Strategic role of operations management

'Strategic'- affecting all key business areas while contributing to the strategic direction/plan of the business.
In order to increase profit the business should focus on:
-revenue/income
-cost/expenses
-costs of operations functions
-input costs (capital, land, resources, installation)
-labour costs (types of employees, overtime)
-processing costs (machinery, maintenance)
-inventory costs (storage, insurance, theft)
-quality management costs (training, planning, inspection etc)

-Cost leadership
A business strategy that involves the business trying to compete in the market and increasing profit by having lower prices than competitors.
-economies of scale and cost management: cost advantages from buying cheaper inputs as a result of buying a large quantity (lower price per unit) and from more efficient and improved technology and machinery.

-good/service differentiation
Distinguishing products in some way from its competitors.

This can be done by:
Goods:
-varying product features (e.g. new features in the market)
-varying product quality (e.g. better quality for less price)
-varying any augmented features (e.g. additional features to a product, like a built in gps in a car)
Services:
-varying the amount of time spent on a service (e.g. time is a factor that differentiates between service providers)
-varying the level of expertise brought to a service (e.g. more expertise results in more specialised service)
-varying the qualifications and experience of the service provider (e.g. results in better quality)
-varying the quality of materials/technology used in service delivery (e.g. largely affects quality and modern reputation of the business)
-Cross branding
Differentiation may be created from cross branding or strategic alliances. This may add value to products. E.g. Woolworths and Caltex

	Created by shaycrystal4 over 10 years ago

	Copied to Note by shaycrystal4 over 10 years ago

Business Studies (Operations) Note on Role of operations management - created from Mind Map, created by shaycrystal4 on 21/01/2014.

Role of operations management - created from Mind Map