BUSINESS STUDIES: OPERATIONS

SUMMARY
INTRODUCTION TO OPERATIONS

Operations involves the transformation or production of the business. It creates value to the
business by transforming inputs into outputs.
Businesses will continuously seek to minimise production costs so that the retail prices are as
low as possible.

Product/goods inputs and outputs;

Services inputs and outputs;

1. ROLE OF OPERATIONS MANAGEMENT

Strategic role of operations management cost leadership, good/service differentiation

To improve productivity, efficiency and quality

In order to gain a competitive advantage, businesses have to show;
Cost leadership involves aiming to have the lowest costs or to be the most price-competitive in the
market basic products

Business Studies By Joshua Hammonds

Cost leadership strategies;

1.
2.
3.
4.
5.
6.
7.
8.
9.

Building efficient production facilities

Establishing control over overhead costs
Keeping the cost of sales low
Investing in the state of the art manufacturing technologies
Ensuring they source the cheapest raw materials while maintaining quality
Using the best quality labour
Sourcing the best information about competitors and raw materials
Using time and money efficiently
Differentiating the product

Product differentiation: Means distinguishing products (goods & services) in some way from its
competitors commanding a higher price

Goods and/or services in different industries

Economies of scale: when a company expands they can usually buy more of a resource and get it for
a cheaper price, you have to factor in costs of machinery, staff, etc. E.g. if you spread the cost of
machinery over 1000 units instead of 100, each unit price is cheaper.
Manufacturing
- A manufacturing firm is one that takes
raw materials and turns them into a
finished product.
- Consumers dont interact with
manufacturers
- Operations manager need to organise;
Raw materials are sourced
Quality control standards are
maintained
Development of systems, random
checking of product & ongoing
research
Storage & distribution process

Services
- Dont have factories
- Risk management is important as this
involves;
Ongoing training
Right labour resources
The actual service needs to be delivered
Quality control

Interdependence with other key business functions

Operations refers to the business processes that involve transformation or production. This relates
directly to marketing because operations is the making of a product where marketing is there to
meet the needs & wants of consumers. Finance is essential to fund all aspects of a business especially
operations because this is the production of the goods. Human resources is important to staff the
right personnel for operations.
Business Studies By Joshua Hammonds

Summary:
Marketing establishing the idea behind a product before production
Finance operations is a big cost for businesses and it is also essential
Human resources employing appropriate staff to look after production lines. Production
involves skills, staff and training.

Business Studies By Joshua Hammonds

2. INFLUENCES OF OPERATIONS MANAGEMENT

Globalisation, technology, quality expectations, cost-based competitions, government

policies, legal regulation, environmental sustainability

Influences HOW the business can manage these to achieve goals and objectives of the business
GLOBALISATION
Globalisation refers to the removal of barriers of trade between nations. It is characterised by;
1.
2.
3.
4.
5.

Is about ACCESS reaching new markets and their influences on operations

High degree of transfer of capital, labour, intellectual capital and ideas
Financial resources and technology
Franchising
Importing

Supply chain Refers to the range of supplies a business has

Importance of supply chain management predictable and reliable supply chain management
is critical to business to keep operations flowing smoothly.
Reverse engineering or process reengineering A process that involves a business taking the
product of a competitor that has already been released into the market and reproducing a similar
product to it (opposite to this is innovation!)
CASE: Paperlinx Limited (based in VIC) who manufacture Reflex paper brand has
operations spanning 5 continents and 31 countries and derives approx. 76% of its sales
revenue from foreign transactions.
TECHNOLOGY
Technology is the design, construction and/or application of innovative devices, methods and
machinery upon operations processes.
To improve efficiency, improve logistics, reduce reliance on human labour
Types of technologies
Administration book-keeping

Other operations

Computers and printers

Machinery and computers

Telephones and stationary

Equipment/tools

Chair, desk

Registers/scanners

Book keeping software e.g. MYOB

Shelving and system e.g. inventory

management
Business Studies By Joshua Hammonds

QUALITY EXPECTATIONS
Quality may be understood to be a specific reference to how well designed, made and functional
goods are, and the overall degree of competence with which services are organised and delivered.
Quality management approaches: inspection of output, Total Quality Management (TQM), quality
circles, kaizen
Quality expectations with goods quality of design, fitness for purpose, durability
Quality expectations with services level of customisation, reliability of service provider,
professionalism of service provider

COST-BASED COMPETITION
Cost-based competition is derived from determining breakeven point (the level at which the
business matches total costs and total revenue) and then applying strategies to create cost advantages
over competitors.
That is, focusing on reducing costs to a minimum while maintaining profit margins.

GOVERNMENT POLICIES
Every business has to adhere to government policies with regard to operations. Government needs
to ensure safety and quality standards, manufacturers must comply with standards or face heavy
penalties.
Policies which impact on business operations include;
Taxation rates
WHS
Environmental policies
Employment relations
Trade and industry practices

LEGAL REGULATIONS
Operations management have particular laws that influence how practices and processes are
conducted. As the function involves; labour, technology, finance, machinery and energy.
Business Studies By Joshua Hammonds

WHS safe working conditions, PPE, use of machinery (Work Health and Safety Act 2011)
Fair work and anti-discrimination laws Racial Discrimination Act 1975 (Cth), Sex
Discrimination Act 1984 (Cth), Anti-discrimination Act 1977 (NSW), Fair Work Act 2009 (Cth)
Other important legislation Taxation Act 1953 (Cth), Corporations Act 2001 (Cth)
ENVIRONMENTAL SUSTAINABILITY
Environmental sustainability means that business operations should be shaped around practices
that consume resources today without compromising access to those resources for future generations.
The operations management is affected by the rise in climate change awareness and the need to
integrate a long-term sustainable plan.
There are 2 main aspects to environmental sustainability:
1. Sustainable use of renewable resources e.g. solar, wind power
2. Reduction in the use of non-renewable resources

Corporate social responsibility

-

Difference between legal compliance and ethical responsibility

Environmental sustainability and social responsibility

Corporate social responsibility is the open and accountable business actions based on respect for
people, the community and the broader environment. It is MORE than complying with laws &
regulations.
o Legal responsibility is MANDATORY, whereas ethical responsibility is OPTIONAL! There is a
growing pressure for businesses to show their contributions to society.
o Environmental sustainability involves environmentally sustainable operating practices.
This is in response to concerns about climate change and the destruction of the natural
environment.
o Social responsibility the practice of production in a way that it is not harmful to society or
the environment e.g. by adopting a human rights code of conduct (e.g. no forced labour)

CASE Body Shop: well known for selling products that are made without conducting tests on animals,
which is seen as ethically correct. Also, the company was involved with the setting up of a Humane
Cosmetics Standard and has formed a partnership with Amnesty International to help highlight the
plight for human rights defenders in many different countries. Increasingly environmentally aware
consumers fuelled a strong demand for these types of products, leading to the success of the Body
Shop.
Business Studies By Joshua Hammonds

3. OPERATIONS PROCESSES

Operations process planning, organising, leading and controlling

Inputs
-

Transformed resources (materials, information, customers)

Transforming resources (human resources, facilities)

Inputs the resources used in the transformation (production) process

Involves; labour, energy, machinery, technology, materials, information
Customer relationship management (CRM)
refers to the systems that businesses used to
maintain customer contact

Key performance indicators special criteria

used to measure the efficiency and effectiveness
of the businesss performance.

Input-transformation-output process means the bringing together of a number of inputs e.g.

finance, equipment, to create the finished good/service output through a transformation process
(which adds value).
Information can shape transformation processes by means of;
Ability to influence behaviour/decision making, including operations
Acts as a transformed resource when it is used to inform how inputs are used, where they are
drawn from, which suppliers and supplies are available, etc.
Transforming resources are those inputs that carry out the transformation process.
Human resources are the employees in a
business
**The effectiveness with which HR carry out their
work duties & responsibilities can determine the
success with which transformation and valueadding occurs.

Facilities refer to the plan (factory or office)

and machinery used in operations
> Large or small?
> Zoning or restrictions?
> Energy use or efficiency?

Facilities impact on operations by;

Can determine the nature of the operations environment

Can determine whether a business runs efficiently or not, and also influences its capacity to
transform

Business Studies By Joshua Hammonds

Transformation processes
- The influence of volume, variety, variation in demand and visibility (customer
-

contact)
Sequencing and scheduling
Gantt charts, critical path analysis
Technology, task design and process layout
Monitoring, control and improvement

Transformation is the conversion of inputs (resources) into outputs (goods or services), whether
they are; physical (goods) or intellectual (services which cannot be touched)

THE INFLUENCE OF VOLUME, VARIETY, VARIATION IN DEMAND AND VISIBILITY (CUSTOMER

CONTACT)

Volume how much of a product is made (quantity)

Lead times is the time it takes for an order to be fulfilled from the moment it is made. If businesses
do not respond quickly to market demand, it can lead to over-production which may lead to wastage
and increased inventory costs.
Variety different types of a product
Variation in demand impacts the transformation of products. Accurate prediction of demand is
important this can be done using; sales history, observing other markets demand of the product
Visibility i.e. customer contact feedback from customers (helps to shape production and potentially
maximising sales
Direct feedback

Indirect feedback

Surveys and interviews

Sales data

Warranty claims

Market share data

Blogs and wikis

Consumer reviews (e.g. Choice magazine,

Letters

Face-to-face

Phone calls

consultants report)

In the transformation process, decisions will need to be made about the following questions:
How much to make what volume of input to draw in and to process?
How much variation what range of outputs should be made in the process of transformation?
How much variation in demand will there be how can the operations processes respond to
changes in demand?
How much customer contact should there be and what, if any, role should it have on
transformation processes?

Business Studies By Joshua Hammonds

SEQUENCING AND SCHEDULING GANTT CHARTS, CRITICAL PATH ANAYLSIS

Sequencing refers to the ORDER in which activities occur.

Scheduling refers to the length of TIME activities take
The Gantt chart outlines the activities that need to be performed, the order in which they should be
performed and how long each activity is expected to take.

The Critical Path Analysis (CPA) allows us to show what tasks need to be done, how long they take
and what order is necessary to complete those tasks.

*Note: The critical path is the

SHORTEST LENGTH OF TIME it
takes to complete the tasks but
it is literally the LONGEST
LENGTH OF TIME!

GANTT CHART
Less complicated
Set out more clearly
Better for long term projects

CRITICAL PATH ANALYSIS

Much more precise in terms of timing
Better for short term projects
*Both show things that can be done at the same
time

Business Studies By Joshua Hammonds

TECHNOLOGY, TASK DESIGN AND PROCESS LAYOUT

Technology is the application of science or knowledge that enables people to do new things or
perform established tasks in new or better ways
BUSINESS TECHNOLOGY involves the use of machinery and systems that enable businesses to
undertake the transformation process more efficiently and effectively

Manufacturing technologies including;

o Robotics a programmable machine capable of doing several different tasks
o Computer-aided design (CAD) a computerised design tool that creates products from
a series of input data (parameters)
o Computer-aided manufacturers (CAM) software that controls manufacturing process

Task design is about how a task is to be performed by breaking it down into a series of steps/jobs
towards its completion (involves job analysis)
Plant/process layout is the physical layout of machinery or equipment in order to ensure the
efficient flow of resources
There are 3 ways to organise the physical layout;
o Process layout deals with high-variety, low volume production (broken into departments)
o Product layout for mass production (assembly line)
o Fixed layout when a product remains in one location due to its size & employees and
equipment come to it e.g. building of Sydney Harbour Bridge
MONITORING, CONTROL AND IMPROVEMENT
All operations processes should be monitored for their effectiveness. This requires effective monitoring and a
focus on continuous improvement. Monitoring and control lead to improvements when there is a focus on
quality and standards.

Monitoring measuring actual performance against planned performance

It uses key performance indicatorsKPIs which are predetermined variables (worked out before
process begins). E.g. Lead times
Inventory turnover rates
Defect rates, repair rates and warranty claims
IT and maintenance costs
Controlling is the corrective action phase. This means controlling compares what was intended to
happen with what has actually occurred.
Businesses undertake regular performance reviews. These are called Quality Controls,
assurance and improvement.
Business Studies By Joshua Hammonds

Improvement refers to the systematic reduction in inefficiencies and wastage, poor work processes
and eliminations of bottlenecks
Improvement typically is sought in the following areas;
o Time through minimisation of bottlenecks; including assessment of wait times and
lead times
o Process flows smoothness of transitions between transforming processes
o Quality setting quality goals, measuring product standards and quality through
number of returns and warranty claims
o Cost through assessing costs of production per unit, a review of expenses (fixed and
variable) and per unit costs of delivery
o Efficiency through reduction of waste and creation of greater output per unit input

One approach to the systematic reduction of inefficiencies and active creation of improvements is
called Six Sigma.
Six Sigma is an improvement process that was invented by Motorola. It follows the 5 steps called
DMAIC define, measure, analyse, control, improve

Outputs
- Warranties
- Customer service

Outputs are the result of the businesses activities. It must always be responsive to consumer demands.

Customer service how well a business meets and exceeds the expectations of customers in all
aspects of its operations
It is less expensive to service existing customers than to establish relationships with new
ones. To retain customers, businesses need to talk and listen to customers. E.g. face-to-face,
online feedback surveys, web view counters, warranty claims, etc.

Warranties is a promise made by a business that they will correct any defects in the goods that they
produce or in the services that they deliver
An assessment of warranty claims can help a business to adjust transformations processes to
be more effective.

Business Studies By Joshua Hammonds

4. OPERATIONS STRATEGIES

Operations strategies HOW to achieve business goals

Operations
strategies

Operations
strategies

1. Performance
objectives

6. Inventory
management

2. New product
or service design
and
development

7. Quality
management

3. Supply chain
management

8. Overcoming
resistance to
change

4. Outsourcing

9. Global factors

5.Technology

Performance objectives quality, speed, dependability, flexibility, customisation, cost

Operations strategies are based around the need to achieve performance objectives. Performance
objectives are goals that relate to particular aspects of the transformation function and can be
allocated to particular key performance indicators (KPIs) in the areas of;
Quality is often determined by consumer expectations, which are used to inform the production
standards applied by the business.
Design how well a good is made or a service is delivered
Conformance meeting customers standards and specifications
Service how reliable, suitable and timely the service delivery is builds reputation
Business Studies By Joshua Hammonds

Speed the time is takes for the production and the operations processes to respond to changes in
market demand
Goals for speed;
Reduced wait times
Shorter lead times
Faster processing times
Dependability how consistent and reliable a businesss products/services are
Flexibility how quickly operations processes can adjust to changes in the market
Customisation the creation of individualised goods or services to meet the specific needs of the
customers
Mass customisation is a process that allows a standard, mass-produced item to be personally
modified to specific customer requirements
Cost the minimisation of expenses so that operations processes are conducted as cheaply as possible

New product or service design or development

In order for a business to be a market leader and gain a competitive advantage, it needs to continually
innovate, design and develop new products and services.

Stages in designing and developing a new product/service;

Approaches that determine product design and development;

Consumer preferences
Changes and innovations in technology
Important factors in new product design and development include;
Quality
Supply chain management
Capacity management
Cost
Service design and development differs from the design and development of products as services
are intangible and consumed as they are produced. A service can be; explicit the application of time,
expertise, skill and effort; implicit the feeling of being looked after
Business Studies By Joshua Hammonds

Supply chain management logistics, e-commerce, global sourcing

Supply chain
management

Involves managing the flow of supplies through the input,

transformation processes and outputs in order to best meet the
needs of customers

Sourcing
Supplier
rationalisation
Backwards vertical
integration
Flexible or responsive
supply chain processes
Cost minimisation
Global sourcing

Purchasing of inputs for the operations process

Reducing the number of suppliers to the least amount

E-commerce
E-procurement
B2B (business to
business)
B2C (business to
consumer)

Buying or merging with suppliers to guarantee quality, delivery and price

of supplies
Not carrying inventories organising supply as you need it
The trend to use off-shore suppliers as they are usually cheaper
Sourcing supplies internationally in order to best meet the sourcing of
requirements
The buying and selling of goods and services via the internet
The use of online systems to manage supply
Direct access from the supplier to the buyer. When stock falls to a certain
point a supplier will supply without formal request
Selling of goods and services to consumers over the internet with payment
e.g. credit card, paypal

Four trends in sourcing;

Supplier rationalisation
Vertical (backward) integration
Cost minimisation
Flexible supply chain processes

Logistics the physical distribution and transportation of products. The use of warehouses and
distribution centres is crucial to the successful management of stock.
Global sourcing advantages and disadvantages;
Advantages
Disadvantages
Cost and expertise advantages
Possible relocation of operations
Access to new technologies and resources
Increased costs of logistics, storage and
distribution
Different regulations in different countries
Overall operations complexity increases
diverse locations

Business Studies By Joshua Hammonds

Outsourcing advantages and disadvantages

Outsourcing involves the use of external providers to perform business activities

Examples of types of outsourcing; manufacturing, merchandising, design, sourcing, human resources,
finance and accounting
Advantages
Simplification
Improved efficiency and cost savings
Less costs and maintenance associated
with employees wages, super
Increased process capability
Increased accountability
Access to skill/resources lacking within
the business
Can focus primarily on its core functions
of business

Disadvantages
- Makes business dependent on other
businesses to supply materials may lead
to disruptions of operations if late
deliveries
- The cost and uncertainty associated with
payback
- Ethics and morality loss of jobs
- Issues with communication and language
- Loss of control of standards and
information security

Technology leading edge, established

Technology the thoughtful application of technology helps a business to create a competitive

advantage
Leading edge technology the most advanced or innovative technology at any point in time. E.g. use
of social media and apps. It can help businesses to;
Create more products quickly and to higher standards
Reduces waste
Operates more effectively and efficiently
Established technology technology that is widely accepted and used e.g. email, word processors,
information systems
Both forms of technology give business efficiencies, productivity gains and a capacity to improve
operations processes.
Again...
Manufacturing technologies including;
o Robotics a programmable machine capable of doing several different tasks
o Computer-aided design (CAD) a computerised design tool that creates products from
a series of input data (parameters)
o Computer-aided manufacturers (CAM) software that controls manufacturing process

Business Studies By Joshua Hammonds

Inventory management advantages and disadvantages of holding stock, LIFO, FIFO, JIT

Inventory/stock includes all the raw materials, semi-finished and finished products that are on the
shelves or in storage
Inventory management is necessary for operations to ensure efficient and effective control and
monitoring of stock!
A business needs to have adequate stock on hand in order to keep customers happy by having
products available in the store. Shortages in stock may mean loss of valued customers who may turn
to competitors to satisfy their needs.
Advantages and disadvantages of holding stock
Advantages
Ability to satisfy customers needs on time
maintain loyalty
Opportunity for taking advantage of
discounted stock when bulk purchasing
Gaining a competitive advantage through
efficient delivery and superior customer
service
Greater loyalty by customers

Disadvantages
- Storage/warehousing requires large space,
handling expenses, insurance, etc.
- Spoilage may occur
- Theft/pilfering of stock
- Stock may become outdated/obsolete
therefore may not be sold
- Overstocking may tie up cash working
capital

The 3 approaches to INVENTORY MANAGEMENT;

LIFO

LIFO (last-in-first-out) used for products that does NOT have a use-by/best before date recent
stock is sold first

E.G. MACHINERY, TOOLS

LIFO = number sold x last price bought
FIFO

FIFO (first-in-first-out) used for perishable items

E.G. FRUITS AND VEGETABLES, BREAD, MILK

FIFO = number sold x first price bought
JIT

JIT (just-in-time) minimum amount of stock is held as it aims to have the business only make
enough products to meet demands
Business Studies By Joshua Hammonds

Advantages; reduction in storage costs, no spoilage, no tied up cash, no warehousing necessary, can
respond quickly to changes improving productivity

Quality management control, assurance, improvement

Quality is the term used to describe the degree of excellence of a product/service and its fitness for
a stated purpose
QUALITY CONTROL

Quality control reduces problems and defects in the product by using inspections at various points
in the production process

Programmed inspections

Businesses need to have defined quality standards and parameters

QUALITY ASSURANCE

Quality assurance involves the use of a system to ensure that set standards are achieved in
production

Quality assurance is done through measuring against pre-determined standards

Fitness for purpose and the desire to achieve right first time

E.g. ISO 9000 - series of standards developed by the International Organization for
Standardization (ISO), that define, establish, and maintain a quality assurance system for
manufacturing and service industries

QUALITY IMPROVEMENT

Quality improvement involves continuous improvement and total quality management (TQM)
Continuous improvement ongoing method of looking for ways to improve a business e.g. asking
for staff suggestions
Total quality management (TQM) focuses on managing the TOTAL business to deliver quality to
customers
Ongoing, business-wise commitment to excellence that is applied to every aspect of the
businesss operations holistic approach to avoid expenses of wastage for faulty products

All staff are heavily encouraged to suggest/make improvements (usually have reward systems)

E.g. Six Sigma is a quality management approach used to identify and remove the causes of
problems in the operations process
Business Studies By Joshua Hammonds

Overcoming resistance to change financial costs, purchasing new equipment,

redundancy payments, retraining, reorganising plant layout, inertia

Managers must plan for changes in the environment in which the business operates as the
environment in dynamic constantly changing. These changes can present opportunities and
threats to a business.
Change in our commercial world is inevitable and is beneficial to a business, but it is sometimes
resisted by some internal stakeholders i.e. workers, management
There are 2 major types of change INTERNAL and EXTERNAL
Internal influences
o NEW TECHNOLOGY
computerisation, stock control,
maintain competitive advantage
o E-commerce
o New systems and procedures
o New business

External influences
o Changing nature of markets
o Economic
o Financial
o Geographic
o Social
o Legal
o Political
o Technological

Reasons for resistance to change:

FINANCIAL COSTS

1.
2.
3.
4.

Cost of purchasing new equipment

Cost of redundancies
Cost of retraining employees
Costs associated with structural reorganisation of the business e.g. changes and to plant and
equipment layouts

PURCHASING NEW EQUIPMENT

Changes in a workplace often necessitate purchasing new equipment, such as new computers, and/or
other modern office equipment. This may burden the business and cause debts to accumulate over
the long term.
May help to achieve key operational goals better;
1.
2.
3.
4.
5.

Improved processing flexibility

Improved processing speed and shorter lead times
More consistency in production
Higher overall quality of processing
Reduced wastage and losses from equipment failure
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REDUNDANCY REPAYMENTS

Redundancy payout is the money that is given to employees when they are forced out of work
because their job skills are no longer required or relevant.

RETRAINING

This cost arises from change that causes a reorganisation of the businesss internal hierarchy or from
the acquisition of technology e.g. computer software

REORGANISING PLANT LAYOUT

Can have high costs associated e.g. transporting, bring old equipment
Can lead to loss of productivity with adaptation to new work processes
CASE Coca-cola: had to relocate its plant within Sydneys metropolitan area since they first
established in Australia. They began their operations in Surry Hills, then moved to Kingsgrove, then to
Northmead. Such relocation will often involve a huge capital outlay in the process.

INERTIA (PSYCHOLOGICAL)

Change feelings of uncertainty or fear of the unknown

Inertia refers to the unease and/or inactivity of a business owner/manager when confronted with
change.

CULTURAL INCOMPATIBILITY

The culture in a business may vary between businesses. In the event of a merger, some management
positions may be lost in order to remove duplications of services.
In the case of a takeover, where one business buys out another business, the new owners may
experience a culture clash if they attempt rapid changes to the operations, which may be resisted by
employees.

Business Studies By Joshua Hammonds

MANAGING CHANGE EFFECTIVELY

Managers must manage change effectively. Change is more likely to be successful if managers follow 4
basic steps;
1. Identify the need for change
Managers must see the need for change and communicate this to employees. The outcomes from
embarking on a course of change must also be clearly communicated to employees.
2. Set achievable goals
Change should have a purpose and be planned with achievable goals. Communication with ALL
stakeholders is essential. Provide necessary training and support to help staff adjust to the new
system and methods. Ongoing evaluation of change needs to be undertaken and monitored.
3. Create a change of change
Change agents are individuals or groups in a business who can inspire and influence workers
towards a culture of change. Change agents must show the traitspositive, encouraging, good
communication, good teamwork.
4. Use change models
UNFREEZE/CHANGE/FREEZE model;
Unfreeze identifies the need for change and prepares the business for it (assure staff that
change will be for the better)
Change the change is implemented (new procedures, systems and behaviour)
Freeze ensure that the change is permanent (offering praise or rewards)

Business Studies By Joshua Hammonds

FORCE-FIELD analysis model;

Driving forces are those pressures or forces that are requiring change
Restraining forces are those forces that dont allow or wish for change to happen

Business Studies By Joshua Hammonds

Global factors global sourcing, economies of scale, scanning and learning, research and
development

GLOBAL SOURCING

Global sourcing finding suppliers who have cheaper, better quality products and more advanced
technology
Benefits of global sourcing
- Cost advantages
- Access to new technologies
- Advantages of expertise and labour
specialisation
- Access to other resources
- Ability to operate over more hours of the day

Challenges of global sourcing

- Possible relocation of aspects of operations
- Increased cost of logistics, storage,
distribution
- Managing different regulatory conditions
between nations
- Increasing complexity of overall operations

ECONOMIES OF SCALE

Economies of scale the cost advantages gained from producing on a larger scale.
As the scale of business grows, the cost per unit decreases. This means profitability can rise.

SCANNING AND LEARNING

Scanning and learning learning best practice from internal businesses

An effective manager should continuously scan the business environment (global) to learn from the
best practice of business around the world. This can allow for continuous improvement.
RESEARCH AND DEVELOPMENT

A central aspect of this is finding out what consumers want and researching and developing
something that meets their needs.
The government encourages this with grants and tax advantages.

Business Studies By Joshua Hammonds