Problematic Situation Matching
Original Business Corporation is a major manufacturing firm in the US that operates in Los Angeles. The company deals in the manufacture of construction products and has been enjoying a period of market dominance for over two decades because of the considerably lucrative real estate market both in California and the rest of the nation. However, in the recent past, the company has had problems with revue generation that have been caused by the high costs of operations and a shrinking real estate market. Resultantly some of the major companies in the industry have relocated their operations to Asian nations because they have a relatively lower cost of doing business than in the US. For such a reason, Original Business Corporation is also weighing the possibilities of migrating its major production line to one of the Asian nations, but is unaware of the associated challenges despite. The biggest motivation to relocate comes from one of the closest competitors who has been talking of low costs of labor and other inputs, little governmental interference, reduced costs incurred because of taxes, a ready market for the products, and other issues. The Human Resources Manager at the company, however, has an new idea concerning the strategy to regain productivity, which is to stay in the US and work on the means of reducing the costs of production.
From Problematic Situation to Case Scenario
The problematic workplace scenario above relates to the six topics of the Operations Management course. In specificity, the case relates to the concept of efficiency, effectiveness, benchmarking, outsourcing, and outsourcing. The case study entails improving the efficiency of the operations of Original Business Corporation such that it would be able to sustain its productivity. In this case, the management’s concerns are to lower the costs of operation as much as possible while maximizing the profits as much as possible. Therefore, effectiveness has to come in terms of the management of the costs of factors of production and marketing the finished products. The fact that the company has heard of competitors that have managed to produce means that it has the choice of benchmarking them before making the correct decision. Currently, the management is weighing options of staying in the US and lowering the costs of production through inventing novel production technologies, lowering the costs of its products to increase the volume of sales, and outsourcing factor inputs such as labor and material from the Asian nations. The management is worried of the fact that moving to any of the may damage the reputation of the firm since it would be unethical to exploit cheap labor for profitability ( Epstein, 2007 ). The second worry is the fact that relocating to any of the Asian nations might disrupt the flow of business because it would require more time and resources to do so. The third fear that the management of the company has is that staying in the US might compromise its financial position because of the reduced volume of sales and the stricter governmental pressure on the nature of businesses. Therefore, the solution to the current dilemma should be the one that will ensure that all the challenges and fears are addressed effectively.
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Analysis of the Case Study
Now, each of the perspectives of moving out of the possibilities of a major depression season looks viable to the Chief Executive Office, Evans Clark-Reuben. However, Mr. Evans-Clark needs answers to each of the following questions:
What are the implications on effectiveness and efficiency of moving the major production plant of the company to Asia?
What are the consequences of remaining in the US and outsourcing labor and production technologies?
What could be the other options that the company might adopt to solve the case at hand?
The above questions concern the issues of effectiveness and efficiency in the operations of the company. The objective of all businesses is to make profits, which is why the management at Original Business Corporation are concerned with maximizing efficiency and effectiveness at the time of a major financial struggle. In the contemporary corporate world, managers have been concerned with ensuring that they remain as effective as possible for them to remain in business.
Implementation of the Solution
The management seeks to understand the implications of the choice to relocate its operations to Asia. According to Porter (1998) relocating businesses to regions that have relatively lower costs of operation should be one of the priorities of organizations that struggle in their operations. In fact, there is evidence in literature that supports the move to nations that have lower costs of doing business. However, it should be noted that this solution might not be useful to the company now for three reasons. First, relocating a major operations function of a manufacturing company to another country could be more costly for the company for the fact that it is capital intensive (Carree et al., 2012). It means that even while the firm might want to stick to this option, they might find it difficult to deal with the financial obligations of the project. The second reason is the fact that relocating the operations of a company to another nation has many legal consequences such as the need to comply to new rules, which might be challenging to the company (Carree et al., 2012). For example, some of the nations in Asia such as China and others have different approaches to economics, which means that the company will need to spend more time in dealing with such requirements. Lastly, relocating the functions of the company to Asia would take time, which means that it is likely to disrupt the nature of business operations. In such a scenario, the company risks losing its market dominance since it will be non-operational for the time during which the changes will be taking place.
Remaining in the US and outsourcing factor inputs such as labor and production technologies would be an advantage to the company. The reasons for this argument are diverse, but a few of them may be enough to justify the claim. For example, the company will not experience significant disruptions to its business activities since it would not undergo many structural changes (Lee and Lee, 2014). The second and the most significant advantage would be the fact that the company has not been operational in any overseas nations, which means that staying in the US would provide a chance of keeping in touch with its market. This way, the organization will be able to sustain its competitive advantage, especially if it outsources production technologies. However, the issue of outsourcing could be another problem to the company particularly when it will displace former employees. In this case, the company will risk losing its reputation and attracting legal scrutiny from the government for possibilities of a violation of employment laws and others. Now, the management of the company has an option of outsourcing production and marketing technologies that will lower the costs of operations as much as possible to offset the low volumes of revenue that has characterized the organization in the recent past. Additionally the public would be critical of the decision since it would be considered unethical to exploit human resources for financial gain (Epstein, 2007).
Besides the above proposal, Original Business Corporation has the option of adopting the continuous improvement approach, which is one of the elements of Total Quality Management. This approach will always ensure that the firm strives to improve in its operations through assessing the competition and the industrial best practices, which might involve benchmarking other organizations (BDC, 2017). In the same approach, the management should seek external consultancy to evaluate the strengths and weaknesses with an objective of finding out, which areas need improvement. When adopted, this approach would be useful in ensuring that the company remains as aggressive as possible in the invention of technologies that would ensure effectiveness and efficiency for a sustainable existence.
Reflective Learning
While developing this case study and the solutions recommended to the management, I learned that each problem could be solved using diverse approaches and that no specific solution could be useful for all cases. Additionally, I now understand that the real workplace could be complicated for modern managers, especially if they are not critical thinkers because of the magnitude of problems that they face. For example, in struggling to remain productive, managers have to ensure that they support their present workforce, which could be an economic challenge. Therefore, critical thinking is useful in establishing a solution, which satisfies all stakeholders. Of critical importance in decision-making is the need for managers to be ethical in their thoughts. Overall, the case study assignment has expanded my perspective of management, especially on the approach to decision-making.
References
BDC (2017). 3 strategies for improving business productivity . Retrieved 7 December 2017, from https://www.bdc.ca/en/articles-tools/business-strategy-planning/manage-business/pages/3-strategies-improving-business-productivity.aspx
Carree, M., Van Stel, A., Thurik, R., & Wennekers, S. (2012). Economic development and business ownership: an analysis using data of 23 OECD countries in the period 1976–1996. Small business economics , 19 (3), 271-290.
Epstein, E. M. (2007). The corporate social policy process: Beyond business ethics, corporate social responsibility, and corporate social responsiveness. California management review , 29 (3), 99-114.
Lee, S., & Lee, H. (2014). The importance of change management after ERP implementation: an information capability perspective. ICIS 2004 Proceedings , 76.
Porter, M. E. (1998). Clusters and the new economics of competition (Vol. 76, No. 6, pp. 77-90). Boston: Harvard Business Review.
