Operational Objectives Flashcards
(34 cards)
What are operational objectives?
Targets set for production to help a company achieve its overall objectives.
How do operational objectives affect operational decisions?
They focus decisions on meeting these objectives.
What is a quality objective?
An objective that involves maintaining or improving levels of quality.
What is a cost objective?
An aim to cut costs, especially for companies competing on price.
How can a firm reduce costs?
By cutting fixed costs or variable costs.
What does flexibility in operational objectives entail?
The ability to react to customer demand by varying the amount of goods or services produced.
What is a zero-hours contract?
A contract where a worker is employed without a guaranteed minimum number of hours per week.
What do efficiency objectives aim to achieve?
Better use of resources to reduce costs and increase profit.
What is capacity utilisation?
Increasing output closer to the maximum amount of goods the firm could produce with current resources.
What is an innovation objective?
A target set for the Research & Development department to achieve new advancements.
Why do firms set environmental objectives?
Due to pressure from customers and the Government.
What is a speed of response objective?
The goal to decrease production time, waiting time for customers, or time to market new products.
What does dependability mean in operational objectives?
The reliability of a business and its suppliers.
What is added value?
The difference between the cost of raw materials and the price that the customer pays.
What formula represents added value?
ADDED VALUE = SALES REVENUE - COST OF BOUGHT-IN GOODS AND SERVICES
How can added value be achieved?
By increasing the selling price or reducing the costs of raw materials.
What factors can justify a higher selling price?
Better quality, environmental friendliness, quick speed of response, and dependability.
What are Internal Factors that influence Operational Objectives?
• Nature of the Product
• Availability of Resources
• Other departments
• Overall objectives
Internal factors can significantly shape the goals and strategies of a business.
How does the Nature of the Product affect Operational Objectives?
Different products lead to different targets; e.g., a computer technology firm focuses on innovation while a family-run B&B aims to increase capacity utilization.
The product type dictates strategic focus.
What does Availability of Resources imply for Operational Objectives?
Limited resources can restrict output; e.g., producing 500 hand-painted dolls’ houses in 3 days may not be feasible with only five carpenters.
Resource constraints directly influence production capabilities.
How do Other Departments impact Operational Objectives?
Decisions made in finance, marketing, and HR affect what the production department can achieve, and vice-versa.
Interdepartmental coordination is crucial for meeting operational goals.
What role do Overall Objectives play in shaping Operational Objectives?
Concerns like environmental impact necessitate adjustments in production processes to be more environmentally friendly.
Strategic objectives guide operational practices.
What are External Factors that influence Operational Objectives?
• Competitors’ Performance
• Market conditions
• Demand for Product
• Changing Customer Needs
• New technology
External factors can compel businesses to adjust their objectives.
How does Competitors’ Performance affect Operational Objectives?
Firms may set targets in response to rivals; e.g., if a competitor gains market share, a company may aim to increase its own market share.
Competitive dynamics drive strategic adjustments.
