotes unethical behavior.
Globalization and Operations Management: Five Recommendations
The processes of globalization today are the main trend of world development and are the main guiding vectors. Currently, globalization is a global concept and is rising at the highest rates. These benefits apply to individuals, businesses, governments, countries, and the world as a whole. Types of off-shoring : Captive off-shoring: Relocating business processes to a low-cost location and delivering from a shared service centre owned by the company itself is known as captive off-shoring. With digitization, the Internet, and high-speed data networks as the driving forces, all kinds of knowledge related work can now be performed almost anywhere in the world.
Key Points of Globalization Effect Put simply, barriers to trade between different countries are being removed, and national economies are being integrated in the current situation. Access to raw materials and low operational costs in financing, transportation, low wages, lower unit costs, and power are attractive in terms of resource access and cost savings. In this chapter, we discussed the operations strategy changes necessary for globalization and the various approaches for managing globalization. Later in the article, we talk about the establishment of these economic processes in the context of globalization. After all, the path to international expansion requires facing new challenges to start over in a new country and new market.
Wal-Mart is an American multinational company that operates a chain of warehouse stores and departmental stores. In the coming years, we can expect international expansion to be the norm. Instead of spending time and money on new product development, companies can create a new revenue source by finding new consumers for a previously successful product. The most important commodity in the context of the globalization of the world market is intellectual capital. Globalization helps to exchange ideas and let people know the cultures and trends of other countries to modify their trends in a better way.
As such, you need to make sure the foreign market you plan to enter is truly the optimal choice for your business and your products or services. You need to remain in control of your sales process to ensure a smooth delivery of goods to your new customers. In order to stay in competition and to avoid the costs of import and export, the best solution is to globalize your business and make your base in other countries. The various types of impediments to the process of globalization are economic, managerial and institutional impediments. They have explored the economies of scale to increase the minimum efficient scale MES for their industries.
Globalization : Operations Management And Globalization
In order to remain competitive, companies move as quickly as possible to secure a strong position in some of the key world or emerging markets with products customized for the need of the people in such areas in which they plan to establish. It also promotes foreign direct investments. Some of the primary disadvantages of globalization include the following. Inventory management, which is one of the most important elements of the supply chain, is the tracking of inventory from the manufacturer to the warehouse, and from there to the point of sale. This allows their company to build strong brand awareness and a connection with local consumers. Payment Methods When expanding internationally, it is imperative to Your business can attract more consumers by providing an easy and accessible way to pay.
The only difference today is that globalization is occurring at a much faster pace thanks to technology — for travel, communication, research, etc. Businesses and organizations that initiate global expansion often do so to gain a first-mover advantage. Total Quality Management TQM in Terms of Globalization The quality of products in the general case largely depends on the level of requirements for competitiveness and quality established by regulatory and technological documentation, the ability to successfully implement business processes at enterprises, the quality of resources purchased for the production of products, mechanisms and methods of production management, labor and organizational decisions. Reduce costs and exchange rate risks 3. This lessens the hassle of opening a foreign currency account and converting currencies themselves. As a result, a complex system of connections between various market entities was formed, which required the improvement of existing models of organizing supply and sales, the ultimate goal was the development of logistics.
