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International Operations Management

  • 12 Pages
  • Published On: 6-12-2023
Executive summary

There are a number of decisions that LGE has to make in order to ensure that its operations are appropriately and perfectly managed and also to ensure that the company is able to achieve its goals and objectives. However, Samsung appears to have an edge over its two rivals in this segment. This is because of the fact that this company has stronger and better relations with the customers, and also a very strong customer service and customer loyalty programs. Although this supply network of LGE is very simple and it can also look one-dimensional, but in essence this network is not only very strongly made by the company, but it is very complex and consists of different tiers and levels.

(1) Key decision areas in operations strategy
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Managing business operations is a very crucial and critical task to perform. There are a number of tasks and activities which have to be kept in mind and carried out by the business enterprise(Ardito & Antonio Messeni Petruzzelli, 2019). If any mistake is made by the organisation, or the operations management strategies are not very effective, then it can have severe negative impact on the firm and its overall performance. One very competitive marketplace is that of the electronics sector and LG Electronics (LGE) is counted among its leading players. In the following paragraphs, an analysis of key decision areas for the LGE in terms of its operations strategy has been made. There are a number of decisions that LGE has to make in order to ensure that its operations are appropriately and perfectly managed and also to ensure that the company is able to achieve its goals and objectives (Lin et al., 2018). In order to identify these decision areas, the sandcone model developed by Ferdows and de Meyers can be used. The main reason for selecting and using this model is that it suggests there are four key aspects for achieving success in the industry and the market – cost, speed, dependability and quality. Any organisation which is able to maintain these factors in the same order will be able to manage its operations with rather ease and also achieve success

Sand Cone Model
1.1. Technological Decisions

Today, one of the key decision areas for businesses such as LGE is related to technology and its implementation and use. The company is significantly affected by latest technologies. It tries to inculcate these into its operations, so as to ensure that its aim and objectives are fulfilled to the greatest possible extent. If LGE does not use the latest technologies, then it would not be able to function properly because of which it would not be able to achieve its targets (Meckenstock & Ana Paula Barbosa‐Póvoa, 2016). Here the company has to decide which technology it wants to implement in its operations and which it wants to avoid. The management has to be very careful because any mistake or wrong decision can hinder company’s operations.

1.2. Regulation

Another key decision area for the company is regarding the rules and regulations. It is imperative for the firm to ensure that it complies with every regulation and guideline set by the government and its associated agencies or bodies. Here LGE has to take decisions in order to ensure that its operations are as per the regulations and that they do not breach the legal system set by the law and the government (Das & Pankaj Dutta, 2015).

1.3 Resource Issues

Resource management is also one of the areas where the company has to take decisions to ensure that the operations are not hampered in any way. This is a very important decision area mainly because of the fact that the company intends to ensure effective, efficient and optimum utilisation of the resources. The resources should not be wasted, but, it should be available in sufficient quantity and of good quality, so that the manufacturing process can be continually carried out (Soto-Silva & Esteve Nadal-Roig, 2016).

(2) Benchmarking against strategic group

The electronics market is a highly competitive one, as there are numerous organisations and enterprises that operate in this market space. LGE’s two main competitors are Samsung and Philips. Both of these organisations are well-established and renowned brands in the electronics industry (Monczka & Robert Handfield, 2015). Due to this reason, LGE faces stern competition from the two organisations. The three companies, essentially, control the whole electronics market. Since LGE faces such high-level competition from the two organisations, a better way to look at and analyse competition prevalent in the market can be by using the balanced scorecard method. In this approach, operations of the three companies can be evaluated together, which will help in comparing their performances (Kim & Soo Wook Kim, 2015).

A balance scorecard helps in identifying and analysing different aspects and parts of performance and functioning of business organisations. Since in this approach, different areas of business’s performance are analysed, it can help in carrying out a thorough and extensive analysis of the functioning and performance of LGE (Alkhayyal, 2019).

Balanced Scorecard

Here it can be said that all the three organisations pay significant attention towards ensuring that needs and demands of the customers are fulfilled to the greatest possible extent. For these organisations, customer satisfaction is of the utmost importance and also the key objectives (Lin et al., 2018). By fulfilling demands of the customers, these firms can enhance their overall performance. In this regard, the companies focus on engaging the customers and interacting with them. This helps them in identifying and understanding their demands. The companies then use this information to make changes in their products and also to develop future products.

Financial goals are the single most important objective for the three companies. All of them want to maximise their revenues and earn most profits (Meckenstock & Ana Paula Barbosa‐Póvoa, 2016). However, these organisations, also focus on ensuring that they do not engage into any kind of ethical malpractice to earn more profits. If they are found to be involved in such practices, then it can have a detrimental impact on not only their performance but also their image in the market.

Satisfying the various stakeholders is also a key part of operations for the three organisations. They all aim at maximising satisfaction levels of the customers and to ensure that their varied expectations are fulfilled to the greatest possible extent. The companies work very hard to ensure that stakeholders such as the suppliers get their payments on time and also so that they have a cordial relation with the organisation. These firms want to extend and prolong their partnership so that both the parties are happy and satisfied to the fullest extent (Lin et al., 2018).

Learning and growth is also an area where the three companies tend to be performing similar. However, Samsung appears to have an edge over its two rivals in this segment. This is because of the fact that this company has stronger and better relations with the customers, and also a very strong customer service and customer loyalty programs (de Oliveira & Fernando Augusto Silva Marins, 2017). These help Samsung to not only reach out to its target customers, but also ensure that the two parties have a positive and open communication amongst them.

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(3) Supply network strategy

Supply chain and supply network is an important part of operations of companies regardless of the market that they may be a part of. For LGE as well, it is important to ensure that the supply chain is managed in a proper manner so that the operations are not hampered and also to ensure that the firm achieves its goals and targets (Alkhayyal, 2019). The cited organisation pays a lot of attention to ensuring that the supply chain is appropriately managed. Any mistake in this regard can be detrimental to the company and can hamper its overall operations and therefore its performance as well.

LG Distribution Channel

From Figure 3 LGE’s distribution channel and system can be identified. For the company it supply network is one of the most important aspects of its operations. Here it can be seen that the distribution channel has several tiers, as the supply process starts from the suppliers who provide the necessary raw materials and other resources to the factories. These materials are then used in the production process at different stages as per the requirements. The finished products are then transferred to and stored in the warehouses, from where they are sent to the distributors. Next stage in the supply network is that the goods are then sent to LG showrooms and dealers from the warehouses and then finally they are sold to the customers (Lin et al., 2018).

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Although this supply network of LGE is very simple and it can also look one-dimensional, but in essence this network is not only very strongly made by the company, but it is very complex and consists of different tiers and levels (Das & Pankaj Dutta, 2015). These enable LGE to perform to the best of its abilities along with ensuring that needs and demands of the customers are fulfilled to the greatest possible extent.

The Figure 4 shows supply chain of LGE. Here it can be seen that the supply chain is actually very complex and consists of different levels and hierarchies. Here it can be observed that the supply chain starts from the LG’s manufacturing unit from where the finished goods are sent to company’s warehouses (Monczka & Robert Handfield, 2015). They are then transported to the retailers, distributors and other members of the distribution network to be finally sold to the end customers.

Supply Chain of LGE
References

Alkhayyal, B. (2019). Designing an optimization carbon cost network in a reverse supply chain. Production & Manufacturing Research, 7(1), 271–293.

Ardito, L., & Antonio Messeni Petruzzelli. (2019). Towards Industry 4.0: Mapping digital technologies for supply chain management-marketing integration. Business Process Management Journal .

Das, D., & Pankaj Dutta. (2015). Design and analysis of a closed-loop supply chain in presence of promotional offer. International Journal of Production Research , 53(1), 141–165.

de Oliveira, U. R., & Fernando Augusto Silva Marins. (2017). The ISO 31000 standard in supply chain risk management. Journal of Cleaner Production , 151, 616–633.

Kim, C., & Soo Wook Kim. (2015). A mathematical approach to supply complexity management efficiency evaluation for supply chain. Mathematical Problems in Engineering.

Lin, Q., Xuemei Su, & Ying Peng. (2018). Supply chain coordination in confirming warehouse financing. Computers & Industrial Engineering, 118, 104–111.

Meckenstock, J., & Ana Paula Barbosa‐Póvoa. (2016). The wicked character of sustainable supply chain management: evidence from sustainability reports. Business Strategy and the Environment, 25(7), 449–477.

Monczka, R., & Robert Handfield. (2015). Purchasing and supply chain management.

Soto-Silva, W., & Esteve Nadal-Roig. (2016). Operational research models applied to the fresh fruit supply chain. European Journal of Operational Research, 251(2), 345–355.


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