The eclectic paradigm is a theory in economics and is also known as the OLI-Model or OLI-Framework.  It is a further development of the theory of internalization and published….
Factors that Affect Selection of Manufacturing Process Design at Apple Inc.
Process design is defined as the alignment of processes to satisfy customer needs while at the same time meeting the set objectives of the organization (Becker et al., 2003). All businesses, regardless of whether they are service based or product based, have the obligation of delivering quality products and services to customers (Matsa, 2011). There are different process designs that can be adopted in organizations, which include serial and parallel processes. The serial approach of involves the alignment of activities to take place one after the other in a defined sequence. Whereas this approach is known to be simple and easy to understand, one disadvantage associated with it is that processes take a longer time to accomplish and thus, reduces capacity (Iravani et al., 2005). Parallel processes, on the other hand, involve the execution of two or more processes in a simultaneous manner. This approach can lead to a reduction in the flow time or an increase in capacity. However, this depends on whether the parallel operations are set to carry out unlike or like operations (Mascitelli, 2004).
Selection of the most ideal service or manufacturing process design for a company depends on several factors. This explains the differences that may exist in the way companies within the same industry may design their processes differently. According to Swift and Booker (2003), selection of the ideal process depends on the nature of the marketplace, the business, and the product itself. With reference to Apple Inc, this paper aims at providing a critical discussion of the key factors that influence the selection of a service or manufacturing process design. It also seeks to discuss ways in which project management principles aid operations managers in introduction of changes to operation processes or systems.
A. Factors that govern selection of manufacturing processes design
The key objective of any business is to maximize their profits while offering quality to customers. Therefore, one of the strategies that can be used in achievement of this objective is ensuring that the processes being undertaken are as cost effective as possible (Swift & Booker, 2003). At Apple, its main products are iPhones, iPads and MacBook computers (Apple Inc., 2014). Whereas its products are known for being slightly more expensive than those manufactured by other brands, the company also increases through cutting costs of production. Pries and Quigley (2013) define process costs as the investments that are required to be incurred in the course of the manufacturing process. These comprise of the expenditures incurred in purchase of equipment, labour and raw materials, and capital costs. There are different approaches that can be used in management of costs incurred in processes (Huang et al., 2005). For Apple, costs are cut by outsourcing components and labour. In the overall electronics and technology industry, most of the components are obtained from Asian manufacturing industries, which are known to be both cheaper and more versatile than those from other parts of the world (Roy et al., 2012). In addition to the fact that outsourcing helps in reducing manufacturing costs, outsourcing of activities that are non-core also enables companies to focus more on their core activities like designing of new products (Polychronakis & Syntetos, 2007). It also helps companies to share their risks.
Components used to build Apple products are obtained from over 150 companies that are spread all over the world. With reference to an estimate made by Milian (2012), the costs that were incurred in the production of the iPhone 4s were at $196. Given that a unit of the iPhone 4s at the time of its production was at $649, the cost reduction strategy meant that the gross profit that was obtained from a single unit was $453 (Milian, 2012). This explains why amidst the stiff competition in the electronics and computer industry, Apple Inc has managed to maintain high profit levels. It had an annual profit of $41.7 billion in 2012, making it the second most profitable company after Exxon Mobil (The Huffing Post, 2013). Apple also further reduces the costs it incurs in manufacture of its products by ensuring that they create partnerships with many companies to encourage competition and as a result, it gets favourable deals (Milian, 2012). Even with the high success that has been achieved by the cost reduction strategy at Apple, the company has faced several criticisms. For instance, one of the companies in China that takes part in the assembly of the company’s products, Foxconn, has a bad reputation for mistreatment of its employees (Chamberlain, 2011).
Operation managers have the role of ensuring that the goods or services that are offered to clients are of optimum quality (Mukherjee, 2006). Apart from reducing costs to maximize profits, companies also select their manufacturing process designs based on the quality of their outcome. Manufacturing processes that do not produce products in the state that was intended by designers or fail to cater for the need of customers in the market ought to be avoided, regardless of how cost-effective they may be (David Bamford, 2010). At apple, the high levels of quality have enabled it perform well in the industry with a large number of customers often ready to purchase new products that they manufacture (West & Mace, 2010). Even though it can be argued that quality control processes ensure that any quality issues can be solved before products are delivered to clients, it is more productive if the original manufacturing process is flawless (Creese, 2013).
To ensure that quality is maintained or improved, the staff members at Apple are often encouraged to be creative and innovative so as to come up with ideas of improving quality. Another approach that ensures quality of processes at apple is through carrying out constant reviews of products. According to Lashinsky (2011), Apple has a program that involves carrying out a review of products every Monday. This enables the company to make the necessary improvements or corrections in case an issue is identified. The issue of quality at Apple has been deeply embedded in the company’s organizational culture, and employees are aware of the need to pay attention to details (West & Mace, 2010). The keen attention that is paid to product and process details at Apple has been among the key factors that have led to the consistency in the company’s market performance. By incurring an extra cost to ensure the manufacturing process is of the required quality, companies are able to satisfy their customers and build string brands in their respective industries of operation (Talib et al., 2011).
The dynamism that characterized the present-day business environment also means that organizational operations should be as flexible as possible so as to maintain their relevance (Merschmann & Thonemann, 2011). Flexibility is the ease at which manufacturing processes can change certain aspects or qualities of products. These range from the shape, materials used to manufacture the product or the finish (Creese, 2013). Lack of flexibility in manufacturing processes may make it difficult for companies to satisfy the ever-changing needs in the market. It may also make quite expensive to replace the existent processes with newer ones (Chou et al., 2010). The need for flexibility is more intense in the computer industry because is one of the most flexible industries. With reference to Moore’s law, capabilities of many electronic devices in the market often change at least once in two years. As technological advancements increase, this pace is bound to increase (Mollick, 2006).
Apple is also well known for manufacturing upgraded versions of previous products approximately on a yearly basis. For instance, between 2007 June and 2013 September, a total of eight versions of the iPhone have been manufactured by Apple (Bergmann, 2013). The improvements that are made in the Apple’s products incorporate the innovative ideas of designers as well as the feedback the company obtains from clients. The need for flexibility in the manufacturing designs also helps companies to stay ahead of the competition on their industries of operation. Apple faces competition from many companies that also frequently upgrade their product to match the market needs (Carbaugh, 2013).
Apart from the three aforementioned factors affecting selection of the manufacturing process design, there are numerous other factors that operations managers put into consideration. One of these is the potential impact that the process may have on the environment (Vezzoli & Manzini, 2008). With the current focus that the international business community on environmental sustainability, companies ought to ensure that they select processes that have the least adverse impact on the environment (Geels, 2011). In an effort to lessen its carbon footprint, one of the strategies that Apple has used is utilization of renewable energy in the company’s operations. These include solar, geothermal, hydro and wind energy (Apple Inc., 2014). However, the company has been under criticism for ignoring the adverse environmental impacts that the company’s operations in China are causing.
Quantity of products
The quantity of products that the company produces for customers also determines the choice of the appropriate manufacturing process. In a situation where companies manufacture single products to fit the specifications of clients, a one-off approach may be appropriate (Jones & Robinson, 2012). On the other hand, if the company deals in the manufacture of products in large quantities, the mass production approach is preferable (Jones & Robinson, 2012). Since Apple manufactures products to satisfy millions of customers worldwide, the manufacturing approach that it utilizes is mass production. By September 2013 alone, Apple sold approximately 33.8 million iPhones, 4.6 million Macs and 14.1 million iPads (Apple Inc, 2013).
Standards and regulations, usually set by different governing bodies also affect the selection of the manufacturing approach. Some of the aspects that that are focused include environmental impacts and specific quality standards that ought to be delivered to customers (Jones & Robinson, 2012). For instance, electronics manufacturing companies are supposed to adhere to the set standards in terms of the air emissions, solid and hazardous wastes and effluents (Multilateral Investment Guarantees Agency, 2010). These regulations are also applicable to Apple. Regardless of how cost effective and flexible a manufacturing process can be, companies have the obligation of adhering to the set standards to avoid getting into legal issues (Bamford & Forrester, 2010).
The factors that have been highlighted above are relevant to all companies that deal in the manufacture of products for their customers. Whereas it is impossible to optimize all the mentioned aspects of manufacturing processes, companies ought to make a comprehensive evaluation of their manufacturing processes to ensure that they deliver quality to their clients and also meet their goals and objectives. Even though Apple has had a few challenges and controversies in its product manufacturing processes, it has managed to maintain its strong position in the electronics industry. This is partly attributed to the effective selection of manufacturing process designs.
B. How the main principles of project management help operation managers to introduce change
Principles of Project Management
Change is an inevitable issue in organizational operations, systems and processes. Therefore, effective project management always puts this into consideration to ensure a smooth transformation from one state of the organization to the other (Boje et al., 2012). Some of the principles of project management include understanding the stages that projects go through from the beginning to the end, possessing good management (controlling), leadership and communication skills and working in the interest of all company stakeholders (David Bamford, 2010). These principles play a very vital role in situations where changes are to be implemented in certain processes or systems within the organization.
Possessing management skills makes project managers capable at effectively implementing the change process (Berkun, 2008). It is important to understand that implementation of change can be more successful if the employees and other organizational stakeholders are involved throughout the process. Failure to effectively communicate to them about the changes to be made may bring about resistance to the process (Vida, 2012). In addition to this, employees may also find it difficult to adjust to the implemented changes. There are several models of change management that have been previously suggested by researchers. These include the eight-step model of change suggested by Kotter (2007).
Henry (2012) also points out several principles of project management, which can also help operations managers in introducing change in systems or processes in the organization. One of these is commitment. For projects involving change to be effectively implemented, managers are supposed to lead by example in showing their unlimited commitment and employees will follow. The other is referred to as the tetrad trade off principle, which is based on the principle that for a project to be implemented successfully, the scope, cost, time and quality have to be in equilibrium and attainable (Sarah & Dixon, 2013). There is also the strategy principle, which defines the planning and implementation procedure. This principle is based on the fact that for a project to begin and end successfully, there are certain procedural activities that ought to be undertaken. Effective incorporation of these principles by operations managers can help in ensuring that changing processes or systems in the organization is undertaken smoothly (Hongjun & Yajia, 2012).
Introducing Change in Processes/Systems
To effectively introduce change in company systems or processes, it is necessary to have a comprehensive plan (Kotter, 2007). This typically involves determining the type of change that will be effective for the company and notifying employees and stakeholders on the imminent change process. Another measure involves building awareness among employees and other stakeholders and building the capacity that will be needed in the process (Jones & Robinson, 2012). Some of the measures that can be undertaken in this stage of preparation include making an announcement of the intended change and when it is expected to take place. It also involves recruitment of some employees that will take up some of the tasks that are involved in the change process (Kotter, 2007). In cases where training is required before the change process is implemented, the recruited employees should be provided with the adequate training. According to Vida (2012), communication skills are quite instrumental in the change process. Project managers need to create an avenue through which employees can give feedback, and eliminate the bureaucratic barriers that may exist to hamper the ease flow of communication within the organization (Henry, 2012).
As companies compete to strengthen their brand positions and increase their market shares, there are several underlying strategies that they use. One of these is the selection of the most ideal manufacturing or service process design that will ensure customer satisfaction is achieved while at the same time contribute to the achievement of organizational goals and objectives. This paper has provided an in-depth and critical discussion of some of the factors that affect selection of the manufacturing processes, with a reference to Apple Inc, one of the leading companies in the electronics industry. Some of the key factors that have been discussed include costs, quality and flexibility of the process. As presented in the paper, Apple Inc has managed to maintain a strong brand position partly because of the effective selection of manufacturing processes. The paper has also highlighted the ways in which the principles of project management can help operations managers to introduce change in organizations. Future research on this subject could address the challenges that project mangers undergo in selecting the ideal manufacturing or service process design.
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