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Chapter 6

MGTA02H3 Chapter Notes - Chapter 6: Intangibility, Operations Management, Gantt Chart

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Arif Toor

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MGTA02 Chapter 6Operations: Making the Things that People Want
OperationsProviding the Things that People Want
Operations: The function of the business that transforms factors of production into the goods or services that
customers want.
If a usiess’ opeatios fail to see its puposes, it’ll lose ustoes ad fail as a result
Why Operations and not Production
Production operations: Activities that turn inputs into tangible goods
o Differs from operations in that production refers to tangible goods, while operations include both
tangible and intangible goods (such as services)
Service operations: Activities that turn inputs into intangible services
o Services rely more on human input than technology
o Services take up the majority of Canadian GDP
o Services can occur between a business and customers, and between businesses
Ex. Businesses can hire photographers to take photos for menus and in-store signs
Operations occur in any workplace/location
Operations management: Management of the creation of goods and services, and their satisfactory provision to
the buyer
Special Characteristics of Services
Unlike production operations where inputs turn into finished material goods, in service operations the outputs
are people whose needs have been met
Goods are Made while Services are Performed
Makes the provision of services more complex than the production of goods
Goods can be made in Advance, Services are Performed Immediately
Goods can be made in a different place and time from their purchase/consumption
Whereas for services, it relies on immediately satisfying customer needs
o Immediacy: The quality that makes something important or relevant because it is happening now
Many Services Require the Involvement of the Consumer
High-contact services: Service operations that necessarily involve interaction with the customer
o Ex. Getting a taxi ride, getting a haircut
Low-contact services: Seie opeatios that do’t eessail iole iteatio ith the ustoe
o Ex. Cutting grass, car repair
Customer involvement makes services more complex
o Ex. Factory workers can do their work regardless of mood, while a waiter in a restaurant must always be
smiling and happy with customers
Services are Intangible
Intangibility: The characteristic of services that makes them unable to be seen or touched
Services aim to achieve the feeling of pleasure, satisfaction, or improvement from the customers
o Thus, they need to identify which intangible aspects of the service best satisfy customer needs
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