Operations

OPERATIONS 

Operational Objectives

• High efficiency 
• High capacity utilisation 
• Low unit costs
• High quality

Economies of Scale 

Unit costs fall as the business expands. Example include:

• Bulk buying 
• Technological 
• Managerial 
• Marketing

Diseconomies of Scale

Unit costs rise as the business becomes too big. Examples include:

• Communication problems 
• Poor co-ordination
• Low morale due to employees becoming alienated

Innovation 

The successful commercialisation of new ideas. Can be either new products or manufacturing processes.

Benefits include:

• First mover advantage 
• Improved reputation 
• Improved quality and efficiency

Problems include:

• High risk of failure 
• High cost 
• Danger of competitors stealing your ideas

Implications for a strategy of innovation:

• Financial- sufficient funds available
• HR- do employees have the necessary skills and experience
• Operations- required machinery and capacity
• Marketing- market research required to identify new opportunities
• Attitude of senior managers- prepared to take the risks required?

Location

Factors influencing location decisions include: 

• Technology 
• Cost of land and labour 
• Infrastructure 
• Need to be close to resources or market 
• Qualitiative 
• Availability of goverment grants 

Issues relating to international location include: 

• Relative costs of land and labour
• Quality of the overseas workforce 
• Communication and co-ordination 

Lean Production 

• This consists of:
• Critical path analysis 
• Just in time
• Time-based management
• Reduced lead times 
• Shorter product development times 
• TQM ''total quality management''- ensures that the quality of the product meets the requirements of customer.

Benefits of Lean Production

• More effective use of time e.g. quicker new product development, faster production 
• Less waste 
• Better quality 
• Improved efficiency
• Higher staff morale

Issues with Lean Production:

• Need for extra training 
• Need for reliable suppliers for JIT
• CPA is dependent upon accurate data

PEOPLE

HR Objectives

• Labour productivity 
• Labour turnover 
• Absenteeism
• Employer/ employee relations

'Hard' HR

• Views the workforce that needs to be fully utilised

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