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This report on International Operations and Project Management explores the various aspects of project expansion by a business entity in a new country. A business organization becomes very famous in its local area but takes a larger time to set its foot on a distant land. It has been often seen that companies that have gained name and fame in its parent country fails to receive the same amount of recognition in a foreign country. Operation management and project are the two important tools of business operations which help an organization to understand the need of the expansion in relation to the factors involved in business expansion.
This report uses the example of Hutchinson Builders, which is a famous construction company in Australia. Since its establishment, the company has constructed many buildings equipped with modern technology in Australia. Now the company has decided to set its foot in Asia and has chosen India as the main location for setting up the business. This report delves deep into the various non-economic factors also to tests the viability of the business expansion. To take a closer note on the project management of the business, the report presents a process map of setting up the business in India.
Table of Contents
Background of the Company.
Part 1: Operation Management of Hutchinson Builders.
Theories of Operation Management
Best Practices and Recommendations.
Part 2: Project Management- Expansion in India.
This report discusses the various aspects of operation management and project management that are important to consider for expansion of business. Here the company considered is Hutchinson Builders which is located in Australia and has been in operation since 1912. Hutchinson Builders has decided to expand its business in the Asia region for which it has chosen India as the location. This report explores the various characteristics of management of the parent company in order to analyses whether it is ready to expand its operations to a new land. Also, the report analyses the features of the chosen location to detect its suitability for the expansion of the business.
Company Logo (Source: Australia's local national builder, 2020)
Hutchinson Builders is a leading construction company in Australia, which is privately owned. It is the largest private sector enterprise in Australia in the construction industry and also the largest local national builder of the country. Although Hutchinson Builders have undertaken many projects in Asia, it has not expanded its business to this continent.
The Hutchinson Builders was established in 1912 and till now it has completed more than 7000 projects alone in Australia. The volume of output of the company is huge comprising of hospitals, education institutions, residential complexes, industrial hubs, shopping complexes, and many more (Australia's local national builder, 2020)
Hutchinson Constructions have successfully completed variety of projects which cater to the needs and the requirements of the present-day consumer. For example, in the health sector it has not only built hospitals but also community care centers, emergency hubs, special care units and research centers installed with state-of-the-art technical equipment. In the civil and infrastructure sector, the company has built parks, cruise terminals, jet bases, rail stations, emergency bases for jet aircrafts and many more varied units.
The products and services delivered by Hutchinson are mostly standardized but with unique features. Over the years the variation of the company has also undergone a considerable change. It started off with small projects like building small units of business entities and gradually moved on to conquer the entire construction industry with large and varied products and services (Australia's local national builder, 2020)
Hutchinson Builders has a wide visibility range for its customers both online and offline. Its offices are located in all the branches and the website provides easy user interface for detailed information gathering. This feature is an USP of Hutchinson Builders because most of the companies have low amount of visibility for the user.
Material Requirement Planning
The first step for planning the materials required for a particular project is to gather the information about all the materials available in the market. In the study of operations management, this is known as logistics. Material Requirement Planning (MRP) the pre-requisite of supply chain management and logistics management. In the present day word of high-end technology, material requirement planning has become an internet based process, where the production managers can get access to all the options of materials for the project and make the appropriate planning (Chopra, 2020).
MRP is a computer and mobile application based inventory search platform where search for production materials can be customized on the basis of industry. For Hutchinson Builders the customized search for materials would include, cement, bricks, concrete, wood panel, etc. These products would be easily available for India. Also being a tropical country with ample amount of rainfall, Indian forest are filed with trees which provide quality woods to the manufacturer. MRP is important for automated production process so that collection of materials is done in a smooth manner (Dalcher, 2019). The nature of the project, the requirements of the project, the blueprint of the project are required for the MRP procedure to be completed. The MRP operates by addressing three basic questions: what material is needed; in how much quantity the materials are needed and at what time. The information collected is summarized and reports are generated with the details of possible suppliers available for the production company.
Just-In Time & Total Quality Management
The next theory applicable is the Just-In Time Quality Management which links the orders from all the suppliers with the schedule of the demand of the production team. It is different from the just-in-case model where producers opt for piling up inventories of raw materials to meet sudden market demand. Just in time is a waste minimizing inventory accumulation strategy (Harvey et al., 2016). This strategy reduces the scope of accumulation of unnecessary inventory by acquiring raw materials only according to the project requirement. India has always been an outstanding supplier of raw materials and Hutchinson Builders would not face difficulty in locating the appropriate suppliers. Also being an Australian Company, Hutchinson Builders can get quality products at a lower rate owing to a minimal exchange rate. Supply of labour would also be abundant. In this century India is advancing the science and technology field, so creating a good connection with the IT companies would also not be a hurdle for Hutchinson Builders.
Just-In Time is integrated with the concept of total quality management. The broader definition of total quality management states that it aims at achieves excellence or quality at every level (Heizer et al., 2019). In the production business, this can be connected to the manufacturing process for delivery to quality products and services to the customers. Total quality management puts onus of quality over every player involved in the manufacturing, from supplier of the raw materials to the manufacturer of the final products. The best way to improve customer experience is to improve the quality of the product and the service with each new launch. Total quality management aims at reducing errors at every level of production like manufacturing, supply chain management, productivity of the employees and delivering the final product to the customer.
Supply Chain Management
Managing the linkages between the various agencies involved in the manufacturing process till the delivery of goods and services to the customer is known as Supply Chain Management (SCM) (Hove-Sibanda and Pooe, 2018).
Figure 2: Supply chain management in manufacturing companies
SCM manages the flow of goods and services in the manufacturing process thus ensuring that the final product is of high class quality. The prime objective of SCM is to obtain customer satisfaction by satisfying the goals of operations management (Kerzner, 2017). In doing so the SCM networks dismantles its activities into different tasks like: purchase and supply management, physical distribution management and materials management. The purchase & supply management and physical distribution management combine to form the materials management.
The focus area of SCM is to develop great quality supply chains by identifying the right suppliers for the production company. The three major components of SCM are production, shipment and distribution (Reid and Sanders, 2015). SCM can be perceived as the best way of total quality management discussed in the above section. SCM enables to identify the right suppliers and connect them with requirements of the business. In this was the excess costs can be cut but ruling out the need of unnecessary items. At first it is needed to identify the perfect substitutes of building materials available in India by Hutchinson Builders and the right suppliers who charge correct price as per market demand. Hutchinson Builders can either conduct a market survey to identify them and build a strong SCM system. Then production costs can be minimized to a greater extent and profitability of the business will increase.
Business Process Re-engineering
Business Process Re-engineering (BPR) is the complete change in the business model to attain a significant jump in production and profitability (Sumardi et al., 2019). BPR stage can be attained by the company when it has established a good position over the area which it is serving. The other aspects of the operations like production, SCM, technical standards, supply chain and distribution systems should be capable enough to have served the desired requirements for the business organization. BPR aims to bring quantitative and qualitative changes in the core business field like return on investment (ROI), reduction in costs and enhancing quality of consumer products and services.
BPR came into the picture in the 1990s and became popular with the drive to incorporate newer technologies in the business entities. One recent development of the BPR is e-commerce. The markets have moved from roadside shops to the computers and mobile phones. Everything starting from a safety-pin to an apartment can be purchased through e-commerce. Before incorporating BPR, the business organization should have an accurate summarized report of workflow, labour productivity, IT standards and infrastructural standards. Hutchinson Builders, no doubt has all these ready but it has no practical experience of doing business in India and this is its first time. There are many political, economic, cultural and social factors involved in developing business bases a particular country. As Hutchinson Builders will be expanding their business to India, BPR modelling should not be applied right at the moment. After a time of around 1-2 years, once it has created a good stronghold in the Indian Construction industry, the BPR technique can be applied.
Hutchinson Builders have a very strong engagement model which connects all the stakeholders of the company. The engagement policy aims to create an amicable professional relationship between all the participants of the supply chain management of the company. Each project is given the best quality time and attention to meet supreme customer satisfaction. Construction companies generally follow the ‘traditional builder model’ while acquiring tenders. Hutchinson Builders have their own tender acquiring model, the ‘Hutchies Model’. In the general model, the tasks of bidding, negotiating and building are taken care of by different managers. On the contrary, the Hutchies Tender Model has the team leader at the core, who looks after all the three stages of model acquisition. So basically, Hutchinson Builders assigns a team leader for each project and gives the leader the free-run to take qualitative and quantitative business decision. Hence, for a particular project, the material management, total quality management, the SCM and the business re-engineering are vested on the acumen of the team leader alone.
Hutchinson Builders has a unique workforce development and training module. Skill upgradation for the workers are considered to be the responsibility of the organization. The company awards the workers with many skill-based learning experiences and with every new project the professional acumen of the worker raises. Each project provides chance to the workers to move to a higher level of their career path by acquiring knowledge. This motivates the employees to learn new skills and they see themselves growing in the same organization. This also acts as an employee retention policy for the company as the happy employees do not feel like leaving the organization and also do not have to worry about their growth trajectory. The best practice in enhancing productivity of the employees is the ‘Statim-Yaga’ employment training programme which Hutchinson Builders has launched with in collaboration with the Federal Government of Australia. This programme aim as creating indigenous employment opportunities for which training is imparted to both in-house employees and outsiders.
India is the second most populous country in the world and due to this reason the availability of cheap labour will not be a problem for Hutchinson Builders. The Indian Government has launched many skill-based training programmes and vocational training programmes for the Indian Youth. A programme like Statim-Yaga can also be launched by Hutchinson Builders in India. However, the recommendations in this would be to consider the socio-political factors of the area or the state in which the company plans to set up its business. India is a land of various culture and hence various beliefs (Chopra, 2020). These beliefs are many a time connected to the type and the nature of job the people are engaged in. Embracing the Indian culture of unity in diversity should be the first priority for Hutchinson Builders to create a connection with the Indian workers. This can be done by creating a mixed workforce that would include Australian workers and Indian workers as this would provide a platform for cultural and linguistic intermingling.
One of the few challenges faced by foreign companies in India in SCM are getting the products delivered at the right time. Getting the products at a cheaper rate would not be a problem in India due to the lower exchange rate, already discussed. However, the distribution networks in India are very weak for ensuring timely delivery of the product. Another challenge in India is that while labour is available at cheaper rate, technology is available at a higher rate. Incorporating information communication and technology (ICT) network like that in Australia could be problem in India. However, the recommendation in this case would be to outsource the task of creating an online distribution channel to any start-up organization in India. The Indian government has implemented a number of scheme for the development of Micro Small and Medium Enterprises (MSMEs). These MSMEs have devised latest technology to find solution to problems in business, medical, governance and education. This aspect of the India can be explored and utilized by Hutchinson Builders for maximum profitability.
The above process map depicts the tasks involved for Hutchinson Builders to expand their business in India. The main tasks that are involved are:
This report aimed to understand the features of operation management and project management of a business organization in detail. The chosen company Hutchinson Builders has wide prospects of growth in India but given the underlying threats, it has to build a strong and effective operation management framework. The business expansion will open many avenues for growth and upgradation but the SCM system should be able to deal with inefficient distribution network in India. The process map presents a brief idea of all the factors that are to be taken into consideration while expanding a business in a new area.
Chopra, S., 2020. Supply Chain Management. New York: Pearson Education Limited.
Dalcher, D., 2019. Leading The Project Revolution: Reframing The Human Dynamics Of Successful Projects.
Harvey, J., Heineke, J. and Lewis, M., 2016. Editorial for Journal of Operations Management special issue on “Professional Service Operations Management (PSOM)”. Journal of Operations Management, 42-43(1), pp.4-8.
Heizer, J., Render, B. and Munson, C., 2019. Operations Management. Harlow, United Kingdom: Pearson Education Canada.
Hove-Sibanda, P. and Pooe, R., 2018. Enhancing supply chain performance through supply chain practices. Journal of Transport and Supply Chain Management, 12(3), pp.10-15.
Hutchinson Builders. 2020. Australia's Local National Builder. [online] Available at: <https://www.hutchinsonbuilders.com.au/> [Accessed 18 August 2020].
Kerzner, H., 2017. Project Management. Wiley & Sons Canada, Limited, John.
Reid, R. and Sanders, N., 2015. Operations Management. New York: Wiley.
Sumardi, R., Najib, M., Sarma, M. and Mahomed, A., 2019. Factors Influencing Consumer Decisions in Halal Tourism (Case Study Indonesia and Malaysia). Journal of Technology Management and Business, 6(1), pp.12-16.
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