MAN515 Operations Management

Running Head: OPERATION MANAGEMENT 1
Operations Management

OPERATION MANAGEMENT 2
Table of Contents
Introduction......................................................................................................................................3
Impact of Challenges on Business...................................................................................................3
Changing Technologies................................................................................................................4
Continued Globalization of markets including 1st and 2nd world entrants.................................5
Changing customer expectations.................................................................................................5
Changing job designs...................................................................................................................6
Quality management....................................................................................................................6
Global manufacturing..................................................................................................................7
Impact of different areas of Operations Management.....................................................................7
Supply Chain Design...................................................................................................................8
Goods and Service Design...........................................................................................................9
Resource Management...............................................................................................................11
Conclusion.....................................................................................................................................13

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Introduction
Operations Management is the process of administrating the business processes to develop
highest level of effectiveness and efficiency possible in a company. It is one of the most
important processes of an organization, which assists an organization in attaining its overall
objectives. It includes using the resources from materials, human resources, equipment, materials
and technology. The idea of operations management is primarily emphasized on administration
and management of different processes and methods, which can be managed by the business
entity for enhancing its capabilities and profitability. The major concern in this process is
sustaining the balance between income and expenses, so that business entity can achieve
increased net profit.
There are some examples of operations management, like; decision making regarding
implementing plants, strategies for expanding the business and utilization of data structure for
innovation systems etc. In order to manage and implement the operations, an organization may
face various issues and challenges. This report includes different challenges, which impact
operations management in an organization, like; quality management, changes in the customer
expectations, changes in job design, globalization etc. The Australian business, which is taken
into consideration here, is BHP Billiton. The company is an international organization in Anglo-
Australian metals, mining and petroleum business. BHP Billiton is dual-listed public
organization that is headquartered in Melbourne, Australia (BHP, 2017). This report analyzes the
effect of these challenges on chosen business and its operations. Furthermore, it includes some
areas of operations management, which mostly impact the success of chosen business in today’s
competitive business environment. The three areas, which are discussed in the below report, are
supply chain design, product and service design and resource management.
Impact of Challenges on Business
Operations management plays a vital role in alleviating the policies and processes of
organization across different business areas, like; technology, finance and planning. Operations
Management is very challenging as it employs highly technical approaches and methodologies
(Anderson, Anderson and Parker, 2013). There are multiple challenges, which are confronted by

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organization on regular basis in managing business operations and processes, like; Technology
changes, globalization, changes in customer expectations, changing job designs, quality
management and global manufacturing. These challenges impact the business of BHP Billiton in
the future. Following are some of challenges and issues, which can be confronted by BHP
Billion;
Changing Technologies
The scope of technology in operations management has progressed over past few years and has
moved from development of products into design, improvement and management of processes
and systems. Changes and advancement in technology is one of the factors, which have been
considered very important for every business organization in today’s business environment.
Technology is a factor, which has different impacts on business activities and processes and
offers both intangible and tangible advantages to an organization (Aviv, Lariviere & Terwiesch,
2009). These advantages support an organization in achieving competitive advantages, increased
efficiency and productivity, quality products and services and enhanced customer satisfaction by
delivering quality products. Changes in technology offer both positive and negative effects to an
organization.
BHP Billiton may have both impacts of technology changes. Apart from positive impacts, there
are some adverse effects, which impact the operations and growth of this business. First and
foremost issue is integration issues, which states that it is not essential that new installed and
advanced technology will match with old and existing technology systems in the organization. If
BHP Billiton incorporates new technology systems in its business operations, then it may face
the issue related to employee resistance because employees make efforts to resist technology
changes (Aaker and Biel, 2013). In addition, the organization will have to bear the training and
development costs to train the employees about advanced technology. Integration issue will lead
to develop a double data entry in the processes that will show on different places in the system.
Thus, integration of new technology with existing can be proven as a threat for BHP Billiton.
In this context, another challenge is backup and data recovery challenges. BHP Billiton needs to
manage the data of its suppliers and customers. If any file gets erased accidently because of
server crash, power cut and other technological issues, then the company may face the issues
related to data and material information loss. So, it is very important to have a data recovery

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system for the organization to overcome technology related issues (Beardwell and Thompson,
2014).
Continued Globalization of markets including 1st and 2nd world entrants
Globalization is the process, by which an organization expands its marketing and business
operations to international or global levels. Globalization offers the markets with different
international stages to handle with the issues, so that it can improve the efficiency, quality and
effectiveness of products and services. This is because of the development of enhanced and
modern methods. Internationalization and modernization are the major factors, which assist the
business environment and markets of an organization. If BHP Billiton expands its business
globally, it may face various challenges, like; the company will need to understand and comply
with the laws and political regulations of international markets. For example, the organization
will confront the issues related to laws and taxes of the emerging market, in which it is
expanding its business operations (Brown, Bessant and Lamming, 2013). In addition, the
company will face the issues due to cultural and language differences. Thus, political and legal
factors are the major challenges, which affect the operations management in the organization.
Changing customer expectations
The significant components of customer service are endless, but expectations of customers are
not. In today’s business environment, customers are always desired a reliable, efficient and
friendly service, but with the emergence of enhanced technology, the expectations of customers
have been changed with the passage of time. Customer is the king of market, so it is necessary to
consider their expectations and needs for managing the organization and its business operations
(Chase, 2017). The organizations manufacture and deliver the products according to the needs
and preferences of customers, which will lead to the organization in attaining its business
objectives and goals. For an organization, demand and supply is totally dependent on the likes
and expectations of customers. It is a significant factor that influences the growth and success of
business of BHP Billiton. BHP Billiton may face the issues related to customer expectations as
the expectations of customers change with the market trends. The customers, who are going with
the products and services BHP Billiton, have the expectation of innovative and upgraded
products (Christopher & Martin, 2016). If the company will be unable to fulfill the needs and
expectations of customers, then there will be chances of declining its customer base and market

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share. It will diminish the sales and revenues of organization. Apart from this, if the expectations
will be fulfilled by the company, then it will assist BHP in developing its customer base.
Changing job designs
Job design is a significant factor that is related to managing and organizing the tasks and
responsibilities, so that it can assist the organization in accomplishing its overall objectives. This
process also includes different methods and practices, which are very important for operating
business operations smoothly (Christopher, 2016). Effective designing of job and duties is
essential for completing the job successfully. There are several effects, which changes in job
designing have on organization and its operations in the future.
BHP Billiton may face various challenges due to changes in job designs. If there will be changes
in the jobs and duties of employees at BHP Billiton, then they will feel demotivated and
frustrated due to fluctuations in their job responsibilities. They will be less interested in
performing their jobs and it will affect the processes and operations of organization. It will create
issues in attaining major goals and objectives of organization. Employee retention and turnover
ratio will lead to the higher expenses for the company and will be recognized as a threat for BHP
Billiton (Galliers and Leidner, 2014). Furthermore, active changes in the jobs lead the employees
to lower morale and frustration towards their job. It will affect the processes and operations of
the company as the performance of employees will get affected by this. Thus, frequent changes
in job designing will have adverse effects on BHP Billiton.
Quality management
Quality management is also considered as a significant factor that will carry the organization to
the growth and success in competitive business environment. This factor is very important that
assists the organization in offering satisfaction to potential customers. Each and every customer
expects that organization offers quality products and services. If an organization will be able to
attain this factor positively, then it will be profitable for the organization. It will assist the
company in improving and enhancing its market share, creating brand equity and goodwill.
Quality Management will assist BHP Billiton also in increasing its profitability and market share.
The organization is offering metals, mining and petroleum services and it has various
competitors in the Australian petroleum industry. Apart from these positive impacts, BHP
Billiton will have some negative impacts, like; if BHP will not be successful to manage its

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quality of the products and services, then it will face several adverse consequences. For example,
if the customers will not be satisfied with the products and services of BHP Billiton, then they
will make steps to other brands like; BP Petroleum, Exxon Mobil etc. It will in turn decline the
sale and market share of company (Heizer, 2016). The organization needs to consider and
emphasize of the quality of its products and services.
Global manufacturing
Global manufacturing is the process that refers to the practices that a business organization
manufactures the parts, assemblies, sub-assemblies and final products for other organizations.
This process is completed by leveraging the cost, manufacturing capabilities, raw materials and
effective supply chain system, which extends throughout the world. Global manufacturing can be
very unfavorable for the organization in many cases. In the case of chosen business, BHP
Billiton can manufacture the mining products and send them to other firms for purification and
some other filtering objectives. It will be very expensive for the organization and it will increase
the costs of goods sold (COGS) that will enhance the final prices of products. It will lead to
decrease the demand for products and services of BHP Billiton (Hill and Hill, 2012). Eventually,
it will adversely influence the market coverage and share of the company in Australian mining
and petroleum industry.
Impact of different areas of Operations Management
Operations are the processes, which are adopted and implemented by an organization to attain its
final objectives. The growth and success of an organization completely depends on management
of its operations and business practices. There are various areas of operations, which are
regarded very important in attaining growth and success for an organization. From all the
operations, three areas are considered here to explain the impact of them on business of BHP
Billiton (Hitt, Carnes and Xu, 2016). The following section of this report includes some areas of
operation management in context of BHP Billiton. The chosen areas are, such as; supply chain
design, resource management and goods and service design. It will explain that how these areas
are impacts the growth and final success of the chosen organization’s business.

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Supply Chain Design
Supply chain management is an essential process for an organization, especially which is
engaged in production and manufacturing activities. It is a process of managing products and
services and comprises of storage and flow of raw material from work-in progress to final
products. Supply chain process includes different areas, like; product flow, information flow,
cash flow and process flow. Designing an effective supply chain system is an integral part of a
business organization and it is very important for the delivery of products and growth and
success of an organization. There are some advantages of supply chain design that will
demonstrate the growth and success of BHP Billiton (Hoyle & Rhiannon, 2017).
From each and every organization, the customers have expectations that they receive right
products and delivery should be done on predetermined time that will enhance the customer
satisfaction level for organization. In addition, the products should be distributed to correct
location in the given time period. Furthermore, after sales service is an extra specification that is
needed to be considered by an organization to enhance the customer satisfaction level. These are
the important factors, which will attract more and more customers and satisfy them with by
adopting an effective and efficient supply chain system (Jacobs and Chase, 2013). With this, it
will aid the growth of organization in today’s competitive business environment.
Supply chain system of an organization brings a variety of costs to decreasing level that are
stated below;
Purchasing costs: At BHP Billiton, supply chain design may impact the purchasing costs and
bring it to decreasing level. Primarily, the retailers are dependent on the process of supply chain
and fast delivery of costly products to avoid the storing expensive inventories in the stores for
longer time. Along with this, making supply chain efforts can reduce the inventory costs for the
organization (Johnson, Christensen and Kagermann, 2008).
Moreover, manufacturers are also dependent on the delivery of raw materials to the
manufacturing premises, so that they can avoid the shortage of material, because it can lead the
production process to stop. There will be huge impact on the production and manufacturing
process and eventually, it will affect the supply of products to customers and productivity and
profitability of BHP Billiton will get affected by this. The raw materials from the suppliers are

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transformed to the finished goods through organization’s assembling premises. These final
products are transferred to transportation services and from transportation to retailers and then
retailers to final consumers. However, supply chain systems of several manufacturers may have
auxiliary, necessary and domestic suppliers (Kammar, 2016). Thus, effective designing of supply
chain system is very important for an organization, so that it can manufacture the products and
deliver them to customers on given time. Supply chain management plays an important role in
attracting the customers towards the organization, as they are more enticed by delivery of right
product on right time.
Goods and Service Design
Products are the final results, which make the business organization able to generate the revenues
and also support the organization in achieving goals and objectives. Goods and service design is
the process of manufacturing a possible future product or service that includes its fit, form and
function. Determining the best suitable method develops effective productivity and it is the best
way for business operations (Khanna, 2015). Product and service design is a process of planning
and organizing the human resources, organizational structure, communication process and
components for enhancing the quality of products and services. For product and service design, it
can be stated that it is the process of developing the products and services, which are to be sold
by an organization to its customers.
The products and services are the major factors, which are accountable for affecting the success
and growth of the business operations of organization. Products are the supplies that are offered
by a business entity after looking at the needs and expectations of their potential customers.
Customer satisfaction level is totally dependent on various elements of products (Krajewski,
Ritzman and Malhotra, 2013). One of the major factors of product is the designing the right
products as per the needs and expectations of customers. This designing process refers to the
identity of that product that develops a different image of that particular product in the
marketplace. Furthermore, if BHP Billiton will focus on the development of products and
services, then it will assist the organization in creating its better brand image in the mining and
petroleum industry in Australia. In addition, it will help BHP Billiton in maintaining and
achieving competitive advantage over its competitors.

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There are some specific factors of product and service design that assists the organization in
increasing its profitability and possibility to get success. These factors for BHP Billiton are
stated below;
Increase in Market share
The product and service design assists the business organization in enticing and affecting the
customers. The product demand shows the market size of the business firm. As the company
experiences increase in demand of products and services, the market share and coverage of that
company will be higher over its competitors in the industry. BHP Billiton should engage in
designing and developing the products according to the needs and preferences of customers, so
that it can satisfy their demand (Li, 2007). It will enhance the demand for its mining and
petroleum products and ultimately it will enhance the market share of BHP Billiton organization
in Australian metals, mining and petroleum sector. An increased market share of the company
shows its profitability and revenue generation capability and its market coverage over its
competitors in respective industry.
Increase in satisfaction level of customers
As discussed above, that the “customers are the king of market”. This phrase is being repeated
time to time by each and every organization. In today’s competitive business world, this phrase
actually positions true. The organization that has maximum customer satisfaction level has more
chances for growth and success. The reason behind this is that if a firm measures its own
customer satisfaction then it may assist it in optimally changing operations and marketing
strategy. Customer satisfaction is the key for retaining the customers (Mahadevan, 2009). For
achieving increased customer satisfaction level, it is essential to consider the needs and
expectations of customers. If an organization manufactures and designs the products and services
by considering the requirements and demands of customers, then it will provide them
satisfaction. If the customer satisfaction level will be high, then it will enhance the repeat
intention of customers to purchase the products from similar organization. In addition, it will
increase the brand loyalty of customers, which in-turn will hike the goodwill of company. Thus,
customer satisfaction level is an important factor that is very beneficial for the growth and
success of organization (Mangan, John, and Lalwani, 2016). BHP Billiton should emphasize on

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achieving maximum customers satisfaction level by considering their demands and needs. It will
enhance the sales of company that will enhance the revenues and profitability of BHP Billiton.
Increase in goodwill and brand equity
Brand equity and good will are two major outcomes, which each and every firm wants to attain
in its lifecycle. The firms make efforts to attain these both factors. Brand equity is regarded as an
intangible asset that is determined by the perception of customers towards the brand and its
products (McFarlane, 2014). A company can attain positive brand equity when its customers are
ready to pay more for its products with well-identified brand name. Furthermore, goodwill is
another intangible asset that includes value of company but it cannot be valued and recognized.
Generally, goodwill is related to the acquisition of business. Good will and brand equity, both
plays an important role in establishing brand image of an organization (Netessine & Christopher,
2009).
As mentioned in the above paragraph, it can be stated that there is a direct relationship among
satisfaction level of customers and good will and brand equity of an organization. If the customer
satisfaction will be high, good will and brand equity will be more than its competitors (Silva,
2005). BHP Billiton is a well-established organization in mining and petroleum industry and has
a better goodwill and brand equity in the market. A higher goodwill indicates the strength of
business organization and a strong business entity is considered to be more effective and
successful.
Resource Management
Resource management is the effective and efficient management of resources of organization,
when they are required. There are different resources, which are included in the category of
organizational resources, like; human resources, financial resources, information technology
resources, production resources, inventory etc. The resources are significant modes that can be
used by an organization for generating revenues (Smith and Offodile, 2014). BHP Billiton is the
international organization that possesses variety of resources and these resources are sectioned in
different categories, for example, intangible and tangible resources. This is the major
segmentation for a company that can be very beneficial for adopting and implementing different
approaches and strategies of resource management. All of these resources are reflected as very

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important for organization and are accountable for the success and growth of business and its
operations (Steenkamp, 2017). Resource management includes the implementation of different
methods and strategies that will make the organization able to optimally utilize the
organizational resources. BHP Billiton has the major resources like; financial resources, human
resources, information technology etc.
Financial resources are the most important resources, which play an important role in the growth
and success of organization. An organization can find out its profitability and revenue generation
by looking at its financial resources. These resources make the company able to make more
investment on best and modern promotional platforms and modes that will increase awareness of
products and services among the population in the market. By utilizing financial resources, the
organization will have ability to recruit the expertise and potential team that will serve the
customers at their maximum extent (Swink, Melnyk, Cooper and Hartley, 2014). An
organization with better financial stability will be able to buy a better quality of raw materials
and finally it will assist the manufacturers in offer finished goods with high quality.
Apart from this, human resources are other resources which are used as one of the major factors
in order to manage resources. Human resources are the people, who are working with
organization for attaining the goals and objectives of organization. Human resource management
is the process of managing the people that right people are working on right position in order to
achieve the organizational objectives. This process will serve the business of organization with
the results, like; achievement of desired targets, enhancement of good will and brand equity.
These resources are the most valuable resources of an organization and they are accountable for
the implementation of business operations and strategies. If BHP Billiton will have well-
organized human resources and workforce, then it will able to gain a higher competitive
advantage over its existing competitors in Australian industry (Wynn, Turner, Banik and
Duckworth, 2017). Goodwill and brand equity of an organization are the intangible resources,
which need to be managed for attaining profits in the competitive business environment. These
resources of an organization can be managed by delivery best quality products to the customers,
so that they can achieve maximum customer level. Good will enables the organization in
attracting more investors, who want to invest their funds in the company. It will attract more
customers towards organizational products and services. Thus, the resource management at BHP

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Billiton can be reflected as very responsible and relevant constraints, which adds growth and
success to the organization.
Conclusion
From the above analysis, it can be concluded that operation management is an aspect that should
be considered a significant concept in order to achieve success and growth of an organization.
The above report has been emphasized on the organization, i.e. BHP Billiton that deals in
different business and operations like; metal, mining and petroleum. The organization is well-
established in Australian industry. The report has included different issues, which may impact
the success of chosen organization, like; changes in customer expectations, job design, quality
management, globalization, global manufacturing. These challenges may impact the business
operations of organization in the future. The organization needs to develop effective strategies to
deal with these issues in today’s competitive business environment.
The next section of the report includes three areas of operation management which are very
much important for the success of organization. There are various operations, from which three
are chosen for this discussion, i.e. goods and service design, supply chain design and resource
management. These areas off operations management contribute to the development and success
of the business organization. Thus, the operations of BHP Billiton are also affected by these
areas of operation management process. The Organization should develop some processes and
strategies to handle all the processes of operations management.

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