Operational Objectives

Question 1

What is “operations”?

Answer 1

The process of using inputs/resources to provide the right good to customers

Question 2

What can we divide resources into?

Answer 2

Land, labour, capital, enterprise

Question 3

What’s the purpose of operational objectives?

Answer 3

•Act as a focus to help make 
decisions
•A benchmark to judge success/failure 
•Can give direction 
•To improve efficiency 
•Help the business to achieve its corporate objective(s)

Question 4

How is the operational hierarchy structured?

Answer 4

Corporate objectives —> operational objectives —> operational strategies —> operational tactics

Question 5

What are some possible operational objectives?

Answer 5

Costs
Quality
Flexibility 
Dependability
Environmental 
Added value

Question 6

What would targets aimed at costs involve?

Answer 6

Operational target - be as cost effective as possible.

• measured by looking at unit costs
• lowest unit cost = strongest position when competing
• can offer lower price & make highest profit margin

Question 7

What would targets aimed at quality involve?

Answer 7

Operation target - provide a high quality product as is suitable
-if a business can develop a reputation for quality then competitive advantage

Question 8

What are examples of some quality targets?

Answer 8

• lower scrap/defect rates, a measure of poor quality
• customer satisfaction, measured by research
• number/incidence of customer complaints
• customer loyalty - e.g. percentage of repeat buys
• speed of response to emails, deliveries, orders

Question 9

What would targets aimed at flexibility involve?

Answer 9

Operational target - for the business to be able to adapt to all market conditions and customer requirements

Question 10

What are some examples of flexibility targets?

Answer 10

• Labour productivity: e.g. output per employee, units produced per production line, sales per shop
• output per time period: e.g. potential output per week on normal shift basis, potential output assuming certain levels of capacity utilisation
• capacity utilisation: the proportion of potential output actually being achieved

Question 11

What would targets aimed at dependability involve?

Answer 11

Operational target - provide a product customers can rely on

• for a service: focus on quality and punctuality
• for a good: focus on durability, reliability and safety of product

Question 12

What do targets aimed at the environmental involve?

Answer 12

Operational target - provide the product in an environmentally friendly way

• increasingly important focus as:
  1. businesses face more stringent legislation
  2. customers increasingly base their buying decisions on firms that take environmental responsibility serious

Question 13

What are some examples of environmental targets?

Answer 13

• use of energy efficiently
• proportion of production or packaging materials that are recycled
• compliance with waste disposal regulations/ proportion of waste to landfill
• suppliers of raw materials from sustainable sources

Question 14

What do targets aimed at added value involve?

Answer 14

Operational target - ensure he value of output is greater than inputs

• in order to make profits business needs to sell the product for more than it costs to make
• this can be done by:
• providing a service that cannot be replicated by consumers
• having a USP
• combing useless individual parts to something that can be bought