© Cambridge University Press 2012 CHAPTER ONE ROLE OF OPERATIONS MANAGEMENT Topic 1 Operations.

© Cambridge University Press 2012© Cambridge University Press 2012

CHAPTER ONE

ROLE OF OPERATIONS

MANAGEMENT

Topic 1 Operations

© Cambridge University Press 2012

Syllabus Agenda• Role Of Operations Management

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

– goods and/or services in different industries– interdependence with other key business

functions


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.

Role of Operations management


Involves gaining a long term competitive advantage over its competitors, by local and overseas. May also use either a cost leadership or product differentiation strategy.

Strategic role of Operations


Strategic operations decisions focus on:• Products to be created• How to produce products• Capacity or size of operations• Organisation of inputs and equipment

in operations• Location of operations• Employees used in operations• Quality.

Strategic role of Operations (cont.)


A strategy where a business aims to obtain an advantage over its competitors by being the lowest cost manufacturer within its industry.

Cost leadership Operations strategy


Activity Time• Complete the following activity sheets:

– Activity 1.1 True False– Activity 1.2 Cloze passage– Activity 1.3 Match the definitions


Creating a low cost basis may be achieved by:

• Using less expensive inputs

• Maximising efficiency by minimising waste and saving time

• Maximising productivity producing more outputs from less inputs

• Using technology

• Producing faster

• Having lower quality outputs

• Increasing size of operations to reduce the average cost of making each item.

Cost leadership Operations strategy (cont.)


Video: How Its made- chocolate• Watch the

following video and then answer the following questions :


How its made - Chocolate - Questions

• What could they use as less expensive inputs in the chocolate process?

• What is an example of maximising efficiency and minimising waste and saving time in this video?

• Are there any ways you can think of that they may have used to maximise productivity producing more outputs from less inputs?

• Name 2 ways that they could use technology to create a customised output?

• What did they use to produce a faster product in the video?• When would chocolate manufacturers want to have a lower quality

output?• Would increasing the size of operations reduce the average cost of

making each item? Why/Why not?


Aims to obtain an advantage over its competitors by having outputs that are different to its competitors, unique or leading edge technology.

Achieved through having:

• better quality outputs

• quicker supply of outputs

• custom designed outputs and/or more varieties to suit different needs

• more features, applications and versatility

• new technology incorporated.

Good/Service Differentiation Operations strategy


Goods outputs•physical, tangible •can be reused •more capital intensive (machinery)•can be stored•hard to modify once manufactured.

Goods and services in different industries


Services•intangible•can only be used by one customer once•more labour intensive •more interaction with customers•easier to change and customise.

Goods and services in different industries (cont.)


• Mining industry

• Retailing

• Education

• Banking & Finance

• Construction

• Tourism

Goods and services in different industries (cont.)


• Specialisation – where the business is separated into

different functions each of which is highly skilled at its

specific task or role.

• Interdependence – where the different parts of a

business must rely on each other to perform their task

or role.

Interdependence of operations with the other key business functions


As a result of specialisation, there will be

interdependence between the key business

functions and a constant flow of information

between Operations, Marketing, Finance and

Human resources.

Interdependence of operations with the other key business functions (cont.)


Creating Connections Activity

© Cambridge University Press 2012 CHAPTER ONE ROLE OF OPERATIONS MANAGEMENT Topic 1 Operations.

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