Operations Management refers to a process of controlling, designing, and overseeing the business operations related to the production of products and services (Andrews, 2011). Each of the companies attempt to adequately perform this aspect of the business activities so as to attain a competitive advantage over other companies at a global level. Strategic operations and resources are managed to make sure that each of the business operations is efficient and effective in meeting the preferences and demands of consumers. The following report compares and contrast the Apple and COFCO on how they have managed their ‘strategic resources and operations’ to achieve a competitive advantage in respect to: sourcing of raw materials, global manufacturing strategy, their people, sustainability, global supply chains and logistics models through to delivering goods and services to customers.
Both the concerned companies are considered to be the leaders in their respective industry and have been conducting their business since 1949 for COFCO and 1976 for Apple. Apple Inc. is an American multi – national company that is known for the development of iPad, iPhone, iPod, and the personal computers. Each of the products offered by the company are combined with innovative marketing strategies which has provided the company with a continuous market for its products. Apple Inc. was founded by Stephen Wozinak and Steven Jobs and became the history’s one of the most valuable company in 2012 in the terms of global market capitalization. On the contrary to this, COFCO, China Oil and Food Corporation, is the largest supplier of diversified services and products within China, belonging to the agricultural food industry. The mission of the company is to adequately provide and feed the China, which is the world’s largest population, with its affordable and quality products and services. Both the companies have been highly successful in reaching the global audience; however the ways and the strategies that has supported each of them differentiate in certain contexts. The following report highlights these differences and outlines the key strengths and weaknesses of company regarding the way they have managed their ‘strategic resources and operations’ to achieve a competitive advantage.
Compare and Contrast
The management of strategic resources and operations has emerged as one of the key business practices responsible for the long – term establishment and sustainable development of companies at a global level (Andrews, 2011). Both the concerned companies Apple and COFCO have been engaged in different strategies and operations to attain and achieve the outlined objectives. Where Apple is associated with Information Technology Industry, COFCO with the food processing, thus the raw materials and resources required by each of these companies differ highly. This difference is clearly evident form the difference in the target market or audience of each of the companies.
Sourcing of Raw Materials
Each of the companies is strongly established and highly reputed, mainly because of their reach globally. Because of the difference in locations and target markets, each of these companies utilizes different raw materials and even chooses different sourcing techniques. Considering, Apple Inc., it has been found that the companies key suppliers are located in China and United States of America. The company is found to import its raw materials from Chinese suppliers and consumes the same in large amounts. The company does not look for affordability but to the quality of the same as it is considered to be one of the premium brands of the world, thus it is essential that each of the products is manufactured from quality resources and techniques. Through utilizing globalization as the base of raw materials sourcing, the company attempts to reach two of its overall objectives. The first objective to develop a stronger relationship with its global supply chain network, and the next is to keep track of the changing technology and source – in the most advanced one (Cachon and Terwiesch, 2011).
The global establishment of company has offered the company with some quality suppliers and quality raw materials. However, importing the raw materials from China is much costlier and lengthier process, the company believes that the return on investment is much higher. The company is not cost sensitive regarding the raw materials sourcing, thus attempts to reach the suppliers with most advanced technological platforms and aspects. This strategy helps the company to keep in touch with each of its suppliers and making its supply chain network well aware that the company is determined and committed towards its suppliers as a partner.
In contrast to Apple Inc., COFCO sources the raw materials from local suppliers so as to be cost effective and invest the saved money on other entrepreneurial activities. The company is focused on protecting the global resources so as to reduce the consumption of raw materials and increase the rate of utilization of the resources. The company attempts to execute the lean management practices so that the use of resources is kept minimal and the output is maximal (Van Mieghem, 2010). The company has been engaged in numerous projects and strategies to ensure that each of the products and services of the company is affordable enough.
The company operates from the fields all the way up to the dinner table, thus requires some of the very basic raw materials. Thus, it becomes essential for the company to have access to the food processing and agricultural value chains. The company believes that to develop sustainably and achieve long – term establishment in the global market, it is important to provide the people with quality products and the quality products can only be produced, if the company has a fully integrated value chain. Where the company of Apple Inc. tries to utilize the global supply chain network, the COFCO is primarily relied on just the Chinese suppliers for raw materials. This difference in the sourcing of raw materials clearly explains the different target market for companies (Andrews, 2011). Apple Inc. is focused on addressing and meeting the needs of youth and business professionals, whereas COFCO attempts to reach the adult and family segment of the consumers. The difference in the raw materials sourcing is also due to the different organizational culture and objectives.
Global Manufacturing Strategy
Apple Inc. has been dominating the global portable media industry with its diverse and innovative products. The global manufacturing strategy of Apple is to offer the global audience with a diverse and unique range of products, so that the different preferences and needs of the people can be met adequately. The key reason behind the differentiating product line of company is that the manufacturing, design and engineering is controlled by just one source. However, the company attempts to make the use of global supply chain network, the key production or manufacturing processes of company are conducted in the country of China.
The design developers and engineering of Apple mainly comes up with the product ideas in the United States, but the overall manufacturing of the products or devices is performed by two of the world’s largest Information Technology Solution companies. These companies include
Inventec and Foxoconn, each located in the country of China. The key reason behind manufacturing the products in the country of China and not in the United States is the comparatively lower labor costs in the China. However, the raw materials sourcing is a costlier process for the company, Apple attempts to keep the labor costs as least as well and utilize the saved revenue for technological development in each of its products. Since, the China has world’s largest population, the production in the same location helps the company to directly reach and meet the needs and preferences of people. China is also considered to have one of the world’s stable and strongest economy, thus offering the company with maximal profits and high productivity.
Apple also utilizes the expertise and other support from the IT professional companies, including AT & T for both the production and launching processes. However, this practice of company may raise the problem of information security for the company, the company attempts to develop a better and stronger relationship with each of its business partners. The key feature if Apple’s global manufacturing strategy is that it manufactures the chips for each of its products itself. The company has also complete control over the proprietary retail stores, a nearly closed ecosystem, and software standards, thus making the manufacturing or production processes of the company effective and efficient.
The global manufacturing strategy of COFCO is inclusive of diverse and significant aspects. With each production and manufacturing processes, the company attempts to strengthen its control over production process, food security, food safety, and employee development. The company has been utilizing advanced food safety management technology within each of its manufacturing and production processes to make sure that the final products are of prime quality. The company also conducts regular inspection and monitoring activities systematically on control risks and every control point so that there is no scope of mistakes or failures of the machinery. The complete production and manufacturing process is performed in China so as to keep the labor costs least possible.
In today’s era of globalization, it can be perceived as a achievement to have 95 percent of the company’s subsidiary enterprises in food industry acquiring accreditation for ISO 9001 Quality Management Systems and 100 percent of the same acquiring HACCP accreditation. Each o these global manufacturing strategies have helped the company to make sure that each of its products
and services is produced in monitoring or supervisory of a standardized and systematic safety and quality management system. The company has also outlined certain guidelines for the risk control and food safety on the basis of the requirements of associated regulations and legal provisions. Throughout the manufacturing and production processes, the company makes use of the modern management standards and best practices in each supply chain so as to adequately recognize the key risk features and the significant links of industrial chain. The company with time has been able to attain seamless linkages in between the different parts or departments of company associated with production and manufacturing processes.
Examples of COFCO’s reach and operations include:
- COFCO straddles the entire agricultural and food processing value chains. It operates from the dinner table all the way back up the fields
- COFCO is a Fortune 500 company
- COFCO tomato operations productions produce 500 000 metric tonnes of tomato paste a year which is enough to fill over 1.3 billion 375g bottles
- COFCO has a tea production of 50 000 tonnes a year this equates to around 33 billion teabags per year
- COFCO’s three rice facilities can produce 2250 tonnes of rice a day
- COFCO products are purchased by 93 per cent of Chinese households
The above made arguments clearly demonstrate the difference in the global manufacturing strategy of each of the companies. Where Apple Inc. seems to be more focus on the technological advancements and providing the people with diverse product line, COFCO is focused on ensuring quality production processes. The company of Apple believes that through offering diverse products and launching products in each of the segment of IT industry, the company can easily meet the different needs and requirements of people. In contrast to this, being associated with different sectors already, the company believes that it is the quality of product that must be maintained and taken care of, if customer satisfaction and stronger customer base is to achieve.
The key similarity between the global manufacturing strategies of both the concerned companies is the location of their key production plant. Both the companies have established their production or manufacturing plants in the country of China because of the cheap labor in nation, cheaper taxes, advanced technology, strong economy, and access to world’ largest population. As stated earlier, both the companies are considered to be the global leaders in their respective field, thus to maintain this position in a highly competitive global market, each of the company attempts to make use of the access to world’s largest population. Apple through its diverse product line and COFCO with its quality products attempt to influence the buying behavior of people and earn maximal profits.
People within both the companies are considered to be a valuable and significant asset as each of the employee and stakeholders highly contribute in each of the decisions and strategies formulated by the companies. Where Apple Inc. has 3,300 temporary and 72,800 permanent full – time employees all around the globe, COFCO has over a million employees in multiple locations all around the globe. Since, it is the employees that deal with the company’s customers personally; both the companies have been attempting to provide each of its employees with significant opportunities, financial and non – financial. Both the Apple Inc. and COFCO has a strong global establishment, thus require a large number of employees to adequately conduct diverse business activities and practices.
Apple Inc. is considered to be the first company to integrate multiple products as one and the company argues that this has been possible more due to the commitment of its work force and less due to the technological advancements. The company has been encouraging and working for the employee career development so as to make sure each of its employees not just grows as a professional, but also as a person. The company has been found to utilize and conduct different programs and facilities for its employees so that the company can gain a better understanding of its employees’ needs and requirements. The determination of company and enhancement in the level of communication with its employees has really paid off for the company and for the employees.
Apple Inc. once stated that with its expansion and increasing global reach, the company is focused on providing each of its employees with significant opportunities to make sure that they
are treated and addressed with dignity and respect. It is a well known fact that more a company attempts to develop better relationships with its employees, more are the chances that the strategic resources and operations will be managed adequately (Drew et al., 2010). It is not a computer program or IT tool that itself looks over the operations and practices of the company, it is the employee who is held responsible for the same. Thus, the company attempts to provide its employees with effective training and coaching sessions so as to empower and improve them and their lives.
Apple has also outlined certain provisions, under which the company attempts to make the people and other associated stakeholders well aware of their responsibilities towards the company’s employees. The company believes that it is not just the responsibility of employees to respect the company’s stakeholders, but each of the stakeholders also must treat the company’s employees ethically and fairly at all times. The company through OHS attempts to provide its employees with an adequate, healthy, and safe work place environment. Other than this, to make use of the employees’ talents and skills, the company has developed certain career development opportunities for its employees, so that they keep growing and the company grows simultaneously.
Similar to the Apple, COFCO also attempts to be respectful and ethical towards each of its employees as it believes that the company’s development is also closely associated with the growth of its employees. The company provides its employees with significant career development opportunities that the company believes bring more opportunities to the company for sustainable development. The company seems to be focus more on a diversified employee composition within its organizational structure so as to make sure that each of its sector or department is incorporated with highly skilled and talented employees.
Through developing production plantation bases, contracted planting, and other methods, the company has been trying to develop a diversified work force, so that the different skills and intellectuality of the employees can be utilized for targeting different purposes for the company. Most of the practices of COFCO towards its employees are similar to that of Apple as it ensures labor security and also provides its employees with some benefits, in response to their consistent performance. The company also focuses on the prevention first approach, so that the there can be consistent refinements in the labor safety and occupational health management practices. This is also one of the key reasons behind people attempting to get associated with COFCO. The company has been successful in reflecting itself as an adequate employer through outlining certain performance appraisal and beneficial systems for its employees.
Sustainable Operations and Global Supply Chains
Sustainable development has become one of the key objectives of each of the companies today, irrespective of the industry or market it belongs to. Both the concerned companies, Apple and COFCO again seem to be similar in their strategies to achieve sustainable development. It is a well known fact that the companies which manage its resources and operations efficiently are more likely to succeed and sustainably develop in today’s highly competitive global market. However, both the companies differ in their perception towards sustainability.
Apple Inc. believes that sustainability refers to the ability to maintain its business at a certain level or time, whereas COFCO defines the term sustainability as the conservation of an ecological balance through preventing the decrease in the natural resources. This difference in the perception is primarily due to the industry each of these companies belongs to. However, as stated earlier, both the companies seem to utilize the same strategy to sustainably develop and grow at an international level. Apple and COFCO consider quality as the key to success, which is clearly evident from the strategies and way they have adopted for the sourcing of raw materials and manufacturing processes.
Both the companies have outlined certain Corporate Social Responsibility policies and provisions. These provisions and policies help the company to make each of its employees well aware of the practices and codes that must be complied with within each of their duties, so that company can establish itself for a longer period of time at a global level (Christensen and Overdorf, 2010). The vision and mission of the companies are broad and attempt to attain global success, rather than earning profits from regional markets. The strategies adopted by the Apple to attain sustainability include innovation, heavy investments in R & D, compliance with CSR, enhancing customer satisfaction, recruitment of talented employees, expanding the global reach,
and enhancing the technological support. Similarly, the strategies adopted by the COFCO for attaining sustainable development include quality products, compliance with CSR, increasing the customer satisfaction level, decreasing the consumption of raw materials, and enhancing the rate of utilization.
It is evident from the above made arguments that even if the company perceives the term sustainable differently, the level of commitment and determination is quite similar. Both the companies are attempting to influence the people’s consumer behavior through aligning the management and production processes in alignment with their preferences and needs.
Global Supply Chains
Apple and COFCO are two of the world’s largest companies, thus require a large amount of materials and resources before initiating the production and distribution processes. It is evident that both the companies have been conducting the complete production processes in the country of China so as to make use of the cheaper labor costs, cheaper taxes, large population, and technological advancement. However, both the companies have been facing certain challenges in managing their global supply chain network and thus, utilize different logistics models.
Although the key production plant of Apple is located in China, the raw materials come from different corners of the world, including Canada, USA, Mexico, Brazil, Germany, France, Singapore, Taiwan, and Japan. China and Japan are two of the key supply chain bases for Apple, and because of being close to each other, it is easy for Apple to manage the suppliers pretty well. However, the same is not so easy for the suppliers established in other nations. Thus, the company attempts to communicate and interact with each of its supply chain consistently, so that it can develop better relationships with its overall supply chain network, and utilize the most advanced and modern technology within each of its business activities (Anupindi et al., 2010). The global establishment of company has offered the company with some quality suppliers and quality raw materials. However, importing the raw materials from China is much costlier and lengthier process, the company believes that the return on investment is much higher.
The company is not cost sensitive regarding the raw materials sourcing, thus attempts to reach the suppliers with most advanced technological platforms and aspects. This strategy helps the company to keep in touch with each of its suppliers and making its supply chain network well
aware that the company is determined and committed towards its suppliers as a partner. The design developers and engineering of Apple mainly comes up with the product ideas in the United States, but the overall manufacturing of the products or devices is performed by two of the world’s largest Information Technology Solution companies. These companies include Inventec and Foxoconn, each located in the country of China, thus, making it easier for the company to adequately manage its global supply chain network.
As COFCO operates from the fields all the way up to the dinner table, it requires some of the very basic raw materials. It is essential for the company to have access to the food processing and agricultural value chains and thus, work towards attaining long – term and stronger relationships with its supply chain network in the global market (Chandler, 2012). Where the company of Apple Inc. tries to utilize the global supply chain network, the COFCO is primarily relied on just the Chinese suppliers for raw materials.
Due to different target market, COFCO is associated with local suppliers rather than the suppliers from different countries. The primary suppliers of the company are located in the country of China, similar to Apple, and thus making it easier for the COFCO as well to manage it supply chain network. The company is relied on the local suppliers so as to be cost effective and invest the saved money on other entrepreneurial activities. The company is focused on protecting the global resources and thus attempts to reduce its consumption of raw materials. Because of this comparatively lower consumption rate, the company has been associated with lesser number of suppliers. The company attempts to execute the lean management practices so that each of its suppliers is adequately treated and addressed. The company has also been engaged in numerous projects and strategies to ensure that each of the suppliers of the company is adequately managed and there is no dissatisfaction at either end.
Conclusion and Future
Apple and COFCO are quite similar in certain aspects and are different in some other. In the context of the management of strategic resources and operations, it is evident that both the companies have been adopting most suitable and best suited practices to achieve a competitive advantage in respect to sourcing of raw materials, global manufacturing strategy, their people, sustainability, global supply chains and logistics models through to delivering goods and services to customers. However, the companies differ in certain aspects, as in the supply chain network, but still the practices or strategies adopted for the management of strategic resources and operations are valid and suitable for each of the company.
The companies seem to well aware of their weaknesses and strengths as each of them attempts to target different segment of consumers and markets. However, Apple Inc. needs to work more on complying with its CSR policies, whereas the COFCO needs to expand itself much more in the global market through utilizing different suppliers at different regions. Both the companies have been associated with different industries and need to think differently. The best way to attain sustainable development for Apple is offering the people with best product in competitive prices and not in premium prices. On the contrary, COFCO can attain sustainable development through expanding its product line, and rather than working in different sectors, need to concentrate its focus on most significant sections of its business. Thus, both the companies have been efficient enough to adequately manage the strategic resources and operations, but there are still some loopholes which must be addressed appropriately.
Andrews, R. (2011). The Concept of Corporate Strategy. Homewood, IL: Irwin.
Anupindi, R., Chopra, S., Deshmukh, D., Van Mieghem, A. and Zemel, E. (2010). Managing Business Process Flows: Principles of Operations Management. Upper Saddle River, NJ: Pearson.
Cachon, G. and Terwiesch, C. (2011). Matching Supply with Demand: An Introduction to Operations Management. New York, NY: McGraw-Hill.
Chandler, D. (2012). Strategy and Structure: Chapters in the history of industrial enterprise. New York, NY: Doubleday.
Christensen, M. and Overdorf, M. (2010). Meeting the challenge of disruptive change. Harvard Business Review 78(2), 67-76.
Drew, J., McCallum, B. and Roggenhofer, S. (2014). Journey to Lean: Making Organizational Change Stick. New York, NY: Palgrave, Macmillan Publishing.
Van Mieghem, A. (2010). Operations Strategy: Principles and Practice. Belmont, MA:Dynamic Ideas.