A Comprehensive Report on Operations Management and Decision Making

This report delves into the core principles of operations management, exploring the increasing significance of the service sector in national economies and the necessary adaptations in operations management to accommodate this growth, particularly in response to globalization and technological advancements. The report further analyzes the aspects of operations management most affected by the internationalization of business, emphasizing the challenges and opportunities that arise in production planning, quality management, and supply chain management within a global context. It then addresses the debate on the future of manufacturing, evaluating the inevitability of manufacturing operations shifting to low labor cost countries. Finally, the report examines the potential consequences of significant geopolitical events, such as Great Britain's exit from the European Union and the implementation of isolationist policies in the USA, on global operations management, focusing on their impact on supply chains, distribution, and international business strategies.

Running Head: OPERATION MANAGEMENT 1
Operations Management & Decision
Making

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Question 1: Why have the service sectors of most national economies
continued to grow in importance and how must operations management
change in response to this growth?
Answer:
The service sector is a significant component for the economy of any country. This sector makes
a direct contribution to the employment, GDP and provides important inputs for other aspects of
economy. Thus, service sector have crucial impact on overall country climate that is an essential
element of development and growth. There are some services sectors, like; education, health,
water and sanitation industry, are also related to attaining the social development goals. Service
sector make a significant contribution to the Gross Domestic Product (GDP) in most of the
nations, generating employment opportunities and public services for the country’s economy.
This is the most important sector, which is continuously improving the economic performance
and offer different export opportunities (Castillo, Flores and Rodríguez, 2014). The service
sector is developing with the demands, which are created by the industries to assist its growth,
for example, banks require industry for making financial transactions. It accounts for a major
proportion of GDP in many countries, involving low income nations, where it generates more
than 50% of GDP.
There are so many factors, which are driving the continuous growth to the service sector in most
of the economies. The major factors behind this growth in importance are globalization and rapid
changes in technology. Among the major drivers of powerful performance of service sector is the
increasing importance of globalization in various services. This globalization is increased the
international sourcing of services from international markets (Enderwick, and Enderwick, 2013).
Due to globalization, the demand for travel, information and communication services have
increased. Thus, information technology has assisted to satisfy this demand of the organizations.
Marketing and advertising services are offering assistance to all the areas of economy. Moreover,
growth in importance of service sectors can be outlined to the economic growth of community
and changes in the socio-cultural environment, which have supplemented it. Changing
environmental factors carried out the services in front of the economy.
Furthermore, economic affluence is also a key factor for increase in the demand for services. In
most of the developing nations, the size of middle income people is increasing fast and the

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proportion of very poor household is declining. Economic liberalization had a positive effect on
the households of these countries (Global Forum on International Investment, 2008). Their
income and expenses has been creating the demand for services. The importance of service
sector is consistently increasing in most of the national economies, as these services are assisting
the countries in expanding their output of services in the fields, where they find a competitive
advantage, in this way creating employment opportunities, serving more to Gross Domestic
Product (GDP) and producing foreign exchange.
The operation management needs to change in response of this growth in the importance of
service sector, as it poses various challenges on operation management. Due to globalization,
development in the information technology and changing needs and preferences, operation
management addressing the quality management and productivity has become very important.
So, the operation management needs to improve the services, which are being offered to the end
customers (United Nations Conference on Trade and Development, 2013). They need to enhance
the service quality, as there are some international players in the industry with similar services.
As these services are becoming more global and outsourced, so there is need of greater
understanding and knowledge of operation management strategies. It needs to make focus on the
effectiveness and efficiency of business processes. This increased globalization impacts the
operations strategies of the organization in both the positive and negative manner (Kloosterman,
Beerepoot and Lambregts, 2015). With the effect of globalization, the companies have changed
the ways in which they maintain their operations and processes.
Question 2: What aspects of operations management are most affected
by the increasing globalization (internationalization) of business?
Answer:
Globalization (Internationalization) is an important term that refers to the changes and
transformations in the world, where the businesses are shifting from domestic countries towards
more integrated globe. Internationalization of business is expanding the operations from a single
nation to multiple nations. It is a complex process, in which firms have to work with different
culture, environments and government rules and regulations (Russell, and Taylor, 2006). When
an organization thinks to expand the business globally, it needs to change its operations

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strategies and management approaches accordingly. Operations managers have to analyze the
different opportunities and challenges, which are present in international countries and
implement appropriate strategies.
There are various aspects of operations management, which need changes under globalization.
There is a great growth potential in the foreign emerging markets that have resulted in intense
competition in domestic markets that forces the firms to enhance their operations and expand the
business globally (Puig, Marques and Ghauri, 2009). There has been development in the
foreign demand that requires the grown international network of manufacturing. When the
companies go global, Production planning become very difficult on one side and it allows
efficient resource utilization on the other side. Moreover, the combination of product designing
and development has become critical success factors in high-tech sectors, where the fast
production and customization regulate the success in markets. As a result of this, the
organizations need to maintain production facilities, resources, production plants and research
and development amenities worldwide (Hirst, Thompson, and Bromley, 2015). For example,
Apple Computer has developed a global manufacturing with the facilities in California,
Singapore and Ireland. It allows the company to launch its new products in other markets, like;
America, Asia and Europe.
Furthermore, total quality management is also a key aspect, which is affected by increasing
globalization. The impact of globalization on quality is dependent on the company (Stromquist,
and Monkman, 2014). If the company does not set up an appropriate framework for quality
management, then effect of globalization will be negative. Globalization can be very demanding
on the company and without having a proper plan; it can create long term issues for the
companies. If the companies operate their business with traditional management style and do not
incorporate Total Quality Management approaches, then quality of products and services can
suffer a loss. In addition to this, it may impact the supply chain management of operations
management (Rushton, Croucher, and Baker, 2014). The global market has made the supply and
demand more impulsive and very hard to estimate as there is a greater dependence on different
firms. The international network is making the supply chain more complex, because number of
customers, suppliers and plants spread across the world. Thus, increasing globalization affects
some key aspects of the operations management of organizations.

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Question 3: Is it inevitable that in the future nearly all manufacturing
operations will be performed in low labor cost countries?
Answer:
It is inevitable that in the future nearly all the manufacturing operations will be performed in low
labor cost countries. There are so many countries, which have very expensive labor costs, like;
US, Australia, Canada etc. Manufacturing services are one of the most important contributors to
the economy of a nation, so it is essential to manage the costs and expenses on this service. For
developing more profitable manufacturing, countries try to make various efforts and outsource
the labor from other low labor countries for their manufacturing process. This process is known
as offshore manufacturing, under which the organizations conduct their fully manufacturing in a
nation, where raw materials and labor are cheaper than their own country, for exports and finally
imports in the home country of manufacturer (Gray, Leiblein, and Roth, 2013). The main
countries with low cost labor are Mexico, Bangladesh, Vietnam, Taiwan, Malaysia etc.
For a long duration, foreign direct (FDI) has been an important practice among the companies in
various countries, so these investments do not seen very remarkable. In the past the companies in
United States went foreign to safeguard an international market or to get the raw materials. Now,
these companies are using different way to enhance their business operations. They enter in other
country to make or purchase the products and deliver them to their home country (Green, &
Roos, 2012). But, this process is not goof, as it is not improving the domestic production, but
replacing it. The manufacturing companies defend this offshoring from foreign market as the
single way to deal with the high quality and inexpensive imports. Moreover, they state that
shifting to low-cost labor nations, like; Taiwan, Malaysia and Mexico can allow the home
country to regain its position in the world.
This is not good for the home countries and its people, as it reduces the job opportunities for the
people. It can be good for an individual company only, but it affects the business operations by
going global. In rush of saving money, the managers in manufacturing generally lose the
prospect of higher penalties of shifting to abroad (Harney, 2008). By continuously moving to
cheaper labor nations, they are just delaying the inevitable day of calculation, when they should
face the phase of business, when they will really need reform. The companies need to go with

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any other alternative than manufacturing outsourcing, because it will not lead the organizations
to net costs saving due to hidden overhead costs. The manufacturers need to understand that it
increases the delivery time for the order and affect the operations management of the company
(Markides, and Berg, 2017). In addition to this, it also affects supply chain management of the
company. These manufacturers think that it cannot be avoided, but it can be avoided, if they
should hire the skilled labor for their business operations at appropriate costs, so that they can
promote the domestic business environment and exports.
Question 4: What could be the possible impacts of Great Britain’s exit
from the European Union and the implementation of the USA’s
isolationist policies on global operations management?
Answer:
European Union (EU) is a union, which is formed of 28 nations for the objective of making the
economic and political decisions simultaneously. Great Britain’s Exit (Brexit) from European
Union was a significant event that affected every area of business in the global market. On 23
June, 2016, 52% people gave vote in favor of decision of Britain to exit the EU (Buiter, Rahbari,
& Schulz, 2016). The major reason behind this event was to work in future with the sovereignty
and freedom, so that they can take major economic and political decisions. Brexit had a large
impact on the global operations management, as majorly it affected the supply chain
management, distribution and logistics management. These were among experiencing and seeing
some of the major shifts and severe impacts as an outcome of departure of United Kingdom from
European Union (Dhingra, Ottaviano, & Sampson, 2015).
According to the Wall Street Journal article, logistics and shipping organizations could be forced
to deal with the supply chain interruptions until they will not establish new regulations and trade
agreements (Ranchman, 2016). Along with the hindrances in the flow of products, many
companies are hoping the surge in retail businesses and manufacturing companies are looking for
the support in balancing the new trade reality. This exit of UK was somewhat good for retail and
logistics, but only for short term. It has made the nations across the region more closely look like
China, Japan and America, because it has made the distribution and shipping operations very
complex (Hallam, 2017). Global supply chain operations were become more complex, as the
distribution channels become restructured and country has imposed more restrictions. In addition

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to this, UK’s exit from European Union forces the organization to change their operations
strategies according to new rules and regulations. They face various issues in globalizing their
business in international market and operating the business in another country (Hunt & Wheeler,
2016).
Isolationism is a judgmental term for the traditional policy of Americans of not engaging in long-
term and permanent alliances with the other nations. It is done by United States to preserve itself
from freedom of action and trusting on the Pacific and Atlantic Oceans for protecting the
country. This event of the country also had a great impact on the global operations management.
At that time, trade flows are controlled and international investment is also prohibited. Global
supply chain that is inherent in the retail businesses are at risks of actions, which may stanch
from the isolationist policies. The motto behind this policy was, “we will purchase the American
and we will recruit the Americans”. It affected the global network of business operations in
different industries (Kamau, 2017).
For example, Wal-Mart has made various changes in its operations management. First the
company has changed its strategy to sell American made products to the consumers in the
country. It has worked with different universities to bring back the manufacturing jobs in United
States. The management also hosted a supplier summit that consists of an open invitation for the
suppliers to demonstrate domestic products to Wal-Mart. Companies need to make focus on its
supply chain and logistics management (PolkaDots, 2017). In USA, this was good as it enhanced
the domestic business and employment. Furthermore, it has a better impact on the global
operations management.

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