Business Objectives And Strategic Decisions

Question 1

Business aims

Answer 1

The overall long term goals of the business.

Question 2

Business objectives

Answer 2

The specific and measurable results the business is trying to achieve.

Question 3

Strategic objectives

Answer 3

The longer term specific objectives.

Question 4

Tactical objectives

Answer 4

The short term specific objectives.

Question 5

Operational objectives

Answer 5

The objectives of each functional area.

Question 6

Why set objectives? (x4)

Answer 6

Gives the business direction
Helps set targets
Helps with decision making
Helps write the business plan and seek investment

Question 7

SMART objectives

Answer 7

Specific
Measurable
Achievable
Realistic
Time related

Question 8

Job production

Answer 8

Making a unique and specific product to the customers’ order.

Question 9

Batch production

Answer 9

Making a specific quantity of a product.

Question 10

Mass / flow production

Answer 10

Making very large quantities of the same product on the one machine.

Question 11

Advantages of job production (x4)

Answer 11

Can charge high prices
Can meet specific customer needs
Motivated staff (end product)
Interesting work for staff

Question 12

Disadvantages of job production (x7)

Answer 12

May take a long time to receive a full payment
Time consuming
Need to break customer loyalty to other businesses
Expensive (staff, resources etc) - high cost of production
Training staff
Only specific customers
Cash flow issues

Question 13

Advantages of batch production (x6)

Answer 13

Can make a wide variety of products
More interesting for workers - variety
Greater quality control
Producing smaller quantities can reduce waste
Useful for seasonal items
Machinery isn’t continually active - reduced running costs

Question 14

Disadvantages of batch production (x5)

Answer 14

Time consuming to change batches
Possible high cost of errors
Periods of downtime where the specialist machinery must be altered
Increased storage costs for large quantities of produced products
High training costs

Question 15

Advantages of flow production (x8)

Answer 15

No downtime
Efficient
Consistent
Reduced labour costs - low skilled employees
Produce a high number of products at a low cost
Production can happen 24/7
Can benefit from economies of scale
Fewer human mistakes

Question 16

Disadvantages of flow production (x7)

Answer 16

Repetitive and boring for workers - lack motivation
Difficult to alter the production process
High cost of machinery
All products have to be very similar or standardised
High storage costs
High maintenance costs
Low retention

Question 17

Cell production

Answer 17

The flow production line is split into a number of sections.
Each team (or ‘cell’) is responsible for several parts of the finished product (multi-roles).

Question 18

Specialisation

Answer 18

Focus on one type of product.

Question 19

Division of labour

Answer 19

Specialisation of labour into separate tasks
This ensures higher productivity per worker

Question 20

Productivity

Answer 20

The ability to maximise the use of your inputs (workers and machines).

Question 21

Advantages of specialisation (x7)

Answer 21

Jobs are done more efficiently (fewer mistakes)
Jobs are done to a higher standard
Work is done more quickly
Organised workplace
Higher productivity
People get very skilful
Less waste

Question 22

Disadvantages of specialisation (x4)

Answer 22

Have to train staff
Boring and repetitive work
Hard to employ and replace staff with a good skill set
Difficult to replace staff on sick days

Question 23

What is a mission statement?

Answer 23

The overriding goal of the business and the reason for its existence.
Provides a strategic perspective for the business and a vision for the future.

Question 24

An effective mission statement… (x4)

Answer 24

Differentiates the business from its competitors
Defines the markets or business in which the business wants to operate
Is relevant to all major stakeholders - not just shareholders and managers
Excites, inspires, motivates and guides - particularly important for employees

Question 25

Why are mission statements criticised? (x5)

Answer 25

Not always supported by actions of the business Often too vague and general Viewed as a public relation exercise Sometimes regarded cynically by employees Not supported wholeheartedly by senior management

Question 26

Why innovate (and invent)? (x11)

Answer 26

Grow your business Adapt to change Make customers buy again from you Stay ahead of the competition Take advantage of new technologies Achieve more success Dominate the market Charge a higher price Improve / meet customer wants and needs To be the first with no competitors Improve brand name

Question 27

Problems with innovation (and invention) (x6)

Answer 27

Very costly Time consuming Can end up wasting resources by developing something that doesn’t sell Risk of failure Resistance to change to new ways of thinking Employees may not be motivated to innovate

Question 28

Critical path analysis

Answer 28

The sequence of project activities which add up to the longest overall duration. The critical path determines the shortest time possible to complete the project.

Question 29

Advantages of critical path analysis (x3)

Answer 29

Reduces the risk and costs Helps spot which activities have some slack (“float”) Links well with other aspects of business planning such as cash flow

Question 30

Disadvantages of critical path analysis (x3)

Answer 30

Reliability is based on accurate estimates Does not guarantee the success of a project Resources may not actually be as flexible

Question 31

Free float

Answer 31

The amount of time that an activity can be delayed without delaying the start of the next task

Question 32

Free float calculation

Answer 32

Next task’s EST - this task’s EST - duration

Question 33

Total float

Answer 33

The amount of time that an activity can be delayed without impacting on the completion date of the whole project

Question 34

Total float calculation

Answer 34

This task’s LFT - this task’s EST - duration

Question 35

Dummy run

Answer 35

A task that needs completing, but its delay has no impact anywhere (e.g printing off the marketing brochures). Dummy run = 0 (shown by a broken line).

Question 36

PERT

Answer 36

Program evaluation review technique

Question 37

Estimated duration of a project is calculated by:

Answer 37

((optimistic time)+(4 x likely time)+(pessimistic time)) / 6

Question 38

Disadvantages of a Gantt chart (x5)

Answer 38

Difficult to prepare and manage Time consuming to update All tasks are not visible in a single view They don’t designate priorities They don’t offer much detail regarding task dependencies

Question 39

Measuring productivity (output per worker)

Answer 39

Number of products / average number of employees

Question 40

Measuring productivity (output per machine)

Answer 40

Number of products (output) / capital

Question 41

Measuring productivity (sales revenue)

Answer 41

Sales revenue / staff

Question 42

Ways to improve productivity

Answer 42

Motivation techniques Targets Monitoring staff Better machinery Training “Marginal gains” (improve everything by a small amount) Factory layout Work your staff harder

Question 43

Capacity utilisation

Answer 43

What percentage of your potential capacity you are currently using

Question 44

Capacity utilisation calculation

Answer 44

(Actual output / potential output) x 100

Question 45

Benefits of working at full capacity (x2)

Answer 45

More output Justifies wages and equipment

Question 46

Disadvantages of working at full capacity (x2)

Answer 46

Breakages Staff illness / stress

Question 47

Outsourcing

Answer 47

A company hires a third-party to perform tasks, handle operations or provide services for the company