Small Business Management Study Set 3

Business

Quiz 18 :
Operations Management

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Quiz 18 :
Operations Management

Origin of the case: T.P. started a brewery in the year 1986 with a goal to serve real German beer in a real German beer hall environment. When T.P. turned 65, he decided to retire from his brewery. He sold a majority of equity position of the business to B. capital, a private equity fund in the country. He still worked as a president with 20 percent stake in the company. T.P. was feeling frustrated because new owners were not running the business profitable and made a decision of selling the company. In the year 2009, new owners offered T.P. back his brewery for a small amount of what they had paid him. T.P. was thrilled and was ready to jump into the business back, but his wife M.B. was not happy with the decision and it became a conflict. His wife feels that brewery business is slippery slope as it has huge amount of debts involved and they have children to take care of. Meanwhile, M.B. has started a new business on her own, restoring historic buildings. The following are the alternatives T.P. has to resolve the conflict: • T.P. should get over from his brewery business and start concentrating on wife's new business, restoring historic building. • M.B. should get convinced and trust her husband that he can run the brewery business profitable again. • T.P. should get into the brewery business, without considering his wife's decision.

Productivity: Productivity is the ratio of inputs used for outputs produced. Inputs are raw material, capital, and labor, whereas output is the end product and it is measured in revenues and other gross domestic product components such as inventories of the business. Quality: Quality is defined as how well a service meets customer's expectations or the degree to which a product conforms to recognized acceptance standards. It is a process during which all business activities are maintained with their required standards to produce output. "Increase of productivity and quality for profitability of company" Explanation: Small manufacturers improve productivity and quality by achieving commitments on a regular basis in all three stages of workforce: 1. Senior management or the owner 2. Middle management 3. Territory employees Senior management: In this stage, the senior management implies management practices and uses technology and resources effectively by using modern techniques up to date. Middle management: In this stage, the middle management with the guidance of seniors and territory employees seek to achieve quality and productivity. Territory employees: In this stage, the employees are the key people to achieve the targets. They mainly concentrate on productivity under the guidance of middle management. These employees improve productivity through acceptance of work and quality commitment. Hence, productivity and quality are mutually responsible for the success and profitability of the company.

Operation management Operation management is managing the business practices to create maximum efficiency in the organization. It is concerned with changing labor and materials into services and goods as competently to maximize the profit in the company. Components of operation management 1) Inputs 2) Transformation process 3) Outputs 4) Control systems 5) Feedback Inputs: The inputs in operational management include all tangible and physical resources that come into the business. Transformation process: Transformation process is the active procedures that are implemented to produce outputs. Outputs: The outputs are the intangible and tangible products that a business produces. Control systems The control systems are the techniques that supervise input, alteration, and output to correct problems when they occur in the operating system. Feedback The feedback is the communication tool that manages the system of a business. Operation system without control system The control systems are the techniques that supervise input, alteration, and output to correct problems when they occur in the operating system. Control systems ensure the quality of the product or service expected by the customers from the process. Hence, without control system, the organization cannot perform any functions. The feedback will be negative if there are no control systems in the process.