1. 4.1.1 Setting operational objectives
4 Decision making to improve operational performance
Inputs
Transformation
process
Outputs
With reference to the cake as an output explain what is meant by inputs and the transformation process.
4.1.1 Setting operational objectives
AQA Business

2. 4.1.1 Setting operational *objectives
In this topic you will learn about
The value of setting operational objectives
External and internal influences on operational objectives and decisions

3. *Operational objectives
Operations management is concerned with those aspects of the business which are directly linked to the fulfilment of customer orders
*Operations management takes inputs, processes them to form an output and distributes to the customer
*Operational objectives relate to how efficiently aspects of this process are achieved

4. *Operational objectives
Operational objectives relate to a number of measures of efficiency including:
1. Cost
The cost of each individual product or service supplied
2. Quality
Quality of raw materials, processes, output and customer service to match customers’ expectations
3. Speed of response and flexibility
The speed with which customers’ needs are met and the ability to tailor the good to meet individual needs i.e. matching supply to demand
What do you think are the main operational objectives of Trunki?
See how your Made for Me Trunki is created in the Trunki workshop!
Trunki UK production- BBC Points West

5. *Operational objectives
Operational objectives relate to a number of measures of efficiency including:
5. Dependability
Getting the right product, with the right quality and quantity to the right customer on time
6. Environmental objectives
Meeting targets to minimise any detrimental effects of the operations of the business on the environment
7. Added value
The ability to ensure that the value of the output is higher than the sum of the value of all the inputs (Task)
Veg fruit how can you add value to that?

6. *Internal influences on operational objectives
A firm will have to take into account the resources that it has available. This may take different forms:
Finance - budgeting will be particularly important in a competitive environment
People - the skills of the workforce and how they are applied are fundamental to a firm
Effective marketing – important in the service sector where customers are persuaded to buy
Capital – a capital intensive approach will improve speed and quality but will mean high initial costs

7. *Internal influences on operational objectives –
A firm will have to take into account the nature of the product:
Target market – niche might require specialist operations management such as expertise in that field; mass might lead to highly automated, capital intensive operations
Regulatory environment – legal requirements will heavily impact on operations e.g. waste
Geographical – location of industry and the closeness of the available factors of production e.g. Sheffield Steel or financial expertise in the City of London

8. *External influences on operational objectives
A firm will have to take into account the performance of its competitors. This may take different forms:
Benchmarking - identifying best practice from other firms and adopting elements of this in the firm’s performance
Environment targets - setting targets to improve performance e.g. wastage
Innovation - in order to differentiate from the competition
Can the government intervene to help businesses achieve operational objectives?
Why are Britain's workers less productive than others?

9. External influences on operational objectives
A firm will have to take into account demand:
Price elasticity of demand – elasticity will affect the revenue and a firm can take this into account when setting an operations budget for the product – the more inelastic the product the higher the budget is likely to be
Income elasticity of demand – if the product is a luxury good it will be income elastic and affected by the position of the economy in the business cycle. Necessities will be income inelastic and the operations budget is less likely to be cut in recession (or raised in a boom)
Recap.
What is meant by YED?

10. External influences on operational objectives
A firm will have to take into account ethical factors:
Ethics infers doing what is thought to be morally correct
Ethical sourcing of raw materials may affect costs and speed of response
Ethical treatment of employees could help achieve quality and dependability
Ethical treatment of waste helping achieve environmental objectives
JLR believes that operating responsibly is key to sustainable business. Do you agree?

11. 4.1.1 Setting operational objectives
In this topic you have learnt about
The value of setting operational objectives
External and internal influences on operational objectives and decisions