3.4.1

Question 1

What is operations?

Answer 1

the function of a business that is concerned with providing customers with a product that they want in a timely, effective, efficient and profitable way. Operations is about the actual production of the good or service sold by a business.

Question 2

The importance of operations:

Answer 2

Effectively managing operations allows a business to:
- control costs of production
- add value to its products
- guarantee the right level of service
- guarantee the right level of quality
- adapt to the needs of customers
- provide itself with ‘green’ credentials
- meet the demand for its products and services.

Question 3

Operations management is the key factor in the transformational process by which a business

Answer 3

creates its products and services. Therefore, operations is the key to adding value to what a business does.

Question 4

Operational objectives

Answer 4

• Costs - the operations department must be able to control the costs of production in order to maximise profit margins.
• Quality - the operations department is responsible for setting quality standards and ensuring these specifications are met, ensuring the product or service is fit for purpose.
• Environmental objectives - the production process can cause many negative externalities, such as pollution. Businesses will set targets on a number of environmental factors such as recycling and waste disposal.
• Dependability - businesses cannot afford to let their customers down.
  Those that do tend to lose loyalty and repeat purchases. Dependability can be the key factor by which a customer chooses its supplier, especially in industrial markets
• Speed of response and flexibility - opportunities and sales can be lost if a business cannot meet order volumes in a specific time frame. Operations is also responsible for ensuring the product is suitably flexible to meet the needs of different customers.

Question 5

Internal influences on operational objectives

Answer 5

• Employee skills - these may determine objectives, such as the level of quality.
• Nature of the product - minimising cost may be very important for a product sold for £1.99.

Question 6

External influences on operational objectives

Answer 6

• Legal / political factors - such as health and safety legislation and industry regulation.
• Economic factors - operations must be able to adapt to changing levels of demand in the market.
• Social factors - such as consumers continue to expect more personalisation of the products they buy.
• Technological factors - technology drives all operational decisions, in particular new product development and processes of manufacture and distribution.

Question 7

4V of operations

Answer 7

Can be used to analyse key issues in the operational decisions of any business.
- Volume
- Variety
- Visibility
- Variability