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Operations
role of operations management
Strategic role of operations management cost leadership, good/service differentiation
! Cost leadership: aiming to have lowest costs or to be the most cost price competitive in
the market. Although trading with the lowest costs, the overall business should still be
profitable.
o EOS & cost management: cost advantages that can be create as a result of increase
in scale bus operations
! Goods/service differentiation
o Product differentiation: distinguishing products (goods/services) in some way of its
competitors
Product differentiation: Goods
- Varying the actual product features
- Varying product quality: (High/low quality)
- Varying any augmented features: adds on/additional benefits associated with good
Product differentiation: services
- Varying the amount of time spent on a service
- Varying the level of expertise brought to a service
- Varying the qualifications & experience of service
- Varying quality of materials/technology

goods and/or services in different industries
! Goods in different industries
- Standardized goods: mass produced. Uniform in quality and meet predetermined
level of quality
- Customized goods: varied accordingly to the needs of customers.
- Perishable goods: have short life span, inexpensive& brought on relative basis
(e.g.: fruits and vegetables:
- Non-perishable goods: More durable than perishable goods (e.g.: motor
vehicles, electoral appliance, clothing etc.)

! Services in diff industries
- Can be both customized and standardized
- Customized: legal, medical, accounting services
- Standardized: Visiting a GP
- Self service: encouraging customer tot take initiative to help themselves





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Interdependence with other key business functions

The Four Main Business Functions
Incorporating:
Operations:
- Manufacturing
- Provision of services
- Other value adding
- Domestic/global
Marketing:
- Sales and advertising
- Product design
- Marketing strategies
Finance:
- Administration
- Finl management & planning
- Mgmt. and planning
HR:
- Industrial relations (IR)
- HRM
- Personnel


influences
globalization, technology, quality expectations, cost-based competition, government
policies, legal regulation, environmental sustainability
! Globalisation: Removal of barriers of trade between nations.
- Provides a source of market opportunities
- Large B increasingly orienting practices towards global market, meeting needs
of consumers
- Use of manufacturing plants for production of goods B can achieve massive
EOS of scale advantages
" Supply chain: range of suppliers a B has & the nature of its relationship with those
relationship
" Global web: network of suppliers a B has chosen on basis of lowest cost & risk and
maximum certainty in quality & timing of supplies
" Imitation & innovation:
o Reverse engineering: process involving a B taking the product of competitor that
has already been released into the market.
- product taken apart to see how its made
- imitating B tries to make their own version of product from component parts,
using diff materials at lower cost
o Innovation: when B creates new products, in doing so leading the market
- Affects O processes by differentiating products, meaning supply chain needed
to be shaped around need for innovation





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! Technology: Design, construction & application of innovative devices, methods &
machinery upon O processes
- Enable people to communicate more easily & enable improved processes.
- Used in manufacturing, logistics & distribution, aspects of inventory
management, SCM etc.

! Quality Expectations:
" Quality: Reference to how well designed, made & functional goods are, and
degree of competence with which services organized & delivered
-
People have inherent belief in what quality standards should be for products


Quality expectations with goods:
-
Quality of design: materials used, how well concept has been developed etc.

-
Fitness for purpose

-
Durability: how reliable, warranty, repair & maintenance


Quality expectations with services:
-
Professionalism of service provider, perceived through:

cleanliness & layout of physical facilities

-
Reliability of service-provider: how well particular needs of customer are fulfilled by
service

-
Level of customisation


! Cost - based competition: determining break-even point & then applying strategies to
create cost - advantages over competitors
-
Recognizes prices cannot keep increasing

-
Cost divided into fixed & variable:

-
Fixed: Costs that don't change regardless of B activity

-
Variable: Vary in direct relationship to the level of B activity


! Government policies
-
Government policies continually change over time

-
E.g.: Carbon pricing: term used for putting price on carbon

-
Policies such as WH&S, employment relations, environmental policies, etc. all impact
on B O's.


! Legal Regulation
-
Compliance: Range of laws that a B must comply to

o Compliance costs: Expenses associated with meeting requirements of legal
regulation (abiding by all laws)
-
Laws relating to O management:

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o WH&S: Employees given training, protective equipment
o Training & Development
o Fair work & anti-discrimination laws: Employees treated with respect
o Environmental protection: Minimizing pollution
o Apply rules related to public health


! Environmental Sustainability: B O's should be shaped around practices that use recourses
today without compromising access to those recourses for future generations
-
O management function significantly affected by rise of climate change & need to
integrate long term sustainable view

-
Needing to reduce carbon footprint


corporate social responsibility
! CSR: Accountable B actions based on respect for community, people & environment, B
doing more than complying with laws
the difference between legal compliance and ethical responsibility
" Legal compliance: B follow law
" Ethical responsibility: B meeting all legal obligations & taking it further
" Complying with laws cost $$, to go further, even more expensive
Legal Compliance in B
-
Labour law compliance: minimum wage, working hrs., breaks
-
Environmental compliance: regulations stopping dumping, pollution
-
B licensing: those requiring partic. level of training
-
Taxation: Levies/taxed imposed on profits
-
Migration & rules on offshore skilled labour: Ensure minimum standards applied
-
Intellectual property: Copyrights, trademarks
-
Human rights: Restricting discrimination
-
Finl regulations: Fiduciary Position of finl trust with respect to others money

" One way B can reduce compliance costs use of outsourcing to other countries
" Onshore/Offshore outsourcing
" Compliance diff in other countries (lower tax, lower standards of labour)
" Raises ethical issues with B behavior (e.g.: sweatshop conditions, increasing
pressure to ensure employees who have low wage are NOT exploited)
Ethical Responsibility
-
With laws differing in countries, hard to know how to be ethical
-
B may follow to choose ILO International Labour Org.
-
Promotes rights at work, encourage employment opportunities
-
Creates provisions for safe working conditions etc.
-
If 2/3 nations agree to recommendation, becomes IL standard



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environmental sustainability and social responsibility
" Environmental sustainability:
-
Requires B to evaluate full environmental effects of their O
-
Growing customer expectation that products should be clean, green, safe
-
Community expects B to:
-
Adopt greenhouse reduction measures, develop long-term sustainability strategies

" Social Responsibility (SR):
-
M: Management of social, environmental & human consequence of its actions
-
Good for B, customers eventually find out which B acting ethically
-
Customers can stop buying if learnt that B exploits customers
-
Customers also rewards responsibly B by purchasing more

operations processes
inputs
o 4 direct inputs: Labour, Energy, Raw materials, Machinery & technology

transformed resources (materials, information, customers)
" Transformed Recourse: Inputs changed/converted in O processes








! Materials
-
Materials: Basic elements
used in production process
consisting of 2 types:
" Raw Materials: Essential
substances in unprocessed
state
" Intermediate goods: Goods
manufactures & used in
further manufacturing
-
There is range of materials
that are ALREADY
transformed but still
become inputs in O process
-
(E.g.: chips in computers)
! Information
-
Information: Knowledge
gained from research
investigation & instruction
-
Can become internal &
external info
" Internal: Within B, such
as finl reports, internal
KPIs
" External: Coming from,
market reports, statistics
from ABS, media reports
etc.
! Customers
-
Become transformed when
their choices shape inputs
-
Consumer orientation
becomes starting point to
production process
-
To better understand
desires, B can implement:
" Customer Relationship
Management: System that
B uses to maintain
customer contact
" Used to improve customer
service, increase
competitiveness, etc.
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transforming resources (human resources, facilities)
" Transforming recourses: Inputs that carry out transformation process
HR
-
Employees said to be most important its into B
-
Is because it is employees who coordinate & combine other recourses
-
Setting performance objectives can improve efficiency will help B achieve objectives
-
Flexible working hours, training programs can assist maximize performance
Facilities
-
M: Refer to plant (factory/office) & machinery used in O processes
-
Decisions include design layout of facilities


transformation processes
the influence of volume, variety, variation in demand and visibility (customer
contact)

o Influence of Volume
-
Volume: How much of a product is made
-
Responsiveness to changes in volume essential in managing lead times
-
Lead times: Times it takes for order to be fulfilled from moment made
-
If B cant adjust to changes in market, can overproduce or under-produce

o Influence of Variety
-
Mix of products made: Mix flexibility
-
Mix flexibility: Mix of products made, services delivered through info process
-
Greater variety made, more O process need to allow for variation

o Influence of Variation in demand
-
Increase in demand require increased inputs from suppliers, HR, energy & machinery
-
Can be hard to meet it:
-
Labour not flexible enough
-
Suppliers cant supply quickly enough
-
Increased energy/power not able to be readily sourced
-
B try to forecast demand so adjustments anticipated
-
Some variations CAN be anticipated (Xmas, seasonal factors)

o Influence of Visibility (Customer Contact)
-
Customer contact directly affect transformation process
-
Customers & their preferences shape what B make
-
Can be direct/indirect contact
-
Direct contact: surveys, interviews, letters etc.
-
Indirect contact: Review of sales, market-share data



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sequencing and scheduling Gantt charts, critical path analysis
o Sequencing: Order in which O processes occur
o Scheduling: Length of time activities takes within the O processes

technology, task design and process layout
" Technology:
-
Capital cost of tech relatively high, B decided to purchase/lease tech
-
Leasing more common: tax deductible



Gantt Charts
-
Type of bar chart showing both scheduled &
completed work over period of time
-
Used in planning & tracking a project
-
Has several steps & involves number of
different activities that need to be performed
-
Used for simple tasks (completed HW) &
complex projects (building a dam)
-
Easy to monitor & specifies time
-
Forces manager to plan steps needed
Critical Path Analysis (CPA)
-
CPA: shows what tasks need to be done, how
long they take & what order is necessary to
complete task
-
Critical path is shortest length of time to
complete process
-
Enables manager to see what needs to be
done
-
Allows timing of tasks to be considered
-
Shows what tasks need to be done at same
time
Office Technology
-
Computer, keyboard, mobile telephone, CD ROM, USB, Printer, photocopier
-
People increasingly starting to telecommute & work from home
-
Telecommute: To travel to work, electronically. Home & other locations become worksite & work
is delivered via email/internet
Manufacturing Tech
-
Robotics: Used in engineering & assembly lines where programmable machinery capable of doing
number of tasks
-
Work without demands for wage rises in conditions boring/dangerous for employees
-
Very high-cost items & unaffordable for small/medium B

-
Computer-aided design (CAD): Computerised design tool allowing B to create product possibilities
from input data
-
Creates 3D diagrams, helps designer visualize what will be produced
-
From design, material use & time can be calculated
-
If cost too high/design too limited, input parameters can be altered
-
Designs number of steps needed to create product in shortest possible lead time

Computer-aided manufacturing(CAM): Software controlling manufacturing process
-
Can calculate how much of each input recourses required
-
CAD can be linked to CAM
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" Task Design:
-
M: Classifying job activities to make it easy for employee to perform/complete tasks
-
Skills audit: Used to determine present level of skilling & skilled shortfalls need to be
made up with recruitment/training

" Plant (factory/office) layout
-
Plant layout: Arrangement of equipment, machinery & staff within facilities
-
Needs to consider best possible layout to ensure:
-
Enough physical space for production
-
Effective use of equipment
-
Adequate location
-
Work environment for employees, conformity with WHS standards
-
3 alternative layout options (process, product, fixed position)

Process Layout (Functional layout)
-
Process layout: Arrangement of machines grouped together by function they perform
-
Typical for hospitals
-
Process production: deals with high-variety, low-volume production
-
Each product has diff sequence of production & moves from departments
-
Small/medium sized B employ this process
-
Feature of approach: creation of work cells
-
E.g.: current layout (straight lines) &
-
Improved layout (workers have improved access, fewer workers needed)
Product Layout
-
Product production (mass production): manufacturing of high volume of quality goods
-
Assembly line most common layout
-
Layout needed: product layout (equip arrangement relates to sequence of tasks performed
in manufacturing of product)
-
E.g.: assembly lines of vehicles/TV sets
Fixed Position Layout
-
Project production: layout requirements for large-scale, bulky activities (Bridges, ships)
-
Layout needed: fixed position layout (Product remains in one location, employees &
equipment come to product)

-
Office layout: office space organized around workstations
-
Workstations: Desk areas required by office workers, fitted with access to computer,
telephone etc.
-
Needs to be designed for smooth workflow, should provide space for employees to take
break





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monitoring, control and improvement
" Monitoring: Process of measuring actual performance against planned performance
-
Arranged around need to measure KPIs (predetermined variables measured so
controls can be made). KPIs include:
-
Lead times, defect rates, inventory turnover, capacity & volume rates etc.
-
Gives chance to measure how B going

" Control: KPIs assessed against predetermined targets & corrective action is taken if
required
-
Compares what intended to happen with what actually occurred
-
Requires O managers to take corrective actin
-
E.g.: O manager makes changes to redesign facilities layout/adjusting level of tech

" Improvement: Reduction of inefficacies & wastage, poor work process &
elimination of any bottlenecks
-
Bottleneck: Aspect of transformation process slowing down processing speed
-
Improvement sought through:
1. Time Assessment of wait times & lead times
2. Process flows Smoothness of transitions
3. Quality - Standards
4. Cost Review of expenses (fixed, variable)
5. Efficiency Reduction of waste


outputs: end result of B efforts good/service provided & delivered to customer
customer service
" Customer service: How well B meets & exceeds expectations of customers
" If customer expresses dissatisfaction with product, then O process needs to be
reviewed
" Market research has shown B with superior CS can:
-
Charge 10% more for same goods/services
-
Grow 2x fast than competitors
" Exceeding customer expectations key in developing long-term customer relo

Warranties
" Warranty: Promise made by B that they will correct any defects in goods
produced/services delivered
" Number of claims made against B on product will give indication of problems
" O management need to trace fault in manufacturing & rectify it









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operations strategies
performance objectives quality, speed, dependability, flexibility, customisation, cost

Quality
-
Determined by consumer expectations
-
Objectives include:
1. Quality of Design: Understanding of customers & preferences
-
Begins prior to creation of product, determines how inputs will be arranged & will
be performed
-
B needs to decide quality of product itll deliver to market
-
Will be reflected in higher price
2. Quality of Conformance: How well product meets standard of prescribed design with
specifications
-
Measure of how consistent products achieve compliance with specifications
regardless of standard of specifications
3. Quality of Service:
-
How reliable service is
-
How well service meets specific needs of client
-
How timely service delivery is
Speed
-
M: Time it takes for production & O process to respond to changes in market demand
-
Goals of speed: Shorter lead times, reduce wait times, faster processing times
Dependability (Reliability)
-
M: How consistent & reliable a B products are
-
How long products useful before they fail
-
Measure of dependability: warranty claims
-
Fewer the complaints, the more dependable service is
Flexibility
-
M: How quickly O processes can adjust to changes in market
-
Best achieved by increasing capacity of production
-
New tech can increase flexibility & capacity
-
Be achieved through increasing number of service providers, increasing employee skill
level, improving tech
Customisation
-
M: Creation of individualized products to meet specific needs of customers
-
Production of many of todays goods based on mass customisation
-
Mass customisation: Process allowing standard, mass-produced items to be personally
modified to specific requirements (E.g.: cars)
-
Cost of customisation higher than cost of standardized products
-
Only B with product that can be easily adapted tend to customise

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Cost
-
M: Minimization of expenses so O process conducted as cheaply as possible
-
Acquisition of new technologies can help B lower cost, use inputs better & minimize
wastage
-
Seek to reduce supplier costs, manage inventory, maximize flexibility etc.


new product or service design and development
! Product design & development
-
Important considerations arising in product design:

Considerations when designing a product:
-

Cost
-

Quality
-

Supply Chain Management
-

Capacity Management
-
Value directly related to cost & also includes customers perception of product utility
-
Product utility: Usefulness & value that product has from consumers POV

! Service design & development
-
When designing services, diff aspects must be considered
-
Aspects to be considered:
-
Explicit service: Tangible service being provided (E.g.: application of time, skill,
effort)
-
Implicit service: Based on feeling, & is intangible. Implicit aspects are
psychological wellbeing feeling of being looked after provided with service
-
In delivering services, goods may be required (E.g.: surgeon performing surgery needs
swabs, bandages equipment etc.)








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supply chain management logistics, e-commerce, global sourcing
SCM: Integrating & managing flow of supplies through inputs, transformation process &
outputs to meet needs of customer
Sourcing Including global sourcing

! Sourcing: Purchasing of inputs for transformation process










-
4 particular trends on SCM:
1. Supplier rationalisition: Accessing number of suppliers in order to reduce number of
suppliers to least amount, resulting in
- Less wastage, less contracting & improved timeliness
2. Backwards vertical integration: Purchasing through mergers/acquisition of suppliers
-
Guarantees supply, supplier owned by B
3. Cost Minimisation: Use of offshore suppliers
-
Access to low-cost recourses/inputs
4. Flexible Supply chain Process:
-
Lean process: B that minimizes waste, lowers costs & improve process

! Global Sourcing: B purchasing supplies without being constrained by location. Buying from
wherever suppliers best meet requirements
-
+ve: Cost & expertise advantage, access to new tech
-
-ve: Increased cost of logistics, storage, distribution

E-commerce
! E-commerce: Buying & selling of products via internet
" E- Procurement: On-line systems to manage supplies, allows suppliers direct access to
needs of buyer & meet them in time
-
Process enables by B2B: Direct access from one B (supplier) to another (buyer)
-
Allowing supplier access to needs of buyer
Another process:
-
B2C: Selling of products to consumers via internet, payment with credit card
-
Must be able to manage supplies

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outsourcing advantages and disadvantages
! Outsourcing: Use of external providers to perform B activities
Advantages
-
Simplification: reducing number of
activities performed within B
-
Efficiency & cost savings
-
Increased process capability: Access to
improved technologies & highly skilled
labor
-
Capacity to focus on core B functions
-
Access to skills/recourses lacking
within B
-
Improvement to in-house performance:
B outsourcing can focus on core
competencies
Disadvantages
-
Communication & language
-
Loss of control & standards &
information security
-
Hierarchies
-
Organizational change and redesign
-
Loss of corporate memory &
vulnerability
-
IT: cost & time with the use of
adaptation of IT to specific
requirements of B & outsourcing
vendors





Logistics
! Logistics: Distribution & transport, use of storage, warehousing and DC, materials handling
& packaging
" Distribution: Ways of getting product to customer (Producer to retailer to wholesaler)
" Transportation & distribution: Physical movement of inventories (van, truck, ship)
" Storage: Secure place to hold stock until required
-
long/short term
-
Can have partic. characteristics to preserve product (cold storage for perishable goods)
-
Doesnt require warehousing
" Warehousing: Use of warehouses for storage, protection & distribution of stock
-
Costs 1incurred:
-
Insurance security for stock, losses from theft, damage, carrying excess/redundant stock,
premises
-
Can save costs IF used well
" DC: Located to minimize time itll take to supply stock to retail outlets
-
Requires managers to balance cost of DC with time saved in logistics
-
Have easy access to railway/major road network
" Materials handling & packaging: Some products need partic. skills, care/attention when
moved
-
E.g.: Glassware needs to be packaged in way to protect from damage, needs to be
transported & stored carefully

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technology leading edge, established
! Leading edge technology: Tech most advanced/innovative at any point in time
-
Creates products more quickly & to higher standard
-
Less wastage & B operates more effectively
-
E.g.: Nanotechnology: manipulation of molecules at nanoscale expected to affect
all parts of life (energy, food etc.)

! Established technology: Tech already developed & used without question
-
Helps establish basic standards
-
E.g.: computers, software, CAD & CAM, robotics, IT for administration, logistics

inventory management advantages and disadvantages of holding stock, LIFO (last-in-
first-out), FIFO (first-in-first-out), JIT (just-in-time)
! Inventory/stock: Amount of raw materials, work-in-process, finished goods B has
! Advantages/Disadvantages of holding stock

















Advantages of holding stock
-
Consumer demand can be met when stock
available
-
If partic product runs out, alternative product
can be offered
-
Reduces lead times
-
Opportunity for B to generate immediate
revenue
-
Older stock can be sold at reduced items,
encourages cash flow
-
Stocks are asset, reflects well on balance sheet
Disadvantages of holding stock
-
Costs associated: Storage charges, spoilage,
insurance, theft
-
Invested capital cant be used elsewhere
-
Cost of uselessness if stock remains
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! LIFO (last-in-first-out) & FIFO (first-in-first-out)

LIFO May overstate cost & understate gross profit
FIFO May understate cost & overstate gross profit

! JIT (just-in-time)
-
JIT: Ensures exact amount of material inputs arrive only as needed in O process
-
Aims to have B make only enough to meet demand
-
Allows retailers to display wider range of products as they now store less
-
Saves money (no expensive holding) & losses minimized
-
Needs ability to quickly respond to changes In market demand



quality management
" QM: Process B undertakes to ensure consistency, reliability & fitness of purpose

control - inspection, measurement & intervention
" QC: Use of inspections during production to check for problems
" Needs to be tests to assess quality of product against standards
" Pre-determined quality targets need to be assessed
" Requires labour trained to apply standards
" B needs to carry out inspections, passed off as okay or defective

LIFO Simplified Cost Analysis
-
LIFO: Assumes last goods purchases are
first goods sold, & cost of each unit sold is
last cost recorded
-
E.g.: Number of items sold: 2200
-
Each item = $120, total cost is 2200 x 120 =
264000
-
Gross profit is:
Total sales total cost of sales =
363000 264000 = $99000
FIFO Simplified Cost Analysis
-
FIFO: Assumes first goods purchases are
first goods sold, & cost of each unit sold is
first cost recorded
-
E.g.: Number of items sold: 2200
-
Each item = $100, total cost is 2200 x 100 =
220,000
-
Gross profit is:
Total sales total cost of sales =
363000 264000 = $99000
LIFO More Accurate Analysis
-
2200 items sold
-
Last 500 phones assumed sold first &
attract cost of $120 & total cost of $60,000
-
2
nd
last batch next 1000 phones
-
Cost of each phone - $110 = $110,000
-
First stock assumed sold last, remaining 700
phones given cost = $100, total = $70,000
-
Total COGS = 60,000 + 110,000 + 70,000
= $240,000
FIFO More Accurate Analysis
-
2200 items sold
-
First 1000 phones assumed sold first &
attract cost of $100 & total cost of $100,000
-
2
nd
batch next 1000 phones
-
Cost of each phone - $110 = $110,000
-
Last stock assumed sold last, remaining 700
phones given cost = $120, total = $24,000
Total COGS = 100,000 + 110,000 + 24,000 =
$234,000
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assurance Application of intl quality standards
" QA: Use of set of standards are achieved in production
" Done by taking measurements & assessing against standards
" Developed in response to impact in globalization
" Widely used standard ISO (International Origination for Standardization)
-
Voluntary but increases competitiveness
Improvement Total Quality Management & continuous improvement
" Continuous Improvement: Commitment in improving B products
-
Can be done by inclusion of staff to suggest improvements
" TQM: Focuses on managing total B to deliver quality to customers
-
W. Edwards Deming:
-
Advocated shift from inspection oriented approach towards emphasis
on employee involvement in prevention of quality problems
-
Can help increase market share

overcoming resistance to change financial costs, purchasing new equipment,
redundancy payments, retraining, reorganizing plant layout, inertia
! Finl cost & resistance to change
Purchasing New Equipment
-
Purchase of equip considered capital cost
-
Cost can be recovered through use & through depreciation
-
Can achieve:
-
Improved flexibility, speeds, shorter lead times, higher quality, more consistency
-
O managers assess cost of buying new equip with leasing leasing doesnt have high
upfront payment, can be more expensive if ongoing

Redundancy Payout
-
Redundancy: Loss of work from job skills no longer needed/relevant
-
Redundancy payout: $$ given to employees when forced out of work, skill not
needed
-
Value of payment depends on:
-
Level of pay employee was on prior
-
Amount of unused leave
-
Any outstanding wages
-
Length employee been with B, need to pay number of weeks to employee
-
Can be high, occurs when machinery replaces labour

Retraining
-
Job roles can change, needing employees to acquire diff working skills
-
New tech requires new training/retraining

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! Psychological costs & resistance to change - inertia
! Inertia: Describes psychological resistance to change
-
How to overcome this:
1. Manage change effectively
" Occur at pace which change can be absorbed & integrated
" Be evaluated to assess impact
" Be introduced in culture supporting employee participation

2. Change management strategies
" Identifying sources of change & assess if there is need to accommodate change
" Lower resistance through communicating with employees about need for change
" Using change agents: Somebody who initiates change
" Applying change models Kurt Lewins unfreeze change refreeze model:
-
unfreeze (breaks down existing system & prepares B for change)
-
change (New procedures implemented)
-
refreeze (Manager offers support to make sure change lasts)

global factors global sourcing, economies of scale, scanning and learning, research
and development
! Global Sourcing
" M: Purchasing products without being constrained by location
" Non-core activities can be outsourced
" Ensures outsourcing position exposed to global market so best decision made on cost,
efficiency & productivity
Benefits:
-
Access to new tech
-
Advantages of expertise
Negatives
-
Possible relocation of aspects of O
-
Increased cost of logistic
-
Diff regulatory conditions in countries
-
Exchange rate fluctuations



Reorganizing Plant Layout
-
Minor changes have little/no effect
-
Major changes (E.g.: complete re-engineering of systems) require extensive
reorganisation
-
Cost incurred: transporting, placing, bringing power to equip
-
Other costs incurred: Testing equip, transporting old to new machinery
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! Economies of Scale
" M: Cost advantages gained by producing on larger scale
" Becomes global factor when B sell to global markets
" Based on scale advantages:
-
As scale of production increases, price per unit falls greater value added

! Scanning and Learning
" Many contemporary B influenced by post WWII success of Japanese companies
" Emphasized improvement: Kaizen from way CEO manages to way assembly lines
perform
" Journals, conferences, etc., are opportunities for B to learn from one another

! Research and Development (R&D)
" Helps create leading edge tech & create innovative products
" Govts encourage R&D and may offer grants
" Aspect of R&D: Establishing what customers want & meeting their needs


























Searage Arabi
19
Abbreviations:
Finl Financial
O Operations
B Business
Tech Technology
$$ - Money/cash
M: Meaning
EOS: Economies of scale
Mgmt.: Management
Diff: Different
Relo: Relationship

Key:
Green Highlight Syllabus dot point
Blue highlight Mini dot point under syllabus dot point
Yellow highlight Important Words
Pink Highlight - RIPS