Operations - Summaries

7/24/2019 Operations - Summaries

1/22

Business StudiesBy Joshua Hammonds

BUSINESS STUDIES: OPERATIONS

SUMMARY

INTRODUCTION TO OPERATIONS

Operations involves the transformationorproductionof the business. It creates value to the

business by transforming inputs into outputs.

Businesses will continuously seek to minimise production costsso that the retail prices are as

low as possible.

Product/goods inputs and outputs;

Services inputs and outputs;

1. ROLE OF OPERATIONS MANAGEMENT

Strategic role of operations management cost leadership, good/service differentiation

To improve productivity, efficiency and quality

In order to gain a competitive advantage, businesses have to show;

Cost leadershipinvolves aiming to have the lowest costs or to be the most price-competitive in themarketbasic products


2/22


Cost leadership strategies;

1. Building efficient production facilities

2. Establishing control over overhead costs

3. Keeping the cost of sales low

4. Investing in the state of the art manufacturing technologies

5. Ensuring they source the cheapest raw materials while maintaining quality

6.

Using the best quality labour7. Sourcing the best information about competitors and raw materials

8. Using time and money efficiently

9. Differentiating the product

Product differentiation: Means distinguishing products (goods & services) in some way from its

competitorscommanding a higher price

Goods and/or services in different industries

Economies of scale:when a company expands they can usually buy more of a resource and get it for

a cheaper price, you have to factor in costs of machinery, staff, etc. E.g. if you spread the cost of

machinery over 1000 units instead of 100, each unit price is cheaper.

Manufacturing Services

- A manufacturing firm is one that takes

raw materials and turns them into a

finished product.

- Consumers dont interact withmanufacturers

- Operations manager need to organise;

Raw materials are sourced

Quality control standards are

maintained

Development of systems, random

checking of product & ongoing

research

Storage & distribution process

- Dont have factories

- Risk management is important as this

involves;

Ongoing training Right labour resources

The actual service needs to be delivered

Quality control

Interdependence with other key business functions

Operationsrefers to the business processes that involve transformation or production. This relates

directly to marketing because operations is the making of a product where marketingis there to

meet the needs & wants of consumers. Financeis essential to fund all aspects of a business especially

operations because this is the production of the goods. Human resourcesis important to staff the

right personnel for operations.


3/22


Summary:

Marketingestablishing the idea behind a product before production

Financeoperations is a big cost for businesses and it is also essential

Human resourcesemploying appropriate staff to look after production lines. Production

involves skills, staff and training.


4/22


2. INFLUENCES OF OPERATIONS MANAGEMENT

Globalisation, technology, quality expectations, cost-based competitions, government

policies, legal regulation, environmental sustainability

InfluencesHOW the business can manage these to achieve goals and objectives of the business

GLOBALISATION

Globalisationrefers to the removal of barriers of trade between nations. It is characterised by;

1. Is about ACCESSreaching new markets and their influences on operations

2. High degree of transfer of capital, labour, intellectual capital and ideas

3. Financial resources and technology

4. Franchising

5. Importing

Supply chainRefers to the range of supplies a business has

Importance of supply chain management predictable and reliable supply chain management

is critical to business to keep operations flowing smoothly.

Reverse engineering or process reengineeringA process that involves a business taking the

product of a competitor that has already been released into the market and reproducing a similar

product to it (opposite to this is innovation!)

CASE: Paperlinx Limited(based in VIC) who manufacture Reflex paper brandhas

operations spanning 5 continents and 31 countries and derives approx. 76% of its sales

revenue from foreign transactions.

TECHNOLOGY

Technologyis the design, construction and/or application of innovative devices, methods and

machinery upon operations processes.

To improve efficiency, improve logistics, reduce reliance on human labour

Types of technologies

Administration book-keeping Other operations

Computers and printers

Telephones and stationary

Chair, desk

Book keeping software e.g. MYOB

Machinery and computers

Equipment/tools

Registers/scanners

Shelving and system e.g. inventory

management


5/22


QUALITY EXPECTATIONS

Qualitymay be understood to be a specific reference to how well designed, made and functional

goods are, and the overall degree of competence with which services are organised and delivered.

Quality management approaches: inspection of output, Total Quality Management (TQM), quality

circles, kaizen

Quality expectations with goodsquality of design, fitness for purpose, durability

Quality expectations with serviceslevel of customisation, reliability of service provider,

professionalism of service provider

COST-BASED COMPETITION

Cost-based competition is derived from determining breakeven point (the level at which the

business matches total costs and total revenue) and then applying strategies to create cost advantages

over competitors.

That is, focusing on reducing costs to a minimum while maintaining profit margins.

GOVERNMENT POLICIES

Every business has to adhere to government policieswith regard to operations. Government needs

to ensure safetyand quality standards, manufacturers must comply with standards or face heavy

penalties.

Policies which impact on business operations include;

Taxation rates

WHS

Environmental policies

Employment relations

Trade and industry practices

LEGAL REGULATIONS

Operations management have particular laws that influence how practices and processes are

conducted. As the function involves; labour, technology, finance, machinery and energy.


6/22


WHSsafe working conditions, PPE, use of machinery (Work Health and Safety Act 2011)

Fair work and anti-discrimination lawsRacial Discrimination Act 1975 (Cth), Sex

Discrimination Act 1984 (Cth), Anti-discrimination Act 1977 (NSW), Fair Work Act 2009 (Cth)

Other important legislationTaxation Act 1953 (Cth), Corporations Act 2001 (Cth)

ENVIRONMENTAL SUSTAINABILITY

Environmental sustainabilitymeans that business operations should be shaped around practices

that consume resources today without compromising access to those resources for future generations.

The operations management is affected by the rise in climate change awareness and the need to

integrate a long-term sustainable plan.

There are 2 main aspects to environmental sustainability:

1. Sustainable use of renewable resources e.g. solar, wind power

2. Reduction in the use of non-renewable resources

Corporate social responsibility

- Difference between legal compliance and ethical responsibility

- Environmental sustainability and social responsibility

Corporate social responsibilityis the open and accountable business actions based on respect for

people, the community and the broader environment. It is MORE than complying with laws &

regulations.

o Legal responsibilityis MANDATORY, whereas ethical responsibilityis OPTIONAL! There is a

growing pressure for businesses to show their contributions to society.

o Environmental sustainabilityinvolves environmentally sustainable operating practices.

This is in response to concerns about climate change and the destruction of the natural

environment.

o Social responsibilitythe practice of production in a way that it is not harmful to society or

the environment e.g. by adopting a human rights code of conduct (e.g. no forced labour)

CASE Body Shop: well known for selling products that are made without conducting tests on animals,

which is seen as ethically correct. Also, the company was involved with the setting up of a Humane

Cosmetics Standard and has formed a partnership with Amnesty International to help highlight the

plight for human rights defenders in many different countries. Increasingly environmentally aware

consumers fuelled a strong demand for these types of products, leading to the success of the BodyShop.


7/22


3. OPERATIONS PROCESSES

Operations processplanning, organising, leading and controlling

Inputs

- Transformed resources (materials, information, customers)

- Transforming resources (human resources, facilities)

Inputsthe resources used in the transformation (production) process

Involves; labour, energy, machinery, technology, materials, information

Customer relationship management(CRM)

refers to the systems that businesses used to

maintain customer contact

Key performance indicatorsspecial criteria

used to measure the efficiency and effectiveness

of the businesss performance.

Input-transformation-output processmeans the bringing together of a number of inputs e.g.finance, equipment, to create the finished good/service output through a transformation process

(which adds value).

Informationcan shape transformation processes by means of;

Ability to influence behaviour/decision making, including operations

Acts as a transformed resource when it is used to inform how inputs are used, where they are

drawn from, which suppliers and supplies are available, etc.

Transforming resourcesare those inputs that carry out the transformation process.

Human resourcesare the employees in abusiness

**The effectiveness with which HR carry out their

work duties & responsibilities can determine the

success with which transformation and value-

adding occurs.

Facilitiesrefer to the plan (factory or office)and machinery used in operations

> Large or small?

> Zoning or restrictions?

> Energy use or efficiency?

Facilitiesimpact on operations by;

Can determine the nature of the operations environment

Can determine whether a business runs efficiently or not, and also influences its capacity to

transform


8/22


Transformation processes

- The influence of volume, variety, variation in demand and visibility (customer

contact)

- Sequencing and scheduling

- Gantt charts, critical path analysis

- Technology, task design and process layout

- Monitoring, control and improvement

Transformationis the conversion of inputs (resources) into outputs (goods or services), whether

they are; physical (goods) or intellectual (services which cannot be touched)

THE INFLUENCE OF VOLUME, VARIETY, VARIATION IN DEMAND AND VISIBILITY (CUSTOMER

CONTACT)

Volumehow much of a product is made (quantity)

Lead timesis the time it takes for an order to be fulfilled from the moment it is made. If businesses

do not respond quickly to market demand, it can lead to over-production which may lead to wastage

and increased inventory costs.

Varietydifferent types of a product

Variation in demandimpacts the transformation of products. Accurate prediction of demand is

important this can be done using; sales history, observing other markets demand of the product

Visibilityi.e. customer contact feedback from customers (helps to shape production and potentially

maximising sales

Direct feedback Indirect feedback

Surveys and interviews

Warranty claims

Blogs and wikis

Letters

Face-to-face

Phone calls

Sales data

Market share data

Consumer reviews (e.g. Choice magazine,

consultants report)

In the transformation process, decisions will need to be made about the following questions:

How much to makewhat volume of input to draw in and to process?

How much variationwhat range of outputs should be made in the process of transformation?

How much variation in demand will there behow can the operations processes respond to

changes in demand?

How much customer contactshould there beand what, if any, role should it have on

transformation processes?


9/22


SEQUENCING AND SCHEDULING GANTT CHARTS, CRITICAL PATH ANAYLSIS

Sequencingrefers to the ORDER in which activities occur.

Schedulingrefers to the length of TIME activities take

The Gantt chartoutlines the activities that need to be performed, the order in which they should be

performed and how long each activity is expected to take.

The Critical Path Analysis(CPA) allows us to show what tasks need to be done, how long they take

and what order is necessary to complete those tasks.

*Note: The critical path is the

SHORTEST LENGTH OF TIME ittakes to complete the tasks but

it is literallythe LONGEST

LENGTH OF TIME!

GANTT CHART CRITICAL PATH ANALYSIS

Less complicated

Set out more clearly

Better for long term projects

Much more precise in terms of timing

Better for short term projects

*Both show things that can be done at the same

time


10/22


TECHNOLOGY, TASK DESIGN AND PROCESS LAYOUT

Technologyis the application of science or knowledge that enables people to do new things or

perform established tasks in new or better ways

BUSINESS TECHNOLOGYinvolves the use of machinery and systems that enable businesses to

undertake the transformation process more efficiently and effectively

Task designis about how a task is to be performed by breaking it down into a series of steps/jobstowards its completion (involves job analysis)

Plant/processlayoutis the physical layout of machinery or equipment in order to ensure the

efficient flow of resources

There are 3 ways to organise the physical layout;

o Process layout deals with high-variety, low volume production (broken into departments)

o Product layout for mass production (assembly line)

o Fixed layout when a product remains in one location due to its size & employees and

equipment come to it e.g. building of Sydney Harbour Bridge

MONITORING, CONTROL AND IMPROVEMENT

All operations processes should be monitored for their effectiveness. This requires effective monitoring and a

focus on continuous improvement. Monitoring and control lead to improvements when there is a focus on

qualityand standards.

Monitoringmeasuring actual performance against planned performance

It uses key performance indicatorsKPIswhich are predetermined variables (worked out before

process begins). E.g. Lead times

Inventory turnover rates

Defect rates, repair rates and warranty claims

IT and maintenance costs

Controllingis the corrective action phase. This means controlling compareswhat was intended to

happen with what has actually occurred.

Businesses undertake regular performance reviews. These are called Quality Controls,

assurance and improvement.

Manufacturing technologies including;

o Robotics a programmable machine capable of doing several different tasks

o Computer-aided design (CAD) a computerised design tool that creates products from

a series of input data (parameters)

o Computer-aided manufacturers (CAM) software that controls manufacturing process


11/22


Improvementrefers to the systematic reduction in inefficiencies and wastage, poor work processes

and eliminations of bottlenecks

One approach to the systematic reduction of inefficiencies and active creation of improvements is

called Six Sigma.

Six Sigma is an improvement process that was invented by Motorola. It follows the 5 steps called

DMAIC define, measure, analyse, control, improve

Outputs

- Warranties

- Customer service

Outputsare the result of the businesses activities. It must always be responsive to consumer demands.

Customer servicehow well a business meets and exceeds the expectations of customers in all

aspects of its operations

It is less expensiveto service existing customersthan to establish relationships with new

ones. To retain customers, businesses need to talk and listen to customers. E.g. face-to-face,

online feedback surveys, web view counters, warranty claims, etc.

Warrantiesis a promise made by a business that they will correct any defects in the goods that they

produce or in the services that they deliver

An assessment of warranty claims can help a business to adjust transformations processes to

be more effective.

Improvement typically is sought in the following areas;

o Time through minimisation of bottlenecks; including assessment of wait times and

lead times

o Process flows smoothness of transitions between transforming processes

o

Quality setting quality goals, measuring product standards and quality through

number of returns and warranty claims

o Cost through assessing costs of production per unit, a review of expenses (fixed and

variable) and per unit costs of delivery

o Efficiency through reduction of waste and creation of greater output per unit input


12/22


4. OPERATIONS STRATEGIES

Operations strategiesHOW to achieve business goals

Performance objectives quality, speed, dependability, flexibility, customisation, cost

Operations strategies are based around the need to achieve performance objectives. Performance

objectives are goals that relate to particular aspects of the transformation function and can be

allocated to particular key performance indicators(KPIs) in the areas of;

Qualityis often determined by consumer expectations, which are used to inform the production

standards applied by the business.

Design how well a good is made or a service is delivered

Conformance meeting customers standards and specifications

Service how reliable, suitable and timely the service delivery isbuilds reputation

Operationsstrategies

1. Performanceobjectives

2. New product

or service designanddevelopment

3. Supply chainmanagement

4. Outsourcing

5.Technology

Operationsstrategies

6. Inventorymanagement

7. Qualitymanagement

8. Overcomingresistance to

change

9. Global factors


13/22


Speedthe time is takes for the production and the operations processes to respond to changes in

market demand

Goals for speed;

Reduced wait times

Shorter lead times

Faster processing times

Dependabilityhow consistent and reliable a businesss products/services are

Flexibilityhow quickly operations processes can adjust to changes in the market

Customisationthe creation of individualised goods or services to meet the specific needs of the

customers

Mass customisationis a process that allows a standard, mass-produced item to be personally

modified to specific customer requirements

Costthe minimisation of expenses so that operations processes are conducted as cheaply as possible

New product or service design or development

In order for a business to be a market leaderand gain a competitive advantage, it needs to continually

innovate, design and develop new products and services.

Stages in designing and developing a new product/service;

Approaches that determine product design and development;

Consumer preferences

Changes and innovations in technology

Important factors in new product design and development include;

Quality

Supply chain management

Capacity management

Cost

Service design and developmentdiffers from the design and development of products as servicesare intangible and consumed as they are produced. A service can be; explicitthe application of time,

expertise, skill and effort; implicitthe feeling of being looked after


14/22


Supply chain management logistics, e-commerce, global sourcing

Supply chain

management

Involves managing the flow of supplies through the input,

transformation processes and outputs in order to best meet the

needs of customers

Sourcing Purchasing of inputs for the operations process

Supplier

rationalisation

Reducing the number of suppliers to the least amount

Backwards vertical

integration

Buying or merging with suppliers to guarantee quality, delivery and price

of supplies

Flexible or responsive

supply chain processes

Not carrying inventoriesorganising supply as you need it

Cost minimisation The trend to use off-shore suppliers as they are usually cheaper

Global sourcing Sourcing supplies internationally in order to best meet the sourcing of

requirements

E-commerce The buying and selling of goods and services via the internet

E-procurement The use of online systems to manage supply

B2B (business to

business)

Direct access from the supplier to the buyer. When stock falls to a certain

point a supplier will supply without formal request

B2C (business to

consumer)

Selling of goods and services to consumers over the internet with payment

e.g. credit card, paypal

Four trends in sourcing;

Supplier rationalisation

Vertical (backward) integration

Cost minimisation

Flexible supply chain processes

Logisticsthe physical distribution and transportation of products. The use of warehouses and

distribution centres is crucial to the successful management of stock.

Global sourcing advantages and disadvantages;

Advantages Disadvantages

Cost and expertise advantages

Access to new technologies and resources

Possible relocation of operations

Increased costs of logistics, storage anddistribution

Different regulations in different countries

Overall operations complexity increases

diverse locations


15/22


Outsourcing advantages and disadvantages

Outsourcinginvolves the use of external providers to perform business activities

Examples of types of outsourcing; manufacturing, merchandising, design, sourcing, human resources,

finance and accounting


Simplification

Improved efficiencyand cost savings

Less costs and maintenance associated

with employeeswages, super

Increased process capability

Increased accountability

Access to skill/resourceslacking within

the business Can focusprimarily on its core functions

of business

- Makes business dependenton other

businesses to supply materialsmay lead

to disruptionsof operations if late

deliveries

- The costand uncertaintyassociated with

payback

- Ethicsand moralityloss of jobs

-

Issues with communication and language- Loss of controlof standards and

information security

Technology leading edge, established

Technologythe thoughtful application of technology helps a business to create a competitive

advantage

Leading edge technologythe most advanced or innovative technology at any point in time. E.g. use

of social media and apps. It can help businesses to;

Create more products quickly and to higher standards

Reduces waste

Operates more effectively and efficiently

Established technologytechnology that is widely accepted and used e.g. email, word processors,

information systems

Both forms of technology give business efficiencies, productivity gains and a capacity to improve

operations processes.

Again...

Manufacturing technologies including;

o Robotics a programmable machine capable of doing several different tasks

o Computer-aided design (CAD) a computerised design tool that creates products from

a series of input data (parameters)

o

Computer-aided manufacturers (CAM) software that controls manufacturing process


16/22


Inventory management advantages and disadvantages of holding stock, LIFO, FIFO, JIT

Inventory/stockincludes all the raw materials, semi-finished and finished products that are on the

shelves or in storage

Inventory management is necessary for operations to ensure efficient andeffective controland

monitoringof stock!

A business needs to have adequate stockon hand in order to keep customers happy by having

products available in the store. Shortagesin stock may mean loss of valued customers who may turn

to competitors to satisfy their needs.

Advantages and disadvantages of holding stock


Ability to satisfy customers needson time

maintain loyalty Opportunity for taking advantage of

discounted stockwhen bulk purchasing

Gaining a competitive advantagethrough

efficient deliveryand superior customer

service

Greater loyaltyby customers

- Storage/warehousingrequires large space,

handling expenses, insurance, etc.- Spoilagemay occur

- Theft/pilfering of stock

- Stock may become outdated/obsolete

therefore may not be sold

- Overstockingmay tie up cashworking

capital

The 3 approaches to INVENTORY MANAGEMENT;

LIFO

LIFO (last-in-first-out)used for products that does NOT have a use-by/best before daterecent

stock is sold first

E.G. MACHINERY, TOOLS

LIFO = number sold x last price bought

FIFO

FIFO (first-in-first-out)used for perishable items

E.G. FRUITS AND VEGETABLES, BREAD, MILK

FIFO = number sold x first price bought

JIT

JIT (just-in-time)minimum amount of stock is held as it aims to have the business only make

enough products to meet demands


17/22


Advantages; reduction in storage costs, no spoilage, no tied up cash, no warehousing necessary, can

respond quickly to changesimproving productivity

Quality management control, assurance, improvement

Qualityis the term used to describe the degree of excellence of a product/service and its fitness for

a stated purpose

QUALITY CONTROL

Quality controlreduces problems and defects in the product by using inspections at various points

in the production process

Programmed inspections

Businesses need to have defined quality standards and parameters

QUALITY ASSURANCE

Quality assuranceinvolves the use of a system to ensure that set standards are achieved in

production

Quality assurance is done through measuring against pre-determined standards

Fitness for purposeand the desire to achieve right first time

E.g. ISO 9000- series of standards developed by the International Organization for

Standardization (ISO), that define, establish, and maintain a quality assurance system for

manufacturing and service industries

QUALITY IMPROVEMENT

Quality improvementinvolves continuous improvement and total quality management (TQM)

Continuous improvementongoing method of looking for ways to improve a business e.g. asking

for staff suggestions

Total quality management (TQM)focuses on managing the TOTAL business to deliver quality to

customers

Ongoing, business-wise commitment to excellence that is applied to every aspect of the

businesss operationsholistic approach to avoid expenses of wastage for faulty products

All staff are heavily encouraged to suggest/make improvements (usually have reward systems)

E.g. Six Sigmais a quality management approach used to identify and remove the causes of

problems in the operations process


18/22


Overcoming resistance to change financial costs, purchasing new equipment,

redundancy payments, retraining, reorganising plant layout, inertia

Managers must plan for changes in the environment in which the business operates as the

environment in dynamic constantly changing. These changes can present opportunitiesand

threatsto a business.

Change in our commercial world is inevitableand is beneficial to a business, but it is sometimes

resisted by some internal stakeholders i.e. workers, management

There are 2 major types of change INTERNAL and EXTERNAL

Internal influences External influences

o NEW TECHNOLOGY

computerisation, stock control,

maintain competitive advantage

o

E-commerceo New systems and procedures

o New business

o Changing nature of markets

o Economic

o Financial

o

Geographico Social

o Legal

o Political

o Technological

Reasons for resistance to change:

FINANCIAL COSTS

1. Cost of purchasing new equipment

2. Cost of redundancies

3. Cost of retrainingemployees

4. Costs associated with structural reorganisationof the business e.g. changes and to plant and

equipment layouts

PURCHASING NEW EQUIPMENT

Changes in a workplace often necessitate purchasing new equipment, such as new computers, and/or

other modern office equipment. This may burden the business and cause debtsto accumulate over

the long term.

May help to achieve key operational goals better;

1. Improved processing flexibility

2. Improved processing speed and shorter lead times

3. More consistencyin production

4.

Higher overall qualityof processing

5. Reduced wastageand losses from equipment failure


19/22


REDUNDANCY REPAYMENTS

Redundancy payoutis the money that is given to employees when they are forced out of work

because their job skills are no longer required or relevant.

RETRAINING

This cost arises from change that causes a reorganisation of the businesss internal hierarchy or from

the acquisition of technology e.g. computer software

REORGANISING PLANT LAYOUT

Can have high costs associated e.g. transporting, bring old equipment

Can lead to loss of productivity with adaptation to new work processes

CASE Coca-cola: had to relocate its plant within Sydneys metropolitan area since they first

established in Australia. They began their operations in Surry Hills, then moved to Kingsgrove, then to

Northmead. Such relocation will often involve a huge capital outlay in the process.

INERTIA (PSYCHOLOGICAL)

Changefeelings of uncertainty or fear of the unknown

Inertiarefers to the unease and/or inactivity of a business owner/manager when confronted with

change.

CULTURAL INCOMPATIBILITY

The culture in a business may vary between businesses. In the event of a merger, some management

positions may be lost in order to remove duplicationsof services.

In the case of a takeover, where one business buys out another business, the new owners may

experience a culture clash if they attempt rapid changes to the operations, which may be resisted by

employees.


20/22


MANAGING CHANGE EFFECTIVELY

Managers must manage change effectively. Change is more likely to be successful if managers follow 4

basic steps;

1. Identify the need for change

Managers must see the need for change and communicate this to employees. The outcomes fromembarking on a course of change must also be clearly communicated to employees.

2. Set achievable goals

Change should have a purpose and be planned with achievable goals. Communication with ALL

stakeholders is essential. Provide necessary training and support to help staff adjust to the new

system and methods. Ongoing evaluation of change needs to be undertaken and monitored.

3. Create a change of change

Change agentsare individuals or groups in a business who can inspire and influence workerstowards a culture of change. Change agents must show the traitspositive, encouraging, good

communication, good teamwork.

4. Use change models

UNFREEZE/CHANGE/FREEZE model;

Unfreezeidentifies the need for change and prepares the business for it (assure staff that

change will be for the better)

Changethe change is implemented (new procedures, systems and behaviour)

Freezeensure that the change is permanent (offering praise or rewards)


21/22


FORCE-FIELD analysis model;

Driving forcesare those pressures or forces that are requiring change

Restraining forcesare those forces that dont allow or wish for change to happen


22/22

Global factors global sourcing, economies of scale, scanning and learning, research and

development

GLOBAL SOURCING

Global sourcingfinding suppliers who have cheaper, better quality products and more advanced

technology

Benefits of global sourcing Challenges of global sourcing

- Cost advantages

- Access to new technologies

- Advantages of expertise and labour

specialisation

- Access to other resources

- Ability to operate over more hours of the day

- Possible relocation of aspects of operations

- Increased cost of logistics, storage,

distribution

- Managing different regulatory conditions

between nations

- Increasing complexity of overall operations

ECONOMIES OF SCALE

Economies of scalethe cost advantages gained from producing on a larger scale.

As the scale of business grows, the cost per unit decreases. This means profitability can rise.

SCANNING AND LEARNING

Scanning and learninglearning best practice from internal businesses

An effective manager should continuously scan the business environment (global) to learn from the

best practice of business around the world. This can allow for continuous improvement.

RESEARCH AND DEVELOPMENT

A central aspect of this is finding out what consumers wantand researching and developing

something that meets their needs.

The government encourages this with grants and tax advantages.

Operations - Summaries

Documents

Transcript of Operations - Summaries