BUSINESS MANAGEMENT 1B Semester 2 Notes. Includes learning units 1-7. Learning units 1 to 3 have complete notes. Learning units 4-7 are incomplete. There is space is type in your own notes.
BUSINESS MANAGEMENT 1B (BMA21B1)
Introduction to Business Management (Erasmus)
Part 3: Functional Areas of a Business
Chapter 11: Operations Management
The student should be able to:
Examine the operations management involved in the business organisation.
Students will be competent if:
The operations management involved in both the products and services within the business is understood.
INTRODUCTION
1.1. Explain why operations management is important for a business.
* Why is operations management important for a business?
• Operations Function and Management thereof:
- aimed at executing the transformation process
- directly concerned with creating products and providing services in order to realise the objectives of the
* creating products and services directly (Systems View - Holistic)
• The importance of operations management:
1 it can reduce the cost of making products or offering services
2 it can increase the revenue the business receives for offering its products/services to its customers/clien
3 it can reduce the amount of investment (capital) needed to manufacture the type and quantity of produ
4 it can provide the impetus for new innovation by using its solid base of operational skills and knowledg
• Other reasons operations management is important to a business:
1 can improve productivity (aim for error-free outputs)
2 can help a business to satisfy the needs of its customers/clients more effectively (customer is focal poin
3 can be decisive for the general reputation of the business (through particular skills to build outstanding
1.2. Discuss what operations management encompasses.
* What does operations management encompass?
• Defining terms used in operations management:
* Definitions:
- a common characteristic with all the definitions
- OM is concerned with the management of the transformation process (operations process)
* Concepts:
1 Operations Function
- is that function in the business primarily aimed at the utilisation of resources to manufactur
2 Operations Managers
- are the personnel in the business who are directly respobsible for managing the operations f
3 Operations Management
, - involves operations managers’ activities, decisions, and responsibilities that tie in with the e
- 4 primary management activities:
> operations planning
> operations organising
> operations scheduling
> operations control
AN OPERATIONS-MANAGEMENT MODEL
1.3. Identify and explain the components of an operations-management model.
* Identify and explain the components of an operations-management model.
Figure 11.1: A basic transformation model
- the management of the operations function
- elements: operations management strategies and objectives; the management activities that influences
• Operation-management strategies and performance objectives:
- if a business intends surviving in the long term: a top-priority objective: consumers who are satisfied wit
- operations management function:
> focus on customers’ needs
> continually formulate strategies and objectives to maintain, strengthen, and expand competitive p
* Although there are numerous customer needs, it can be reduced to 6 main elements:
1 Higher quality
2 Lower costs
3 Shorter lead time (quicker manufacturing or provision of services)
4 Greater adaptability (flexibility)
5 Lower variability with regard to specifications (reliability)
6 High level of service (better overall service)
, * Operations management performance objectives:
- can be formulated to give the business an “operations-based advantage”
- must indicate the specific areas with the domain of the operations function that will be emphasise
- are formulated in such a way that they are applicable to both manufacturers and service providers
- to acquire operations-based advantages, the following 6 general objectives can be followed:
1 Do things right the first time
2 Do things cost effectively
3 Do things fast
4 Make changes quickly
5 Do things right every time
6 Do things better
Positive results obtained by operations management guidelines:
• The transformation model:
> operations function is primarily concerned with the application of resources by means of a transformat
> could apply to both manufacturers and service providers
> comprises three main components:
1 inputs
2 transformation process itself
3 outputs
1 Inputs:
- comprise both the resources that are to be transformed (processed, changed, or converted) and the res
- the resources to be transformed include the following:
· Material
· Customers/clients
· Information
- the resources required to make transformation possible include:
· Human Resources
· Equipment and facilities
· Technology
2 The Transformation Process:
, - converts inputs to outputs
- the nature of the process is determined by what input is predominantly being processed
- three main types of resource inputs are addressed:
1 transformation of materials
2 transformation of customers/clients
3 transformation of information
3 Outputs:
- the ultimate goal of any transformation process is to transform inputs into outputs
- characteristics of products manufactured and services provided differ
- NB to note the difference because they have specific implications for the management of the various o
Characteristics of products and services:
* Different operations have different characteristics:
- while the basic purpose of all operations is similar in that they transform inputs into outputs, the p
- the implications of these four characteristics can be significant in terms of the cost of creating prod
* four distinctive characteristics (Four Vs):
1 volume of output may differ (amount)
> number of items produced in a period of time
> the more of one type product that is made = greater standardisation and repeatability
> influences cost = lower production cost per unit = fixed costs are spread over a large n
> e.g. KFC
2 variety of the output may differ (range)
> range of items produced in a period of time
> the more types of products made = greater flexibility and non-standardisation
> comes at a higher cost per unit
> e.g. taxi's vs buses
3 variation of output may differ (demand pattern)
constant, highly irregular, non-routine, unpredictable
sudden changes in the operations capacity to meet the needs of clinet/customer
seasonal variations
e.g. coastal hotels/resorts
4 visibility of output may differ (exposure to operations activities)
how much of the operations activities the customers experience themselves or are exp
high visibility = value adding activities experienced directly - in a designer's wedding dr
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