Operations
Inputs
• Human Resources
Management of stakeholders
Business requires human skill → physical and mental
• Land
Physical space for premises that must have particular characteristics
The physical site the business is based on
• Capital
Manmade forms of production, inputs such as computers and machinery
Intellectual Capital: intangible capital such as human capital (trained workers), structural
capital (database and information systems) and relation capital (good links with suppliers
and customers).
• Money
Essential for day to day transactions so bills paid on time
Transformation Process
Converts inputs into outputs by:
- changing nature of substances
- Supplying information that is available elsewhere
- Retrieving resources and transporting them
Chain of production: process involved in the making of final product
Efficiency: producing outputs at highest ratio of output to input
Effectiveness: meeting objectives of the business bu using inputs productively to meet customer
needs
Labour Productivity: how well a firm’s workers are working.
Output per period
Number of employees per period
• Any increase in productivity suggest efficiency improvement
• Higher productivity leads to lower labour costs per unit and greater competitiveness
Labour cost per unit = total labour costs
Number of units
How to improve Productivity:
- Improve training to raise skills
- Improve worker motivation
- Purchase more technologically advanced equipment
- More efficient management
Capital Productivity: efficiency of capital used compared to output generated
Output
Capital Employed
→ can help to identify if fewer need to employed and it helps reduce unit cost of production
SxTeri Page 1
Inputs
• Human Resources
Management of stakeholders
Business requires human skill → physical and mental
• Land
Physical space for premises that must have particular characteristics
The physical site the business is based on
• Capital
Manmade forms of production, inputs such as computers and machinery
Intellectual Capital: intangible capital such as human capital (trained workers), structural
capital (database and information systems) and relation capital (good links with suppliers
and customers).
• Money
Essential for day to day transactions so bills paid on time
Transformation Process
Converts inputs into outputs by:
- changing nature of substances
- Supplying information that is available elsewhere
- Retrieving resources and transporting them
Chain of production: process involved in the making of final product
Efficiency: producing outputs at highest ratio of output to input
Effectiveness: meeting objectives of the business bu using inputs productively to meet customer
needs
Labour Productivity: how well a firm’s workers are working.
Output per period
Number of employees per period
• Any increase in productivity suggest efficiency improvement
• Higher productivity leads to lower labour costs per unit and greater competitiveness
Labour cost per unit = total labour costs
Number of units
How to improve Productivity:
- Improve training to raise skills
- Improve worker motivation
- Purchase more technologically advanced equipment
- More efficient management
Capital Productivity: efficiency of capital used compared to output generated
Output
Capital Employed
→ can help to identify if fewer need to employed and it helps reduce unit cost of production
SxTeri Page 1
