Operations management (OM) - created from Mind Map

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Art and science of making sure that goods and services are created and delivered successfully to customers.

3 issues at core:

Improve profitability by increasing productivity through more effective allocation of limited resources to capitalize on the “best” marketplace opportunities

Customer Satisfaction:

Forms of Business

Profit Maximisation

Objective of Fin Management

Corporate Governance

(1) Design (2) Management (3) Improvement

(1) Efficiency (2) Quality (3) Cost

- Increase productivity through (1) Technology (2) People

Customer: any individual or group that uses output of a process

Correlated with repeated business and customer referrals

Determined by what customers do and dont expect

Sole trader

Partnership

Closed Corporation

Private Company (Pty) Ltd.

Public Company Lyd

Manipulation of accounting profits

Timing of Returns

Does not reflect cash flows

Accounting profits do not account for cost of equity capital

Risk - if higher profits come with higher risks, share price may fall

Management should maximise the shareholders' interest in the company

- The agency problem arises from separation of management and ownership in a firm which may result in conflicts of interest

Role of Financial Manager

A conflict of interest arises from fact that managers make decisions that are not in line with the goal of shareholders' wealth maximisation

1. Pursue wealth-creating investment opportunities

2. Source funds to finance the investments

- Focus of King IV (1) Effective leadership (2) Sustainability (3) Corporate citizenship

- Board of Directors must set out ethical values and corporate strategies of the firm

Sustainability and Integrated reporting

Triple Bottom Line: Social, Economic and Environmental

Investors prefer companies with high levels of corporate governance disclosure