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Business Exam Notes.odt

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Wilfrid Laurier University
Valerie Irie

Business Exam Notes Operations: 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 customization. • 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 production. • 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 another. • 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 suppliers/ transportation). • 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. Resource planning • 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 manor. • 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 perpetual inventory. • 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 low) • 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 communication costs. 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 method network. • 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 environmental management) • 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 system. • Robotics: o Robotics is the technology involves in designing, constructing, and operating robots. • 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 transportation devices. • 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 repairs scheduling. • 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 effectiveness, repetition • New economic reality: constant change, customer-driven, customization and innovation • 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 Line • 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 support. • 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 consumer. • 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 false. Human Resources: 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 competitive advantage. 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 supply forecast) 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 searched. 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 employees. 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. Employee selection • 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 time. 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 a protégé. • Off the job training: o Usually takes place in classrooms. o Programmed instructions- a form of computer-assisted off-the-job training. o Simulation- a scaled down version of mock-up of equipment, process, or work environment. 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. Trends • 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 HR practices. 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 predictors. • 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 grievance procedures. •Union Security: 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. •Management Rights: 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 bargaining. •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 price index) 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 dispute. •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
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