Operations:
- Role of Operations Management
o Strategic Role of Operations Management
 Cost Leadership
 Businesses aim to have the lowest costs or to be the
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Cost leadership strategies include
o Efficient production
o Reduced overhead costs
o Low costs of goods
o Economies of scale
o Outsourcing
o Investment in technology
Economies of Scale
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Cost advantages that can be created as a result of an
increase in scale of business operations
Product differentiation
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o
most price-competitive in their market, generally this
is achieved through:
o Basic products with fewer features, or lower
quality
o Small profit-margins, higher volumes of sales
o Example: Kmart or Aldi
Distinguishing products from your competitors.
Product differentiation may allow a business to
command a higher price and build brand loyalty. A
differentiated product can command a higher
premium price.
Price Differentiation strategies include:
o High Quality
o Brand image
o Technology
o Fast Delivery times
o Customised Products
Goods and/or Services in Different Industries
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Types of Goods can include:
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Customised goods (Vary according to customer’s
needs)
Perishable goods (Goods with a use-by date, short
lead times, quick effective distribution, may need
cold storage or packaging)
Non-perishable goods (Goods without a use-by date,
e.g., Technology, paper etc)
Intermediate goods (Processed more than once e.g.,
wood, metal etc)
Types of Services can include:
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Self-service (e.g. Self checkout at supermarket)
Standardised (e.g., Burger at a fast food
establishment)
Customised (e.g., Personal house cleaning service)
Examples of Industries:
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o
Standardised goods (Mass Produced, Uniform
Quality)
Manufacturing Industry:
o Outputs are tangible
o Can be stored
o Productivity is easily measurable
o Capital intensive
Service Industry:
o Intangible
o Labour intensive
o High customer interaction
o Easy to modify and customise
o Productivity is hard to measure.
Interdependence with Other Key Business Functions
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Interdependence:
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A mutual dependence that the key functions have
with one another.