© Karen Devine 2011

Globalisation

Environmental
Technology
Sustainability

Influences
on
Operations
Legal Quality
Regulation Expectations

Government Cost-based
Policies competition

© Karen Devine 2011

 The global or world
economy includes all
trade, investment,
labour, technological
and speculative activity
which occurs across
international borders.

© Karen Devine 2011

 The global economy is an
integrated economic
system and due to
changes in technology,
communications and the
computer age, businesses
can now choose how to
conduct their operations
internationally.

© Karen Devine 2011

 Today there is:
a) globalisation of markets:
an international market
place for goods, services,
labour and finance.
b) globalisation of
production: an
international market for
purchasing components
used in the production
process.

© Karen Devine 2011

 There have been
significant increases
in the global flows
of:
a) finance
b) labour
c) goods and
services.
© Karen Devine 2011
 These increased
global flows have led
to greater integration
of markets.
 Hence, in a sense,
the world is “a
smaller place”.

© Karen Devine 2011

 Global trade in goods has
risen astronomically.
 Nations now use the
principle of comparative
advantage and specialise
in those goods in which
real cost is lowest.
 Such cost decisions
impact on operations
managers worldwide.

© Karen Devine 2011

 Technological change
occurs at a rapid rate and
impacts on the business
community.
 Improvements in technology
are most significant in the
following areas:
a) Robotics
b) CAD
c) CAM
d) Information technology
e) Communications
technology.

© Karen Devine 2011

 The pace of technological
change often outstrips a
business’ ability to cope
with it.
 Technological change has
increased the speed and
amount of communication
and has also expanded the
client base for most
businesses.

© Karen Devine 2011

 Technological
change has altered
the workplace
significantly and
has meant that
many people can
now work from
home.

© Karen Devine 2011

 Technological change has
been significant in the areas
of:
a) email
b) voice mail
c) the internet
d) video conferencing
e) mobile internet phones
f) pagers
g) eCommerce.

© Karen Devine 2011

 Effective operations
management also involves
cost control measures.
 Management must
examine fixed and
variable costs as a change
in business operations can
affect the level of variable
costs.

© Karen Devine 2011

 Sourcing of cost increases is also important.
 If increases can be sourced to a particular
department or business area these are called
cost centres.
 Cost centres may have:
a) direct costs: sourced to a particular area
b) indirect costs: sourced to many areas,
projects or departments.

© Karen Devine 2011

 Revenue controls over
sales and pricing are
essential to cover costs
and ensure profitability.
 Changes to the sales
mix by diversifying or
extending a product
range or ceasing
production of an item
may be necessary.

© Karen Devine 2011

 Changes to the pricing
policy may also be required
by specifically examining:
a) costs
b) prices of the competition
c) the psychological effect of
prices
d) the price and product
ranges.

© Karen Devine 2011

 Governmental factors can impact upon
operations management including:
a) Political: political change and elections can
affect the decisions made by business and
consumers.
b) Legal: changes to legislation and policy
are influential on business behaviour.
c) Regulatory: laws and government bodies
influence marketing decisions and
business activity. Eg: Carbon Tax.

© Karen Devine 2011

 Significant legal changes have occurred in the
following areas:
a) regulation/deregulation
b) competition
c) fair trade
d) OHS
e) environmental protection.
f) consumer protection
g) industrial relations
h) trade practices.
 These changes impact on business’ activity, ability
to compete, trade and operate efficiently.

© Karen Devine 2011

 Environmental
concern has grown
in recent times
with greenhouse
gas emissions and
global warming
dominating the
world’s agenda.

© Karen Devine 2011

 For many environmentalists
the key solution is “think
globally, act locally”.
 Businesses have made some
commitment to
environmental protection,
yet governments often
ignore environmental issues
in favour of increasing
business development.

© Karen Devine 2011

 Businesses will act ethically regarding the
environment when they:
a) perform an environmental impact assessment
b) take intergenerational equity into account
c) evaluate a development’s ecological
sustainability
d) demonstrate environmental integrity
e) make reparations.

© Karen Devine 2011

 What does it
mean to “think
globally and act
locally”?

© Karen Devine 2011