Unit 4: AS Business Studies Notes

Unit 4: Chapter 11: Setting Operational Objectives 

Operations is a business function. It is responsible for production - operations management, therefore, is managing the process of converting inputs into outputs. The overall operations process consists of a series of smaller operations processes. Operations management involves making decisions, it is at the heart of the organisation - it affects all aspects of out lives and involves a transformation process to turn inputs into outputs.

The process is ongoing. Products being unsold means operation managers review their activities. 

Operations management involves making decisions such as the following: 

• The level of output needed to produce (investment in equipment / people, manage growth, consider risk of more output)

• Product range, level of customer service, flexibility in customer demands 

• Best production method (capital intensive or labour intensive)

• How best to provide to customer (online, high street, both)

• How much of the process your business provide or suppliers provide (decide how much of supply chain you wanna control)

There are stages of operations. 

Raw materials → manufacturing → transportation → retail → disposal

Operations process continues after consumption, so when the product may need disposing. Through the operations process, business activity impacts on society and stakeholder groups. 

Operations management is based on transforming resources, so adding value is the aim. The value of a process may be measured in multiple ways depending on what it is and who’s measuring. Ensure the process adds enough value to be worth undertaking, you can measure what’s being achieved and work out how to improve it further.

Operations can involve:

• Gathering, analysing, distributing info

• Storing and transporting products

• Transforming people

• Producing goods

• Bringing products and customers together

Some processes may be capital intensive, some may be labour intensive. 

The operation decision-making process involves 5 steps. 

1. Identifying objectives

2. Analyse current position in relation to objectives

3. Choose actions

4. Implement decisions

5. Reviewing 

This is an iterative process (may move back and forth on steps). 

Operations decisions will include an ethical element. These may crop up regarding issues such as how to reward / treat employees (increased workload), where to locate (low wage areas), safety features (avoid adding safety features to save costs), the environment (supplier worries, noise, pollution, emissions). 

Competitiveness of a business depends on benefits it offers in relation to rivals. Operation activities often deliver goods / services. They also account for majority of business costs. Both of these things are vital to competitiveness - benefits and costs. “Operational excellence” is key to success, it usually involves ongoing improvements. You must constantly be adapting and changing your product and operations to keep up with rivals. 

Operation objectives are set by the business, ensuring they fit the competitive strategy. Consider a low costs objective - operations would achieve this whilst making sure the business remains profitable. Typical operation objectives include quality (e.g. Maccys), speed of response (e.g. Direct Line home insurance), dependability (e.g. bus company), costs (e.g. Poundland), flexibility (e.g. M&S tailoring). 

Others may include environmental objectives (e.g. recycling waste), defect rates…