M4- topic 1 role of operations management Flashcards
what is operations
the function that involves transformation or “production’. Operations
what is value adding
the creation of extra value as inputs are converted into outputs
what is the value adding chain
Inputs –> transformation + value adding –> outputs
what is the strategic role of operations management
to improve efficiency, productivity and quality of outputs, in order to maximise profits.
what does efficiency mean
to achieve maximum output with minimum input
how does a efficiency increase maximum profit
it minimises waste and keeps cost as low as possible
what is productivity
the value of how efficiently goods and services are produced.
what is cost leadership
when a business has the lowest operating costs within a industry
how does cost leadership affect a business
it lets the business sell higher above the manufacturing price(if quality is maintained),
what are some challenges when using the cost leadership strategies (3)
Competitors adapting the same strategy, and achieving even lower costs
Product perceived as low quality compared to competitors
Market demand for ‘low cost’, ‘low quality’ products may change or shrink
what is economies of scale
the scale of operations
what does economies of scale do for a business
by increasing scale a business is able to lower cost of individual outputs
what is differentiation
distinguishing a product or service from others, to make it more attractive to a particular target market
how is differentiation achieved (4)
better quality
more features and applications
clever design
more reliable
what are goods
tangible, items that we use
what are services
intangible, things that people do for us.
what types of business sectors are there (5)
primary secondary tertiary quaternary quinary
what is the primary sector responsible for
the sourcing collection of raw materials to be used in manufacturing
what is an example of an industry in the primary sector
logging
what is the secondary sector responsible for
the manufacturing of raw materials to be sold to retail
what is an example of an industry in the secondary sector
food processing
what is the tertiary sector responsible for
retail products to consumers
what is an example of a industry in the tertiary sector
clothes retail
what is the quaternary sector responsible for
It related services
