Introduction to Operation Management
Strategic location is a key determinant of success for any company. In this regard, a company should consider and evaluate several factors before choosing to locate in one area and not another. Similarly, an automobile company should consider the following factors while choosing the location for its factory and dealership: competition level, government regulation, market potential and cultural factors (Shimizu, 2006). Managers of multinational automobile companies usually determine market potential by collecting data on Gross Domestic Product (GDP), transportation cost and infrastructure, population and per capita income. These factors are important in helping a company to determine the purchasing power of consumers in different market segments. On the other hand, to determine the degree of competition in different potential markets, the manager should identify all the companies operating in each and every market, their market shares, sizes and prices (Lock, 1977). If a certain area is saturated with competitors, it may not be suitable for location. Besides, regulatory environment is worthwhile considering. This is because different countries have different trade and taxation policies, different legal structures and hence different ease of establishing business. Cultural factors are the most difficult to evaluate. Nevertheless, cultural factors should enter the company’s location decision in that they are important for effective planning and motivation of employees. A multinational company should preferably select a location whose cultural orientations bear some similarity with its home country (Crane, 2007).
Product by Value Analysis
This is a tool that helps in determining how a company can create the greatest possible value for its customers. This is more important in manufacturing industries where raw materials are converted into outputs through value addition. Raw materials have less use value compared to the finished products. However, product by value analysis is also important in service industries where people use inputs of time, knowledge and equipment to create value.
With globalization, e-commerce has gained much importance. In this regard, a grocery store can make the best use of it by advertising products online, ordering online and sensitizing clients on new product and price offers. E-commerce has a variety of advantages over traditional commerce. It reduces advertising costs, improves efficiency and facilitates faster access to information.
PERT and CPM
These are project management techniques. They are both used to determine the project duration (Mennecke, 2003). CPM achieves this objective by managing a path of critical activities. Moreover, CPM is not based on probability. Rather, it is based on preceding tasks concept. On the other hand, PERT is based is based on the concept of probability that an event will occur at a certain time. The two techniques are the most widely used in project management.