5.1 & 5.2 Flashcards
what does LLCE stand for
land, labor, capital, and entrepreneurship
Defect
something bad that can negatively affect the business in all sorts of way
transformation process
objects (water, yeast) inputs –> transformation process –> outputs (bread)
What should be considered when creating a Transformation Process?
- What level of Output is required?
How much of a product or service do you need to properly run your business? - How will the business provide the service?
Online or with a store/location? Does it require a lot of staff or only a few? - What quality of service will be provided?
How many people will sit in your cafe? How long will the average order take? - What parts of the business will be handled internally? Which parts of the operation(s) will be outsourced?
Hire cleaners or outsource them? What level of cleanliness is required?
what is outsourcing
Instead of doing it themselves: A company chooses to contract with another company (the “outsourcer”) to do specific work.
Focus on core business: This allows the original company to focus on its core business activities and what it does best.
Capital or Labor intensive?
Some business functions, agriculture and manufacturing, in particular, require Capital-Intensive Processes to work efficiently.
Examples include:
A bottling plant for Pepsi
Watering and seeding of extensive farmland
Creating and wrapping millions of candies for the holiday season.
some businesses functions, mostly in the tertiary and quaternary sector (but not always), require a Labour-Intensive Process and require less land and capital to complete.
Examples include:
Clothes manufacturing
Harvesting of particular foods such as coffee
Custom-made products
Job Production- One and Done
An operation that requires specialized work and custom features. Each finished product is unique and strongly connected to the producer and customers. Examples include: painted portraits, architecture, and custom cars or fashion.
These items take time to make and are expensive.
Batch Production- Move as a group, made as a group
One group of items is started at the same time, moves together to the following stage(s) and finishes at the same time. One batch can differ from another but the batch that starts together is uniform in its creation.
This is common in bakeries and cafes with signature items.
Costs are lower than Job Production as costs are shared among the items being made.
Mass/Flow Production- Continuously Working until the job is done.
Large scale production using capital intensive equipment to make large volumes of standardized products. In this method, a product goes from start to finish, through various stages, continuously until the output target is met.
High start-up costs, unit costs are spread out among the items being produced.
Mass Customization- Newest style, heavy investment to meet customer needs.
Mass production but with custom features. Requires specialized steps to add in customer specific requests and the inventory available to do this but still meeting mass production method standards. This is most common in the car industry where a basic model is used (frame/chassis) with custom options placed onto this template.
High start-up costs, high inventory requirements, costs are still spread out more than other methods.
Things to consider before choosing a Production Method (AO3)
Output Requirements
Demand Requirements
Capital Costs
Inventory Capacity and Costs
Location (5.4)
Distribution
BM Tool #13: Decisions Trees
a diagram that represents different options that are available to a business in the decision-making process, showing possible outcomes.
This tool allows managers to calculate the expected value of each decision in order to plan the best options for the future.
