Operations Management.

Operations Management

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Executive Summary
The main aim of this report is to understand the concept of operation management. The value
chain model will be used by the company to analyse the operation activities of the company.
Commonwealth Bank has been taken into consideration to analyse the operation activities of
the company. In this report, value chain analysis has been done which helps the company to
improve the flow of information. The financial institution industry of Australia is highly
active but has the high threat of competitors as per the analysis of porters five forces
framework. At the end, it has been recommended that the company has to adopt the systems
to maintain the data such as Cyber Physical System, and Big Data.

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Contents
Introduction...........................................................................................................................................3
Overview...............................................................................................................................................3
Value Chain Model................................................................................................................................4
Value Chain analysis of mortgage process of Common wealth.............................................................5
Primary Activities..............................................................................................................................5
Secondary Activities..........................................................................................................................6
Advantage of value chain model........................................................................................................6
Porters Five Forces Framework.............................................................................................................7
Recommendations.................................................................................................................................9
Conclusion.............................................................................................................................................9
References...........................................................................................................................................11

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Introduction
Operation management is an area of management concerned with the designing and
controlling the process of production and redesigning the business operation. The process of
operation management helps the company to ensure the business operations are efficient in
the terms of using as few resources. Planning, organising and the supervising are the
primarily concerned. The main motive of this process is to manage the entire operation
activities of the company (Nakamura, Yamane, Shimoda, & Morino, 2015). In this report, the
discussion is made on the topic of operation management. It is observed that the company
expanding the business as the globalisation is increases day by day. The company faces the
challenges in the context of competitiveness that directly impact on the quality, variety,
convenience, timelines and cost. It is essential for the company to analyse the challenges and
try to overcome in order to operate smoothly in the market. For analysing the operations of
the organisation, the Common wealth has been taken into consideration.
At the beginning of the report, the overview of the organisation and its industry will be
discusses. After that, the discussion is made on the concept of value chain model in order to
understand its functions and activities. Value chain model implement on the company in
order to analyse the process. At the end of the report, operation strategy will be mentioned on
the basis of current trends and the analysis will be done on recommendation to identify the
issues in the near future.
Overview
Commonwealth Bank of Australia is an Australian multinational bank which provides the
multi services related to finance such as retail, business, institutional banking, insurance,
superannuation, funds management and many others. It is the largest Australian listed

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company on the Australian Securities Exchange. It is the one of biggest bank under the four
Australian banks. It operates under the industry of Banking, financial services which helps to
achieve the success (Commonwealth, 2018).
Bank is a financial institution that accepts deposits from the public and creates the credit.
Financial and economic conditions in the country is well sufficiently capitalised and well
regulated. The four largest banks in Australia are Westpac Banking Corporations,
Commonwealth Bank of Australia, Australia and New Zealand Banking Group and National
Australia Bank. The Australian banking system is undergoing progressive deregulation and
privatisation. The Reserve Bank of Australia sets the monetary policy and regulates the
payment system. It is largest sector in the Australia who contributes the large amount around
$140 billion to GDP over the last year. It is major drivers of the economic growth and it
achieves the success with the help of employees (The Economic Times, 2019).
Value Chain Model
It is a set of activities that a firm operating in a specific industry performs to deliver the
valuable product and services. It is a process of analysing the activities of organisation in
order to deliver the services to consumer to create the value in the market. Creation of value
also creates the higher profit for an organisation (Morden, 2016).
Value Chain analysis mainly focuses on the systems and activities with the consumers as
the central principle rather than the departments and accounting expenses categories. In the
process of analysis, the effects and impacts on analysis has been analysed on the costs and
profit. It is classified in two categories such as primary activities and secondary activities.
The whole activities of the company is analysed on the basis of these two activities (Rawlins,
De Lange, & Fraser, 2018).
.

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Value Chain analysis of mortgage process of Common wealth
Primary Activities
Inbound Logistics
The company provides the financial services to its consumers as per their
requirements on the basis of rates, and offers. It provides the 95% of amount on the behalf of
bank mortgages (Finder, 2019).
Production
The company made the documents and provides the financial support to borrowers
with the 95% of amount of mortgage value.
Outbound logistics
The company allow the borrowers to split the loan into fixed and variable portions
due to which the consumers gain the relaxation in the terms of interest. It supports the
borrowers by providing the financial services as per the mortgages value.
Marketing and Sales
The company promote the services in order to provide the number of packages such
as extra home loan, fixed rate wealth packages with the special interest rates and discounts on
selected credit cards (Finder, 2019).
Service

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It provides the quick services but the borrowers have to fill all the formalities and
fulfil the eligibility. The borrowers have to fill the documents that are required to take the
financial support from the company. It charges the interest on investors, and owner occupiers
by including the extra home loan and fixed rate wealth packages.
Secondary Activities
Firm infrastructure
Processor, underwriters, and appraisal reviewer are the staff members who support the
loan services of the company. These analyse the eligibility criteria and all the necessary
documentations (Regions, 2018).
Human resource management
There are 51800 numbers of employees who deliver the services and support the
company in providing the excellent number of services to consumers (Finder, 2019).
Technology development
As discussed above, it is one of the largest banks in Australia with the branches in
different nations. It maintains the operation activities by operating online platform by
different online and mobile applications (Regions, 2018).
Procurement
It develops the strong relationship with the borrowers by providing the financial
support in the terms of loan. It also offers the different percentage of interest rate and the
other benefits packages to build strong relation (Mudambi, & Puck, 2016).
Advantage of value chain model
Improved flow of products and services

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The process of value chain analysis helps to improve the flow of product and services.
The systematic way of doing work helps to maintain the efficiency of quality of services
provided by Commonwealth to consumers. There are also other factors of the company that
can maintain and helps to develop the relation with the borrowers. As per the analysis of firm
infrastructure, the company implement the chain effectively in the terms of delivering the
services to consumers. The accurate forecasting of documents and eligibility criteria helps to
provide the accurate services to consumers (Durden, 2018).
Seamless flow of information
It has been seen that the borrowers have a plenty of queries during the borrowing
money on the basis of mortgage. The borrowers want a quick response as it is a matter of
money. Value chain analysis helps to analyse the performance of employees and uses of
technology in order to deliver the services. The mortgage loan originator, underwriter,
processor and appraisal reviewers are the person who helps to provide the quality of
information to consumers as they performing well. The analysis company of technology also
helps to analyse the quality of information and services provided by the.
Enhanced flow of finances
Supply chain management is not about the improving of flow of products but also
improving the flow of cash. As the company is a financial institution due to which it deal
with the many financial transactions by enabling them to assess the current processes. The
value chain management helps to evaluate the appropriate operation of flow of information,
products, and finances (Mudambi, & Puck, 2016).
Porters Five Forces Framework
The threat of new entrants

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The threat of new entrants is low as it is very difficult to enter the financial industries. The
high capital is required to enter the industry. It is also difficult to enter because it requires the
government approval and license to operate the business (Gans, & Ryall, 2017).
Bargaining power of consumers
Bargaining power of consumer is less as there are minimum numbers of companies. It
has been seen that it is difficult for the borrowers to switch with the other companies
(Toolshero, 2018).
Bargaining power of suppliers
Bargaining power of suppliers is high as compared to its consumers. There are limited
numbers of suppliers in the industry that support the company in the financial terms. The
companies support each other in the industry at the time of emergency.
The threat of competitors
The threat of competitors is high as they have high brand image in the market. The
competitors beat the company as commonwealth also has the high brand image such as
Westpac, Australian Bank and many others (Owler, 2018).
The threat of substitute
The threat of substitute of the company is low as it is difficult to support the people in the
terms of finance. There are many small companies provided the money in the mortgage terms
but it also provides the services at certain limit (Rothaermel, 2015).

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Recommendations
It is recommended that the company has to adopt the cyber physical system. Cyber
Physical System consist the high level of integration and coordination among the
computational elements and physical resources of the company. It helps the company to
develop the efficiency in performing the numerical transaction as it is operating in the
financial transactions.
It has been seen that the company provide the financial services to consumers as per its
operation activities. It is a challenge for the company to maintain the data in the accurate
manner. That is why; big data is recommended to company as it helps to maintain the
financial records and transactions (Oracle, 2018).
Although, these recommendation is appropriate for the company as per its services. It is
observed that the company can face the challenges during the combination of the big data and
CPS system. CPS is a mechanism program that is controlled and monitor by the algorithms
and big data is a system that record the data with the exact information. It is observed that the
chance of facing the challenges in the near future is high during the combination of both the
systems. The company face the issues related to these two terms such as system infrastructure
and data analytics. Both the system have their different functions due to which it faces the
issues such as data capture, distributed computing and database in the terms of system
infrastructure. In the data analytics, the company faces the issue of descriptive analytics,
predictive analytics, and prescriptive analytics (Xu, and Duan, 2018).
Conclusion
From the above analysis, it has been concluded that the company is effectively
implementing the process of Value chain analysis. The industry is highly competitive due to
which the company face the challenges but effective value chain helps to gain the competitive

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advantage. It is recommended that the company has to adopt the Big Data and Cyber Physical
System to achieve the success in the market. But it also has to adopt these system
appropriately otherwise it also creates the issues for the company.

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References
Commonwealth. (2018) About Commonwealth Bank. Retrieved from:
https://www.commbank.com.au/about-us.html
Durden, O. (2018) What Are the Benefits of Value Chain Management?. Retrieved from:
https://smallbusiness.chron.com/benefits-value-chain-management-70083.html
Finder. (2019) Commonwealth Bank Home Loans. Retrieved from:
https://www.finder.com.au/home-loans/commonwealth-bank
Gans, J., & Ryall, M. D. (2017). Value capture theory: A strategic management review.
Strategic Management Journal, 38(1), 17-41.
Morden, T. (2016). Principles of strategic management. Routledge.
Mudambi, R., & Puck, J. (2016). A global value chain analysis of the ‘regional
strategy’perspective. Journal of Management Studies, 53(6), 1076-1093.
Nakamura, T., Yamane, T., Shimoda, E., & Morino, K. (2015). U.S. Patent No. 9,031,703.
Washington, DC: U.S. Patent and Trademark Office.
Oracle. (2018) The Definition of Big Data. Retrieved from: https://www.oracle.com/big-
data/guide/what-is-big-data.html
Owler. (2018) CommBank's Competitors, Revenue, Number of Employees, Funding and
Acquisitions. Retrieved from: https://www.owler.com/company/commbank
Rawlins, J. M., De Lange, W. J., & Fraser, G. C. (2018). An ecosystem service value chain
analysis framework: a conceptual paper. Ecological economics, 147, 84-95.
Regions. (2018) Mortgage Loan Process. Retrieved from:
https://www.regions.com/personal-banking/mortgages/learn/loan-process

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Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
The Economic Times. (2019) Banking Industry. Retrieved from:
https://economictimes.indiatimes.com/topic/banking-industry
Toolshero. (2018) Porter’s Value Chain Analysis. Retrieved from:
https://www.toolshero.com/management/value-chain-analysis-porter/
Xu, L. D. and L. Duan (2018). "Big data for cyber physical systems in industry 4.0: a
survey." Enterprise Information Systems: 1-22.