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2 Influences on Operations
Influences refer to factors outside the business that will have an impact on operations management and how the business performs in the marketplace.

1.2.1 Globalisation Globalisation is very significant influence on operations management. Globalisation provides opportunities for a business to source its inputs of component parts, finance, raw materials and labour from a global market. While at the same time, selling a finished or intermediate product or service to a global market. Issues may include Global consumers and Supply chain/web management. Global Web refers to the network of suppliers a business has, chosen on the basis of lowest overall cost, lowest risk and maximum certainty in quality and timing of supplies. Reasons for employing a global web strategy include cost advantages which occur because of: The abundance of raw materials Favourable movements in exchange rate A plentiful labour supply and low wage rates Government incentives in foreign countries, such as low cost loans, subsidies and low or no tax rates Technology, skills and processes that do not exist or are not available in the home country Relatively low transport costs

Global consumers refer to consumer groups living in many countries or regions of the world that have similar needs or seek similar features and benefits from products or services.

1.2.2 Technology Technology is the key to creating the most efficient production system. The software is knowledge were a business must have knowledgeable workers in operations if they wish to succeed as this is intangible and is what makes the systems to maximise operational performance. The hardware is what physically makes the products or services, so the more efficient and better quality the machines are the better quality the outputs will be.

1.2 Influences on Operations

1.2.3 Quality Expectations Today it is expected that products will be produced with high levels of quality. An example of quality expectations would be customization, which is building products that better meet individual needs of customers. Examples include: Quality of design Durable Level of customization Reliability of service provider 1.2.4 Environmental Sustainability Operations management function is significantly affected by the rise in climate change awareness. A business needs to integrate a long term sustainable view of resource management into planning to use less non-renewable resources. Examples include: Plan to reduce and minimise waste Reduce carbon footprint Recycle 1.2.5 Government Policies Government policy is a notable source of change and a significant influence on the business operations. E.g. The Carbon Tax has re-shaped how business operates to try and reduce costs from carbon emissions. WHS- Safety Equipment training.

1.2.6 Legal Regulations The range of laws with which a business must comply, are collectively termed compliance. Operations management has particular laws that influence how practices and processes are conducted. Relevant laws relate to labour and labour management , also environment and public health. (OH&S, T&D, Fair Work anti discrimination, Environment protection)

1.2 Influences on Operations

1.2.7 Cost Based Competition Cost based competition impacts on operations as it has to take into consideration achieving the cost reducing areas such as: Economies of scale Elimination of wastes Standardised product High volume input Automated production system 1.2.8 Corporate Social Responsibility Corporate social responsibility (CSR) is a commitment by a business to operate ethically and contribute to economic development while improving the quality of life of its workforce and their families, as well as the community at large. CSR has a cost involved; if it didnt then more companies would have it. It can have significant impact on operations by lengthen procedures and increasing costs. For example most coco used in chocolate is from Africa because it is cheaply produced, but this is because the workers are children either sold or abducted into slavery. This is low corporate social responsibility, but saves money. The Difference between Legal Compliance and Ethical Responsibility It is possible for a business to undertake legal compliance while not being ethically responsible, simply by just obeying the letter of the law. Legal Compliance involves making sure that the laws and regulations relating to the operation of a business are strictly met Ethical Responsibility in operations management is were managers understand value systems and morality or what is right or wrong with regards to the production of goods and services Environmental Sustainability and Social Responsibility Environmental Sustainability is about meeting the needs of the present generation with compromising the ability of future generations to meet their needs Social Responsibility of a business is concerned with a business interacting in a positive way in terms of its operations with the local community and improving the quality of life of community members