Business Studies Operations

Topics: Management, Quality management, Quality management system Pages: 32 (6819 words) Published: July 25, 2013
10.1 Operations
Potential questions, Students learn to:

Examine contemporary business issues into:
* Discuss the balance between cost and quality in operations strategy. * Examine the impact of globalisation on operations strategy. * Identify the breadth of government policies that affect operations management. * Explain why corporate social responsibility is a key concern in operations management.

Investigate aspects of business using hypothetical situations and actual business case studies to: * Describe the features of operations management for businesses in a tertiary industry. * Assess the relationship between operations and other key business functions in two actual businesses. * Explain how operations strategy can help a business sustain its competitive advantage. * Recommend possible operations for one hypothetical business.

Students learn about:

* Role of operations management

* Operations are the day to day activities of a business. * Inputs are the components used to make a product.
* Transformation process is the process of changing an input into something else. * To produce; Outputs are the final product or finished good. * To achieve; Productivity is the measure of how efficiently goods and services are produced.

The creation of goods and the services of a business, the transformation process is to do with the transformation of inputs into outputs and the services; products being sold, this involves: * planning activities

* purchasing inputs
* managing inventory
* selecting and implementing manufacturing processes
* Developing strategies to gain a sustainable competitive advantage.

* The strategic role of management – cost leadership, good/service differentiation

Strategic role
* To achieve long term goals.
* Operation is concerned with the transformation of inputs to outputs. * Transformation is any changes made to inputs that adds value and converts them into outputs. * Inputs are raw materials, components and parts used to produce a good or supply a service.

Inputs| Outputs| Transformation process|
* Potatoes * Beef cattle * Cups * Water * Employees * Oil * lettuce| * fries * burgers * coffee * soft drink * apple pies * customer service * warranty| * cooking the food * making the burger * freezing the meat * putting the milk in the fridge * taking the order|

The strategic goals of a business may be to improve:
* productivity
* efficiency
* quality of outputs

Therefore, all strategic decisions will focus on lowering costs through efficiency and producing a good or service that is different to and competitive against rivals in the market.

There are 3 types of strategies that are commonly used by businesses to gain and maintain a competitive advantage. These are: * cost leadership
* product differentiation
* market segmentation

Cost leadership
* Is where a business aims to be the lowest cost manufacturer within its industry. * Products are the basic, no-frills type with fewer features, perhaps lower quality and using low-cost packaging.

Low costs can be achieved through:
* Economies of scale in production and distribution.
* Access to cheaper raw materials.
* Exclusive access to a large source of low cost inputs.
* Distributing the product using dealers who work with lower profit margins.

Issues that operation mangers need to be aware of are:
* Competitors can use the same strategy and can achieve even lower costs. * The business’s product is not perceived by customers to be equal to its competitors because competitors offer better technology, features and service. * Developments in technology change consumer preferences. * Consumers may even feel that these types of ‘throwaway are not environmentally sustainable. * A strong competitor uses aggressive...
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