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Business > Unit 4-Decision making to improve operational performance (4.1) > Flashcards

Unit 4-Decision making to improve operational performance (4.1) Flashcards

1
Q

Define objectives.

A

‘A quantifiable (measurable) target which helps co-ordinate activities.’

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2
Q

What is a mission statement?

A

A statement about the organisation’s aims that is designed to motivate​.

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3
Q

What are corporate objectives?

A

These are goals for the whole organisation and are usually based on the mission statement​

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4
Q

What are functional objectives?

A

These are goals or each functional area (different departments) of a business and are based on corporate objectives.

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5
Q

Give the order of what objectives can be split into.

A

Mission statement

Corporate objectives

Functional objectives

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6
Q

What can functional objectives be split into?

A

Departmental and even individual objectives.

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7
Q

What is it called when a business runs it through setting objectives?

A

MBO

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8
Q

What does MBO stand for?

A

‘management by objective.’

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9
Q

What acronym should objectives be?

A

SMART

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10
Q

What does SMART stand for?

A

Specific
Measurable
Agreed/achievable
Realistic
Timely/time bound

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11
Q

What does specific mean in SMART?

A

Easily defined

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12
Q

What does measurable mean in SMART?

A

Quantifiable (can be calculated)

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13
Q

What does agreed/achievable mean in SMART?

A

Stakeholders involved in setting them

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14
Q

What does realistic mean in SMART?

A

Not in conflict with other objectives

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15
Q

What does timely/time bound mean in SMART?

A

Based on a timescale

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16
Q

Why should a business set a mission?

A

Having a mission will help to guide employees and motivate them in the direction the organisation wants to go

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17
Q

Why should businesses set corporate objectives?

A

Gives a more detailed sense of direction.

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18
Q

Why should a business have functional objectives?

A

Allows for greater co-ordination of resources to ensure corporate objectives are met

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19
Q

What do operational objectives need to be?

A

Broad

General goals

Long and medium term

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20
Q

Why do operational objectives need to be broad?

A

They need to encompass anything to do with the operational side of the business.

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21
Q

Why do operational objectives have to link to general goals?

A

These ensure that departments can understand what they need to do to achieve the operational objectives.

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22
Q

What is devised in order to ensure that long and medium term objectives are met?

A

Plans and strategies

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23
Q

What are short term measures called?

A

Operational tactics

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24
Q

Define tactics.

A

Day-to-day activities that help achieve objectives.

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25
What do the 5 key operational objectives include?
1. Costs (reducing mainly) 2. Quality 3. Speed of response and flexibility 4. Dependability 5. Added value
26
Formula to calculate profit.
Sales revenue - (variable cost + fixed costs)
27
What are the 2 main things a business needs to do to improve profit?
Increase sales Reduce costs
28
What are the 3 main ways a business can reduce costs?
1. Reducing unit costs 2. Reducing fixed costs 3. Reducing variable costs per unit
29
What does a low unit cost allow a business to do?
Either: Keep prices low for customers To enjoy higher profit margins
30
When can reducing fixed costs be a common aim?
When businesses have merged because they may have duplication of fixed costs i.e., two premises on the high street.
31
How can a business reduce variable costs per unit?
Finding cheaper supplies (i.e., reducing raw material costs) Cheaper manufacturing (i.e., reducing labour costs by improving labour productivity)
32
Define quality.
'Those features of a product or service that allow it to satisfy (or delight) customers'
33
Why is there no set measure of quality?
It depends on people's opinions
34
What are the 4 methods of measuring the quality of a business?
1. Customer satisfaction ratings 2. Customer complaints 3. Scrap rate 4. Punctuality
35
How can customer satisfaction ratings measure quality?
Can gather satisfaction in both qualitative (opinion) or quantitative (numerical) form. Customer satisfaction surveys can therefore measure if quality has been achieved.
36
How can customer complaints measure quality?
Shows whether a business has problems it needs to address. Satisfied customers returned to the business, unsatisfied customers complain
37
How can customer complaints damage a businesses reputation?
People don't only complain to businesses but also everybody around them.
38
What is scrap rate?
Evaluates the number of goods companies produce that become waste because of defects or errors during manufacturing.
39
How can evaluating scrap rate be used to measure quality?
Manufacturers track the rejects through the manufacturing process. This show whether the production process is working effectively.
40
What does a high scrap rate show?
Money is wasted. Unit costs of goods is increased
41
How can looking at punctuality measure quality?
Measures how promptly a business delivers its goods (or services).
42
What is punctuality expressed as?
Percentage
43
Formula for punctuality.
(Deliveries on time/total deliveries) x 100
44
Compare punctuality percentage and customer satisfaction.
The better the punctuality percentage, the higher the customer satisfaction.
45
What types of businesses is punctuality important for?
Online B-2-B businesses
46
What are B-2-B businesses?
Business to business
47
Give an example of a business which is famous for their speed of response.
Zara-the Spanish clothes retailer
48
Why is Zara famous for their speed of response?
It takes just two weeks from the design of a skirt to it being on the shop floor.
49
How does it take Zara just 2 weeks from designing the product it being on the shop floor?
They have a vertical integration of the supply chain. This means they are very flexible and can change designs far quicker then their rivals – a very good objective for a fashion retailer!
50
What is vertical integration?
A business strategy where the business itself controls the supply chain and multiple stages of its production process, thus eliminating or reducing third-party vendor dependencies
51
What does being dependable mean?
Not wanting to let customers down so ensuring the business meets promises.
52
Give examples of how certain business are dependable.
Amazon state delivery dates for their products and keep customers informed if that date changes using email – this ensures that their reputation is maintained with customers.​ Dyson do extensive product testing to ensure that their vacuums deliver their promise
53
Why are environmental objectives important?
Many businesses want to ensure their operational side does not harm the environment-especially for their CSR report.
54
What is CSR?
Corporate Social Responsibility
55
Give 5 examples of what environmental objectives could include.
1. Reducing waste​ 2. Reducing carbon footprint​ 3. Minimising waste products or materials​ 4. Increase recycling​ 5. Achieving self-sufficiency in energy use
56
Give an example of how a business ensures they meet their environmental objectives.
M&S's 'Plan A'
57
What does M&S's 'Plan A' include?
Having delivery HGV's with sloped/curved roofs to reduce fuel consumption. Reducing the use of plastic bags at the counter.
58
What does adding value allow a business to do?
Develop a USP for its products
59
What things could adding value include?
1. Increasing spending on R&D 2. Achieving a certain number of patents 3. Developing a particular innovation
60
What is R&D?
Research and development/design
61
What are patents?
Protection of an idea
62
Which business is one of the world's biggest spender on R&D?
Land Rover
63
How much patents does Dyson currently hold?
1200-sending roughly one a day!
64
Give an example of a product with a particular innovation.
Google glasses
65
What are the 4 factors which have external influences on operational objectives?
1. Market factors 2. Competitors' actions and performance 3. Economic factors 4. Political factors
66
How does the market influence operational objectives?
Is the market growing or declining? If declining, then the business should consider developing a new market. If growing, then market penetration should be used.
67
What is market penetration?
A growth strategy where the business focuses on selling existing products into existing markets.
68
How do competitors' actions and performance influence operational objectives?
What are competitors doing? Will it affect sales? Is there a more efficient way of operating?
69
How do economic factors influence operational objectives?
Operations management is dependent on capital investment and if interest rates are high this may increase costs or may reduce sales as customers struggle to pay back loans
70
Give an example of how political factors influence operational objectives.
Car manufacturers have faced increased pressure to improve the efficiency of their products and how they manufacture them. This means modern cars are manufactured in a more environmentally friendly way and are far more fuel efficient than they were 10 years ago.
71
What are the 4 internal influences on operational objectives?
1. Corporate objectives 2. Finance 3. Human resources (HR) 4. Nature of product/service
72
How do corporate objectives influence operational objectives?
The operations department has to ensure that its objectives are consistent with the overall corporate objectives.
73
What are corporate objectives?
Those that relate to the business as a whole
74
Give an example of some contrasting corporate objectives in the same market.
British Airways' = Be world's leading global premium airline Ryanair = Be Europe's leading low-fare airline
75
How does finance influence operational objectives?
Operations management objectives rely on high capital expenditure (i.e. machinery, etc.) so healthy finances are essential.
76
How does HR influence operational objectives?
Skills and training as well as motivation of the workforce are essential to ensure objectives are met.
77
How does the nature of the product/service influence operational objectives?
Some products are suited to mass production (i.e. Cadbury chocolate bars) whereas others need to be high quality with good customer service (i.e. wedding dress design).
78
What helps a business have a significant competitive advantage?
Having the most appropriate operational objectives.

Business (16 decks)

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