Operation Management With In The Institute Business Essay

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Operation management with in the institute. The three primary functions such as operations, finance and marketing in any institute perform different activities, many of their decisions impact the other areas of the organization.the three major functions of business institute:-


By exchanging information finance and operation management corporate each other and describe such activities as the following:-

Budgeting:- Budgets are numerical plans and, within organization, they represent the projected allocation resources.bedget provide direction and helps in estimating the available resources and then allocating the resources for various purposes. In fact, the budget is the most widely used planning and controlling tool at every level of an organization. Budget helps in estimating the available resources and then allocating the resources for various purposes. When the available resources are not sufficient, then it is called resource gap.

Economic analysis of investment proposals:- Evaluation of alternative investments in plant and equipment requires inputs from both operations and finance people.

Provision of funds. The necessary funding of operations and the amount and timing of funding can be important and even critical when funds are tight. Careful planning can help avoid cash-flow problems.

marketing mainly focus on selling and promoting the goods and services of an organization. It is also responsible for consider customers wants and for communicating those to operations people short term and to design people long term. Because of these operations needs information about demand over the short to intermediate term so that it can plan accordingly, while design people need information that relates to improving current products and services and designing new ones. Market design mudt work closely together to successfully implement design changes and to develop and produce new products.

operations can supply information about capacities. Operations will also have warning if new equipment or skills will be needed for new products or services.

Finance people should be included in these exchanges in order to provide information on what funds might be available short term and to learn what funds might be needed for new products and services to long term.

Thus marketing operations and finance must interface and process design forecasting , setting realistic schedules, quality and quantity decisions and keeping each other informed on the other's strengths and weaknesses.

Operation management support business activities

Links between strategy and operations performance targets

Conflict between different performance targets

Key performance indicator and relation with OM

Value chain analysis and creating competitive advantages

The value chain analyses:

The value chain-Every organization consists of activities that link together to develop the value of the business: Purchasing supplies, manufacturing, distribution and marketing of its good and services. These activities taken together form its value chain. The value chain identifies where the value is added in an organization and links the process with the main functional parts of the organization. It used for developing competitive advantage because such chains tend to be unique to an organization. According to porter, the companies are divided into two activities:

Primary activities of production, such as the production process itself

Support activities such as human resources management, that give the necessary the background to the running of the company but cannot identified with the individual part.



"The direction and scope of an organization over the long-term which achieves advantages for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations". (Johnson and schools, 2008)

Strategy can involve hard decisions about the scope of the business, its management and its organization structure. Successful implementation of these strategies is very much dependent on the efficient and effective deployment of all organizational resources.

Models of strategic information system planning

According to James Van Horne, the functions of finance/ accounting comprise three decisions: the investment decision, the finanacing decision and the dividended decision. It is important to recognize that a firm's financial condition depends not only on the functions of finance, but also on many other factors that include:- management, marketing, management production/ operations, research and development and management information systems decisions etc.

Decision Making

Decision making in organisation behaviour is very vital and it is one of the most important function for any organisation. Decision making is a process of choosing alternative course of action from different alternatives available and it should be kept in mind that the decision made should be effective and efficient for the organisation. According to the Herbert A.simon decision making involve three steps which are mentioned below.

Identifying the problem- This step includes the identification of the problem that the organisation is facing

Identify and examine the different alternatives available to solve the problem.

At last when the problem is identified and the various options are available then the organisation decides which alternative to choose and that alternative should be effective for the organisation.

Systematic Approach to decision making:

Systematic approach in decision making helps the organisation to take good decisions to help the organisation in solving the problems.

Creation of useful environment for decision making- while creating the environment different factors should be considered:

One should know that what he or she wants to achieve.

Should know that how the decision will be taken in the end.

Involvement of the people that are keen to provide solution for the problem organisation should include the people who are qualified and can take the effective decisions for the organisation.

It is very important that everyone should get the chance to involve in decision making process so that the employees will be highly motivated and feel like hold importance for the organisation.

Next important thing that should be considered is to bring out different ideas from mind that can help in making the decision. Because if more and more ideas are available then the organisation will have more choices while making the decisions.

Analyse the different course of alternatives present it includes the amount of risk involved in selecting the specific action and what will its implications and will it have positive or negative effect.

Now choose the best alternative among the different alternatives available. After complete analysis of the different alternatives the decision maker will select the most effective alternative that will provide the solution for the problem

Cross checking the decision taken after the decision is made now it is important to cross check that the decision made is worth or not and is it working properly or not or if its needs any amendments.

At last when everything is done now the decision should be communicated to the people who are affected by it and to each and every member who is associated with the implementation of the decision. And provide the complete details about it so that they agree upon the decision taken and appreciate it.

In organisations creativity can be used in various ways to improve the performance of the company. The various ways of doing this are:-

Personal Mastery -

In personal mastery, managers give their employees the freedom to create and explore something new.

Mental Models -

In mental models, mangers try to give their employees challenges to find new and better methods to perform any task.

Team Learning -

Team learning is a very important fact as most of the decisions in the company as group based decisions.

Building a shared vision -

In an organisation, all the people work to achieve the common goal of the company. So, creativity helps in finding new and creative ways of influencing and motivating employees towards the common goal.

Systems thinking -

It helps in understanding the impact of decisions of the company on other companies.

Qualitative techniques in strategic decisions making

Finance for managers:-

Cash budget

Cost- volume- profit formula limitations and assumptions:-

CVP analysis is used to decide how changes in costs and volume affect an institute operating income and net income. In performing CVP Used several assumptions such as:-

Constant sales price per unit

Constant variable costs per unit

Constant total fixed costs

Sold everything which is produced

Because of activity changes cost affect

They are sold in the same mix if a company sells more than one product

An institute required to produce a cash budget in order to ensure that there is enough cash within the institute to achieve the operational levels by the functional budgets. Using given information in the below table we are explain cash budget:-



































Capital expenditure



Figures are in £000s: 2013

Long and short term decision making in investment appraisal:-

Limitations of ratios

Financial ratio analysis is one of the most popular financial analysis techniques for companies and particularly small companies. Ratio analysis provides business owners with information on trends within their own company, often called trend or time-series analysis, and trends within their industry, called industry or cross-sectional analysis.

Financial ratio analysis is useless without comparisons. in doing industry analysis, most business use benchmark companies. Benchmarks companies are those considered most accurate and most important and are those used for comparison regarding industry average ratios. Companies even benchmark different divisions of their company against the same division of other benchmark companies.

There are other financial analysis techniques to determine the financial health of their company besides ratio analysis, with one example being common size financial statement analysis. These techniques fill in the gaps left by the limitations of ratio analysis discussed below.