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Business > Unit 4-Decision making to improve operational performance (4.1) > Flashcards

Unit 4-Decision making to improve operational performance (4.1) Flashcards

1
Q

Define objectives.

A

‘A quantifiable (measurable) target which helps co-ordinate activities.’

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2
Q

What is a mission statement?

A

A statement about the organisation’s aims that is designed to motivate​.

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3
Q

What are corporate objectives?

A

These are goals for the whole organisation and are usually based on the mission statement​

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4
Q

What are functional objectives?

A

These are goals or each functional area (different departments) of a business and are based on corporate objectives.

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5
Q

Give the order of what objectives can be split into.

A

Mission statement

Corporate objectives

Functional objectives

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6
Q

What can functional objectives be split into?

A

Departmental and even individual objectives.

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7
Q

What is it called when a business runs it through setting objectives?

A

MBO

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8
Q

What does MBO stand for?

A

‘management by objective.’

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9
Q

What acronym should objectives be?

A

SMART

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10
Q

What does SMART stand for?

A

Specific
Measurable
Agreed/achievable
Realistic
Timely/time bound

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11
Q

What does specific mean in SMART?

A

Easily defined

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12
Q

What does measurable mean in SMART?

A

Quantifiable (can be calculated)

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13
Q

What does agreed/achievable mean in SMART?

A

Stakeholders involved in setting them

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14
Q

What does realistic mean in SMART?

A

Not in conflict with other objectives

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15
Q

What does timely/time bound mean in SMART?

A

Based on a timescale

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16
Q

Why should a business set a mission?

A

Having a mission will help to guide employees and motivate them in the direction the organisation wants to go

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17
Q

Why should businesses set corporate objectives?

A

Gives a more detailed sense of direction.

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18
Q

Why should a business have functional objectives?

A

Allows for greater co-ordination of resources to ensure corporate objectives are met

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19
Q

What do operational objectives need to be?

A

Broad

General goals

Long and medium term

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20
Q

Why do operational objectives need to be broad?

A

They need to encompass anything to do with the operational side of the business.

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21
Q

Why do operational objectives have to link to general goals?

A

These ensure that departments can understand what they need to do to achieve the operational objectives.

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22
Q

What is devised in order to ensure that long and medium term objectives are met?

A

Plans and strategies

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23
Q

What are short term measures called?

A

Operational tactics

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24
Q

Define tactics.

A

Day-to-day activities that help achieve objectives.

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25
Q

What do the 5 key operational objectives include?

A
  1. Costs (reducing mainly)
  2. Quality
  3. Speed of response and flexibility
  4. Dependability
  5. Added value
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26
Q

Formula to calculate profit.

A

Sales revenue - (variable cost + fixed costs)

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27
Q

What are the 2 main things a business needs to do to improve profit?

A

Increase sales

Reduce costs

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28
Q

What are the 3 main ways a business can reduce costs?

A
  1. Reducing unit costs
  2. Reducing fixed costs
  3. Reducing variable costs per unit
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29
Q

What does a low unit cost allow a business to do?

A

Either:
Keep prices low for customers

To enjoy higher profit margins

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30
Q

When can reducing fixed costs be a common aim?

A

When businesses have merged because they may have duplication of fixed costs i.e., two premises on the high street.

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31
Q

How can a business reduce variable costs per unit?

A

Finding cheaper supplies (i.e., reducing raw material costs)

Cheaper manufacturing (i.e., reducing labour costs by improving labour productivity)

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32
Q

Define quality.

A

‘Those features of a product or service that allow it to satisfy (or delight) customers’

33
Q

Why is there no set measure of quality?

A

It depends on people’s opinions

34
Q

What are the 4 methods of measuring the quality of a business?

A
  1. Customer satisfaction ratings
  2. Customer complaints
  3. Scrap rate
  4. Punctuality
35
Q

How can customer satisfaction ratings measure quality?

A

Can gather satisfaction in both qualitative (opinion) or quantitative (numerical) form.

Customer satisfaction surveys can therefore measure if quality has been achieved.

36
Q

How can customer complaints measure quality?

A

Shows whether a business has problems it needs to address.

Satisfied customers returned to the business, unsatisfied customers complain

37
Q

How can customer complaints damage a businesses reputation?

A

People don’t only complain to businesses but also everybody around them.

38
Q

What is scrap rate?

A

Evaluates the number of goods companies produce that become waste because of defects or errors during manufacturing.

39
Q

How can evaluating scrap rate be used to measure quality?

A

Manufacturers track the rejects through the manufacturing process.

This show whether the production process is working effectively.

40
Q

What does a high scrap rate show?

A

Money is wasted.

Unit costs of goods is increased

41
Q

How can looking at punctuality measure quality?

A

Measures how promptly a business delivers its goods (or services).

42
Q

What is punctuality expressed as?

A

Percentage

43
Q

Formula for punctuality.

A

(Deliveries on time/total deliveries) x 100

44
Q

Compare punctuality percentage and customer satisfaction.

A

The better the punctuality percentage, the higher the customer satisfaction.

45
Q

What types of businesses is punctuality important for?

A

Online

B-2-B businesses

46
Q

What are B-2-B businesses?

A

Business to business

47
Q

Give an example of a business which is famous for their speed of response.

A

Zara-the Spanish clothes retailer

48
Q

Why is Zara famous for their speed of response?

A

It takes just two weeks from the design of a skirt to it being on the shop floor.

49
Q

How does it take Zara just 2 weeks from designing the product it being on the shop floor?

A

They have a vertical integration of the supply chain.

This means they are very flexible and can change designs far quicker then their rivals – a very good objective for a fashion retailer!

50
Q

What is vertical integration?

A

A business strategy where the business itself controls the supply chain and multiple stages of its production process, thus eliminating or reducing third-party vendor dependencies

51
Q

What does being dependable mean?

A

Not wanting to let customers down so ensuring the business meets promises.

52
Q

Give examples of how certain business are dependable.

A

Amazon state delivery dates for their products and keep customers informed if that date changes using email – this ensures that their reputation is maintained with customers.​

Dyson do extensive product testing to ensure that their vacuums deliver their promise

53
Q

Why are environmental objectives important?

A

Many businesses want to ensure their operational side does not harm the environment-especially for their CSR report.

54
Q

What is CSR?

A

Corporate Social Responsibility

55
Q

Give 5 examples of what environmental objectives could include.

A
  1. Reducing waste​
  2. Reducing carbon footprint​
  3. Minimising waste products or materials​
  4. Increase recycling​
  5. Achieving self-sufficiency in energy use
56
Q

Give an example of how a business ensures they meet their environmental objectives.

A

M&S’s ‘Plan A’

57
Q

What does M&S’s ‘Plan A’ include?

A

Having delivery HGV’s with sloped/curved roofs to reduce fuel consumption.

Reducing the use of plastic bags at the counter.

58
Q

What does adding value allow a business to do?

A

Develop a USP for its products

59
Q

What things could adding value include?

A
  1. Increasing spending on R&D
  2. Achieving a certain number of patents
  3. Developing a particular innovation
60
Q

What is R&D?

A

Research and development/design

61
Q

What are patents?

A

Protection of an idea

62
Q

Which business is one of the world’s biggest spender on R&D?

A

Land Rover

63
Q

How much patents does Dyson currently hold?

A

1200-sending roughly one a day!

64
Q

Give an example of a product with a particular innovation.

A

Google glasses

65
Q

What are the 4 factors which have external influences on operational objectives?

A
  1. Market factors
  2. Competitors’ actions and performance
  3. Economic factors
  4. Political factors
66
Q

How does the market influence operational objectives?

A

Is the market growing or declining?

If declining, then the business should consider developing a new market.

If growing, then market penetration should be used.

67
Q

What is market penetration?

A

A growth strategy where the business focuses on selling existing products into existing markets.

68
Q

How do competitors’ actions and performance influence operational objectives?

A

What are competitors doing?

Will it affect sales?

Is there a more efficient way of operating?

69
Q

How do economic factors influence operational objectives?

A

Operations management is dependent on capital investment and if interest rates are high this may increase costs or may reduce sales as customers struggle to pay back loans

70
Q

Give an example of how political factors influence operational objectives.

A

Car manufacturers have faced increased pressure to improve the efficiency of their products and how they manufacture them.

This means modern cars are manufactured in a more environmentally friendly way and are far more fuel efficient than they were 10 years ago.

71
Q

What are the 4 internal influences on operational objectives?

A
  1. Corporate objectives
  2. Finance
  3. Human resources (HR)
  4. Nature of product/service
72
Q

How do corporate objectives influence operational objectives?

A

The operations department has to ensure that its objectives are consistent with the overall corporate objectives.

73
Q

What are corporate objectives?

A

Those that relate to the business as a whole

74
Q

Give an example of some contrasting corporate objectives in the same market.

A

British Airways’ = Be world’s leading global premium airline

Ryanair = Be Europe’s leading low-fare airline

75
Q

How does finance influence operational objectives?

A

Operations management objectives rely on high capital expenditure (i.e. machinery, etc.) so healthy finances are essential.

76
Q

How does HR influence operational objectives?

A

Skills and training as well as motivation of the workforce are essential to ensure objectives are met.

77
Q

How does the nature of the product/service influence operational objectives?

A

Some products are suited to mass production (i.e. Cadbury chocolate bars) whereas others need to be high quality with good customer service (i.e. wedding dress design).

78
Q

What helps a business have a significant competitive advantage?

A

Having the most appropriate operational objectives.

Business (16 decks)

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