Business Operations Strategies
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.