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UNIT: OPERATIONS MANAGEMENT PRACTICE

UNIT CODE:DOM511

COURSE: MASTER IN BUSINESS ADMINISTRATION

TITLE: ASSIGNMENT 1

PERIOD: SEPT 2010 TO JAN 2011 SEMESTER

REG. NO: D61/61432/2010

QUESTION
Describe the relationship between the operations function and the other organizational functions
for an organization of your choice.
SOLUTION
The relationship between functions can be seen as a number of sub-systems within the
system called the ‘organisation’. Thus each function can be treated using the same
input/process/output transformational model as the operations functions. In other words each
function within the organization can be treated as performing an operations activity as they are
transforming inputs into outputs. This implies that every part of the organization is involved in
the operations activity (to an external and internal customer) and thus the theory operations is
relevant to them.The three sub-systems of a firm related to specific business disciplined are
termed the functional areas of a business. The 3 main functional activities of a business are:

1. Operations

2. Sales and marketing

3. Finance

All functions must compliment each other to form an efficient and productive whole.
Generally, production and operations employ the bulk of the workforce, use the bulk of the
assets and the bulk of the finance. It is imperative that production and operations are properly
managed as the profits of the organization will come from the marketing and sale of the product
and service. The information flows between production and operations management and other
functions are shown the the figure below:

Customer

Product or service Needs

Finance Marketing Personnel

Sales and Organizations


demands ability to meet
requirements sales and demands
Financial Availability
status Manpower
Operational needs requirements
and financial Production Operations (numbers and
requirements skills)
Fig 1: Information flows and relationships between production and Operations and other
functions.

The sales and marketing function work to find and create demand for the company’s
goods and services by understanding customer needs and developing new markets. By doing so,
operations can help to shape future sales in existing markets as well as helping to determine the
viability of entering new markets. The need for marketing and operations in East African
Breweries Limited to work closely together is particularly important as capacity, quality,
delivery capabilities and costs are all within the realm of operations management.

The marketing function will provide the forecast of demand from which operations can
plan sufficient capacity in order to deliver goods and services on time. This is because EABL’s
marketing teams work closely with the retailers such as bars and pubs to determine the demand
and forecast future demand which is required by the operations team to know what to produce
and how much of it to produce. Also in case of new product development, the operations team
depends on the feedback from the marketing team to determine customer needs and suggestions.

EABL marketing teams for each product line such as Tusker study the customers’ needs
through market surveys and the interaction with the customers. Marketing personnel along with
the customers come up with a product concept. They also estimate the market demand for the
product or service in quantitative terms. EABL operations team must produce the product or the
service which will satisfy the customers need. The quantity as well as the quality of the product
or service required is determined by the marketing surveys. The market demand largely
influences production capacities and production runs so there is need for a very close relationship
between marketing and production and need to work hand in hand.

The finance function is responsible for the obtaining and controlling of funds and
covering decisions such as investment in equipment and price-volume decisions. Even though
capacity is available and there is adequate demand for whatever is produced, adequate funds to
support such operations may not be available. For an organization such as EABL, the finance
department must approve and release adequate funds for purchase of the required raw materials
as well as other resources required for production of each of EABLs product. This is such as the
payment of manpower, sources of energy required for production e.t.c. They are also responsible
for setting the price of the product after performing a cost-volume-price analysis with the
intention of maximizing profits.

Other functions that play a supporting role in the organization include the personnel or
human resource function which will play a role on the recruitment and labour relations, the
research and development, R&D function which generates and investigates the potential of new
ideas. Similarly, the non-availability of manpower in the required numbers and the required
skills will impose restrictions on the productions and operations. In EABL, the human resources
function is charged with the responsibility of assigning human resource and personnel to the
operations teams for the different product lines. This is dependent on the capacity of production
and level of automation of production for the product.
Also there is the Information Technology department in EABL which supplies and co-
ordinates the computer-based information needs of the organization. This is necessary in
providing the informational and communication needs between personnel in the operations team
as well as maintaining and repairing the equipment used in operations.

REFERENCES
1. Production and Operations Management

By R.B Khanna

ISBN-978-81-203-3203-4

2. Operations management in business

By Andrew Greasley

Stanley Thornes (Publishers) Ltd.

ISBN 0-7487-2084-7

3. Strategic operations management

By Steve Brown,Richard Lamming, John Bessant and Peter Jones.

2nd Edition.

ISBN 0-7506-6319-7

4. Analyzing operations in business: issues, tools, and techniques

By Michael Roger Summers

ISBN: 1-56720-126-1

5. Operations management

From Wikipedia, the free encyclopedia