Business Text book Topic One Operarions

Question 1

What does Operations refer too?

Answer 1

Operations refers to the business process that involves transformation or, more generally, ‘production’.

Question 2

What is meant by Transformation?

Answer 2

Transformation is the conversion of inputs (resources) into outputs (goods and services)

Question 3

What is meant by Lean production?

Answer 3

Lean production aims to eliminate waste at every stage of production. It involves analysing each stage of the production process, detecting where inefficiencies are and correcting them.

Question 4

What are the seven sources of waste that can come from a business?

Answer 4

There are several sources of waste in business, including the underuse of labour, overproduction, errors and defects requiring remediation or creating lost product, underutilisation of machinery, slow lead times and waiting times within processes and carrying of excess inventory. Each of these sources of waste adds cost but does not add value.

Question 5

The growth of the fair trade movement is a direct result of……?

Answer 5

The growth of the fair trade movement is a direct result of consumers advocating for operations processes in production and supply to integrate notions of a fair price, decent working conditions, ethical sourcing and local sustainability.

Question 6

What does the word Ethical Sourcing refer to?

Answer 6

Ethical sourcing refers to business practices of sourcing from suppliers that engage in ethical conduct such as the payment of fair wages and the use of environmentally friendly practices.

Question 7

How have consumers changed in regard to the thought process of buying a product

Answer 7

Consumers are making more informed decisions about which businesses they will buy from and are concerned about how businesses source their supplies as well as the practices and standards used by businesses within a supply chain. Consumers have expressed concern about these practices and are increasingly purchasing from businesses that refuse to support unethical practices. This includes if the unethical practice are perpetrated by businesses within the supply chain

Question 8

What have NGO’s done in regard to ethical sourcing?

Answer 8

NGOs have drawn attention to the poor labour practices and damaging environmental impacts of businesses operating in low-cost nations such as Vietnam, Bangladesh and India.

Question 9

How have consumers shaped businesses in recent years in regard to ethical sourcing?

Answer 9

Numerous global brands now make it a contractual obligation for suppliers to disclose their labour standards and environmental impacts. In the event of a breach of the contractual obligation, global brands can use alternative suppliers. In this way, consumer choice affects corporate practice, which in turn affects supply chain and sourcing decisions.

Question 10

Identify business inputs for a producer if a good?

Answer 10

InformationRaw materials Human resources Capital in the form of equipment

Question 11

Identify business inputs for a service provider?

Answer 11

Skill educationtime qualifications MaterialsTechnology

Question 12

Explain how new business opportunities can arise as technology changes?

Answer 12

Improvements in technology mean that the capability and functionality of products is changing and the way people do things is also changing. This can be seen through advancements in communications and digital technologies.

Question 13

Define the word strategic?

Answer 13

Strategic refers to the long-term, broad aims affecting all key business areas; that is, the strategic role of each key business function involves the managers of each function contributing to the strategic direction or strategic plan of the business.

Question 14

What are profit centres

Answer 14

Profit centres are those aspects of a business that directly derive revenue and profits.

Question 15

What are cost centres?

Answer 15

Cost centres are particular areas, departments or sections of a business to which costs can be directly attributed.

Question 16

What is cost leadership?

Answer 16

Cost leadership involves aiming to have the lowest costs or to be the most price-competitive in the market. A key aspect to cost leadership is that although trading with the lowest cost, the overall business should still be profitable.

Question 17

What are some costs that are a feature of the operation process?

Answer 17

Input costs, Labour costs, Processing costs, Inventory costs and Quality management costs.

Question 18

Name four input costs of operations function?

Answer 18

Facilities, land, resources and interest on investment.

Question 19

Name four Labour costs of the operation function

Answer 19

• Full-time and part-time employees
• Casual employees
• subcontractors
• redundancy

Question 20

Name four costs of the processing costs in the operations function

Answer 20

• Machinery maintenance
• Electricity
• Product design
• Template and Tooling

Question 21

Name four costs of the inventory costs in regard to the operations function

Answer 21

• Back order
• logistics and distribution
• Storage
• Inventory management

Question 22

What is cross-docking?

Answer 22

Cross-docking describes a process whereby stock from suppliers is transferred to distributors without the need for holding in between. Normally, businesses gather their source inventory at a warehouse or distribution centre. The stock is offloaded from the supplier, stored and then later retrieved for distribution to the retail outlets. Cross-docking means that most inventory is never stored in a warehouse, but is brought to a point where it can be directly transferred for shipment to retail outlets.

Question 23

How is there a direct relationship between cost and quality?

Answer 23

There is a direct relationship between cost and quality. As the standard of materials, labour and other outputs rise, and the precision and speed of facilities and equipment rise, the prices of products made by the business will increase. Conversely, if the costs of inputs are very low then it is likely that the final prices will reflect the lower quality of inputs and processes. Operations managers and those who lead the other business functions will need to decide what level of quality is sought and hence what level of costs incur. In this way, they will need to decide what balance to create between cost and the desired quality.

Question 24

What does Economies of scale refer to?

Answer 24

Economies of scale refers to cost advantages that can be created as a result of an increase in scale of business operations. Typically the cost savings come from being able to purchase lower cost per unit of input and from efficiencies created through improved use of technology and machinery.

Question 25

How can products be classified as?

Answer 25

Products can be classified as either good or services.

Question 26

What are the features of Goods in regard to Tangibility and perishability?

Answer 26

They are tangible. That is, they have a physical dimension in that they can be seen, moved, touched and stored. Some goods are perishable in that they may spoil if not used (e.g fresh food)

Question 27

What are the features of a Service in regard to Tangibility and reliability?

Answer 27

Services are intangible. They only exist while they are being performed, although the effects may endure for long after the completion of the service.

Question 28

What are the features of a Good in regard to customisation?

Answer 28

Goods tend to be standardised through they can sometimes be customised.

Question 30

What are the features of a Service in regard to Customisation?

Answer 30

Services are generally customised, though they may be standardised to a high degree.

Question 31

What are features of a Good in regard to ownership?

Answer 31

Goods can be owned and transferred between people through the sale of ownership.

Question 32

What are the features of service in regard to ownership

Answer 32

Services cannot be owned.

Question 33

What are features of a good in regard to Time between production and consumption?

Answer 33

The length of time between the production of goods and their consumption can be considerable.

Question 34

What are the features of services in regard to time between production and consumption

Answer 34

The production of services and the consumption of services are simultaneous

Question 35

What are the features of goods in regard to Determination of value?

Answer 35

Value can be independently ascertained through costing all inputs and adding a margin. Inputs can easily be determined: cost of labour, materials and transformation plus a margin for profit.

Question 36

What are the features of services in regard to determination of value?

Answer 36

Value is highly subjective and depends on what the market is prepared to bear. However, the value will increase with the service provider giving high levels of skill, longer time, higher levels of education and experience, and high levels of ability and expertise.

Question 37

Why are goods and services sometimes hard to distinguish?

Answer 37

Sometimes goods and services are hard to distinguish because while the product itself may be a good, there are many things behind it that are a service. An example of this is “You go to a fast-food provider and buy two pizzas. The pizzas are goods that are perishable and should be eaten while fresh. However, the goods cannot be separated from the service that comes with it: the way in which the customer is treated by the person taking the order, the customisation of the goods to meet the customer’s specific requirements, the layout of the stone and the skill of the chef preparing the ingredients.

Question 38

Define the word standardisation?

Answer 38

Standardisation refers to the making of products that are homogenous or identical.

Question 39

What is meant by product differentiation?

Answer 39

Product differentiation means distinguishing products (goods or services) in some way from those of competitors. There are different forms of product differentiation, and product differentiation will be different for goods and services.

Question 41

What are the three ways good’s can be made different?

Answer 41

Varying the actual product features.

Varying product quality

varying and augmented features.

Question 42

What is meant by varying the actual product features?

Answer 42

Generally, goods will come in one basic variety and then in other varieties of increasing complexity options. Thus, breakfast cereal at its most basic can be processed grain, or it can be a mix of the processed grain with added ingredients such as sugar, dried fruit and nuts. In reference to electronic goods, products are made with remarkable variation as a means of differentiating the market.

Question 43

What is meant by varying product quality?

Answer 43

This can be done by making a low-quality model that is very affordable and then increasing the quality (which will be reflected in the higher price). Sometimes the higher quality alternative may be sold under an alternative trade name so that the market perceives both products as being produced by different produces

Question 44

What is meant varying augmented features?

Answer 44

Varying augmented features. This refers to add-ons or additional benefits associated with particular goods. Typically, augmented features are seen in electronic goods and motor vehicles. For example, a car manufacturer may allow consumers to buy a vehicle with the capacity to fit a spoiler, windscreen whippers on headlights, a built-in GPS and self-parking (autopilot) systems. These are not standard features that can significantly vary a product.

Question 45

How can services be differentiated with regard to services?

Answer 45

Varying the amount of time spent on a service

varying the level of expertise brought to a service

varying the qualifications and experience of the service provider

varying the quality of materials/technology

Question 46

What is meant by Varying amount of time spent on a service?

Answer 46

Time is a factor that differentiates between service providers.

Question 47

What is meant by varying the level of expertise brought to a service?

Answer 47

If a person has a higher level of expertise then, as a service provider, they can provide a more specialised service.

Question 48

What is meant by varying the qualifications and experience of the service provider?

Answer 48

Highly qualified and experienced service providers can significantly affect the quality of service provided. This will be an important factor for consumers when deciding between service providers.

Question 49

What is meant by varying the quality of materials/technology used in service delivery

Answer 49

The use of computer-based technologies such as accounting software, CAD and CAM programs, medical technologies and ICT’S can significantly affect the quality of service provided and is a notable source of differentiation in the service sector.

Question 50

Demonstrate how an operations decision can affect each key business function?

Answer 50

Operations management is an essential key business function that overlaps with the other business functions such as marketing, finance and human resource management (HRM). Each of these essential business functions has a strategic component. Strategic means ‘affecting all key business operations’; that is the strategic role of the operations management involves operations managers

Question 51

Distinguish between a profit centre and a cost centre

Answer 51

Profit centres are those aspects of a business that directly derive revenue and profits

Cost centres are particular areas, departments or sections of a business to which costs can be directly attributed.