AQA A Level Business 3.4 - Decision Making to Improve Operational Performance

3.4 – Decision Making to Improve Operational Performance


Operational objectives

Operations management – Taking inputs and processing them into outputs to distribute to
the customer.


Operational objectives – Objectives to make different aspects of this process more efficient


Key operational objectives:
 Costs
 Quality
 Speed of response
 Added value
 Flexibility
 Dependability
 Environmental


Internal influences are the four functions
External influences on these are PESTLE-C / MEDICC




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, 3.4 – Decision Making to Improve Operational Performance


Measures of Operational Performance 1

Unit costs – The cost of producing one unit
 This includes the wages of workers involved
t ot al c ost s
out put


 Low unit costs gives the business in a strong competitive advantage
 Low unit costs  high profit margins


Methods of lowering total costs (leads to lower unit costs if output doesn’t fall):
 Restructuring – For example delayering
 Switch to cheaper supplier
 Minimise waste
 Increase capacity




Labour productivity


Productivity – Output per worker per time period
 High productivity reduces costs
Efficiency – Getting more output from the same input


out put
nu m b e r o f w o r k e r s



Influences on labour productivity:
 Training and skill of workforce
 Worker’s motivation
 Complexity of product
 Labour / capital intensive




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