Topic 2.3 Making operational decisions Flashcards
What does business operations mean?
Process that organises, produces and delivers goods or services to customers from business
What is the production process
taking resources - such as raw materials, finance and the business’ workforce - and using them to create finished goods or services.
Outline 2 purposes of business operations
-to produce products
-to provide services
What are the three production methods?
Choice of method will depend on the nature of the product and the level of production
-Job production
-Batch production
-Flow production
Job production and its advantages + disadvantages
One off(made one at a time) or bespoke products, focus on meeting specific customer needs and individual service e.g a house extension, personal trainer
ADVANTAGES:
-Unique to customer, more personal so can charge a premium price
-Higher quality products,more time taken
-Workers may be more motivated to use their specialist skills and see end results may encourage them to work harder and gain enjoyment
DISADVANTAGES:
-Highly skilled staff are required, which increases costs
-Longer production process, slower
-Cost per making one product is high
-Highly skilled staff may not be available, which can make training staff very expensive
Flow Production and its advantages + disadvantages
Involves continuously making identical products e.g a mass produced laptop
ADVANTAGES:
-Highly automated process(relies on machinery) so increased efficiency due to continuous process, there is less downtime resulting in higher productivity
-“economies of scale,” which refers to the cost advantages gained by producing larger quantity of goods, leading to lower average costs per unit, making products more competitive in the market
DISADVANTAGES:
-Lack of flexibility because F.P typically produces a single product or a limited range so it is difficult to adapt to changes in consumer demand
-Dependent on machinery so if there was any breakdown in the production line, it would be costly and there would be production delays
-High initial investment(not suitable for a small business)
-Potential waste of products because of high speed and continuous process, defects or errors can result in large quantities of products being wasted before detected
Batch production and its advantages + disadvantages
Involves making a set quantity of identical products e.g a bath of cupcakes
ADVANTAGES:
-flexible (because production can be changed to meet customers needs or changes in demand e.g different flavours)
–standard production means it can be done by machines, so less labour involved
-Larger volume of products than job production
DISADVANTAGES
-productivity reduced when switching batches
-not fully receiving maximum economies of scale
-not specific to customer
What is productivity?
measure of efficiency, e.g. number of products produced per day
What are the negative impacts of technology on operations?
- Can involve a costly initial investment
- Requires employees to be trained to use new technology
What are the positive impacts of technology in operations?
- Speeds up production process
- Ensures fewer mistakes and defects
-Lowers production costs
-Keeps business in touch with their customers
Factors that affect choice of technology
COST-Technology costs money to purchase, but reduces the cost of producing products
QUALITY-Businesses need to be consistent in the quality of the products they produce. Mechanising or automating parts of production can help with this.
PRODUCTIVITY-Using machinery to mechanise or automate parts of the production process leads to an increase in productivity. This means a business can either reduce its prices to remain competitive or increase its profit margins
FLEXIBILITY-Businesses often need to balance technology with human flexibility. Automation is good for mass production but it doesn’t work so well for products that will be personalised to meet individual customers’ preferences.
State 4 ways to a business can improve productivity
-invest in modern technology
-providing incentives to workers to work harder and faster e.g promotions
-Providing training to staff to improve their skills so they can work more efficiently.
-encouraging staff to come up with ideas
What’s economies of scale
Economies of scale is a term that describes the situation where the average costs of production fall as the volume of production increases. This is an advantage that businesses gain as they grow in size.
Examples of technology used in business operations
-e-commerce
-computer aided design
-supply chain management
What are the five key stages of the sales process?
-customer interest
-speed and efficiency of service
-customer engagement
-post-sales service
-customer loyalty
