What factors influence the location of a business?
Costs, labour availability, infrastructure, market proximity, government incentives, competition, management preference.
Why might a business relocate?
Reduce costs, access new markets, find skilled labour, respond to growth or decline.
Difference between local, national, and international location decisions?
Local: Close to customers or labour pool.
National: Operate across regions of one country.
International: Entering/locating abroad for cost, market, or strategic advantages.
What is offshoring?
Moving production abroad to reduce costs.
What is reshoring?
Bringing operations back to the home country.
Impact of globalisation on location decisions?
Businesses seek cheaper labour, wider markets, efficiency, supply chain advantages.
What influences the scale of a business?
Demand, capital available, technology, competition, owner objectives.
What are internal economies of scale?
Cost advantages from growth inside the firm (e.g., purchasing, technical, managerial).
What are external economies of scale?
Cost advantages from industry growth (skilled labour pool, suppliers nearby).
What are diseconomies of scale?
Rising unit costs due to coordination problems, bureaucracy, communication breakdown.
Link between scale and unit costs?
: Economies ↓ unit cost; diseconomies ↑ unit cost.
What is quality in operations management?
Being fit for purpose and meeting customer expectations.
What is quality control and its impacts?
Inspecting products at the end of production. It detects faults but does not prevent them; increases costs.
What is quality assurance and its impacts?
Preventing defects by checking processes and standards at each production stage. It reduces waste, boosts consistency, motivates workers.
What is Total Quality Management (TQM) and its impacts?
Culture where all employees aim for continuous quality improvement. It contributes to higher customer loyalty, motivated staff, lower waste — but expensive to implement.
What is benchmarking and why is it important?
Comparing operations with industry leaders to identify best practices and it is important because it helps improve efficiency, quality, and competitiveness.
How do human, marketing, and finance resources influence operations decisions?
HR: skills, labour availability
Finance: capital for equipment or expansion
Marketing: output must match demand and customer needs
Role of IT/AI in operations?
Automation, efficiency, forecasting, cost reduction, improved accuracy.
Why do firms need flexibility?
To adjust volume, delivery times, and product specifications as market conditions change.
What is process innovation?
Improving or redesigning production methods to boost efficiency.
What is Enterprise Resource Planning (ERP) and how does it improve efficiency?
Integrated software system linking all business functions (finance, HR, production, logistics).
-Better inventory control
-Accurate costing and pricing
-Higher capacity utilisation
-Faster response to change
-Flexible workforce planning
-Real-time management information
Purpose of lean production?
Minimise waste, lower costs, improve quality and efficiency.
Key lean methods?
-Kaizen: continuous improvement
-Quality circles: small worker groups solving problems
-Simultaneous engineering: concurrent product/process design
-Cell production: teams working on complete units
-JIT: produce only when needed
-Waste management: eliminate non-value-adding activities
Limitation of lean production?
Requires employee commitment, reliable suppliers, and cultural change.
