Business Studies (Hsc) - Operations
Topic 1- operations
Chapter 1: ROLE OF OPERATIONS MANAGEMENT
The role of operations management
The creation of goods and the provision of services by businesses. The transformation of inputs into outputs or products to be 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
A strategic decision is one that affects the business in the long term. The strategic goals are to improve: productivity efficiency quality of outputs
Therefore, all strategic decisions will focus on lower costs to an industry benchmark 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
A cost leadership strategy is where a business aims to be the lowest cost manufacturer within its industry. The 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.
The issues that operation mangers need to be aware 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 marketing with heavily
Chapter 1: ROLE OF OPERATIONS MANAGEMENT
The role of operations management
The creation of goods and the provision of services by businesses. The transformation of inputs into outputs or products to be 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
A strategic decision is one that affects the business in the long term. The strategic goals are to improve: productivity efficiency quality of outputs
Therefore, all strategic decisions will focus on lower costs to an industry benchmark 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
A cost leadership strategy is where a business aims to be the lowest cost manufacturer within its industry. The 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.
The issues that operation mangers need to be aware 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 marketing with heavily