IB Business & Management Unit 5.1 The Role of Operations Management (often referred to as production)

Learning Outcomes To understand: Operations management and its relationship with other business functions – A01 Operations management in organizations producing goods and/or services – A02 Operations management strategies and practices for ecological, social (human resource) and economic sustainability - A03

Central Question What is Operations Management and why is it crucial in the modern business world?

Definition “ Providing the right goods and services in the right quantities at the right quality level in a cost-effective and timely manner ” (Hoang, 2014)

Production & Other Business Functions Production is one Business Function. What are the others and how might they be: Affected? Influenced? Related? Can we link this to our case study companies? Are the relationships between the functions as important for each business? Discussion points

Production & Marketing Method of production used affects product quality and individuality – links to ‘brand image’ Bugatti vs Toyota

The Differences Bugatti Toyota Job Production Flow Production Custom made – bespoke (e.g. interior) Limited customisable options e.g. (colour, trim) Highest standard of Personal and customer Service Standard service (basic) Very high price Competitive price Price Inelastic Price Elastic

Production and Human Resource Management (HRM) It is crucial for HR department to communicate effectively and efficiently with the Production function (especially if manufacturing business) Changing products, changing demand, lack of quality can all directly impact HR and in turn HR can directly influence and solve problems the production department faces.

Consider Production relationship with HRM across 2 different sectors Secondary Labour Intensive Capital intensive Tertiary Training Redundancies? If you sell a service, the people in your organisation are the most important asset Demand forecasts (more or less labour required) Addressing falling motivation Motivation New skills necessary to compete? Financial remuneration Motivation – how to maximise Method of production used – job, batch, flow?

Thoughts? Manufacturing labour intensive Manufacturing capital intensive Services

Operations Management and Finance Very important for capital intensive industries or businesses as require large capital investment Financial Planning – budgets, forecasts will all be linked to production If considering expansion will external sources of finance be needed – which one is most appropriate and why? In a labour intensive industry like services then salaries/wages will be a large component of the whole businesses costs.

Ops Man and the Sectors….thoughts?? Tertiary sector Primary sector Quaternary sector Secondary sector

CELL Capital Enterprise Land Labour Key is maximising Added Value without compromising quality

Sustainability Links to our Key Concept of Ethics It promotes intergenerational equity This means that “production enables consumption of goods and services for the people of today without compromising the consumption for the people of tomorrow” (Hoang, 2014, p.474)

John Elkington Pillars of Sustainability, 1994 Which one is most important? Would every business stakeholder have the same opinion? See task on next slide

Task in Pairs – 5 mins Choose a business that produces goods or products And a business that provides a service. Compare and contrast the different possible approaches to sustainability in the different sectors or industries Analyse the different perspectives on sustainability from the different points of views of the stakeholders.

Forms of Sustainability Ecological / Environmental Social/Community (CSR) Economic/Financial The ability of the natural environment to meet the needs of the current generation without jeopardising the needs of future generations The way in which society develops to meet the social wellbeing needs of the current and future generations The ability to meet the economic needs of the present generation using existing resources without compromising the ability of future generations to meet their needs. 2011 – 7 billion people 2050 – 9.7 billion people Concerns optimizing quality of life for future generations CELL (capital, enterprise, land, labour) Many resources are considered finite – is this therfore a concern? Social barriers (racism, inequality, discrimination) inhibit societal progress. How can business ensure women have equal opportunities to succeed in business? Waste and overuse of resources could compromise future generations. Especially with the forecasted global population growth!!

Do these population statistics make sustainability even more important?

Concepts CONCEPT RELEVANCE TO OPERATIONS MANAGEMENT PLANNING CHANGE CULTURE ETHICS GLOBALISATION INNOVATION STRATEGY

So…What have we learnt so far? Write your answers (or any questions) on a post it and stick on the board 