Topic 4

Question 1

Name the 6 main operational objectives

Answer 1

Quality
Cost
Volume
Innovation
Efficiency
Environmental

Question 2

In what 5 ways is quality perceived?

Answer 2

Performance
Functionality
Predicted life
Standards and requirements
Perceived quality

Question 3

What are the 4 main costs involved in operations?

Answer 3

Manufacturing costs
Provision of service costs
Running costs
Servicing costs

Question 4

What is meant by volume targets?

Answer 4

the number of units produced and flexibility to meet demand
Helps to achieve economies of scale and cost targets
Resource mix influences flexibility possible

Question 5

How can innovation targets be met?

Answer 5

Launching new products/processes by a better/more efficient method of production
May reduce long term costs and increase volume and quality

Question 6

What are efficiency targets?

Answer 6

Sets minimum acceptable standards
Measure efficiency by added value
Being efficient means maximising output and minimising costs
Control machinery usage, stock wastage and labour productivity

Question 7

What are environmental targets?

Answer 7

Must be aware of impact on environment, must try to reduce negative impacts

Question 8

What is benchmarking?

Answer 8

Increase performance by identifying, investigating and adapting aspects of best practice from other firms
Requires time, money, commitment and an open relationship between 2 organisations

Question 9

Name 6 internal influences on operational objectives

Answer 9

Finance
Corporate objectives
Available resources
Nature of the product
Human resources
Company traditions

Question 10

Name 6 external influences on operational objectives?

Answer 10

Competitors performance
Demographics
Technology
Market conditions
Competitors
Consumers

Question 11

What are economies of scale?

Answer 11

Benefits of large scale operations by a fall in average costs - creates a competitive advantage and barriers to entry

Question 12

What are purchasing economies of scale?

Answer 12

Buying in bulk and getting better deals with suppliers

Suppliers want larger orders so give better terms and discounts - convenience

Question 13

What are financial economies of scale?

Answer 13

Easier credit/availability of loans

Question 14

What are technological economies of scale?

Answer 14

Ability to buy technically advanced equipment but able to spread the cost over more units
Invest in equipment to operate more efficiently
May reduce staff

Question 15

What are specialisation economies of scale?

Answer 15

Ability to employ specialists/staff which only focus on one area as can invest more - charge more
Cheaper than using external services

Question 16

What are diseconomies of scale?

Answer 16

Disadvantages experienced as a result of operating beyond optimum output - results in rising costs
Occurs when one factor of production has run out: land/labour/capital/enterprise

Question 17

What are communication diseconomies of scale?

Answer 17

Breakdown in effective communication due to expansion of operation
When efficiency falls, costs rise
Essential to invest in sophisticated communication channels
Extra problems if multinational

Question 18

What are co-ordination diseconomies of scale?

Answer 18

Breakdown in co-ordination due to size
Co-ordination is difficult with more staff and resources
Difficult to motivate and make sure everyone is working to same objectives

Question 19

What is the resource mix of operations?

Answer 19

Combination of capital and human resources which allows for greatest efficiency

Question 20

Name 4 advantages of being a capital intensive business

Answer 20

Reduction in human error
Greater speed and uniformity in output
Ease of workforce planning
More scope for economies of scale

Question 21

Name 4 disadvantages of being a capital intensive business

Answer 21

high initial capital needed
Loans - interest rates
Lack of initiative
Lack flexibility to respond to falling demand

Question 22

Name 5 advantages of being a labour intensive business

Answer 22

Greater flexibility
Creates employment for the economy
Personal response to consumer needs
Tailor to meet individual consumer needs
Opportunity for continuous improvement

Question 23

Name 3 disadvantages of being a labour intensive business

Answer 23

Prone to labour relation problems
Possible workforce shortages
High HRM costs

Question 24

What are the 7 steps in the process of R&D?

Answer 24

idea generation
Idea screening
Concept testing
Development of ideas
Business analysis
Product development
Test marketing

Question 25

What 4 things does R&D allow to do?

Answer 25

Develop new products New material Improve existing products Improve production processes

Question 26

What is the purpose of R&D?

Answer 26

keep products at a competitive advantage and charge premium price - helps gain market share

Question 27

Practical implementation of the results of R&D creates an innovation, what are 4 risks of innovation?

Answer 27

Heavy time and resource commitment but no guaranteed success Potential loss of focus on core function of business Competitors reaction Company image and reputation if product fails

Question 28

What are 4 potential rewards of innovation?

Answer 28

develop USP - competitive advantage Charge high prices Improve efficiency of production Improve reputation

Question 29

What is the impact of innovation on the marketing function?

Answer 29

inform R&D of potential niche/consumer opinions HAs major role in getting product to consumers and designing an effective marketing mix in order to achieve sales targets

Question 30

What is the impact of innovation on the finance function?

Answer 30

Budgets During business analysis stage - involved in costing products and looking at pricing structures and potential profit levels

Question 31

Impact of innovation on HR function?

Answer 31

Workforce planning issues | May need new skilled workers/reduced force

Question 32

What are the 3 key characteristics of location decisions?

Answer 32

Strategic nature Difficult to reverse due to cost Decision made at highest level

Question 33

Name 5 drawbacks of poor location decisions

Answer 33

High fixed costs affect profits High variable costs reduce competitiveness Low unemployment means higher staff turnover High unemployment means low demand Poor transport means no access

Question 34

Name 5 quantitative factors concerned in making location decisions

Answer 34

``` Site and capital costs Labour costs Transport costs Potential revenue Government grants ```

Question 35

Name 5 qualitative factors concerned in making location decisions

Answer 35

``` Safety Room for expansion Preferences Ethical considerations IT infrastructure ```

Question 36

Give 4 advantages of multisite locations

Answer 36

Greater convenience to customers Lower transport costs Reduce risk of supply disruption Opportunity to delegate authority

Question 37

Give 3 disadvantages of multisite locations

Answer 37

Co-ordination and communication problems Potential lack of control and direction Different cultural legal systems

Question 38

Give 5 reasons in support of offshoring

Answer 38

``` Cost reduction Access to global markets Avoidance of protectionist trade barriers Government financial support Better skilled labour ```

Question 39

Give 5 issues with offshoring

Answer 39

``` Language and communication barriers Cultural differences Level of service concerns Supply chain concerns Ethical considerations ```

Question 40

What are the 3 main lean techniques to reduce waste?

Answer 40

Just in Time production Time based management Kaizen system

Question 41

What is Just in Time production?

Answer 41

limits stock holding at each stage of production Reduces costs - less physical need to hold and handle stock - less waste obsolete stock Risky if long supply chain

Question 42

What is Kaizen?

Answer 42

Improving efficiency and performance by continual improvement Requires all staff to feel empowered by ability to spot opportunities and recommend improvements Creates motivation and improves efficiency Easier to implement smaller changes

Question 43

What is time based management?

Answer 43

Managing resources effectively to ensure products are fit for market in the shortest time possible To be effective staff must be trained and flexible to perform many tasks

Question 44

Give 3 benefits of time based management

Answer 44

Quicker time to market for new products Shorter lead times Improved ability to respond to changes in market conditions and consumer tastes

Question 45

What is Critical Path Analysis?

Answer 45

A network to plan complex projects in shortest time by finding tasks that can be completed simultaneously Critical path identifies the activities dependent on completion of earlier activities Non-critical activities have float times

Question 46

Give 8 benefits of Critical Path Analysis

Answer 46

``` Reduces risk and costs Allows to fully consider whole project Used to plan, monitor and make decisions Helps find earliest times for JIT production Allocate resources effectively Tasks can be allocated to staff appropriately Clear targets are motivational Helps financial planning ```

Question 47

Give 5 drawbacks of Critical Path Analysis

Answer 47

Based on estimates - limited reliability Must be monitored closely and corrective actions taken Ongoing process Resources may not be flexible Too many activities make it too complicated