Operations and Supply Chain Management - Essay Example

? OPERATION AND SUPPLY CHAIN MANAGEMENT By of Institute Executive Summary This report is intended to advise potential investors on manufacturing and service operations attractiveness in Australia. It is based on an assessment done through evaluation of past studies about the nature of Australian market and on policy guideline by the Australian authorities. This report will also consider current Australian market trend against the overall global trend for comparison, analysis and evaluation purposes. Subsequently, this report will provide a recommendation for foreign and Australian investors based on such concrete evaluation of the attractiveness of business environment in Australia. Introduction It has been noted that the role of manufacturing sector in Australia has experienced alarming changes over the first half of the 20th Century, prompting the service sector to be expanded as well. By expanding, manufacturing and service sector have created enormous opportunities in Australian business environment. These opportunities can be exploited new manufacturing and service industries should by supplying what is missing, or differentiate already existing products to fit the specific customer desires. To understand the nature of Australian market, there was a need to review various studies about Australian market and other similar studies that offer similar approaches in evaluating market competitiveness. The major focus of assessing these studies is to evaluate the competitiveness of Australian Market for foreign and Australian investors. Since the potential entry in any market is be determined by factors such as firm factor, environmental factors, government policies and regulations, corporate policies and firm size (Druscoll, 1995), it will be of important to put some of these factors into consideration. Druscoll had categorized firm factor and environmental factor under situational influences in his model. He further expanded firm factor to incorporate firm specific advantages, experience and strategic considerations. On the category of environmental factors, which will be the major interest of this assessment, he considered aspects such as demand and competitive conditions, political and economic condition, and socio-cultural conditions. His model had classified government policies and regulations, corporate policies and firm size as moderating variables. Literature Review: Australian Manufacturing and Service Market Studies carried out to survey the service delivery have shown that the public sector has undergone significant reforms to meet public expectation on its performance. The government had addressed this through microeconomic reforms that were characterized by financial deregulation, improved monetary and fiscal policy, tariff reforms, labor market reform, and trade liberalization amongst others (Shergold, 1996, p. 18 and James, 2003, p. 96). In the later years, however, there was a shift to privatization of service delivery to NGOs and private sector (Tang, 1997, p. 98; Productivity Commission 1999. p. 6; Lyons, 1994, p. 182; James, 2003, p. 105 and Rapper, 2000, p. 23). Surveys carried out in Australia to determine whether government should outsource health services for an improved service delivery found out that there is the likelihood of poor performance in terms of quality, cost, and other externalities (Boardman and Hewitt, 2004, p. 921). This had left the house undecided on whether to privatize service delivery in this sector or not. Surprisingly, studies conducted to determine delivery speed and delivery reliability found transportation is very fast and reliable but quite expensive. The study shows that Australian gross value added of the transport and storage sector was $ 34, 496 million in 1999-2000. This was 5.6% of GDP. On comparison to other logistic costs, transportation occupies 29.4% of logistics cost, exceeding even warehousing cost, packing cost, management cost ordering cost and movement cost (Chang, 1998, p. 15 and BTRE, 2001, p. 9). Similarly, studies conducted on new product introduction in the Australian market suggested that the rate of success of new products depends on the following: management style, marketing strategies, staff expertise, senior management support, available resources, organization size and distribution channels (Soldator and Hardy, 2007, p. 7; Cravens, 2000, p. 56; Hutt and Speh, 2004, p. 65; Varley, 2006, p. 43). The study also found that effective interaction between an organization’s functional departments was regarded as very vital, a position also confirmed from qualitative and quantitative findings by a record of 78% of respondents. Different studies have had different results on the nature of Australian market. A study by on ethnic marketing found that the ethnic minority population in Australia is considerably big and represent a market segment that influences demand for goods and services (Chan and Ahmed, 2006, p. 1; Australian Professional Marketing, 1995, p. 5; Pires, 1999, P. 34). The study goes on to note that although there is no best single measure of ethnicity, language use has been used to measure ethnicity. Migrant minorities hardly abandon speaking their native languages, thus maintaining their original cultural values and habits. These cultural values and habits determine demand for goods, services, and consumer behaviour to a certain extent. Subsequently, these variables have been found to be potential determinants of the range and type of products and services that should be supplied to tap the idle ethnic market in Australia (Migliorino and Chan, 1993, p. 23). Other studies about Australian market have shown that Travel and Tourism is one service sector that attracts a lot of income though not fully exploited. Studies found that the coastal region of Australia has not been given much attention as far as travel and tourism is concerned. The study also found that tourism sector would also strengthen other industries. To make establishment easy, studies have found that Calvia, a Municipality in the Mediterranean coast, undertook an Agenda 21 project to assist the sustainable development of tourism sector as a measure to encounter short-term tourism since the 1960s. The survey found that the local council now offers transferable policy (WTTC, 2007). Besides, studies have also found that Australian skilled labor is an issue that plays a critical role in both the service sector and manufacturing sector in Australia (Kler, 2005a; Kler, 2005b, p. 48; Linsley, 2005; Voone & Miller, 2005). If was found that Australian labor is one which is educated, something that is really an issue of concern to employers. This labor works either in manufacturing or service sector of the economy. In finer details, the study found that 10% to 30% of the labor force is over educated. Over-education in terms of ethnic affiliation was found to be higher in migrant population from non-English speaking backgrounds (Green et al. 2004, p. 34; Linsley, 2005). Evidence drawn from some studies (Commonwealth of Australia, 2003, p. 17) indicate that manufacturing had quadrupled since the period after the mid 1950s with the fastest growing sectors of economy being attributed to those related to the natural endowments as well as differentiated products. Nevertheless, service sector still led manufacturing growth. Although manufacturing industry was unstable at some point, so indicates the study, the period between the year 1999 and 2000 had seen the industry becoming more globally oriented. The survey notes that the manufacturing sector registered an improvement of up to 24% with import shares also noted to rise. From the trend of continuing rises in the Australian intra-industry trade (Commonwealth of Australia, 2003, p. 17), it can be predicted that Australian market has the potential to expand in very many areas, including those where competitiveness seem to have experienced a decline. Methodology As noted, this report used materials from previous studies to gather statistical information about the nature of Australian market. This was prompted by the nature of the research since it was not so specific, thereby requiring an analysing and evaluation of the larger manufacturing and service sector. The chosen market industries were assumed representatives of the related industries in terms of trends and consumer behaviour. In addition, official documents on regulation of commercial activities in Australia was also reviewed to collect information which was later on evaluated and analysed for consistency. A combination of the above literature was used to assess the attractiveness of Australian market for foreign and Australian investor. Findings Until now, the assessment and evaluation carried on studies out found that the Australian market has very customer specific demands in the service industry and in the manufacturing industry. It must be noted, however that service industry in Australia is still the leading sector. In the research that was carried to find out the relationship labour and education as determinants of wages in the manufacturing and service industries, the survey found that allocation of work in an industry was by educational attainment. Wages paid are expected to go by the level of education, making it expensive if an over-educated worker is hired in a manufacturing industry of service industry. Table 1: Allocation of Workers to Jobs by Education Attainment, Combined Sample (%) Educational Attainment Degree Vocational Secondary Incomplete Secondary Total By Education Attainment Degree 78.72 9.12 6.69 5.47 100 Vocational 13.02 41.00 22.99 22.99 100 Secondary 11.30 14.64 39.3 34.73 100 Incomplete secondary 5.99 12.62 24.61 56.78 100 Total by required education 27.12 21.84 22.29 28.78 100 Figure 2: Chang’s Modified Cost Ratio of Logistics Items Statistics on delivery reliability and delivery speed showed that reliability is very high given the improved transport networks by air, road and water. Nevertheless, the study found out that the cost of transport remains relatively higher than other strategic expenses. Transport by percentage was 29.40%, rivalled by a difference of 12.00% with inventory that came closest with 17.40%. Others were warehousing at 17.00%, ordering at 5.50%, management at 11.00%, movement at 7.80% and packing at 11.90%. Worth analysing also is the study conducted on ethnic market in Australia by Chan. Statistical analysis show that Chinese, Italian, Greek, Arabic, and Vietnamese culture from the major migrant minority cultures that were found to be quite specific when it comes to consumer demands. Chinese population in Australia has been growing over the past twenty years with the latest analysis being taken in the year 2001. In terms of percentage of the overall population, Chinese language and dialects accounted for 2.1%, 1.9% and 1.6% in the years 2001, 1996 and 1991 respectively. Italian population in Australia has been dwindling downwards with 1.9%, 2.1% and 2.5% in the years 2001, 1996 and 1991 respectively. Likewise, Greek population was 1.7% of the total Australian population in 1991, 1.5% in 1996 and 1.4% in the year 2001. Vietnamese population in Australia has never changed significantly, remaining at an all time low of 0.7% in 1991 and 0.9% in 2001. The population figures help in market segmentation and assessment of culture specific demands by various groups. These figures are as per Australian Bureau of Statistics. Discussion From the findings above, investing in the tourism and travel could be attractive given the income with which it comes. However, there exists a higher degree of competition, which the company must put into consideration before investing in tourism and travel. Although the company will have an upper hand if it invests in the coastal region that is not yet tapped, firm establishments such as Quicksilver Tours, Queensland, Kingfisher Bay Resort at Fraser Island, Queensland and Maho Bay’s camps remain very competitive. Constant evaluation of marketing strategies should be assessed very frequently to help the company stay focused on its market target. It has noted that over-educated worker have an education level that is higher than that required to obtain the job while undereducated workers have less education that is required to qualify for a job. It become difficult for a company to recruit from a labour force whose segment is made up of over-educated labourers. This comes as an environmental challenge, which potential investors will be, faced with given that they must recruit from the local community significantly. As pertains to service quality and delivery, there are still other sectors in the Australian economy where service quality is still in demand, save for health related sector. There is an ageing population that would benefit from customized personal services. Investors have not exploited this sector sufficiently well despite the fact that it represents a potential source of service demand. Report by The Productivity Commission in 2008 suggests that the ageing Australia’s population may call for provision of aged care services to bigger numbers of people over the coming decades. This indicates a potential demand-guaranteed sector of the economy in which to invest. Investment in the natural endowment-based manufactures presents a credible sub-sector in which to invest. Going by the trends, the sub-sector seems to have a steady demand for commodities it manufactures from the natural resources. This reveals the hidden consumer behaviour particularly in Australia. The behaviour seems to revolve major around consumption of natural products as much as possible as opposed to synthetic products. This can be noted from the results obtained that indicate that other manufacturing sectors in general have not been a stable as natural endowment-based manufacture sector as been. Recommendations Having analysed the nature of Australian market, it is apparent that although service industry may be leading, the manufacturing industry also plays a crucial role in the economy. The competitiveness of the Australian market remains very stiff even where opportunities present themselves. For instance, I would recommend services that aim towards customer satisfaction for the case of tourism and travel investment. This is because there are other businesses that are well established with a competitive edge against any new comer in the market. As pertains to ethnic marketing and marketing in general in Australia, positioning plays a fundamental role in advertising a product to the potential buyers. Potential investors in Australia should strategize about the uncommon ways of doing the common things like advertisement and publicity. In essence, companies should be creative in the industries they choose for investment. Instead of coming up with a totally new product, packaging the existing products attractively can work to give new-comers a head start as they get acquainted with the market. The ageing Australian population is another area that requires tapping. I would recommend that an assessment of the nature of lifestyle adopted by the aged be carried out. This will help come up with customized or consumer specific services that an investor may opt to offer in form of services. This is especially so since customer satisfaction is vital when it comes to offering services. In a summary, the report found that Australian environment is ripe for various business enterprises though highly competitive. The competitive nature of the market has acted as a factor that has protected consumers as firms try to outdo others. It should be noted that other opportunities also exist since Australian market is so huge. The above recommendations are based on the overall nature of the market, but there is room for even a more specific investment assessment. Bibliography Boardman, A. E., and Hewitt, E. S., 2004. “Problems with contracting out government services: Lessons from orderly services at SCGH”, Industrial and Corporate Change. 13(6): 917- 29. BTRE, 2001. Logistics in Australia: A Preliminary Analysis. Bureau of Transport and Regional Economics, Canberra, . Chan, A.M., 2006. “Tapping the Multicultural Market in Australia”, in Rao, C.P. (Ed.), Marketing and Multicultural Diversity, Ashgate, pp. 238-252. Chang, Y.H., 1998. Logistical Management. Taiwan: Hwa-Tai Bookstore Ltd. Green, C., Kler, P. and Leeves, G., 2004. Over-education and the Assimilation of Recently Arrived Immigrants: Evidence from Australia, CEPM Working Paper No. 4. James, C., 2003. “Economic rationalism and public sector ethics: Conflicts and catalysts.” Australian Journal of Public Administration, 62(1): 95-108. Soldatos, J., And Hardy, J., 2008. The New Product Development Process in Australian Grocery Organizations. Australia. Kler, P., 2005a. Graduate Over-education and Its Effects amongst Recently Arrived Immigrants to Australia: A Longitudinal Survey, CEPM Working Paper No. 3. Kler, P., 2005b. ‘Graduate Over-education in Australia: A Comparison of the Mean and Objective Methods’, Education Economics, 13, 47-72. Linsley, I., 2005. Over-education in the Australian Labor Market: Its Incidence and Effects. The University of Melbourne Department of Economics Research Paper No. 939. Lyons, M. 1994. “The privatization of human services in Australia: Has it happened?” Australian Journal of Public Administration, 53(2): 179-89. Migliorino, P. and Chan, A., 1993. “The Australian Chinese Community in New South Wales”, Access China, No. 12, December 1993, pp. 18-22. Pires, G., 1999. “Domestic Cross Cultural Marketing in Australia: A Critique of the Segmentation Rationale”, Journal of Marketing Theory and Practice, 7 (4), pp. 33-44. Productivity Commission, 1999. Impact Of Competition Policy Reforms On Rural And Regional Australia: Inquiry report. Productivity Commission, Canberra. Raper, M., 2000. Public and Private Sector Roles in Social Services. Paper presented in the International Conference on Social Welfare, Cape Town, South Africa, 23-27 October, 2000. Shergold, P., 1996. Shocks: Public Administration over the Next Five Years. Paper presented at the Annual Conference of Commonwealth Regional Heads Forum, 26-27 July, 1996. Tang, A., 1997. “The changing role of government in community services Issues of access and equity to administrative review.” Australian Journal of Public Administration, 56(2): 95- 105. Varley R., 2006. Retail Product Management, (2nd Ed). London and New York: Routledge. Voone, D., and Miller, P.W., 2005. ‘Under-education and Over-education in the Australian Labor Market.’ The Economic Record, 81, S22-S33. Appendices Table 3: Average hourly cash earnings for full-time non-managerial adult employees, May 2006 Industry subdivision/group Hourly earnings in $ Food, beverage and tobacco manufacturing 23.20 Meat and meat product manufacturing 20.10 Fruit and vegetable processing 21.60 Bakery product manufacturing 22.10 Textile, clothing, footwear and leather manufacturing 22.40 Textile fibre, yarn and woven fabric manufacturing 18.50 Textile product manufacturing 22.80 Knitting mills 17.80 Clothing manufacturing 23.60 Footwear manufacturing 18.00 Leather and leather product manufacturing 19.60 Wood and paper product manufacturing 24.10 Log sawmilling and timber dressing 20.30 Other wood product manufacturing 21.80 Printing, publishing and recorded media 27.60 Printing and services to printing 22.90 Petroleum, coal, chemical and associated product manufacturing 26.30 Rubber product manufacturing 20.90 Plastic product manufacturing 22.90 Non-metallic mineral product manufacturing 25.20 Metal product manufacturing 26.50 Sheet metal product manufacturing 20.40 Fabricated metal product manufacturing 22.70 Machinery and equipment manufacturing 25.60 Electronic equipment manufacturing 22.40 Other manufacturing 18.90 Furniture manufacturing 18.60 Other manufacturing 20.00 Total 24.90 Source: ABS, Employee Earnings and Hours, Australia, May 2006, Catalogue No. 6306.0, Canberra, ABS. Read More