12BUS - topic 1. operations

im definitely going to get a 90+ atar

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

define strategy

a long-term business goal that affects all KBF

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

describe a case study with strategic operations

Case Study: Apple

• produces complex products (e.g. iPhone)

• designed and built with materials sourced globally

• built to suit specific expectations and requirements 

• no further setup to operate

• efficient operations → became one of the most profitable companies globally

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

define cost leadership

aiming to have the lowest costs in producing a good or delivering a service

• allows businesses to compete on prie, but must remain profitable

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

types of operational costs

• input costs

• labour costs

• processing costs

• inventory costs

• quality management costs

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

what is a way to minimise costs?

using economies of scale: cost advantages that come from an increase in scale and volume of production 

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

describe a case study that minimises costs

Case Study: ALDI

• coins in trolleys

• charges for plastic bags

• checkout - customers bag their own items + no ‘eight items or less’ lane 

• short opening hours 

• multi-purpose beverage trays - goes to supermarket without being unpacked → saves on shelf stackers

• cost-effective advertising 

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

ways in which goods are differentiated 

• varying the product features

• varying product quality

• varying augmented features (add-ons) - e.g. leather seats 

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

ways in which services are differentiated 

• time spent on service

• qualifications, experience, expertise

• material quality, technology, delivery

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

describe a case study that is successful because of differentiation 

Case Study: Tesla

• first successfully produced mass production electric car

• features of differentiation

  • autonomous driving

  • no “new model” each year - constant improvements instead

  • minimalistic interior - lack of buttons

  • supercharging

goods and/or services in different industries

list the types of goods in diffferent industries

• standardised goods

• customised goods

• perishable goods

• non-perishable goods

• intermediate goods

goods and/or services in different industries

define standardised goods

goods that are mass produced, usually on an assembly line (e.g. pencil)

goods and/or services in different industries

define customised goods

goods that are varied according to customer needs (e.g. sofa)

goods and/or services in different industries

define perishable goods

goods with a limited shelf life (e.g. fresh produce)

goods and/or services in different industries

define non-perishable goods

household and business goods (e.g. canned beans) 

goods and/or services in different industries

define intermediate goods

finished products that become part of another production process (e.g. wool → cardigan)

goods and/or services in different industries

• services can also be ____ or ____ (e.g. ___)

• businesses with standardised operations are usually following a ____ strategy 

• services can also be standardised or customised (e.g. Just Cuts vs wedding hairdresser)

• businesses with standardised operations are usually following a cost leadership strategy

interdependence with other key business functions

define interdependence

the mutual dependence that the key business functions have on one another to work best

interdependence with other key business functions

interdependence of operations with marketing

marketing → operations

• marketing may wish to develop a new product → operations must deliver

• e.g. marketing wants to add colours to iPhone → operations adapts

operations → marketing

• efficient operations → offer marketing opportunities 

• e.g. economies of scale → marketing can price a low cost version of the product

interdependence with other key business functions

interdependence of operations with finance

finance → operations

• operations relies on money → workings of finance department affects operations

operations → finance

• efficient operations → reduces costs of production → increase profits

interdependence with other key business functions

interdependence of operations with human resources

HR → operations

• hiring the right people → improves operations processes

operations → HR

• improved operations processes → drop in staff demand 

goods/services in different industries 

interdependence with other key business functions

how does the tesla cybertruck (case study) demonstrates goods/services differentiation

Case Study: Tesla Cybertruck

Goods/services in different industries

1. exoskeleton design - made of ultra hard stainless steel and armour glass

2. performance and speed - base model has performance of typical V6 sedan, top model has supercar performance faster than Porsche

3. unique, futuristic design

4. adaptive air suspension - raises/lowers ground clearance to suit different terrains

5. steering - front and rear wheels both steer to reduce turning circle and improve responsiveness

how does the tesla cybertruck (case study) demonstrates interdependence

Case Study: Tesla Cybertruck

Interdependence (operations ⇌ marketing)

• marketing designed a new, unique product → operations responsible for delivering vision

• significant modifcations made to the Tesla Factory → needed new relationships with glass and steel suppliers

• strong interdependence → built 65,000 cybertrucks so far + plans to produce 250,000 in 2025

list the influences on operations

• globalisation

• technology

• quality expectations

• cost-based competition

• govt policies

• legal regulation

• environmental sustainability

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

globalisation

the process by which economies around the world become more connected and dependent on each other

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

what opportunities does globalisation provide to business’s operations?

• new markets - production levels need to increase → opportunities for economies of scale and cost savings

• more sources of raw materials + more places to locate factories → easier to find lower costs

• outsourcing to countries with cheaper labour and less stringent laws

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

what threats does globalisation provide to global and domestic business’ operations?

• global businesses - increased competition

• domestic businesses - new global competitors with better cost-cutting techniques 

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

supply chain

the range of suppliers a business uses

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

global web

businesses that choose global suppliers to get the best low-cost, high quality supplies

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

technology definition and its influence

the tools, machines and systems that help a business work faster, easier and more efficiently 

• more efficient and safe processes without error → cost leadership + competitive advantage 

• reduces / eliminates need for staff

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

how do businesses meet quality expectations?

adopting the quality management processes: 

• quality control

• quality assurance

• total quality management

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

quality expectations for goods

• design quality

• fitness for purpose

• durability

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

quality expectations for services

• professionalism 

• reliability

• level of customisation

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

cost-based competition

the strategy where businesses try gain a competitive advantage by lowering their prices

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

ways to reduce costs

• eliminate waste

• bulk by inputs

• economies of scale

• produce standardised products for larger markets

• automated production

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

types of government policies

• public health policies

• taxation

• employment relations

• trade and industry policies

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

examples of legal regulations for businesses

• work health and safety (WHS)

• training and development

• environmental protection laws

• australian consumer law

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

compliance costs

expenses associated with complying to legal regulations

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

how do business operations achieve environmental sustainability?

business operations are shaped around practices that consume resources today without compromising access for future generations

• minimising waste

• reducing carbon footprint

• recycling

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

CASE STUDY: WOOLWORTHS - how has globalisation influenced woolworths?

local supply chains → can buy fresh produce, packaged foods, and other goods from many countries → helps keep costs competitive and ensures a steady supply of products

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

CASE STUDY: WOOLWORTHS - how has technology influenced woolworths?

• self checkouts - reduces wait times

• woolworths mobile app - includes online shopping, personalised discounts, digital loyalty cards (Everyday Rewards) and meal planning 

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

CASE STUDY: WOOLWORTHS - how has quality expectations influenced woolworths?

• company motto: “the fresh food people”

• emphasises freshness through marketing and in-store displays

• responds to expectations by improving supply chains (e.g. faster delivery, sourcing from trusted supplers) 

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

CASE STUDY: WOOLWORTHS - how has cost based competition influenced woolworths?

• Globalisation → increased competition to Australia from international supermarket chains like Aldi and Costco → Woolworths reduced costs

• Automation (e.g robotic systems for sorting and packing, self checkouts) → improved operational efficiency → cut back on manual processes and reduce human error

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

CASE STUDY: WOOLWORTHS - how have legal regulations and government policies influenced woolworths?

• food safety regulations - e.g. Food Standards Australia New Zealand (FSAZN)

  • dictates how food is sorted, handled, labelled and sold

• consumer protection - the Australian Consumer Law (ACL) requires Woolworths to provide accurate product information and fair terms for customers (e.g. clear refund policies, honest advertising)

globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

CASE STUDY: WOOLWORTHS - how has environmental sustainability influenced woolworths?

• uses LED lighting, solar panels and energy efficient refrigeration → reduce costs and meets sustainability goals