THE IMPACT OF INTERNATIONALISATION ON OPERATIONS

Question 1

What does ‘operational measures of performance’ measure?

Answer 1

Unit costs

Labour costs per unit

Capacity

Capacity utilisation

Quality

Speed of response (lead time)

Question 2

What are potential risks that poor quality outsourcing can have

Answer 2

Quality

Security of intellectual property and loss of internal knowledge

Risk of counterfeiting

Delays and lead time

Question 3

What are the most common operational issues of internalisation

Answer 3

Changing the production process: Often a move overseas is associated with an increase in the capital intensity of the production process. Businesses may use the opportunity to invest in new machinery and technology. What effect will that have on workers? What training will they need?

Reducing control: Quality and production schedules become harder to monitor centrally when production is taking place in a range of locations across different time zones and cultures.

Deciding what to produce: Businesses need to balance the need to achieve economies of scale through producing a single, standardised product over the need for adapting products for local markets.

Location decision: Deciding the best locations for production facilities can be a time consuming process. Proximity to suppliers, customers and infrastructure all need to be considered, alongside local cultures, customs and laws.

Question 4

What may certain companies do to foreigh workers that may be considered unethical

Answer 4

Companies may take advantage of certain workers in different countries. For example: Extremely low pay, below required working conditions, extreme work hours.