Business Operations Strategies Essay Example for Free

Business Operations Strategies Essay Cost Leadership- Cost Leadership is a way of getting a competitive advantage by finding the most efficient way of manufacturing the good or delivering the service in the industry. A cost leadership strategy is where a business aims to be the lowest cost manufacturer within its industry. Low costs can be achieved through economies of scale in production and distribution, access to cheaper raw materials or inventing an innovative way of producing a product. Visibility- Operations can be influenced with something such as what they can see from the operations in action. Service based businesses will have a higher based level of visibility, while customers will rarely see the operations process of a manufacturing based business. The implications for operations of a highly visible operations process are that the quality of labour will be significant. Operations will generally need to have well trained, highly skilled, adaptable staff that are able and willing to deal with the individual needs of customers. A close relationship with human resource will be essential. Speed is also a crucial factor in operations as customers usually have a much lower tolerance for waiting. Short time lags are important in operations between the customer ordering and the delivery. Otherwise the customer may get sick of waiting and move onto a competitor. Overheard costs- This refers to the ongoing expenses of an operating business. Overhead expenses are all costs on the income statement except for direct labour, direct materials direct expenses. Overhead expenses include accounting fees, advertising, depreciation, insurance, interest, legal fees, rent, repairs, supplies, taxes, telephone bills, travel and utilities costs. Over-head costs can be classes under four titles such as Functional classification, Classification on the nature of expenditure Element-wise classification and Classification on behaviour of expenditure. Globalisation- Gives the consumer the opportunity to purchase products from the business will provide them with the best value for money. Globalisation is the integration of different national economies into a single market where goods and services can be traded easily. This can increase the flow of goods, services, people, finance, and information around the world. It refers to the increasingly global relationships of culture, people, and economic activity. Cost Based Competition- A business can keep it competitive edge by structuring a cost based competition with other businesses. A business can gain price advantage over its competitors by using operational strategies that lower costs. In this approach a business can reduce its prices lower than its rivals. This should increase the profit of sales and market share. Supply Chain Management The supply chain management includes all the businesses directly linked to one another to supply goods and services to one another. This is useful in way of a business being able to consume various resources necessary to produce a good or supply a service. Good suppliers are to be found that can provide good inputs with the best price and reliability. Technology Technology is the equipment and knowledge that are available to help businesses perform certain functions or make products. Technology is very important and very crucial in businesses. The most significant influence is on businesses that fail to keep up with the progress in technology by hanging onto equipment or operation methods where competitors have released new technology giving them an advantage. Adapting new technologies may make a business more competitive if the technology is widely adopted but it prevents the loss of competitiveness. Government based policies Government policies can be a very important influence on the operations functions of a business. They can impact on the operations function include regulation, subsidies and grants, and taxes and tariffs that encourage or discourage aspects of operations or ways the operations functions are conducted. Corporate and Social Responsibility Corporate social responsibility refers to the relationship between business and the broad society and the way its relationship is perceived and managed. The focus of the responsibility is to ensure the business activities have a positive impact on society and the stakeholders in the business. These days the community have high expectations about the behaviour and the behaviour of a business. Volume Volume is that amount of a product that is produced. Sometimes a business will be better off producing more than what is needed to ensure they will have the products ready to be sold. This can work out to be cheaper in ways of getting the products made in bulk, this can be both convenient for the buyer and the seller. An example of this would be Dominos pizza. If they have their pizzas already made and cooked for people, it would be more convenient for them to just walk in and buy it straight out of the oven rather than ordering the pizza and having to wait for the usual waiting period. Quality expectations A business that is customer focussed will try to produce goods and services that will satisfy the desires of its customers. Customers always have their own idea of how a product should be and what quality it should be at. The business must keep their intentions in mind. An example of this would be at JB HIFI. A woman wants to buy a pair of ear phones. She enters the shop intending to buy a $20 headset but the shop does not have the product in her price range, the woman ends up disappointed and goes to another shop. Sequencing and Scheduling These are tools that are used to identify all steps in operations process and organise them into the most efficient way and order to complete. A key role of operations when scheduling and sequencing is to perform a detailed task analysis to determine the different parts of the entire process of making a good or providing a service. There are many factors come under scheduling and sequencing such as- What production and activities are used. When a particular activity will occur. How long an activity will take to finish. What activities are independent and can therefore occur at the same time. What activities are related so that one can occur before the other What resources will be used etc. Legal Regulations Legal regulations are a very important influence on any business. It impacts on the operations functions of a business. Legal regulations are laws that regulate the ways things can be done. They are also important because of the potentially dangerous aspects with the use of the equipment in the business. Each State Government Have legal regulations that govern the behaviour of the employer and the employee in the work place, it is a legal requirement to provide a safe working environment. Logistics Logistics are a massive part of the functions of a business. It is a crucial aspect of the supply chain management. Logistics is important because it can be part of a source of a competitive advantage if a business can do their logistics activities more cheaply than their competitors. An example of this would be when Woolworths spent billions of dollars on overhauling their entire distribution system. This is what gave them their competitive edge over Coles. E Commerce This is one of the fastest growing aspects of supply chain management. The term E-commerce refers to the use of the internet for all aspects of commercial transactions. An example of this would be EBay. This is a website where you can buy and sell your own personal items. Businesses also use this site to sell their products too. This gives them a wider range to sell their products to all over the world. Global Sourcing Global sourcing is important in the supply chain of management because businesses are increasingly seeking raw material and component parts wherever they are cheapest. Buying and selling raw materials around the world is very useful in ways of saving money and making money. Buying raw materials from other countries may work out to be cheaper than to buy the products from the country the business is based at. Outsourcing Outsourcing is a very significant in the development in current business practises. It is a supply chain of management strategy that can provide very significant value to a business. Outsourcing is the term used when goods and services that would normally be part of the business are obtained outside of the business. Inventory Inventory is an area of operations that is undergoing significant change. It is often called stock and refers to the store of transformed resources waiting to be processed. To have an inventory can be very useful in the case of having an impulse of buyers. Having the stock already produced and ready for sale will be convenient for both the buyer and the seller. Economies of Scale (EOS) This is when the managers of a business design a factory to conduct the transformation process. They have to make the decision as to the capacity volume. Economies of scale in other words mean the expansion of a business to minimise costs through the use of high volume and production. An example of this would be Wal-Mart, they are a massive franchise and are expanding all over the world. Product differentiation The Product differentiation strategy and is a very different way of developing a competitive advantage. A product differentiation is concerned with developing products that are different from their competitors because they have benefits or attributes a customer values. This means that customers will be willing to pay more for a differentiated product. Visibility Customers appreciate being able to see what they buy and try it out before they get the product. This is an approach of having good customer service from the staff showing off the product to the interested customer. An example of this is at Athletes foot. The customer enters the shop and immediately gets attended from staff. The staff will then assist the customer in trying and showing the customer what he/she is interested in. Customer Service Customer serive is a massive part of running a successful business. With helpful staff that is able to assist you, this makes things much easier for the customer and will make them more willing to buy the product. So either way with this approach everybody wins depending on how well the customer service. Flexibility When a business is manufacturing a product or delivering a service in a dynamic environment the ability to change is important. A business must have the ability to make changes to suit the changes to keep up its competitive edge and keep up with the game. Flexibility is important for every business because businesses can fall behind and lose track of what else is happening within other businesses. Warranties Warranties are very important to customers. Potential customers often find that a number of competing products will effectively meet their needs. This is to do with products such as cars and white goods such as refrigerators, televisions etc. Warranties become an important part of the consideration in the customers choice. Speed Speed is a major factor within running a successful business. Customers appreciate quick service and prefer to be in and out of the shop as quick as possible. Speed refers to the time difference between a customers request for a good or a service to when it is actually received. Control Dependability Dependability is an important performance objective for many businesses. It means that the business is consistently good in its quality and its performance. This is a key performance indicator for all businesses. Having a dependable business will keep customers coming back for more, and will keep people talking about the reliability of the business. Environmental Sustainability Environmental sustainability is a massive concern to both the wider world and the community and of what the business has of impact on the environment. It is the ability to maintain the qualities that are values in the physical environment. Climate chance, Water, Waste etc. Quality Assurance Quality assurance involves establishing and using a set of procedures and/or processes that will prevent product defects from occurring in delivering services. Global factors There are a number of global factors that influence operations strategies. They include global sourcing, economies of scale, scanning and learning and research and development. Global sourcing is where products are acquired outside the home country and are bought from overseas for cheaper sales. Scanning and Learning This is the competitive global environment within which many large businesses operate which is constantly changing. Technology as an example is changing at a very fast rate. Businesses need to scan and learn off other businesses what is going on in the market of other businesses.