1. Operations -role

Question 1

What is operations

Answer 1

the activities of a business that acquire and combine inputs and changes them into finished goods (outputs).

Question 2

role of operations management

Answer 2

• Concerned with managing the transformation process.
• Involves planning activities, purchasing inputs, managing inventory, selecting & implementing manufacturing processes and developing strategies to gain a sustainable competitive advantage.
• Ensure efficiency of operations by using the least amount of input possible and be effective by making sure customers’ needs are met and they are satisfied.

Question 3

strategic role of operations management

Answer 3

One that affects the business in the long term.
• Focus on decisions and the plans for achieving goals that need to be made in the long term.
• All strategic decisions will focus on reducing costs through efficiency and differentiation of products.
• Goals: improve productivity, efficiency and quality of outputs.

Question 4

Importance of cost leadership

Answer 4

• Where a business aims to be the lowest manufacturer within its industry.
• Products are standardised
• Attempt to achieve efficiency by using the least amount of input possible.

Question 5

Pros of cost leadership

Answer 5

• Competitive advantage is gained by offering consumers greater value via lower prices, better quality or by providing greater benefits and service at no extra cost to consumer.
• Exploit cost savings that occur due to the scale or size of the business (economies of scale).
• Benefits customers who receive value in the form of a quality product at a lower price.

Question 6

Cons of cost leadership

Answer 6

• Competitors can also use same strategy and achieve even lower costs.
• Product is not perceived as equal to competitors due to competitors offering better technology, features and services.
• Developments in technology change consumer preferences.
• Consumers may see them as not environmentally sustainable. (cheap, throwaways)
• Strong competitor uses aggressive marketing with heavily discounted prices

Question 7

Role of good/service differentiation in cost leadership

Answer 7

• Products may achieve greater market share due to uniquely different products.
• Achieved through better quality, faster delivery, custom designed products, consistency, features and applications.
• Differentiated products can command higher premium price in the market as customers are attracted to the product and build up brand loyalty.
• 3 ways of aiming for cost leadership through differentiation: styling of the product, service levels, producing a product with max quality at min cost.
• By differentiating products/services, a business will makes its output stand out from its competitors and therefore capture greater market share.

Question 8

Goods and services in different industries

Answer 8

• Most businesses will produce a combination of goods and services.

Producing goods
• Inputs will be physically transformed.
• Less labour intensive production
• Technology (CAD, CAM) can reduce labour needs.

Producing services •	Greater people skills required •	Labour intensive production •	Technology is needed to manage the output of services

Question 9

Interdependence

Answer 9

Operations: must supply a product that has features and quality consumers demand. Reliably distributing product to the market.
Human resource management: most of the employment will be in operations. HRM will acquire, develop, maintain and separate employees with appropriate skills to produce the good/service.
Marketing: connects operations function directly with the customer. Identifies consumer demand by identifying the target market for the product. Identify the nature of good consumer’s desire and develop marketing strategies to encourage purchases. Make the product available to the market.
Finance: create budgets and make funds available to purchase inputs, equipment and repairs.