Role of Operations Management

Question 1

Define operations

Answer 1

The business function concerned with the transformation of inputs into outputs

Question 2

What are the strategic goals of operations?

Answer 2

Increase productivity, reduce costs and improve quality in order to obtain a competitive advantage

Question 3

What is a cost leadership strategy?

Answer 3

One where a business aims to be the lowest-cost manufacturer within an industry

Question 4

What are common features of cost-leadership strategies?

Answer 4

The products will tend to be mass-produced, with fewer features and lower quality

The business will expect a small profit margin on each item it sells, balanced by a high volume of sales to balance revenue

Question 5

How does McDonald’s use cost leadership?

Answer 5

McDonald’s uses economies of scale and training (Hamburger University) to ensure that its operational costs are similar to that of Yum! Brands Inc

Question 6

What is a product differentiation strategy?

Answer 6

One where a business attempts to gain a competitive advantage by producing a good/service unique from others in the industry

Question 7

What are the key features of manufactured goods?

Answer 7

Outputs are tangible

Production is capital intensive

Outputs can be stored before distribution

One made, they are difficult to change or customise

Question 8

What are the key features of services?

Answer 8

Outputs are intangible

Tend to be labour-intensive

Requires greater interaction with consumers

Productivity is harder to measure

Question 9

What is the relationship between operations and marketing?

Answer 9

Research identifies the features of a good that consumers desire

Marketing may require innovation from operations

Marketing must understand the capabilities and limitations of operations

Question 10

What is the relationship between operations and finance?

Answer 10

Operations will seek to remain under-budget in order to maximise profits

Finance will collect data and analyse the financial performance of operations

Question 11

What is the relationship between operations and human resources?

Answer 11

HR will ensure that enough employees with appropriate skills are available for the operations function and provide training if needed

The HR manager will use their leadership style and rewards to ensure that quality work is undertaken by employees in the operations function