3.3 Business operations

Students should understand the interdependent nature of business operations, human resources, marketing and finance. Students should be able to give examples of how business objectives would be split into functional plans with clear links throughout.

What business operations involve, their role within the production of goods and the provision of services, and how they influence business activity.

Production processes


Additional information

Methods of production:

  • job
  • flow.

Students should be familiar with job and flow production methods and understand when each is appropriate.

Efficiency in production:
  • lean production
  • just in time (JIT).

Students should consider how production might be made more efficient by the use of lean production techniques.

The role of procurement


Additional information

Managing stock:

  • Just in time (JIT)
  • Just in case (JIC).

Students should be able to evaluate the use of managing stock using JIT to a given business.

Students should recognise that the benefits of reduced costs must be balanced against the cost of more frequent deliveries and lost purchasing economies of scale.

The benefits of having spare stock to satisfy demand balanced against the cost of holding buffer stock.

Students will not be asked to draw or interpret stock control charts.

Factors affecting choice of suppliers including:

  • price
  • quality
  • reliability.

Students should be able to analyse the factors that affect the choice of supplier for a given business.

The effects of procurement and logistics on a business, including:

  • efficiency
  • lower unit costs.

The value of effective supply chain management, including:

  • working with suppliers to ensure that key processes are running efficiently and cost effectively
  • getting goods and services for the best price and value
  • cutting any waste and unnecessary costs to create a streamlined process and fast production times.

Students should understand what procurement and logistics are and their effect on a business.

Students should recognise that the benefits of reduced costs must be balanced against the quality of service.

Students should understand what a supply chain is and recognise the benefits of managing an effective supply chain.

The concept of quality


Additional information

Consequences of quality issues

Students should have an understanding of customer expectations of quality in terms of production of goods and the provision of services.

How businesses identify quality problems and how businesses measure quality and the consequences of these issues.

Methods of maintaining consistent quality: Total quality management (TQM)

Students should be aware of the methods of maintaining consistent quality and be able to identify the advantages to a business of using TQM.

Costs and benefits of maintaining quality:

  • additional sales
  • image/reputation
  • higher price
  • inspection costs
  • staff training
  • product recalls
  • the provision of services.

Students should be aware of the possible quality issues as businesses grow, particularly if outsourcing and franchising is used.

Good customer services


Additional information

Methods of good service:

  • product knowledge
  • customer engagement (creating a positive experience for the customer)
  • post sales services (eg user training, help lines, servicing).

Benefits of good customer service, including:

  • increase in customer satisfaction
  • customer loyalty
  • increased spend
  • profitability.

Dangers of poor customer service, including:

  • dissatisfied customers
  • poor reputation via word of mouth
  • reduction in revenue.

Students should understand the sales process.

Students should be able to understand the importance of providing good service to customers and analyse the techniques businesses use to provide good customer service.

The ways in which advances in ICT have allowed customer services to develop:

  • websites
  • e-commerce
  • social media.