How Technology Affects Business Operations
Operations management is the responsibility of producing goods and/or services of value to consumers. Several factors, such as location, technology, and the global climate, should be considered by a business going global with its product or service. These factors play an important role in international markets and impact the operations management of the business. For instance, the constantly changing nature of technology requires businesses to stay updated with the latest advances to maintain relevance within their market. Utilizing current technologies enables businesses to allocate resources better and connect with global clients and suppliers abroad.
Continuous improvements in technology help advance communications, transportation, and logistics, allowing businesses to adjust their operations to meet new market demands (How Technology Affects Business Operations, n.d.). Therefore, from an operational management viewpoint, a business must ensure that a chosen location has a substantial market share and suitable infrastructure. The business should also consider other factors such as labor cost and incentives offered by the host government. Trane Inc., a global company that manufactures heating, ventilating, and air conditioning systems (HVAC) and building management systems and controls, provides a good example.
How it works
Trane Inc. employs over 29,000 people at 104 manufacturing locations in 28 countries, with more than $8 billion in annual sales. To sustain their operations on such a wide scale, Trane Inc. had to determine the demand for their products. They came up with a business plan that incorporated their core values into a plausible vision statement: “We are dedicated to inspiring progress for our customers, shareholders, employees, and communities by achieving: Dramatic Growth, by focusing on innovative solutions for our customers. Operational Excellence, by pursuing continuous improvement in all our operations.” (STRENGTHS, n.d.). Demand drives economic growth. A business must increase demand to improve its bottom line. Therefore, Trane must consider the price of its products, the income of their client base, and the cost of related products such as parts and components on a global market. Their products must keep up with the fast-paced innovations to sustain their market base.
In relation to Trane, Starbucks operates in an entirely different market. As a premier roaster, marketer, and retailer of specialty coffees worldwide, their approach to determining the demand for their product greatly differs from Trane’s as their sales are more tied to the economy. During hard times, consumers are more likely to forego luxuries like dining out or purchasing high-priced coffee drinks due to dwindling disposable incomes. Another factor they must consider is the price of coffee beans, which has risen significantly in the past decade, affecting their profit margin. Additionally, consumer attitudes towards health play a crucial role in determining the demand for their products.