Business Studies- OPERATIONS

year 12

what is the strategic role of operations?

manage the transformation process effectively in order to create a competitive advantage through cost leadership (lowest cost of production) and / or product differentiation (quality or features)

what is cost leadership?

aiming to have the lowest costs in order to be price-competitive in the market

how can cost leadership be achieved?

• economies of scale

• maximising productivity

• maximising efficiency by minimising waste

• using less expensive inputs

• using technology

what is good/service differentiation?

distinguishing products in some way from competitors

how can differentiation be achieved in goods?

• Varying the actual product features

• Varying product quality

• Varying any augmented (additional) features

how can differentiation be achieved in services?

• amount of time spent on a service

• level of expertise brought to a service

• the qualifications and experience of the service provider

• the quality of materials/technology used in service delivery

what are three features of goods?

• tangible (physical items that can be moved, touched & stored)

• more capital intensive (i.e. made with machinery)

• more difficult to modify once manufactured.

What are the four things operations must consider when producing goods?

• Standardised goods— are those that are mass produced, usually on an assembly line.

• Customised goods— are those that are varied according to the needs of customers.

• Perishable goods VS

• Non-perishable goods

What are the four things operations must consider when producing services?

• Services can be both standardised and customised:

  • In the fast-food industry standardised service is provided. 

  • Dental surgeries, medical services and legal services are customised.

what is the definition of interdependence?

the mutual dependence that the key functions have on one another

what are inputs? (transformation process)

the resources used in the transformation process.

what are transformed resources & what are they?

inputs that are changed or converted during the transformation process. Includes: Materials, Information, Customers (MIC)

what are materials (transformed resource)?

Physical raw ingredients, parts and supplies used in production

what are examples of materials (transformed resources)?

yeast for bread, wood for chair, extracted metals for laptop

what is information (transformed resource)?

internal and external information which is used during the production process and information which is transformed during the production of a service

what are examples of information (transformed resources)?

accountants use information, doctors use medical knowledge

what are customers (transformed resource)?

when they are literally changed in some way

what are examples of customers (transformed resources)?

hairdressers change hair & other health services (like dentistry)

what are transforming resources?

carry out the transformation process, enabling the change and value adding to occur, including human resources (labour) & facilities (equipment)

what influences the transformation process?

Volume, Variety, Variation & Visibility

what is volume & how does it influence the transformation process?

 the amount of output produced 

• Higher volume =

• higher complexity =

• economies of scale (lower costs)

what is variety & how does it influence the transformation process?

the number of different products sold

• More variety =

• higher complexity =

• higher average costs

what is visibility & how does it influence the transformation process?

how visible the operations process is to the customer

• Higher visibility =

• higher presentation standards =

• higher costs

what is variation & how does it influence the transformation process?

how much customer demand changes due to seasons

• Higher variation =

• changing storage, output & labour =

• higher costs

what is the purpose of sequencing and scheduling in the transofrmation process?

assist with structuring and ordering so that tasks occur in the most efficient order.

what does scheduling refer to?

the length of time activities take

what does sequencing refer to?

the order of actvities

what are the two sequencing & scheduling tools?

Gantt charts & critical path analysis (CPA)

which path is the critical path in CPA?

Path where any increase in time taken, will cause a delay, therefore is the shortest time. Simply, it is the longest path.

what are the three things (on syllabus dot point), that can be used to maximise efficiency of the transformation process?

technology, task design & process layout

what is technology in the tranformation process?

use of machinery & systems to improve effectiveness & efficiency

• CAD (computer automated design)

• CAM (computer automated machines)

what is task design in the tranformation process?

structuring job activities for the most convenient way

what is process layout in the tranformation process?

the physical layout of a workplace (e.g. factory or office

what is monitoring in the transformation process?

process of measuring actual performance

what is controlling in the transformation process?

when KPIs are assessed against predetermined targets and corrective action is taken if required

what is improving in the transformation process?

the systematic reduction of inefficiencies and wastage, poor work processes and the elimination of any bottlenecks

what are part of the TPC (total product concept) for operations?

customer service & warranties

what is the performance objectives acronym?

“Quesadilla Football Cclub” 

what are the performance objectives?

• quality

• speed

• dependability

• flexibility

• cost

• customization

what does quality refer to? (performance objective)

how well designed, made and functional goods are.

what does speed refer to? (performance objective)

the speed of production

what does dependability refer to? (performance objective)

how consistent/reliable products or ops process is, measured by warranty claims

how quickly ops processes adjust to changes in the market (eg demand)

what does customization refer to? (performance objective)

creation of individualised products to meet the specific needs of customers

what does cost refer to? (performance objective)

minimisation of expenses so processes are as cheap as possible

what is outsourcing?

use of external providers to perform non-core business activities

what are some advantages of outsourcing?

- simplification

- efficiency & cost savings

- access to skills/technology

- increased accountability

- specialisation/focus on core competencies

what are some disadvantages of outsourcing?

- payback periods/costs

- communication & language

- organisational change/redesign

- loss of corporate jobs (memory)

- reliance on other businesses/lack of direct control