Operational Strategies

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Operational Strategies: Capital Intensity
The extent to which production or operations depend on investment in and use of capital – i.e. machinery, IT systems, buildings etc
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Critical Path Analysis
Project management tool that uses network analysis to help manage complex and time-sensitive operations
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Diseconomies of Scale
Factors which result in higher unit costs as production output reaches too high a level
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Economies of Scale
Cost advantages that a business can exploit as a result of expanding its scale of production. Economies of scale reduce the average (unit) cost of production
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Efficiency
A measure of the ability of a business to achieve the required level of production whilst minimising the use of resources
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Industrial Interia
Where a business decides to stay in its existing location despite potentially better locations being available to it
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innovation
Putting an new idea or approach into action – the commercial exploitation of ideas
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Just In Time
Method of lean production where production resources arrive at the moment they are required rather than being held in stock
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Kaizen
A cultural approach to lean production and quality assurance. Involves encouraging employees to constantly seek and implement small incremental changes to production in order to improve quality and efficiency
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Labour Intensity
The extent to which production or operations depend on investment in and use of labour – i.e. people, training
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Labour Productivity
The level of output per unit of labour
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Lead Time
The period of time between an order being placed and being received
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Lean Production
An approach to management that focuses on cutting out waste whilst still ensuring quality.
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Marketing Economies
Where marketing costs per unit sold can be lowered by spreading marketing costs over larger output
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Minimum Efficient Scale
The minimum output a business needs to achieve in order for its to be able to minimise unit costs
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Multinational
A business which owns operations in more than one country
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Network Analysis
Breaking a project down into separate activities and their requirements
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Offshoring
Where a business has work done for it overseas
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Outsourcing
Where a business has work done for it by someone else
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Productivity
Measures of how effective a business is in turning resources (e.g. labour hours) into output
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Purchasing Economies
Cost savings that arise from buying in bulk or from a more powerful relationship with a supplier due to increased output
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Quota
A restriction on the volume or quantity of a good that can enter or be sold in a market (form of trade barrier)
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Scale
The size or output of a business, best measured relative to that of direct competitors
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Subcontracting
Part of outsourcing – where another business is used to provide part of the production process
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Tariff
A tax levied on imports to increase their price compared with domestic goods (form of trade barrier)
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Unit Costs
The key measure of productive efficiency – calculated as total costs divided by total output (over a specific period)
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Technical Economies
Reductions in unit costs arising from the effective use of technology
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Other cards in this set

Card 2

Front

Project management tool that uses network analysis to help manage complex and time-sensitive operations

Back

Critical Path Analysis

Card 3

Front

Factors which result in higher unit costs as production output reaches too high a level

Back

Preview of the back of card 3

Card 4

Front

Cost advantages that a business can exploit as a result of expanding its scale of production. Economies of scale reduce the average (unit) cost of production

Back

Preview of the back of card 4

Card 5

Front

A measure of the ability of a business to achieve the required level of production whilst minimising the use of resources

Back

Preview of the back of card 5
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