Operations Notes.pdf - Business Studies Operations 1 Roles...

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Business Studies: Operations 1. Roles of Operations Management Strategic Role of Operations Management Operations is the business function concerned with the transformation of inputs into outputs. The operations manager will make strategic decisions about the overall design of the operations system. A strategic decision is one that affects the business in the long term. The strategic goals of operations are to improve productivity, efficiency and quality of outputs. Strategic operational decisions will also need to suit the overall strategic goal and vision in the business plan and fit the changing business environment. Long term decisions will cover three broad areas: - planning production and delivery - controls to manage quality - improving operations Therefore, all strategic decisions will focus on lowering costs through efficiency and producing a good or service that is different from and competitive against those of rivals in the market. - Cost Leadership: A cost leadership strategy is one in which a business aims to be the lowest-cost manufacturer within its industry. The products are basic with fewer features, perhaps lower quality and using low- cost packaging.
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Business Studies: Operations Low costs can be achieved through economies of scales in production and distribution, access to cheaper raw materials or by using technology . The business will expect a small profit margin on each of the items it sells, balanced by a high volume of sales to generate revenue. The issues that operations managers need to be aware of when using a cost leadership strategy are: - competitors can use the same strategy and may achieve even lower costs. - small businesses are able to implement strategies to reduce costs much faster than larger firms. - consumer preferences may change and the market for a ‘low-cost, low-quality’ product may shrink. - consumers may think the product is of poor quality compared to those of its competitors. - Good/Service Differentiation: A business may decide that a better strategy to achieve a sustainable advantage in a competitive market is to differentiate its products rather than aiming to be the lowest-cost supplier. Customers have ever-increasing expectations about quality, service and technology. Therefore, a product may achieve a greater market share because it is uniquely different from its competitors. Differentiation through operations may be achieved through: • better quality • faster delivery • custom-designed products • more features and applications • incorporation of new technology • clever design. An example of a differentiation strategy are the voice recognition software and touchscreen technology used in Apple product. A differentiated product can command a higher price in the market because customers are attracted to the product and loyal to the brand.
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  • Fall '16
  • Eric Ash
  • Business, Management, Operations, Operations Manager, Mass production, Business Studies

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