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OPERATIONAL STRATEGIES] AQA - BUSS3
Understanding Operational Objectives
A firm's operational aims and objectives are the goals or targets of the operations
management department or function.
Types of Operational Objectives
Cost Targets:
Cost targets come in different forms. Commonly used targets for businesses include:
o Reducing Unit Costs ­ this is likely to be a primary aim of most businesses.…read more

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OPERATIONAL STRATEGIES] AQA - BUSS3
Corporate Objectives:
The operations department must ensure that its objectives are consistent with the
corporate objectives of the business so that it produces products of a suitable
quality for the company.
Finance:
Operations management objectives rely on considerable capital expenditure on
equipment or research and development, meaning a healthy financial position is vital.
Human Resources:
The skills, training and motivation of a business' workforce will have a major impact
on operational objectives.…read more

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OPERATIONAL STRATEGIES] AQA - BUSS3
Scale and Resource Mix
A business needs to ensure that its costs are kept as low as possible in order to
compete effectively. But what size should a business be to operate efficiently?
A key concept in this topic is that of "unit costs". A firm will aim to produce at
optimum capacity, where it benefits from economies of scale, but not too many
that it is affected by diseconomies of scale.…read more

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OPERATIONAL STRATEGIES] AQA - BUSS3
the disadvantages that an organisation experiences due to an increase in size.
These cause a decrease in productive efficiency and an increase in unit cost.
Co-ordination Diseconomies:
There may be a loss of control by management as an organisation becomes more
complex. Individuals are less likely to follow organisational policies as the level of
control is reduced and spans of control are larger.…read more

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OPERATIONAL STRATEGIES] AQA - BUSS3
The production operations of any business combine two factor inputs:
Labour ­ i.e. management, employees (full-time, part-time, temporary etc)
Capital ­ i.e.…read more

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OPERATIONAL STRATEGIES] AQA - BUSS3
Innovation
Innovation is commonly described as 'the commercially successful exploitation of
ideas'. Successful innovation is mainly about creating or adding value. It does so
either by:
Improving existing goods, processes or services (process innovation), or by
Developing goods, processes or services of value that have not existed
previously (product innovation)
It can be seen that Research and Development is a crucial element of innovation.…read more

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OPERATIONAL STRATEGIES] AQA - BUSS3
Problems and Risks
Generic Products - An innovation only confers a competitive advantage if
competitors are not able to replicate it in their own businesses. Whilst patents
provide some legal protection, the reality is that many innovative products and
processes are hard to protect. The innovative company could take all the risk,
only for a rival firm to offer a similar product for a much cheaper price as they
didn't have to spend on R&D.…read more

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OPERATIONAL STRATEGIES] AQA - BUSS3
Location
For businesses in some sectors, location really is critically important. For others, it is
a relatively minor decision. The key is to consider the main issues faced by a business
choosing a business location and to address the most appropriate way of making a
choice.
Location decisions are usually pretty important ­ to both large and small businesses.…read more

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OPERATIONAL STRATEGIES] AQA - BUSS3
For a significant decision on business location, it is considered good practice to
undertake quantitative methods to make decisions, normally investment appraisal.
The decision may involve a substantial capital investment (e.g. buying land & buildings,
fitting out retail or other outlets, installing IT and production facilities).…read more

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