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6 A global business has adopted a strategy which aims to lower the average cost of its product by increasing output. What is this strategy called?
(A) Outsourcing(B) Global pricing(C) Global sourcing(D) Economies of scale
8 A business plans to increase its stock to be ready for the grand opening of five new stores. This shows the interdependence between which business functions?
(A) Operations and finance(B) Operations and marketing(C) Finance and human resources(D) Human resources and marketing
9 Which performance objective measures how well a product meets the prescribed design specifications?
Operations is intrinsically and intricately linked with each of the the other key business functions. Management perspectives to solving operations issues and problems are important. For example, cost is crucial:
� Cost leadership� Two aspects apply
� Efficiency – cost-minimisation� Note the relationship between supply costs and cost leadership� Delivering product to the market in a price-competitive manner
• Note the cost implications of: • Standardisation and customisation• Goods and services
• Warranties� A quantitative (measurable) assessment of operations processes� Effect on inputs and processes
Case studies � Recall of Samsung phones – exploding batteries� The recall of 8.1 million Toyotas following slipping mats and sticky
accelerators being linked to 19 accident deaths. Honda recalled 437,000 vehicles due to faulty airbags. VW (Skoda and Audi) did a mass recall on the basis of accelerators losing power causing fatal accidents too. But the Australian recall came MANY months after a recall elsewhere.
Outsourcing (the most underrated strategy and most widely used)� Advantages
� Cost saving/efficiency� Increased ability to process – functional/capacity increases = growth� Flexibility� Through Service Level Agreements (SLA’s) – specified standards� Access to process/knowledge experts� Strategic benefits (eg British Airways ticketing with WNS)
� Disadvantages� Possible loss of privacy� Cost of outsourcing� Negotiating SLA’s� Loss of control of business processes� Cost of organisational redesign� Loss of corporate memory
Case studies: Nanna’s Blueberries and Hep A, Mattel and Apple – breaches to SLA’s..?
Insourcing trend – cosourcing:Interactive and Flight Centre Travel Group (FCTG)
2013 Q18A business is experiencing increasing costs for its stock over time. It is seeking to maximise its profit for the current financial period. Which strategy should it adopt to value its inventory?
2014 Q7A car assembly plant had to shut down operations for a day because tyres had not been delivered.
What inventory management strategy at the car assembly plant may have caused this situation?(A) Just-in-case(B) Just-in-time(C) First-in-first-out(D) Last-in-first-out
Sunshine Fruit Juices employs 100 people in its Queensland factory andsupplies juice to large supermarket chains in Asia and North America.Customers have recently complained that the product has beendamaged and bottles have been wrongly labelled. An increase inindustrial disputes has also occurred due to a number of recentworkplace accidents and demands from employees for higher wages.
You have been employed by Sunshine Fruit Juices to preparea report for management on the issues outlined above. Inyour report, recommend strategies for human resources andoperations that the firm could implement to improve itsbusiness performance.
Emu Uniform Manufacturers Pty Ltd are a successful business based in NSW. Theycurrently supply a range of school, sport and work uniforms to a large number ofcustomers throughout Australia. They are known for their outstanding customer serviceand high quality products.
Sales have been increasing for many years and they have recently received a large long-term contract to supply uniforms to a major company.
This will require them to significantly expand their output. To do this, the business willhave to outsource overseas or spend $5 million to expand its existing factory in NSW.
You have been hired as a consultant to write a report to the management. In your report:
� recommend a source of finance for the factory expansion� discuss outsourcing overseas compared with the factory expansion� explain the global factors that need to be considered if they decide to use outsourcing