current busman exam deck

Define 'Operations Management' and outline its 3 key elements.

1. The coordination of resources to transform inputs into final goods and services for customers.

2. The 3 elements are Inputs (raw materials/labour), Processes (transformation), and Outputs (final good/service).

Compare Manufacturing vs Service Businesses (2 Sims, 2 Diffs)

Similarities:
• Both aim to optimise operations to produce high-quality outputs at low cost.
• Both utilise technology to improve operational productivity.

Differences:
• Manufacturing produces tangible goods, WHEREAS service businesses produce intangible outputs.
• Manufacturing outputs can be stored as inventory for later sale, WHEREAS services cannot be stored and are consumed as they are produced.

Define 'Automated Production Lines' (APL) and 'Robotics'.

1. APL: Machinery arranged in a sequential order where products are assembled automatically under computer control.

2. Robotics: Programmable machines designed to perform specific, highly repetitive, or dangerous physical tasks.

'APL & Robotics' - Discuss (2 Pros, 2 Cons).

Strengths:
(+) Works with extreme speed and precision, drastically reducing errors and wastage.
(+) Reduces ongoing wage expenses by replacing manual human labour.

Weaknesses:
(-) Extremely high initial setup, purchase, and maintenance costs.
(-) Leads to employee redundancies, which can damage workplace morale.

Distinguish Computer-Aided Design (CAD) and Computer-Aided Manufacturing (CAM).

1. CAD is digital software used to create, modify, and test 3D product designs on a computer screen.

WHEREAS...

2. CAM is software that directly controls and directs the physical machinery during the manufacturing process.

'CAD & CAM' - Discuss (2 Pros, 2 Cons).

Strengths:
(+) Increases precision and accuracy, leading to higher quality products and less material waste.
(+) Speeds up the design/production phase, allowing the business to meet customer demand faster.

Weaknesses:
(-) Software licensing, hardware, and setup costs are highly expensive.
(-) Requires costly and time-consuming training for employees to operate the software.

Define 'Artificial Intelligence' (AI) and 'Online Services'.

1. AI: Computerised systems simulating human logic to analyze patterns and make operational decisions without human input.

2. Online Services: Digital platforms (e.g., websites, apps) allowing customers to purchase goods or book services remotely.

Define 'Forecasting' as a materials strategy.

1. Forecasting is a planning tool that uses past sales data and market trends to estimate future customer demand for materials.

2. SAC Application: It helps managers order the correct quantity of raw materials, preventing stock shortages or waste from over-ordering.

'Forecasting' - Discuss (2 Pros, 2 Cons).

Strengths:
(+) Minimises warehouse holding costs by preventing over-ordering of stock.
(+) Ensures adequate materials are available to prevent idle production downtime.

Weaknesses:
(-) Relies on past trends, meaning unexpected changes in market demand can cause stockouts.
(-) Analysing historical data and market trends is time-consuming for management.

Distinguish Master Production Schedule (MPS) and Materials Requirement Planning (MRP).

1. A Master Production Schedule (MPS) is a detailed plan outlining what specific goods will be produced, in what quantities, and when.

WHEREAS...

2. Materials Requirement Planning (MRP) is an itemised list of the exact raw materials and components needed to fulfil that schedule.

Define 'Just in Time' (JIT) as a materials strategy.

1. Just in Time (JIT) is an inventory management approach that ensures raw materials arrive from suppliers only as they are needed in the production process.

2. SAC Application: It aims to completely eliminate idle inventory, meaning the business holds close to zero stock in storage.

'Just in Time' (JIT) - Discuss (2 Pros, 2 Cons).

Strengths:
(+) Drastically reduces warehouse storage costs by keeping stock levels minimal.
(+) Minimises the risk of raw materials perishing, expiring, or getting damaged in storage.

Weaknesses:
(-) Highly vulnerable to supply chain disruptions; if a supplier is late, production stops immediately.
(-) Forgoes bulk-purchasing discounts because materials are bought in frequent, smaller batches.

Distinguish Quality Control (QC) and Quality Assurance (QA).

1. Quality Control (QC) is an internally managed, reactive strategy where finished goods are inspected at various production stages and defective items are discarded.

WHEREAS...

2. Quality Assurance (QA) is an externally audited, proactive strategy where an independent body certifies that the production processes meet designated global standards (e.g. ISO 9001).

'Quality Control' (QC) - Discuss (2 Pros, 2 Cons).

Strengths:
(+) Prevents faulty or defective products from reaching the customer, protecting brand reputation.
(+) Simple and inexpensive to organise as inspections are managed internally.

Weaknesses:
(-) Reactive; it does not prevent defects from occurring in the first place.
(-) Highly wasteful, as defective goods are discarded after resources have already been spent making them.

'Quality Assurance' (QA) - Discuss (2 Pros, 2 Cons).

Strengths:
(+) Proactive; it builds quality into the operational processes, preventing errors before they occur.
(+) Gaining certification allows the business to display a recognized quality logo, boosting customer trust and sales.

Weaknesses:
(-) Very expensive to hire external bodies to conduct initial and ongoing audits.
(-) Requires extensive time and documentation to comply with rigorous certification standards.

Define 'Total Quality Management' (TQM).

1. Total Quality Management (TQM) is a holistic, company-wide commitment to continuous improvement in quality across every stage of the operations system.

2. Core Principles: It relies on three principles: Customer Focus, Continuous Improvement, and Employee Empowerment (using quality circles).

'Total Quality Management' (TQM) - Discuss (2 Pros, 2 Cons).

Strengths:
(+) Eliminates defects across all processes over time, leading to massive long-term cost savings.
(+) Fosters a positive, empowering corporate culture where staff actively solve quality issues.

Weaknesses:
(-) Requires a complete cultural shift, which can take years to successfully embed.
(-) Highly expensive and time-consuming to train all employees in quality analysis methods.

Define 'Waste Minimisation' (and the 3Rs) and 'Lean Management'.

1. Waste Minimisation: Reducing unused material/time/labour to lower costs, achieved via the 3Rs (Reduce, Reuse, Recycle).

2. Lean Management: A systematic approach to eliminating waste in all areas of production while maximizing customer value.

Outline the 4 principles of Lean Management.

• Pull: Producing goods only when customer demand triggers an order.
• One-Piece Flow: Processing one single product through each manufacturing step at a time.
• Takt: Synchronising production rhythm to match the exact pace of customer demand.
• Zero Defects: Halting production immediately to resolve defects as soon as they arise.

'Lean Management' - Discuss (2 Pros, 2 Cons).

Strengths:
(+) Substantially reduces production costs by eliminating material, time, and labour waste.
(+) Improves customer satisfaction by delivering higher quality, defect-free products faster.

Weaknesses:
(-) Requires significant time and expense to train staff in continuous improvement tools.
(-) Can cause high employee stress, as the constant demand for perfection and speed is demanding.

Define 'Corporate Social Responsibility' (CSR) in operations and give 3 examples.

1. The ethical commitment by a business to go beyond legal requirements to reduce negative social and environmental impacts.

2. Examples:
• Inputs: Sourcing renewable materials.
• Processes: Using renewable energy.
• Outputs: Using biodegradable packaging.

Define the 3 Global Operations Strategies (Sourcing, Manufacture, Outsourcing).

• Global Sourcing of Inputs: Purchasing raw materials from overseas suppliers.
• Overseas Manufacture: A business retaining full ownership of a manufacturing facility located in a foreign country.
• Global Outsourcing: Contracting an external, third-party overseas business to complete specific operational tasks.

List the 9 Key Performance Indicators (KPIs) - Acronym: SWAMP CAPT

S - Number of Sales
W - Level of Wastage
A - Rates of Staff Absenteeism
M - Percentage of Market Share
P - Rate of Productivity Growth

C - Number of Customer Complaints
A - Number of Workplace Accidents
P - Net Profit Figures
T - Level of Staff Turnover

List the Driving and Restraining Forces - Acronyms: PIGS MELT CC & TOM ELF

Driving Forces (PIGS MELT CC):
Pursuit of profit, Innovation, Globalisation, Societal attitudes, Managers, Employees, Legislation, Technology, Competitors, Cost reduction.

Restraining Forces (TOM ELF):
Time, Organisational inertia, Managers, Employees, Legislation, Financial considerations.

Define 'Business Change'

1. Business change is the alteration of a business's behaviours, policies, and practices.

2. It can impact specific areas (like operations) or the entire organisation, requiring strong leadership to overcome employee resistance.

Distinguish between a Proactive and Reactive approach to change. (2 Differences)

1. A proactive approach anticipates future events, whereas a reactive approach responds to an already existing crisis or competitor action.

2. Proactive change is highly planned and controlled with fewer pressures, whereas reactive change is often urgent, spontaneous, and pressured.

Define 'Key Performance Indicators' (KPIs)

1. Key performance indicators (KPIs) are specific criteria used to measure a business's efficiency and effectiveness in achieving its objectives.

2. Managers use this data to identify areas needing change and to evaluate the success of changes already implemented.

Define 'Percentage of Market Share'

1. Percentage of market share is the proportion of a business’s total sales compared to the total sales in the entire industry, expressed as a percentage.

2. An increase indicates that the business is successfully taking customers away from its competitors.

Define 'Net Profit Figures'

1. Net profit figures are a financial measure calculated by subtracting total business expenses from total revenue earned.

2. High net profit figures indicate strong financial performance, allowing the business to reinvest in growth or pay higher dividends.

Define 'Rate of Productivity Growth'

1. Rate of productivity growth is the percentage change in the total outputs produced from a given level of inputs over time.

2. A positive growth rate indicates the business is using its resources more efficiently, which lowers production costs.

Define 'Number of Customer Complaints'

1. Number of customer complaints is the recorded amount of customers who notify the business of their dissatisfaction over a specific period.

2. A high number highlights poor product quality or service that requires immediate management action to fix.

Define 'Rates of Staff Absenteeism'

1. Rates of staff absenteeism are the average number of days employees are not present when scheduled to be at work.

2. High rates often indicate poor corporate culture, low staff morale, or an unsafe work environment.

Define 'Level of Staff Turnover'

1. Level of staff turnover is the percentage of employees who leave a business over a specific period of time and must be replaced.

2. High turnover significantly increases the financial costs and time associated with recruiting and training new staff.

Define 'Level of Wastage'

1. Level of wastage is the amount of inputs and outputs that are discarded during the production process.

2. A low level reflects a highly efficient, cost-effective, and environmentally sustainable operations system.

Define Lewin's 'Force Field Analysis'

1. Force Field Analysis is a theoretical model used to determine if a business should proceed with a proposed change.

2. It does this by identifying and scoring the forces driving the change against the forces restraining it.

Distinguish between Driving Forces and Restraining Forces. (2 Differences)

1. Driving forces promote and initiate a proposed change, whereas restraining forces resist the change and actively try to stop it.

2. Driving forces guide the business towards successful implementation, whereas restraining forces create barriers that will cause the change to fail if they are stronger.

Outline the 4 principles (steps) of a Force Field Analysis.

• Weighting: Scoring each force (e.g., 1-5) based on its level of impact.

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• Ranking: Arranging the forces in order of value to determine the total driving vs. restraining score.

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• Implementing: Taking action to strengthen driving forces and eliminate restraining forces.

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• Evaluating: Using KPIs to measure if the implemented change was successful.

Force Field Analysis: Pros & Cons (2 of each)

Advantages:
(+) Allows managers to identify and address specific employee resistance before implementing the change.
(+) Saves the business money by ensuring they only proceed with changes that are statistically likely to succeed.

Disadvantages:
(-) Can be highly time-consuming to accurately identify, weight, and rank every single force.
(-) The weighting (scoring) process is subjective and relies heavily on the manager's personal bias.

Explain how 'Managers' act as BOTH a driving and restraining force.

• Driving: Managers will push for change if it improves overall business performance, secures their job, or increases their financial bonuses.

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• Restraining: Managers will resist change if they feel the new policies threaten their current position, power, or job security.

Explain how 'Employees' act as BOTH a driving and restraining force.

• Driving: Employees will push for change to improve their working conditions, gain better training, or invent faster ways to improve productivity.

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• Restraining: Employees will resist change (e.g., via strikes) due to a fear of the unknown, fear of job loss, or a lack of proper training.

Explain how 'Legislation' acts as BOTH a driving and restraining force.

• Driving: When new laws are passed, a business is forced to alter its operations to remain legally compliant and avoid severe fines.

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• Restraining: Existing laws and regulations (e.g., zoning permits or OH&S) can legally restrict a business from implementing its desired change.

Explain how 'Competitors' act as a driving force.

1. Competitors are rival businesses in the same industry selling similar goods or services.

2. A business is driven to change its prices or products to avoid losing its percentage of market share to these rivals.

Explain how 'Pursuit of Profit' acts as a driving force.

1. The pursuit of profit involves a business seeking to increase the surplus remaining after total costs are deducted from total revenue.

2. This drives changes such as launching new products or entering new markets to increase revenue and pay higher dividends.

Explain how 'Reduction of Costs' acts as a driving force.

1. The reduction of costs involves a business continually seeking to decrease its operating expenses to improve its profit margins.

2. This drives changes such as sourcing cheaper materials or introducing automated machinery to reduce labour costs.

Explain how 'Globalisation' acts as a driving force.

1. Globalisation is the process where people and businesses become more internationally interconnected, creating a single global market.

2. This drives businesses to expand overseas to increase sales, or find cheaper offshore manufacturing to remain competitive against international rivals.

Explain how 'Technology' acts as a driving force.

1. Technology is the practical application of science to invent new tools, systems, or processes.

2. Businesses are driven to adopt new technology (like robotics or AI) to increase their rate of productivity growth and avoid falling behind rivals.

Explain how 'Innovation' acts as a driving force.

1. Innovation is the process of creating a new product/procedure or significantly improving an existing one.

2. This drives change as businesses seek a competitive edge to fulfil unmet market needs and attract new customers.

Explain how 'Societal Attitudes' act as a driving force.

1. Societal attitudes are the collective values, beliefs, and views held by the general public.

2. Businesses are driven to change their practices (such as becoming environmentally sustainable) to align with these values and avoid losing sales.

Explain how 'Time' acts as a restraining force.

1. Time can act as a restraining force if a business does not have enough time to properly plan or implement the change before a deadline.

2. If a competitor acts quickly, the business may lack the time required to respond effectively, causing the change to fail.

Explain how 'Organisational Inertia' acts as a restraining force.

1. Organisational inertia is the tendency of a business to maintain its established, comfortable ways of operating.

2. A deeply entrenched corporate culture can make staff highly resistant to shifting away from their familiar routines.

Explain how 'Financial Considerations' act as a restraining force.

1. Financial considerations act as a restraining force because implementing change involves high costs, such as purchasing new equipment or paying redundancy packages.

2. If a business cannot afford these upfront costs or cannot secure a loan, the change cannot go ahead.

Define 'Porter’s Generic Strategies'

1. Porter's Generic Strategies is a theoretical framework stating businesses can gain a competitive advantage by adopting either a lower cost or differentiation approach.

2. Porter argues a business must select only one of these strategies to avoid being "stuck in the middle" and losing profitability.

Define Porter's 'Lower Cost Strategy'

1. The lower cost strategy involves a business offering similar or lower-priced products by achieving the lowest cost of operations in the industry.

2. Implementation: It is achieved by reducing operating costs (e.g., automated production lines) or reducing supply costs (e.g., economies of scale).

Porter's Lower Cost Strategy: Pros & Cons (2 of each)

Advantages:
(+) Highly attractive to cost-conscious customers, driving up total sales volume.
(+) Creates a barrier to entry for new competitors who cannot afford to match the low operating costs.

Disadvantages:
(-) Standardised, basic products will not appeal to customers wanting premium or unique features.
(-) Brand loyalty is low; customers will immediately switch to another business if they offer a cheaper price.

Define Porter's 'Differentiation Strategy'

1. The differentiation strategy involves the provision of unique services or product features that are of perceived value to customers.

2. Implementation: It is achieved through heavy innovation (e.g., patented technology) or by using premium materials to offer exceptionally high quality.

Porter's Differentiation Strategy: Pros & Cons (2 of each)

Advantages:
(+) Customers develop strong brand loyalty because they cannot get the unique features from competitors.
(+) The business can charge premium prices, resulting in high profit margins per unit.

Disadvantages:
(-) High costs and time associated with the research and development (R&D) of the unique features.
(-) The premium selling price can easily deter cost-conscious customers from purchasing.

Distinguish between Lower Cost and Differentiation strategies. (2 Differences)

1. Lower cost aims to gain a competitive advantage by becoming the cheapest producer to attract price-sensitive customers, whereas differentiation offers unique features to attract customers willing to pay a premium price.

2. Lower cost often involves mass-producing standardised, "no-frills" goods to save money, whereas differentiation involves significant R&D spending to create high-quality, innovative products.