A-Level Business Unit 4.1 (Year 1/AS AQA Slides)
- Created by: SxrxM-W2002
- Created on: 10-04-19 10:54
Learning Outcomes
- What you need to know:
- why businesses set operational objectives - what is the value of setting them?
- the external influences on setting operational objectives
- the internal influences on setting operational objectives
Overview of Key Concepts
- What is meant by the term 'operational objectives'
- Identifying the main operational objectives - quality, reducing costs, speed of response, depandability, environmental and adding value
- The internal and external influences on the operational objectives
Objectives
- A definition of objectives is:
- 'a quantifiable target which helps to co-ordinate activites'
- Objectives should be SMART, or:
- Specific - easily defined
- Measurable - quantifiable
- Agreed/Achieveable - stakeholders involved in setting them
- Realistic - not in conflict with other objectives
- Timely/Time Bound - based on a timescale
Diagram
Why Set Objectives
- Having a mission will help to guide employees and motivate them in the direction the organisation wants to go
- Having corporate objectives gives a more detailed sense of direction
- Having functional objectives allows for greater co-ordination of resources to ensure corporate objectives are met
Operational Objectives
- Operational objectives are:
- broad - they encompass anything to do with the operational side of the business
- general goal - these ensure that departments can understand what they need to do to achieve the operational objectives
- long and medium term - plans and strategies are devised to ensure that the long and medium term objectives are met
- Short term measures and called operational tactics
- Operational objectives include:
- costs
- quality
- depandablilty
- added value speed of response
- envirnmental objectives
Remember
- Sales Revenue - Total Costs = Profits
- Therefore, to improve profit, you can:
- increase sale, or
- reduce costs
- Reducing costs is frequently part of the operational management objectives
Reducing Costs
- Reducing unit cost: a low unit cost enables a business either to keep low for customers or to enjoy higher profit margins
- Reducing fixed cost: this is a common aim when businesses have merged because they may have duplication of fixed costs, i.e. two premises on the high street
- Reducing variable costs per unit: this could include finding cheaper suppliers or cheaper manufacturing
Quality
- Qualitty is defined as:
- ' those features of a product or service that allow it to satisfy customer'
- There is no set measure of quality because it depends on people's opinion, but it can be measured using various methods:
- customer satisfaction - can gather satisfaction n both qualitative or quantitative form
- customer complaints - this is a good measure to show whether a business has problems it needs to address. good and bad customer thoughts will be told
- scrap rate - manufacturers track the rejects through the manufacturing process
- punctuality - measure how promptly a business delivers its goods and is expressed as a percentage:
Punctuality (%) = Deliveries on time x 100
Total Deliveries
Dependability
- Some businesses do not want to let customers down and so focus on ensuring that they meet promises - or are dependable.
- Examples:
- Amazon state delivery dates for their products and keep customers informed if that date changes, using emails - this ensures that their reputation is maintained with customers
- Dyson do extensive product testing the ensure that their vacuums deliver their promises
Environmental Objectives
- For many businesses, ensuring that their operational side does not harm the environment is important - especially for their corporate social responsiblity reports
- Environmental objectives would include:
- reducing waste
- reducing carbon footprint
- minimising waste products or materials
- increase recycling
- achieving self-sufficiency in energy use
- M&S has a 'Plan A' to help them achieve environmental objective. This includes having delivery HGV's that have a slopped roof to reduce fuel consumption and reducing the use of plastic bags at the counter.
Added Value
- Adding value is an operational bjective because it allows the business to develop a unique selling point (USP) for its product
- Adding value objectives would include:
- increased spending on R&D - Land Rover, for example, are one of the world's biggest spender on R&D
- achieving a certain number of patents - Dyson currently hold 1,200 patents, sending roughly one a day
- developing a particular innovation - Google glasses add value to their brand
External Influences on Operational Objectives
- External influences are those outside the business. This is covered more in a later topic, but briefly:
- Market factors
- Competitors' actions and performance
- Economic factors
- Political factors
Internal Influences on Operational Objectives
- Internal influences are those from within the business. E.g:
- Corporate pobjectives
- Finance
- Human Resources
- The nature of the product or service
Summary
- Operational objectives allow a business to concerntrate on what they consider to be important to make a=them as effiecient as possible or to give them a competitive advantage
- They can be influenced by the finance, HR and marketing of the goods or services
- External influences like cmpetitors and the economy can affect what objectives the business wants to achieve and how quickly they can achieve them
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