Chapter 1 Flashcards
Define operations in terms of operations management
are activities involved in producing good and services.
What does operations management focus on today?
tangible aspectes of manufacturing the field of operations management from end of the value chain (research and development) management process improvement production distributions delivery of products and services
how would one define operations management
a field of investigation into business practices and processes for designing, managing, measuring and improving the development, production and delivery, distribution, and support of a broad range of products and services.
How would financial service companies define operations management?
concerns managerial efforts to ensure that the products and services a company provides to customers meet stated quality standards are timely and are delivered profitably at the lowest reasonable cost to the company.
What 3 topics do operations managers focus on?
- quality
- timeliness
- cost control
what are the 4 activities that make up the functions of management?
managment is the organizational role o
1) planning
2) organizing
3) directing
4) controlling.
define planning
1) consist of anticipating environmental changes, selecting preferred future outcomes, and avoiding undesirable future outcomes, and determining the mix, cost and timing of the resources necessary to support the company’s competitive position and long-term viability in future periods
define organizing
differentiating and classifying resources for the purpose of coordinating the activities of a complex system
define directing
supervising the work of others, this function encompasses the leadership and mentoring roles of a manager as well as the decision process necessary to adjust to changes in theplan, the outcomes or the business.
define controlling
ensuring that organizational processes, assigned resources and associated outcomes all conform to the organizations mission, goals, strategies, policies, plans and procedures and to applicable regulatory requirements.
a corporations management hierarchy is often depicted using an organizational pyramid or organizational chart (org chart). define both of these concepts
- Organizational pyrimid: triangular graphic for displaying the formal hierarchy of power and authority in an organiztion.
- org chart is a hierarchially pattened array of boxes and lines depicting the formal lies of authority, responsibility and communhication in an organization.
What are the essential levels of chains of commands?
1) strategic level
2) functional level
3) operational levels
The domain of top management is strategic management. Define this
the process of providing overall long-term direction to the company.
focus: defining and fulfilling the vision and mission, gorwth, and competing effectively.
emphasizes: function of planning and organization. 3-5 year goals.
in large companies it encompasses the corporate and business levels of management
the domain of functional level of management rests with what process?
providing the planing and organizaing wihtin a given area of specialization, along with ensuring that the units activities fully support the company;s establish strategic direction
What is the domain of operations management?
carrying out the organizations’ day to day business activities. This is also known as the tactical or front-line level.
emphasizes: management functions of directing and controlling
focus: shorter planning horizon, narower slices of resources, and narrower tasks
What is the focus of operations managers in financial services companies?
ways to maintain and improve quality, speed, cost control using state of-the-art approaches from the field of operations management.
How does one achieve goals of max staff productivity and improve customer satisfaction?
controlling cost of 1) staff hours and 2) customer served per staff hour
what kind of measures are taking by financial services companies to maintain the quality and efficiency of their operations ?
- adopting new process improvements, ie: automation, tech and vendor services
- offering staff desirable and flexible working conditions
- providing staff with training and education
- using measures and controls to call attention to opportunities for improvement.
Define the term automation
refers to the operations of a process, system or piece of equipment without human intervention.
- can improve speed and acuraccy and decrease staff cost.
what is first-contact resolution
this is practice of resolving a customers needs in one phone call with no need for follow-up. Simmlar to real-time processing.
How can one use vendor services to improve services?
improve efficiency by tracking the vendors’ costs and efficiencies.
- used to monitor credit reports or to perform background check on job candidates or insurance applicants.
Companies can support operational efficiency by supporting employee retention. How is this completed”?
- supports operational efficiency by retaining employees who offer the company the benefits of training and on-the-job experience,
define the concept of environmental management
is an effort to blend company needs with staff productivity by incorporating job design aspects including flex hours, part-time work, split shifts, space management, and telecommuting.
what is usually covered in employe required training?
focuses on areas of compliance, business ethics, new company initiatives, new products, or new technology for a given unit.
how can technology provide operational effectiveness?
by delivering and monitoring employee training through an online training platform and by supporting statistical tracking delivery and outcomes.
how to companies typically ensure operational efficiency and identify and resolve emerging issues?
they automatically monitor and control processes at all phases.
they require prompt attention to corrective actions up the management chain.
- some companies allocate IT costs for disk storage back to business units where IT users will manage IT costs.
What is the Value chain (model created by Micheal Porter)
a model in which companies can use for analyzing which company functions contribute directly to a company’s competitive position. the value chain reflects the philosophy that a company and all of its resources are dedicated to generating value for customers and profits for owners of the company.
what is an important view of operations, expressed in the value chain ?
a system for transforming or converting resource inputs to product and service outputs. the output represents new value creation and should draw a profit to the company and owners.
What are the 3 pain parts in such a system as mentioned previously?
- resource inputs
- transformative processes
- outputs
define resource inputs
any element that can be used to create a product or service.
-ex monetary investments from company owners; lbor and knowledge from employees, information of sales
define the transformative processes
communication systems, information management and processing systems, analysis of information, transfers of information, investment options, and customer service operations.
What is a process?
a series of ongoing actions directed toward achieving a specified results.
define outputs
investment growth, profits, contractural benefits, satisfied customers, satisfied employees, and satisfied sales procduces
what is a value chain diagram?
the sries of resource imputs, company activities, and profits illustrated in a graphical depiction of the chain of transformation processes that directly add value for customers and owners
inputs> process 1>process2>processX> outputs
what is a value-added function?
commonly defined as a function that has the effect of increasing the amount of money customers pay the company.
what are the specific process that, overall, are said to add value to resource input in a In a value chain for insurance companies,
- product development and design
- product implementation
- product distribution and sales
- underwriting, policy issue, and new business
- brokerage and trade desks
- annuity administration, customer service, and claims
What are support operations?
these are important operations that support the value of chain but do not directly add value for customers and owners
ex: accounting, IT, HR, adveritsing, PR, and markerting research
companies have various ownership arrangements, including stock ownership. mutual ownership, and fraternal ownership. NAme some examples
- stock ownership
- mutual ownership
- fraternal ownership
draw a value chain diagram for insurance companies
actuarial services and product development > sales and distributions > UW and NB > operations and customer services > claims > profits and benefits
Support operations
- marking research
- IT
- HR
- accounting/auditing/internal control
- other general admin
In insurance companies operations processes are directed towards what 3 primary customer groups?
- sales producers
- purchasers
- users of company products and services
Operational employees in insurance and financial services generally perform one of 3 broad functions. NAme them
- NB acquisition functions
- administrative and support functions
- service funtions
What is new business acquisition functions?
employees perform one or several of the activities to close a sale, initiate new customer accounts, pay commissions, process and code insurance application, issue insurance, process initial premiums
What is administrative and support functions?
either managerial or non-managerial employees perform duties to support operational or production activities, but do not directly perform operational or production duties.
- requires operating computers, performing data entry, and operating communication systems and other office equipment.
Administraation functions can include what tasks:?:
include records maintenance, accounting and tax function, actuarial services, advertising, marking administration, quality control, training, agent licensing, public relations, shareholder relations, and regulatory compliance.
define service functions
employees provide service directly for a sales producer, purchaser, or user of insurance product; serve policyholders making premium payments and policy changes on inforce business or help deliver policy benefits ina claim setting.
Customer service functions include what kind of tasks/services?
1, policy holder services, customer service for annuity administration, sales support services, sales commission admin functions, and claim admin functions.
Types of work in operations can be classified as transactional work, transitional work or/and knowledge work. Define these
- transactional: handling various written media, there limiting the range of customer interactions and need for special knowledge. they set work priorities, processing transactions. ie: coding work, policy changes clerk/issue clerk.
- transitional: performing routine tasks. requires knowledge in a specific area. includes IT support, customer services.
- knowledgable: worker interprets information with specific + broad domain. skills and knowledge required to define problems, identify alternatives, and solve issues. ^ quality of knowledge required, and be able to fill in for both transactional or transitional when needed.
ie: actuaries, u/w, claim examiners, and lawyers
Define the term industry
a set of companies engaged in a particular commercial pursuit. Definition of a given industry may include territorial limits.
Classified as manufacturing or services\
Define a financial services industry
consist of companies that provide services to support and enhance the functionning or security of financial assets, which may include but are not limited to weath building, preservation, tax strategies, risk mitigation, and retirement protection.
- AKA finacial institutions.
What is the insurance industry?
consist of companies that provide services to protect and grow financial assets.
- many companies are one division in a financial congloomerate that includes banks, CC companies, consumer finance companies, mortgage companies, and investment brokerages.
What is an industry sector?
part of an industry comprised of organizations carrying out a similar function within the broader industry.
True or false:
Insurance companies can have different ownership dorms?
yes.
Ex: they can include stock ownership and other forms of ownership.
How do techincal expertise and complex products affect insurance companies
they technical complexity of insurance products can lead to misunderstandings on parts of customers, regulators, journalists and piublic as well as employes.
this is always a risk.
the calculations of future outcomes can also be overwhelming at times, which also can resul in miscalculations.
how do social trends affect insurance companies
the financial service companies respond to many forces:
demographics, age, income, values, beliefs, norms of behaviour, epidemics, environmental disasters, politic movements, languages, culter prefernces.
How is the age population affecting insurance companies.
age distribution is changes.
retires and workers are retiring and are more inclined to protect estate assets.
younger workins need to product assets in cases of emergencies, need to accumulate funds,
preferences of older and younger generations need to be reviewed ie: collection of evidence, research, loyalty.
How can insurance companies grow?
increasing their product sales, or by joining forces with another company in a transaction such as a merger, acquisition, joint venture or reinsurance agreement.
stock companies can drive growth by establishing executive compensation incentives that reward executives when company share price grows.
What are 3 important sustained trends affecting companies ability to grow within the financial service industry?
- globalization
- consolidation
- convergence.
Define globalization
increasing potential for businesses to communication, conduct trade, and move funds with relative freedome across national boundaries.
Define consolidation
trend towards mergers, which leads to fewer sellers in the industry.
define convergence
refers to a breakdown of transitional distinctions between sectors of the financial service industry, in convergence, companies may face new competitors for their traditional products and services.
Name 3 paths of converges observed in the financial service industry
- ownership convergence: same corporate group owns companies that operate in different sectors of the financial service industry
- product convergence: products developed in one sector gain features formerly associated with products in another financial sector.
- distribution channel convergence: products issued by one industry sector are sold through distribution channels formerly associated with another sector of the industry.
Independent and cooperation. Name some ways insurance companies may participate in cooperation
- they contribute to broad projects for collecting relevant data and share considerable statistical information
- RI collect broad industry risk data and use those results to provide risk management services to retail insurance companies
- share expense and performance data about best practices for achieving product and financial compliance with complex legal/governemental requirements.
- insurance- related professions and functions maintain active associations that set professional standards which become standard practices for companies in the industry.
