Business Exam Notes
Operations and Sustainability – 15 marks
Chapter 13(11) –Achieving World-Class Operations Management – 4 marks multiple choice
Production and operations management overview
• Production- the creation of products and services by turning inputs such as:
natural resources, raw materials, human resources and capital into outputs which
are products and services.
• Operations management- management and production process.
The production process
• There are three types of production process
• To pick one, consider: company’s goals, customer demands, and type of good or
service being produced.
• Three types of production: mass production, mass customization, and
• Operation managers classified production processes in two ways: by how inputs
are converted into outputs and by the timing of the process.
• Mass production: the ability to manufacture many identical goods at once. This
relies heavily on standardization, mechanization, and specialization.
• Mass Customization: a manufacturing process in which goods are mass produced
to a point and then custom tailored to the needs or desires of individual customers.
• Customization: the production of goods or services one at a time according to the
specific needs or wants of individual customers. It is the opposite of mass
• Converting inputs to outputs: two basic processes for converting:
• Process manufacturing- the basic input is broken down into one or more outputs.
• Assembly process- the basic inputs are either combined to create the output or
transformed into the output.
• Production timing- a continuous process that uses long production runs that could
go on for days, weeks, or months without equipment shutdowns. Intermittent
process- short production runs used to make batches of different products.
Location • Facilities location affects operating/ shipping costs/ price of the product or
service/ company’s ability to compete. Factors that must be weighed: availability
of production inputs, marketing factors, manufacturing environment, local
incentives, and international location considerations.
• Availability of production inputs: must assess the availability of raw materials,
parts and equipment for each production site under consideration. It must consider
costs of shipping and raw materials and finished goods. The availability and costs
of labour are critical to both manufacturing/ service businesses, and unionization
of local labour must be considered. Payroll costs vary from one location to
• Marketing factors: must evaluate how facility location affects ability to serve
customers. It will need to assess difficulties and cots of distributing goods to
customers from a chosen location. They might gain a competitive advantage by
being located closer to the customers (lower costs, easy access).
• Manufacturing environment- Consider manufacturing environment in a potential
location. Some localities have strong existing manufacturing base. When a large
number of manufacturers are already located in an area, area is likely to offer
greater availability of resources (manufacturing workers, accessibility to
• Local incentives- incentives offered by countries, states or cities influences site
selections. Common incentives are a tax break. Local governments sometimes
offer exemption from certain regulations/ financial assistance to attract/ keep
production facilities in area.
• International location considerations- often sound financial reasons for
considering step. Labour costs lower in countries, foreign countries might have
lower regulations based on how factories might operate.
• Must ensure that resources needed for productions (raw materials, parts, and
equipment) be available at strategic moments in the production process. Cost is an
important factor. Bill material is drawn up that lists the items and the number of
each that is required to make the product.
• Make or buy? Determination by a firm of whether to make its production
materials or buy them from outside sources. The quantity of items needed is one
consideration. Outsourcing is purchasing items from an outside source instead of
making them internally. In deciding whether to make or buy, a firm must also
consider whether outside sources can provide high quality supplies in a reliable
• Inventory management- deciding how much inventory to keep on hand is one of
the biggest challenges facing operation managers. With large inventories, firms
can meet most production/ customer demands. Buying in large quantities also allows a company to take advantage of quantity discounts. However large
inventories can tie up the firm’s money. Inventory management involves deciding
how much of each type of inventory to keep on hand and the ordering/ receiving/
storing/ tracking of it. The goal is to keep the cost down. One way to determine
best inventory levels, look at the three costs: the cost of holding inventory, re-
ordering frequently, and not keeping enough on hand. Most companies use a
• Computerized resource planning- many companies have adopted computerized
systems to control flow of resource/ inventory.
o Material requirement planning (MRP)- computerized system of
controlling the flow of resources and inventory at the right times. The
schedule is based on forecasted demands for the products.
o Manufacturing Resource planning II (MRP II)- uses complex
computerized systems to integrate data from many departments. This can
generate a production plan for the company as well as management reports
and financial statements. Helps managers make more accurate forecasts
and impact of production plans on profitability.
o Enterprise resource planning- these go a step further and incorporate
information about the firm’s suppliers and customers into the flow of data.
Combines everything into one software which eliminates some costs and
delays on information.
• Supply chain: entire sequence of securing inputs, producing goods, and delivering
goods to customers. Effective supply chain strategies reduce costs. Technology
also improves supply chain efficiency by tracking goods through the various
supply chain stages and also helps with logistics. (keeps inventory holding costs
• Supply chain management: focuses on smoothing transitions along the supply
chain, with the ultimate goal of satisfying customers with quality products and
services.Acritical element in this is developing tighter bonds with suppliers.
(Reduce the number of suppliers make deals “win-wins” with them)
• E-procurement- the process of purchasing supplies and materials online is
becoming very popular.
• Reverse auctions- the manufacturers post its specifications online for the materials
are requires and potential suppliers bid each other for the job. (Can have a
negative impact because the job always goes to the lowest bidder which means
your suppliers always feel squeezed)
• Electronic data interchange (EDI) - increased speed, accuracy, and lowered
Improving production and operations • Routing- the aspect of production control that involves setting out the workflow,
the sequence of machines and operations through which the product or service
progresses from start to finish.
• Value-stream mapping- routing technique that uses simple icons to visually
represent the flow of materials and information from suppliers through the factory
and to customers.
• Scheduling- The aspect of production control that involves specifying and
controlling the time required for each step in the production process.
• Gantt charts- Bar graphs plotted on a timeline that show the relationship between
scheduled and actual production.
• Critical path method (CPM)- Ascheduling tool that enables a manager to
determine the critical path of activities for a project- the activities that will cause
the entire project to fall behind schedule if they are not completed on time.
• Critical path- the longest path through the linked activities in a critical path
• Program evaluation and review technique- Ascheduling tool that is similar to the
CPM method but assigns three time estimates for each activity (optimistic, most
probable, and pessimistic);allows mangers to anticipate delays and potential
problems and schedule accordingly.
• Quality: goods and services meet customer expectations by providing reliable
performance. (customer judge quality by how well it serves its purpose) (For
company conforms to set of pre-determined standards)
• Quality control: involves creating those quality standards, producing goods that
meet them, and measuring finished products and services against them.
• Top quality management (TQM) emphasises the use of quality principles in all
aspects of a company’s production and operations. TMQ focuses on continuous
improvement- a constant commitment to seeking better ways of doing things to
achieve greater efficiency and improve quality.
• Six sigma- a company-wide process that focuses on measuring the number of
defects that occur and systematically eliminating them to get as close to “zero
defects” as possible. (DMAIC- define, measure, analyze, improve, and control).
• Worldwide Excellence: International Quality standards:
o ISO 9000- a set of five technical standards of quality management created
by the international organization for standardization to provide a uniform
way of determining whether manufacturing plants and service
organizations conform to sound quality procedures. o ISO 14000- a set of technical standards designed by the international
organization for standardization to promote clean production processes to
protect the environment. (Must commit to continually improving
• Lean Manufacturing – streamlines production by eliminating steps in the
production process that do not add benefits customers are willing to pay for. (cut
the “non-value add” production processes)
• Just in time (JIT) - goes hand in hand with lean manufacturing. It is a system in
which material arrive exactly when they are needed for production rather than
being stored on site.
Transforming with technology
• Computer-aided Design and manufacturing systems:
o CAD- computers are used to design and test new products and existing
ones. They can analyze the products, make changes, and test prototypes
even before making one item.
o Computer-aided manufacturing (CAM) - uses computers to develop and
control the production process.Analyze steps to make the product
automatically send instructions to the machines that do the work.
o (CAD/CAM systems)- combine the advantages of the two by integrating
designs, testing, and manufacturing control into one linked computer
o Robotics is the technology involves in designing, constructing, and
• Adaptable factories: Flexible Manufacturing systems:
o (FMS)- automates a factory by blending computers, robots, machine tools,
and materials0and-parts-handling machinery into an integrated system.
These systems combine automated workstations with computer-controlled
• Quick change with computer-integrated manufacturing (CIM)-combines
computerized manufacturing processes (like robots) with other computerized
systems that control design, inventory, and production and purchasing.
Trends • Some manufacturing employment has been eliminated as manufacturers attempt
to cut operating costs.
• Asset Management: From raw materials to inventories and manufacturing
equipment, wasted, malfunctioning or misused assets are costly. Asset
management software systems, many of which are internet based, are beginning
to solve this problem. These programs automatically track materials, equipment,
and inventory. They also automate inventory management, and maintenance and
• Modular production: involves breaking a complex product, service, or process
into smaller pieces that can be created independently and then combined quickly
to make a whole. This not only cuts costs of developing innovative products but
also gives a business tool for meeting rapidly changing conditions. It also makes
implementation of mass or pure customization strategies easier.
• Designing production efficiency: Many manufacturers are investing in new
methods of integrating product design and engineering with the manufacturing
supply chain. Another trend is the use of factory simulation tools for product
design. These tools allow product designers to see the effects their designs will
have on production equipment.
Lecture – 10 marks short answer
Service vs. manufacturing
• Both transform “raw materials into finished goods. Service is performed not
produced. Judged on quality of work and service.
• Service is intangible. Experience is key, customized and can’t be stored. The
extent of contact to contact affects operations.
• Manufacturing is physically making something, which is tangible. Customer
doesn’t come and watch you make a product in manufacturing industry.
• Characteristics are different: in service customer is a part of process.
• Service and manufacturing both impacted by capacity in different ways:
integration of marketing and operations demand and capacity trade-off.
• Manufacturing sets capacity slightly ahead of demand. It is expensive to add/have
products sit idle. In the short term not high enough capacity you will turn
customers away or outsource at lower margins.As well take seasonality into
account, shift demand and capacity requirements by pricing.
• Service has low contact, set capacity to average demand. With high contact set
capacity at peak demand. Mass Production vs Mass Customization
• Mass production technology: stable market conditions, efficiency vs
• New economic reality: constant change, customer-driven, customization and
• Service is typically seen as highly customized. Manufacturing can use something
in-between now, mass customizing. Everything flows from what customer wants.
Not just quantity, its quality.
Sustainable Product Design: C2C and biomimicry, product stewardship,
sustainability through servicing, and sustainability of the supply chain
• “development that meets the needs of the present without compromising the
ability of future generations to meet their needs” by focusing on the Triple Bottom
• Triple Bottom Line Profit/Environment/Society = People/Planet/Profit
• Cradle-to-Cradle Design: products are developed for closed-loop systems. Every
output is safe and beneficial. Eliminate the concept of waste. Waste equals food.
• Biomimicry: sustainable innovation inspired by nature (“biologically inspired
engineering”). Based NOT on what we can extract from organisms and
ecosystems but what we can learn from them.
• Product Stewardship: the responsible and ethical management of healthy, safety,
and environmental aspects of a product throughout its total life cycle. The concept
of extended producer responsibility accounting for the impact of a product
during use and after disposal.
• Sustainability through Servicing: increased efficiency and creation of
environmentally friendly benign products and processes necessary but not
sufficient. Gains may eventually be counteracted by increases in consumption.
Changes the business model from selling products to providing services (turn
demand for reduced material use into strategic opportunity). Service more
difficult to imitate (competitive advantage).
• Sustainability of the Supply Chain: outsourcing business operations doesn’t mean
outsourcing responsibilities or risks in today’s global economy sustainable
supply chain management is key to the integrity of the brand. ‘Greenwashing’- 6 sins
• Definition : the act of misleading consumers regarding the environmental
practices of a company or the environmental benefits of a product or service.
• The Sin of the Hidden-Trade Off: By suggesting a product is “green.” based on a
single environmental attribute (the recycled content of paper, for example) or an
unreasonably narrow set of attributes (recycled content and chlorine free
bleaching) without attention to other important, or perhaps more important,
environmental issues (such as energy, global warming, water, and forestry impacts
of paper). Such claims are not usually false, but are used to paint a “greener.”
picture of the product than a more complete environmental analysis would
• The Sin of No Proof: Any environmental claim that cannot be substantiated by
easily accessible supporting information, or by a reliable third-party certification,
commits the Sin of No Proof. (For this research, we determined there to be ‘no
proof.’If supporting evidence was not accessible at either the point of purchase or
at the product website.)
• The Sin of Vagueness: Committed by every claim that is so poorly defined or
broad that its real meaning is likely to be misunderstood by the intended
• The Sin of Irrelevance: Committed by making an environmental claim that may
be truthful but is unimportant and unhelpful for consumers seeking
environmentally preferable products. It is irrelevant and therefore distracts the
consumer from finding a truly greener option.
• Sin of Lesser of Two Evils: These are “green.” claims that may be true within the
product category, but that risk distracting the consumer from the greater
environmental impacts of the category as a whole.
• The Sin of Fibbing: Committed by making environmental claims that is simply
Human Resources and EI – 17 marks
Chapter 14(10) – Managing Human Resources and Labour Relations – 3 marks multiple choice
Achieving high performance through HR Management • Human resource (HR) management- is the process of hiring, developing,
motivating, and evaluating employees to achieve organizational goals. HR
practices and systems comprise the firm’s human resource decision support
system that is intended to make employees a key element for gaining
o Job analysis and design
o Human resource planning and forecasting
o Employee recruitment
o Employee selection
o Training and development
o Performance planning and evaluation
o Compensation and benefits
• HR planning and job analysis and design:
o Human Resource planning: creating a strategy for meeting future human
resource needs. The HR planning process begins with a review or
corporate strategy and policy. By understanding the mission, planners can
understand its HR needs.
o Job analysis- a study of the tasks required to do a job well.
o Job description- the tasks and responsibilities of a job.
o Job specifications- a list of the skills, knowledge, and abilities a person
must have to fill a job.
• HR planning and forecasting: forecasting an organization’s human resource
needs is now as HR demand forecast and involves two forecasts:
o Determining the number of people needed by one future time
o Estimating the number of people currently employed by the organization
who will be available to fill various jobs at some future time (internal
o By comparing HR demand and supply forecasts, a future personnel
surplus or shortage can be determined and appropriate action taken place.
o Many firms with employee shortages are hiring contingent workers-
persons who prefer temporary employment, either part or full time.
Employee recruitment • Two sources of job applicants are the internal and external labour markets.
o Internal Labour market: internal recruitment can be greatly facilitated by
using a human resource information system containing a skills inventory,
or computerized employee database or information about an employee’s
previous work experience, education and certifications, job and career
preferences, performance, and attendance. Promotions and transfers are
the most common results of internal recruitment.
o External Labour market:
o Recruitment- is the attempt to find and attract qualified applicants in the
external market. The type of position determines which recruitment
method will be used and which segment of the labour force will be
o Job fair- is typically a one-day event held at a convention centre to bring
together thousands of job seekers and hundreds of firms searching for
o Corporate open house- persons are invited to an open house on the
premises of the corporation. Qualified applicants are encouraged to
complete an application before leaving.
o Electronic Job boards-An increasingly common and popular recruiting
method involves using the internet.
• Selection- is the process of determining which persons in the applicant pool
possesses the qualifications necessary to be successful on the job.
• Successive hurdles approach
o Initial screening: application form and brief interview (asks questions
about: education work experience, and previous job duties)
o Employ testing: may be asked to take one more employment test. (Myers-
Briggs test- emotional intelligence)
o Selection interview: an in-depth discussion of an applicant’s work
experience, skills and abilities, education, and career interests.
o Background and reference checks: If applicants pass the selection process,
most firms examine their background and check their references.
o Physical exams: Companies frequently require job candidates to have a
medical check-up to ensure they are physically able to perform the job. o Decision to hire: The decision to hire is nearly always made by the
manager of the new employee.
Employee training and development
• Training and development- activities that provide learning situations in which an
employee acquires additional knowledge or skills to increase job performance.
• New employee training is essential and usually begins with orientations- which
entails getting the new employee ready to perform on the job.
• On the job training:
o Training in which the employee learns the job by doing it with guidance
from a supervisor or experienced co-worker.
o Job rotation- is the re-assignment of workers to several different jobs over
o An apprenticeship- usually combines specific on-the-job instructions with
class room training.
o Mentoring- a form of on-the-job training in which a senior manager or
other experienced employee provides job and career related information to
• Off the job training:
o Usually takes place in classrooms.
o Programmed instructions- a form of computer-assisted off-the-job
o Simulation- a scaled down version of mock-up of equipment, process, or
Laws affecting HR management
• Federal laws help ensure that job applicants and employees treated fairly and not
discriminated against. Hiring, training, and job placement must be unbiased.
Promotion and compensation based on performance.
• Employers may not discriminate against persons with disability. They must make
‘reasonable accommodations’so that qualified employees can perform the job
unless doing so would cause ‘undue hardship’for the business.
• Altering work schedules, modifying equipment so a wheel-chair bound person
can use it, and making buildings accessible by ramps and elevators are considered
reasonable. • The employment of women in professional occupations continues to grow, but
minority representation among professionals has not significantly increased.
• Employee Diversity and CompetitiveAdvantage:
o Becoming increasingly more diverse in terms of racial and ethnic
status, age, educational background, work experience and gender.
o Want to gain a competitive advantage: set of unique features of a
company and its product or service that are perceived by the target
market as superior to those of the competition. Can even be created by
o Top management must be fully committed to hiring and developing
women and minority individuals.
• Outsourcing HR and Technology:
o One change has been the use of technology in handling relatively
routine HR tasks, such as payroll processing, initial screening of
applicants and benefits enrollments. Firms outsource or contract out
these tasks to HR service providers.
• Organizational Culture and Hiring for Fit:
o Many firms expanding operations and hiring additional employees.
Corporate culture can be a key aspect of developing employees into a
competitive advantage for the firm. Corporate culture refers to the core
values and beliefs that support the mission and business model of the firm
and guide employee behaviour. In addition to culture fit, firms are
increasingly hiring for technical knowledge and skills fit to the job.
Lecture – 10 marks short answer
Realistic approach to recruitment
• When hiring/conducting interviews you be honest with prospective employees so
they know what they are getting themselves into, and don't end up leaving the job
because they didn't know what they were going to be doing, or what to expect.
Validation of selection methods – process, application forms and interviews • Administer the selection procedure to a group of people. Correlate (compare) the
results/predictor scores with performance/criterion scores. Look for valid
• Two methods: Predictive and Concurrent
• Predictive: Give interview questions to an applicant. Have to wait, can’t use
results have to store them. Very accurate but very slow.
• Concurrent: using current employees with that. Current employees have measures
for, can immediately compare results. However selection not used on current, way
answer is going to be different. It is faster but not as accurate.
• Application forms have certain questions you can and can’t ask. Can’t ask leading
questions, however can ask anything relevant to the job and only the job.
• Interviews are the most common but the least valid. There is a degree of variance
and validity of the questions asked in the interview. The solution to the problem is
for Interviewers: train, use more than one, and give feedback. For questions: use
job analysis as a guide for developing, validate, and use ‘patterned’questions.
Job evaluation process and pay equity legislation
• To determine compensation the objectives are to attract, retain and motivate.
There external and internal equity.
• Internal equity is based on job evaluation. Based on different jobs inside the
company and if they are paid fairly. Assign pay based on relative value. Have to
develop a rating system, which uses universal factors. These are things like skill,
effort, responsibility, and job conditions.
• Pay Equity Legislation: Prohibits paying different wages to employees who work
for the same firm in jobs that are different but of comparable worth to company.
Jobs of equal value paid the same regardless of gender.Attempts to end “systemic
wage discrimination” and eliminate portion of wage gap that can’t be explained
by differences in education, labour market experience, or seniority.
EI vs IQ vs personality
• Emotional Intelligence: “Emotional intelligence is your ability to recognize and
understand emotions in yourself and others, and your ability to use this awareness
to manage your behaviour and relationships.” It leads to More successful hiring
decreased attrition rates, reduced training costs, higher levels of productivity and success, greater individual performance, better leaders and managers, stronger
relationships with employees and customers
• IQ: Static measure and it grows and develops until you hit 17 years old.
• Personality is based on everything else
Negotiations and Labour:
Labour Relations and Negotiating – 18 marks total
Chapter 14(10) – Managing Human Resources and Labour Relations – 1 mark multiple choice
Understanding labour relations in a unionized environment
•Labour union: an organization that represents workers in dealing with management over issues
involving wages, hours, and working conditions
•Collective bargaining: the process of negotiating labour agreements that provide for
compensation and working arrangements mutually acceptable to the union and to management.
•Phase 1: group of employees within a firm might form a union on their own, or an established
union may target an employer and organize many of the firm’s workers into a local labour union.
Phase 2: is collective bargaining. Phase 3: involves the daily administering of the labour
agreement primarily through the handling of worker grievances and other workforce
management problems that require interaction between managers and labour union officials.
•Modern Labour Movement:
o There are 3 main functions of a local union: collective bargaining, worker
relations and membership services, and community and political activities.
Collective bargaining generally takes place every two or three years. Local
union officers and shop stewards oversee worker-management relations on
a day-to-day basis.
o Local union: a branch or unit of a national union that represents workers at
a specific plant or in a specific geographic area
o National union: a union that consists of many local unions in a particular
industry, skilled trade, or geographic area and thus represents workers
throughout an entire country
o Shop steward: an elected union official who represents union members to
management when workers have issues
•Negotiating Union Contracts:
o Union contract created through collective bargaining. Typically both teams
made up of few people. Begin with setting a bargaining agenda, list of contract issues that will be discussed. Demands, proposals and
counterproposals exchanged during several rounds.
o The contract is legally binding agreement that typically covers issues as
union security, management rights, wages and benefits, job security, and
o Closed shop: a company where only union members can be hired
o Union shop: a company where non-union workers can be hired but must
then join the union.
o Agency shop: a company where employees are not required to join the
union but must pay it a fee to cover its expenses in representing them.
o Open shop: a company where employees do not have to join the union or
pay dues or fees to the union; established under right-to-work laws.
o Company becomes unionized; management loses some of decision making
abilities. One way to lessen union’s influence is by having a management rights
clause in the labour agreement or list areas that are not subject to collective
•Wages and Benefits:
o Cost of living adjustment : a provision in a labour contract that calls for wages to
increase automatically as the cost of living rises (usually measured by consumer
o Other contracts provide for lump-sum wage adjustments, the workers’base pay
remains unchanged for the contract period, but each worker receives a bonus once
or twice during the contract.
o Firm’s ability to pay depends on profitability. Unions also want better fringe
benefits. Benefits might include higher wages for overtime work, holiday work,
and less desirable shifts; insurance programs; payment for certain non-work time;
pensions; income maintenance plans
•Job Security and Seniority:
o Most financial security related to job security (the assurance, that workers will
keep their jobs). Seniority, the length of an employee’s continuous service with a
firm, is discussed in about 90% of labour contracts.
•Grievance and Arbitration: o Grievance: a formal complaint, filed by an employee or by the union, charging
that management has violated the contract.
o If the grievance cannot be solved goes to arbitration
o Arbitration: the process of settling a labour management dispute by having a third
party – a single arbitrator or a panel – make a decision, which is binding on both
the union and the employer
o Similar to arbitration is mediation.
o Mediation: a method of attempting to settle labour issues in which a specialist (the
mediator) tries to persuade management and the union to adjust or settle their
•Tactics for Pressuring a Contract Settlement:
o When contract expires and a new agreement has not been reached, the union is
free to strike or engage in other efforts to exert economic pressure on the
employer. Aemployer can put pressure on the union through a lockout or hiring
strike replacements if the union has called a strike.
Lecture – 10 marks short answer
Structure of labour movement
• Union represents workers. Once you have a union, have to work through the
union to get to the employees. Become bargaining agent for them.
• Government formulates rules, and legislation governs relationship. Allows unions
to exist, rules you play by. It is a provincial matter, and content of Ontario
relations act implemented.
• The Canada Labour Code, what takes over from legislation in company does
business crosses provincial boundaries.
Union structure – local, parent, labour congress
• Structure of union: the local goes to the parent who goes to labour congress
• Local: belongs to a parent. For example CAW local number 753, in this local we
have a branch of this union, and workers working in this branch. The local level is
where bargaining takes place and contracts administered.
• Parent: deal with policy, legal aid, strike fund control, research, collective
bargaining, and have final authority. They decide on rules, layout policy, and help
with legal matters. They make help with the strike fund so for example if a branch of union on strike needed money to pay workers, do research and can step in to
negotiate for you.
• Labour Congress: lobby with government, do research and meditate disputes.
Union vs Management – sources of power
• Union Power: threat of a strike (timing), and the ability to carry it out (strike
fund). With the threat of strike, try to time it when it