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Importance Of Operations Management: Finance

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Question:

Discuss about the Importance of Operations Management for Finance.

 

Answer:

Introduction and Definition

A business organization has Finance, Operations and Marketing sections as its primary function. Operations Management performs a transformation role in the process of converting inputs into complete goods and services (Reid, & Sanders, 2005). The contributions include human resources, facilities, and processes that form outputs in the shape of goods and services.  In a local manufacturing plant, raw materials are physically changed into fashion clothes that equally transform the state. This department is responsible for decision making and design product delivery activities to the firm. All companies are categorized into manufacturing and service organizations. The manufacturing organizations create tangible products that can be stored while service agencies on the other hand yield intangible products. Customers contact the manufacturers through retailers or distributors. Operations and supply chains are inherently linked; hence no business organization could exist without the other. Therefore, without communication between marketing and operations, the company may find difficulties in its setup. The bottom line is that a company that embraces a supply chain need to harmonize and associate with the operations management. This creates a chain that is efficient in a timely fashion of produce and component delivery. 

 

Abstract

In Australia, the retail model has emerged on customers actively.  The entry and growth of global fashion powerhouses such as H&M, Topshop, and Zara in the market, has benefited the supply chain. The sheer speed in design concepts has allowed such companies to compete in the many markets effectively. They hold customer values in high esteems thus posing challenges to department stores.  These competition challenges provide apparel clothing products to the consumers hence a change in retail industry. The retailers can sell goods and offer services online. The H&M’s opening was a spectacle as it competes with Zara another powerhouse in fashion phenomenon in Australia.

From the beginning, fast fashion has had an important effect on the international fashion prospect. Since fast fashion involves taking styles set at the major fashion weeks and making them accessible for bulk consumption as swiftly as possible while preserving reasonable prices. These companies have established fierce competitors to the established brands in the country. The fast fashions have degraded the fashion brands of Australian companies. The Zara powerhouse company uses entire supply chain to control the influence of customers.  Fast fashion retailers such as H&M and Zara often produce a substantial proportion of products at a percentage just under 50% in Europe (Ly, 2014). In these brands, they tend to neglect characteristics of the country hence Japanese retailer Uniqlo was formed. It favors quality and more basic merchandise that charm a wider demography compared to H&M and Zara. Due to these fast fashions, there is a change in Australia’s brands. The international fast fashion in Australia has brought adverse effects to local brands, environmental damage and labor exploitation. These are complex problems to social and political issues in the country. In a more profitable manner, fashion people in the country inject new varieties in the local fashion scene. Due to these competitions, the industry has adapted to market share hence fashion revolution.

 

Competition in Fashion Industry

In fashion, the competitive nature controls demand and revenue (Bridson, Evans, Mavondo, & Minkiewicz, 2013). Factors that influence company development include the economy, lifestyle and new product developments. Additionally, demography of industry trends in distribution and supply chains. Due to low-priced nature of fast fashion consumers can keep up-to-date with the latest styles while maintaining their budget. The short-range outlook for the Australian fashion retail industry has been disrupted by new types of machinery and advanced competition. The continued online retail growth has affected the retail spectrum the bigger retailers will remain larger and better while the smaller and medium will not develop to become competitors. Adaptation and embracing change has provided the market for retailers to connect with the customers (KO, & Kim, 2014). These business models have offered innovations for product offering hence keeping up with environment competition.

 

Impacts of Fast Fashion Retailers

The fast fashion retail trends mandate for innovative reaction. The Zara retailer illustrates this better due to the wage costs production worldwide for example in Asia (Qin, & Lee, 2014). This has resulted in a universal supply chain which is focused on its head office in Spain, and produce designers more profitable than the average fashion traditional retailers at a short duration of the production. The Zara retailer significantly outdoes specialty retailers. It is more profitable than the average fashion stores due to higher turnover margins. Its innovative approach drives it to mega total supply chains. World manufacturer of fashion is dedicated to trading companies. They play a primary role in the distribution of apparels to retailers. Zara landed a different route of manufacturing trends higher than the local industry in less than one week to finish the fabrics. Furthermore, approximately two-thirds of the fashions are obtained from Europe and North Africa and one-third from Asia. Zara produces more price and time sensitive products and supplies 70% externally to vendors. They deliver superior customer wants hence better production supply chains.

The Australian fast fashion outlook in the wholesaling industry grows globalization of retailers and customers. The Fashion Wholesaling industries are categorized into female clothing vendors, branch stores, male clothing retailers, and nightwear, underclothing and toddler clothing retailers. They all have contrast demands depending on the customers (Vazifehdoost, Rahnama, & Mousavian, 2014). The impacts of the overseas fast fashions entering Australia both positively and negatively affected the country.  The environment upstage has led to retailers to offer better purchases to consumers. An increase in senior people demands influences retailers to provide high-quality products. The social media has affected the retailers increasingly to advertise to consumers their products. Online retailers paved the way for customers to purchase products on their websites and keeping track on the past purchases.

 

Issues Affecting the Fast Fashion Industry

Factors affecting the fast fashion industry have impacted the consumer characteristics in Australia. They influence technology, government and the economy (Ming Law, Zhang, & Leung, 2004). The norms, cultures, lifestyle and population changes affect segments of the clothing industry. Wholesalers and retailers evade in the production of too many fashions hence they tumble on the norms of society. Technology also makes the industry to be vulnerable to demand and production. Retailers will increase the prices to counter shortages hence consumers will be affected (Shankar, & Bolton, 2004). A couple of legal and political factors will affect small businesses in the country. For example, issues like workers' rights and child labor laws will praise hence Unions for workers will be formed. The wages impact production in the clothing industry. Small retailers will inquire minor profits. Economic Factors have both positive and undesirable effects on the clothing industry. During economic booms, sales will rise, but when recessions occur, sales will significantly drop. Retailers will face indispensable losses in the country. Also, consumers consider their social responsibility to money (Goodman, & Cohen, 2004). This will exploit the practices of retailers hence unethical practices may occur in the country. This will lead to the negative publicity of the Australia’s economy both on the manufacturers and the retailers.

Deductions of the Paper

In conclusion, traditional Australian retailers find themselves in a competitive market (Chowdhary, 1999). The market share has made fashion retailers to adapt the fast fashion basics to survive and thrive. They have articulated the operation management system through active price management to please the customers. Finally, Australia's fascination with new fast fashions and textile clothes has had major social and environmental implications. There has been a great change in the way people source, consume and dispose of the apparels. Textiles are natural fibers hence decomposable, but a majority of fast fashions are synthetic hence they do not decay quickly.

 

References

Bridson, K., Evans, J., Mavondo, F., & Minkiewicz, J. (2013). Retail brand orientation, positional advantage, and organizational performance. The International Review of Retail, Distribution and Consumer Research, 23(3), 245-264. https://dx.doi.org/10.1080/09593969.2013.776991

Chowdhary, U. (1999). Retail store attributes fashion leadership and older consumers. Journal of Fashion Marketing and Management: An International Journal, 3(2), 126-132. https://dx.doi.org/10.1108/eb022554

Fashion-Oriented Impulse Buying. Mediterranean Journal of Social Sciences. https://dx.doi.org/10.5901/mjss.2014.v5n16p223

Goodman, D., & Cohen, M. (2004). Consumer culture (1st Ed.). Santa Barbara: ABC-Clio.

KO, S., & Kim, E. (2014). Effects of Marketing Strategy on Brand Attitude, Store affect and Store Loyalty: A comparison between Global and Korean SPA brands. Fashion & Textile Research Journal, 16(3), 386-395. https://dx.doi.org/10.5805/sfti.2014.16.3.386

Ly, S. (2014). Paris pop-up store provides a tantalizing glimpse of Ivorian fashion. International Trade Forum, 2014(3), 36-37. https://dx.doi.org/10.18356/dcf28024-en

Ming Law, K., Zhang, Z., & Leung, C. (2004). Fashion change and fashion consumption: the chaotic perspective. Journal of Fashion Marketing and Management: An International Journal, 8(4), 362-374. https://dx.doi.org/10.1108/13612020410559966

Qin, F., & Lee, J. (2014). The Influence of Fashion Product Purchase Criteria and Effects of Store Attributes Toward Shopping Satisfaction for Inbound Chinese Tourist in Korea.Fashion & Textile Research Journal, 16(4), 554-563. https://dx.doi.org/10.5805/sfti.2014.16.4.554

Reid, R., & Sanders, N. (2005). Operations Management (1st Ed.). Hoboken, N.J.: John Wiley & Sons.

Shankar, V., & Bolton, R. (2004). An Empirical Analysis of Determinants of Retailer Pricing Strategy. Marketing Science, 23(1), 28-49. https://dx.doi.org/10.1287/mksc.1030.0034

Vazifehdoost, H., Rahnama, A., & Mousavian, S. (2014). Evaluation of the Influence of Fashion Involvement, Personality Characteristics, Tendency to Hedonic Consumption and Store Environment on

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