Business Studies- OPERATIONS

year 12 HSC course, includes definitions, role, strategies, processes and influences (+examples)

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 (corporate memory)

-reliance on other businesses/lack of direct control

what are the three aspects of supply chain management?

logistics, e-commerce and global sourcing

what does supply chain management involve?

coordinating the flow of supplies and outputs across the supply chain in order to best meet the needs of customers

what does logistics refer to? (supply chain management)

distribution, storage and handling of physical inputs + distribution of physical outputs to markets in the most efficient way and for the least amount of cost.

what does e-commerce refer to? (supply chain management)

buying & selling via the internet

what does global sourcing refer to? (supply chain management)

he purchasing of inputs without being constrained by location

what are the two types of technology, as an operations strategy?

leading edge & established technology

what is an advantage of leading-edge technology?

Supports market share & competitive advantage

what is a disadvantage of leading-edge technology?

Attracts high risks & costs from unforeseen bugs/uncertainty

what is an advantage of established technology?

low risk & typically reliable

what is a disadvantage of established technology?

Absence of use may result in a competitive disadvantage

what is inventory?

the raw materials, work-in-progress and finished goods that a business has on hand at any particular point in time.

what are two inventory management approaches?

“Just-In-Time” (JIT) OR Holding Stock

what are two stock valuation methods?

FIFO - First In, First Out

LIFO - Last In, First Out

what are some advantages of holding stock?

• Consumer demand can be met = prevent lost sales

• If a particular product runs out, an alternative can be offered

• Buffer against uncertainties such as supplier delays

• Reduces lead times between order and delivery

• Stocks (current asset) that hold value in business

• may reduce costs as there are EOS

what are some disadvantages of holding stock?

• Costs, such as storage & insurance

• The cost of obsolescence (stock goes off)

• Opportunity costs (what is missed out on)

what are the three types of quality management?

quality control, quality assurance & quality improvement

what is quality management?

processes a business uses to make sure its products are consistent, reliable, safe, and suitable for their intended purpose

what does quality control involve?

checkpoints- to check for problems and defects that may occur and to ensure the process is meeting specified standards. 

what does quality assurance involve?

formally documented procedures, such as external certifications such as the ISO9001 cert

what does quality improvement involve?

improved quality through cultural commitment to continuous improvement, customer focus and benchmarking progress.

what are the two different ways ‘resistance to change’ (strategy) can be viewed?

• reasons for resistance

• ways to overcome resistance

what is an example of a reason for resistance?

• Costs of New Equipment

• Costs associated with Reorganising Plant Layout

• Costs of Redundancy Payments

• Costs of Retraining Employees

what is an example of a way to overcome resistance to change?

Retraining OR Redundancy Payments

what are global factors (as a strategy)?

global sourcing, economies of scale, scanning & learning, research & development

what is global sourcing (global factor)?

• refers to the purchasing of inputs without being constrained by location. 

what is economies of scale (global factor)?

• refers to cost advantages that can be gained by producing on a larger scale.

what is scanning & learning (global factor)?

• scanning the global environment to identify and learn about global trends such as new technology and innovation. 

what is research & development (global factor)?

• innovation strategy for the creation of new products and improvement of existing ones.

what is globalisation (influence)?

refers to the removal of trade barriers between nations

what opportunities & challenges has globalisation led to?

+ access to technology, suppliers, and lower-cost jurisdictions, allowing businesses to grow and benefit from economies of scale. 

- heightened exposure to cost-based competition and added complexity

what is technology (influence)?

changes in technology in the external environment

what is quality expectations (influence)?

the standards customers anticipate in terms of a product's quality level

what is cost-based competition (influence)?

an increase in competition in the market based on cost

what is government policy (influence)?

the decisions made by governments or political actors that impact the business environment

what does government policy involve?

• Government objectives

• Direction of policies

• Informing law making

what is legal regulation (influence)?

laws that have been passed by the government and that businesses must comply with

what are examples of important legal regulation (laws) businesses must comply with?

• Work Health & Safety Act 2011

• Fair Work Act 2009

• Australian Consumer Law (ACC) 

• Environmental Law, such as Environmental Protection and Biodiversity Conservation Act (EPBC)

what is corporate social responsibility (influence)?

CSR- Acting ethically through actions which go above and beyond legal compliance

what is the difference between legal compliance and ethical responsibility?

Legal compliance is making sure that laws and regulations relating to the operation of a business are strictly observed, whereas ethical responsibility is an obligation to adhere to moral principles

what does environmental sustainaibility refer to? (CSR- influence)

concept that economic growth should not occur at the expense of polluting and degrading the environment

what does social sustainaibility refer to? (CSR- influence)

when the ops exceed legal responsibilities and takes into account broader social, community and environmental concerns