5.1 INTRODUCTION TO OPERATIONS MANAGEMENT / IB BUSINESS MANAGEMENT / production, sustainability

Summary

This introductory class to Unit 5 focuses on the role of operations management within a business. It defines operations management as a key business function responsible for improving the production process across all industry sectors. The class explores the input-output model, emphasizing the value-adding process managed by operations. It also discusses the interdependence of business functions, highlighting the collaborative nature of HR, finance, marketing, and operations management. Lastly, the concept of sustainability in business is introduced, urging operations managers to consider economic, environmental, and social impacts in their practices.

Takeaways

• 📚 Operations Management is a key area of management focused on developing, managing, and improving the production process.
• 🔑 It is one of the four business functions, alongside Human Resources, Finance, and Marketing, as covered in IB Business Management units 2, 3, 4, and 5.
• 🏭 Operations Management applies to all sectors of industry, including primary (extraction of raw materials), secondary (manufacturing), tertiary (services), and quaternary (intellectual pursuits).
• 🔄 The input-output model is central to understanding how businesses work, with operations management being the stage where inputs are processed and value is added to produce outputs.
• 🔗 There is an interdependence among all business functions, and operations management is no exception, needing to work in concert with HR, finance, and marketing for the overall success of the business.
• 🤝 The collaboration between operations management and HR is crucial for hiring the right people for production roles, ensuring the best fit for the operational needs of the business.
• 💰 Finance and operations management are interlinked, with the former setting realistic budgets based on the insights from the latter regarding production costs and processes.
• 📈 Marketing strategies are more effective when they are informed by the deep knowledge of product features and production processes that operations managers possess.
• 🌿 Sustainability is a core concept in business, encompassing economic, environmental, and social elements, and operations management plays a key role in ensuring sustainable practices within a company.
• 🌐 Sustainability in operations management involves finding ways to operate that benefit the local community, maintain financial health, and minimize environmental harm.
• 🎓 Understanding the role of operations management requires considering its definition, its place in the input-output model, its interdependence with other business functions, and its contribution to sustainability.

Q & A

What is the main focus of the first class of Unit 5?

The main focus of the first class of Unit 5 is to learn about the role of operations management and how to explain it.

What are the four parts into which the role of operations management is broken down in the class?

The role of operations management is broken down into four parts: defining operations management, reviewing the input-output model, discussing the interdependence of business functions, and talking about sustainability.

What is operations management and how does it relate to the four business functions?

Operations management is an area of management responsible for developing, managing, and improving the production process. It is one of the four business functions along with HR, finance, and marketing.

Why is operations management important for all types of businesses, regardless of size or sector?

Operations management is important for all types of businesses because it involves the core activities of producing goods or services, which is a universal requirement across all sectors and sizes of businesses.

What is the input-output model and how does operations management fit into it?

The input-output model explains how businesses work by taking inputs (factors of production), processing them, adding value, and producing outputs (goods or services). Operations management specifically deals with the processing and value-adding stage of this model.

What is the concept of interdependence among business functions?

The concept of interdependence among business functions refers to the idea that all business functions—HR, finance, marketing, and operations management—rely on each other and work together towards the same organizational goals.

How does operations management relate to human resource management in a business?

Operations management works closely with human resource management to ensure that the right people are hired for the production process, with HR focusing on hiring and operations management focusing on the production itself.

What role does operations management play in the financial aspect of a business?

Operations management plays a crucial role in the financial aspect of a business by working with finance managers to create realistic production budgets and ensure the financial well-being of the organization.

How is operations management connected to marketing in the context of a business?

Operations management is connected to marketing through the shared knowledge of product features and production processes, which helps marketing managers devise appropriate promotional strategies.

What are the three elements of sustainability in business as discussed in the script?

The three elements of sustainability in business are economic (maintaining financial well-being), environmental (not harming the environment), and social (benefiting the local community).

How should operations management consider sustainability in its practices?

Operations management should consider sustainability by finding ways to operate that benefit the local community, maintain financial well-being, and do not harm the environment, potentially even improving it.

Outlines

00:00

📚 Introduction to Operations Management

This paragraph introduces the topic of Unit 5, focusing on the role of operations management within a business. It emphasizes that operations management is one of the four key business functions, alongside human resources, finance, and marketing. The paragraph outlines the class's main goal: to explain the role of operations management. It also mentions that operations management is applicable to all sectors and sizes of businesses, not just manufacturing, and includes both tangible goods and intangible services. The importance of understanding the input-output model and the interdependence of business functions is highlighted as essential to grasping the full scope of operations management.

05:02

🔧 Operations Management and the Input-Output Model

The second paragraph delves into the input-output model, explaining its relevance to operations management. It describes how businesses take inputs such as land, labor, capital, and entrepreneurship, process them, and add value to create outputs, which can be either goods or services. The paragraph clarifies that operations management is intrinsically linked to the value-adding processes within this model. It also touches on the interdependence of business functions, illustrating how operations management collaborates with human resources, finance, and marketing to achieve business goals. Examples are provided to show how these functions interrelate and the importance of this synergy in running a successful business.

10:04

🌿 Sustainability in Operations Management

The final paragraph introduces the concept of sustainability as one of the core concepts of the IB business management course, often referred to as 'CCES' concepts. It defines sustainability in business as maintaining financial well-being without depleting natural resources and benefiting the local community. The paragraph breaks down sustainability into three elements: economic, environmental, and social. It emphasizes the importance of sustainability in operations management, suggesting that production managers should seek ways to operate that benefit the community, are profitable, and do not harm the environment. The paragraph concludes by encouraging viewers to continue learning about the role of operations management in achieving sustainability throughout Unit 5.

Keywords

💡Operations Management

Operations management is a critical area of management focused on developing, managing, and improving the production process. It is one of the four business functions, alongside human resources, finance, and marketing. In the video, it's emphasized that operations management is integral to all types of businesses, from sole traders to multinational conglomerates, and applies to all sectors, not just manufacturing. The script illustrates this by discussing how operations management fits into the input-output model, where it is responsible for the value-adding processes that transform inputs into outputs, which can be either goods or services.

💡Input-Output Model

The input-output model is a fundamental concept in business that explains how businesses work by transforming inputs into outputs. Inputs are factors of production, including land, labor, capital, and entrepreneurship. The script explains that operations management is intrinsically linked to this model as it pertains to the processing stage, where value is added to inputs, resulting in outputs that can be tangible goods or intangible services. This model is used in the video to show how operations management fits within the broader business framework.

💡Interdependence of Business Functions

The concept of interdependence among business functions highlights that all four main functions—human resources, finance, marketing, and operations management—rely on each other to achieve business goals. The video script stresses that no single function is more important than the others, and they must work in harmony. For instance, operations management relies on human resources to hire the right people and on finance for budgeting, while it informs marketing about the product features for effective promotion.

💡Sustainability

Sustainability in business, as discussed in the video, refers to maintaining an organization's financial well-being without depleting natural resources and benefiting the local community. It encompasses economic, environmental, and social elements, often summarized as 'profit, people, planet.' The script connects sustainability to operations management by suggesting that production processes should be carried out in a way that is economically viable, environmentally friendly, and socially beneficial, such as hiring locally and paying fair wages.

💡Business Functions

Business functions are the core activities that every business engages in to achieve its objectives. The script identifies four primary business functions: human resource management, finance and accounts, marketing, and operations management. These functions are interdependent and essential for the smooth operation of any business. The video emphasizes that all businesses, regardless of size or sector, have these functions and that they must work together for the success of the organization.

💡Production Process

The production process is the sequence of activities that transform inputs into outputs in an operations management context. It is a key focus of operations management, which aims to improve this process to increase efficiency and effectiveness. The video script explains that operations management is about how services are provided or goods are manufactured, which is the essence of the production process.

💡Tertiary Sector

The tertiary sector, also known as the service sector, involves the provision of services rather than the production of tangible goods. In the script, it is mentioned that operations management is not only applicable to the manufacturing of goods but also to the service sector, emphasizing its broad relevance across all industry sectors.

💡Quaternary Sector

The quaternary sector is associated with knowledge-based activities, such as research and development, education, and information technology. The video script points out that operations management extends to this sector as well, where the 'production' involves intellectual pursuits and knowledge generation.

💡Sole Trader

A sole trader is an individual who runs a business single-handedly, performing all business functions by themselves. The script uses the term to illustrate that even in the smallest businesses, operations management is a necessary function, albeit managed by one person.

💡Multinational Conglomerate

A multinational conglomerate is a large corporation that operates in multiple countries and often spans across different industry sectors. The video script mentions this term to emphasize that operations management is a universal function necessary for all businesses, regardless of their size or the scope of their operations.

💡Stakeholders

Stakeholders are individuals or groups with an interest or concern in the activities of a business. While not explicitly detailed in the provided script, the concept of stakeholders is fundamental to understanding business operations, as they are affected by and can influence operations management decisions, particularly in the context of sustainability.

Highlights

The main point of the class is to understand the role of operations management in production.

Operations management is one of the four business functions, alongside HR, finance, and marketing.

Operations management is crucial for businesses of all sizes, from sole traders to multinational conglomerates.

It applies to all sectors of industry, not just manufacturing.

The input-output model is central to understanding how businesses work, including operations management.

Operations management is about adding value to inputs through processes to create outputs.

The interdependence of business functions is key to understanding their collective role in an organization.

No single business function is more important than the others; they all work together towards common goals.

Examples of interdependence include HR hiring and operations management production strategies.

Finance and operations management work together to create realistic production budgets.

Marketing and operations management collaborate to devise promotional strategies based on product knowledge.

Sustainability is a core concept in business management, with economic, environmental, and social elements.

Sustainability in operations management involves finding ways to operate that benefit the community and the environment.

The triple bottom line and three pillars of sustainable development are terms for the same concept of sustainability.

Sustainability should be considered at all levels of business operations.

The role of operations management can be explained from four perspectives: definition, input-output model, interdependence, and sustainability.

The class concludes with an assessment objective to explain the role of operations management.

Transcripts

welcome to the first class of unit 5 the

role of operations management

[Music]

the main point of this class is to learn

what operations management or production

is about there is only one part in this

class the role of operations management

and only one assessment objective to

learn how to explain the role of

operations management if you have not

yet done so then please subscribe to my

channel like this video and enjoy

learning unit 5.

in order to achieve the assessment

objective of this class to learn how to

explain the role of operations

management we are going to break it down

into four parts first we'll Define

operations management secondly we will

review input output modal and see how

operations management refers to this

input output model then we're going to

review what interdependence of the

business functions is and again see how

operations management fits into these

interdependence phenomenon and lastly we

are going to talk about sustainability

which is one of the four key concepts of

the IB business management course or as

I call them cces Concepts so what is

operations management this is an area of

management that refers to developing

managing and improving the production

process additionally we have to say that

operations management is one of the four

business functions HR Finance marketing

and operations management these are

units 2 3 4 and 5 and these units

correspond to the business functions so

operations management is an area of

management responsible for developing

managing and improving the production

process and also it is one of the four

business functions as you remember from

unit 1 business functions is something

that all businesses have if you are a

sole Trader just one person running a

business single-handedly you still have

all four business functions including

operations management if you are a huge

multinational conglomerate you still do

operations management so the first

important thing for you to remember is

that operations management is one of the

four business functions and all

businesses do that the second thing that

we actually already learned in the very

first class 1.1 is that operations

management applies to all sectors of

Industry if you forgot what sectors of

Industry are then unit 1 class 1.1 is

something that you have to watch right

now and if you remember what sectors of

Industry are then there are primary

secondary tertiary and quaternary and

regardless of the sector of Industry

that business operates in again all

businesses do operations management

regardless of the sector of Industry

that they are in so for primary sector

businesses they are managing the

extraction of raw materials secondary

sector businesses manage production

manufacturing of goods tertiary sector

businesses manage provision of services

and quaternary sector businesses manage

intellectual Pursuits naturally when you

say operations management or production

you only think about manufacturing of

goods operations management does refer

to manufacturing of goods but it's not

only about manufacturing of goods so

once again operations management is

something that all businesses do

operations management is something that

applies to all sectors of Industries not

not only to manufacturing of goods and

lastly operations management is not only

about Goods which are tangible products

as we learned in unit 1 but also it

applies to Services which are intangible

products so please keep these three key

points in mind and remember that

operations management is something that

all businesses have or do the second

thing on our list is input output model

to review what that is you gotta watch

class 1.1 please follow the link in the

description below and see class 1.1 I'm

gonna make plenty of references to it in

this class so anyway what is input

output model this model explains how all

businesses work so we take inputs or

factors of production land or physical

resources labor or human resources

capital or financial resources in

entrepreneurship so we take all those

four things together then we process

them and we add value to them either by

manufacturing of goods or provision of

services and then we have outputs or

products which can be tangible goods or

intangible services

so why have I told you about this input

output model because the second stage of

the input output model the add-in value

the processes stage is exactly what

operations management is about the way

how you provide services or how you

manufacture Goods is exactly what

operations management is about I'm sure

you remember what input output model is

from unit 1 but now you know how

operations management as a business

function refers to and fits into the

input output model

the third thing on the list is

interdependence of the business

functions again let me quote something

I've already said in class 1.1 all

businesses have four business functions

which are human resource management

finance and accounts marketing and

operations manager

map 3 4 and 5 of the IB business

management course overlap so basically

what your IB business management course

is about is business functions plus unit

1 introduction stakeholders objectives

multinational companies etc etc so once

again all businesses have business

functions small business businesses have

business functions large businesses have

business functions one person who is a

sole Trader is doing all four functions

by himself or herself huge multinational

companies may break down their

organization into four departments or 24

departments regardless of the size all

businesses have four business functions

they manage HR they manage operations

they count their money and plan for the

future and they're trying to Market

their goods you cannot take this away

take one function away and business

stops to make sense so tricky question

then which business function is the most

important the correct answer is none

well actually many people say that human

resources is the most important business

function because it's about people and

it's impossible to run a business

without people even if it's automated

you still need human beings to set it up

well yeah we can argue with that but

actually from the interdependence

perspective there should be no such

thing as the most important business

function all business functions and all

the Departments or business units that

represent these functions they should

cooperate and work together towards the

same goals and objectives please see

class 1.3 to learn what goals and

objectives are so this phenomenon when

all functions depend on each other rely

on each other and work together towards

the same goal is called interdependence

how does it refer to operations

management well operations management is

one of the four business functions which

means that it is interdependent with the

Romanian three business functions HR

marketing and finance and accounts let

me give you a few examples of how

operations management refers to the

remaining three business functions so

human resources are in charge of hiring

people but operations management is in

charge of producing stuff so production

managers are very well aware how to

produce Stuff how to manufacture Goods

or provide services and HR managers have

expertise in and how to hire people so

if they work together then they will be

able to hire the best and the most

suitable people for the job if just HR

managers do that then they might not

know much about operations management

about how exactly services are provided

our goods are manufactured so that is

why operations management and HR come

together finance and accounts how do you

make a production budget if you do not

know what production is so once again

the way Finance managers cooperate with

production managers is setting up the

budget that is realistic one more

example of interdependence between

operations management and marketing

production managers are very well aware

of how exactly services are provided or

goods are manufactured they know

everything about the features of the

product that is offered to customers so

since they possess that much knowledge

about the product it would make perfect

sense for them to cooperate with

marketing managers and devise the

appropriate promotional strategies

together

so those were some of very few examples

of how operations management refers to

the remaining three business functions

HR finance and marketing but actually

the list of examples is nearly infinite

all four functions work together rely on

each other and there is no such thing as

the most important business function

from interdependence perspective

and the last thing on the list the

fourth item in our list is

sustainability sustainability is one of

the Core Concepts of the IB business

management Concepts or cces concepts so

you gotta watch the corresponding video

on my YouTube channel or read the

correspondent chapter in my online

textbook but I will briefly talk about

sustainability anyway sustainability in

business refers to the ability to

maintain Financial well-being of an

organization in such a way that avoids

depletion of natural resources and

benefits the local community if I break

down this definition for you then you

will see that sustainability has three

elements economic the ability to

maintain Financial well-being

environmental the ability not to harm

the environment and social the ability

to benefit the local community this

picture will illustrates sustainability

in these three elements economic or

profits social or people and

environmental or Planet prophets people

planet or three peace the other names of

sustainability that you can see in other

videos or in different literature is

triple bottom line and three pillars of

sustainable development so three piece

triple bottom line three pillars of

sustainable development is all the same

they all refer to sustainability so

sustainability ideally should underpin

the entire business it should be at all

levels in all business functions at all

levels of hierarchy how it refers to

operations management operations

management unit or Department same as

any other unit or Department should

think about sustainable ways of

operation this means that production

managers should find a way to provide

services or manufacture Goods in such a

way that local community benefits from

it for example by hiring local people

and paying them wages additionally they

think of the way how to operate in such

a way that it makes money to the

business and also does not harm the

environment or even makes it better how

exactly to achieve that how to be

sustainable in operations management

this is something that you have to

figure out throughout the entire unit 5

so keep watching my videos like And

subscribe

oh yeah

this is the end of the very first class

of unit 5 introduction to operations

Management in this class we only had one

assessment objective to learn how to

explain the role of operations

management and I'm quite sure that now

you are able to do it very well if you

break down the role of operations

management into definition input output

modal interdependence of business

functions and sustainability you have

four different perspectives how to

explain what operations management means

and what its role is in the organization

now before you like this video And

subscribe to my channel as always please

have a look at the assessment objective

and think whether you have achieved it

or not

[Music]

thank you