Business Studies Unit 3 Key Defintions

Business Studies Unit 3 - Strategies for Success - Key Definitions

Operations Management

Operations Management - Refers to the design, execution and control of operations that convert resources into desired goods and services, and implement a company’s business strategy.

Economies of Scale - Refers to an advantage a business attains through the size of its operations. In theory there should be a reduction in long-run average and marginal costs arising from an increase in size of an operating unit eg a factory or plant. Economies of scale can be internal eg. cost reduction due to technological and management factors, or external eg. cost reduction due to the effect of technology in an industry, for example Computers have become cheap but more complex compared with the past, as there is a higher demand for computers so the price falls due to the production costs being much lower.

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

Research and Development - Refers to a facet of a Business which systematically combines both basic and applied research, and aims to discover solutions to existing problems or to create new innovative products. Research and Development may result in ownership of intellectual property such as patents eg. Nike have patented the ‘Air Max’ technology it implements in several types of shoes they produce.

Innovation - Refers to putting an new idea or approach into action, basically the commercial exploitation of ideas eg. The iPad devised by Apple.

Critical Path Analysis - Refers to a commonly used Project Management tool that uses network analysis to help manage complex and time-sensitive operations.

Critical Path - Refers to the longest sequence of activities in a Project plan which must be completed on time for the project to be fully complete on the deadline day. An activity on the critical path cannot be started until its predecessor activity is complete; if it is delayed for a day, the entire project will be delayed for a day unless the activity is following the delayed activity is completed a day earlier.

Float Time - Refers to in the context of Project management, the time for which an activity can be delayed without delaying the entire project's finish date.

Location - Refers to a named Geographical place such as an airport, seaport, container freight station or terminal. The location provides permanent facilities for movement of goods or is designated for a stated purpose.

Outsourcing - Refers to The contracting or subcontracting of non-core activities to free up cash, personnel , time, and facilities for activities in which a company holds competitive advantage. Companies having strengths in other areas may contract out data processing, legal, manufacturing, marketing, payroll, accounting or other aspects of their business to concentrate on what they do best and thus reduce average unit cost. Outsourcing is often an integral part of downsizing or reengineering.…