IB Business Management: Unit 5

Operations Management

Operations Management

The art of managing production to achieve the best end product and meet consumers' needs and wants.

Business Functions

Operations are described as the "what" of business management and are closely linked to other functions within an organization.

Sustainability Factors

Operations managers need to consider economic, social, and ecological factors to ensure economic, social, and ecological sustainability.

Job Production

A production method focused on quality, uniqueness, and originality, where products are made to specific orders for individual customers.

Batch Production

A production method offering customized products using standardized options, associated with quality and affordability in the middle market.

Mass Production

Involves producing high volumes of standardized products using continuous flow and automation, typically sold at the low end of the market.

Implications of Changing Production Methods

Changing production methods impacts various business functions like HR, marketing, and finance, requiring careful planning and management.

Factors in Locating a Business

Considerations like land, labor, transport, and competition play a crucial role in determining the location of a business.

Cannibalistic Marketing

A strategy where companies open multiple branches in the same location, even if it reduces profits of existing outlets, to prevent competitors from entering the market and to saturate the area with their own outlets.

Break-even Quantity

The minimum number of items a business must sell to cover all costs by sales revenue, resulting in neither profit nor loss.

Outsourcing

Employing another business to perform peripheral activities, allowing the organization to focus on its core activities and potentially reduce costs.

Pull Factors

External factors that attract businesses to set up or relocate abroad, such as improved communications, dismantling of trade barriers, and increasing size of multinational companies.

Infrastructure

Includes transport networks, electronic networks, and other facilities like education, housing, healthcare, and utilities, which are crucial factors to consider when choosing a business location.

Margin of Safety

The output amount that exceeds the break-even quantity, indicating the level of output beyond which the business starts making a profit.

Supply Chain

The system of connected organizations, information, resources, and activities that a business needs to produce goods or provide services to customers, involving flows from raw materials to finished products.

Supply Chain

The flow of information and goods from producers to consumers, involving logistics (hardware) and information/communication (software) aspects.

Local Supply Chain

Characterized by short distances between producers and consumers, less transport, pollution, and transactions, often leading to fresher products and benefiting the local community.

Global Supply Chain

Involves international trade, less sustainable than local chains but profitable due to consumer demand and access to a variety of goods.

Just-in-Time (JIT)

Modern stock control method involving minimal stock holding, ordering supplies when needed, and producing only when ordered.

Just-in-Case (JIC)

Traditional stock control method involving holding reserves of raw materials and finished products in case of sudden demand increase or supply chain issues.

Buffer Stock

Minimum stock level ensuring production and order fulfillment.

Reorder Level

Stock level at which reordering is triggered.

Reorder Quantity

Amount of stock reordered.

Lead Time

Time between ordering and receiving new stock.

Economic Order Quantity (EOQ)

Optimal amount of stock to be ordered for a given time period, minimizing total costs.

Labour Productivity

Efficiency measure of a worker's output per unit of time, aiding in comparisons and identifying underperformance.

Operating Leverage

Measure of fixed and variable costs to assess profit generation efficiency.

Crisis Management

Systematic steps to limit damage from sudden crises, involving transparency, communication, speed, and control.

Contingency Planning

Procedures to deal with crises through scenario planning, aiming to anticipate and limit damage.

Research and Development (R&D)

Innovation for technical development of products/processes, creating new strategic directions, and addressing customers' unmet needs.

First-mover advantage

The benefit gained by a company that is the first to enter a new market or introduce a new product.

Innovation

The process of introducing something new or making changes to improve existing products or processes.

Product innovation

Creating new products or enhancing existing ones.

Process innovation

Improving manufacturing or service delivery methods.

Disruptive innovation

A significant innovation that can change an entire industry.

Data mining

Finding patterns and correlations in large databases to extract useful information.

Digital Taylorism

Monitoring workers through digital technology.

E-commerce

Buying and selling goods and services online.

Cybersecurity

Defending computers and IT systems against malicious attacks.

Artificial neural network (ANN)

Simulating human brain functions to process information.

Cloud computing

Delivering services over the internet, including data storage and software.

Big data

Analyzing large databases to identify trends and patterns.

Virtual Reality (VR)

Creating simulated three-dimensional environments for user exploration.

Internet of Things (IoT)

Network of connected devices that communicate without human involvement.

Artificial Intelligence (AI)

Computers mimicking human thinking and information processing.