IT Busi 101

Jan Leo R. Crisanto

Instructor
How do businesses produce new goods and services? What are some of
the steps involved in the production of computers? How important is
customer service and how can businesses get it right? In this
explanation, these questions will be addressed along with everything you
need to know about business operations.

2
• Business operations are the
actions that companies carry out
daily to grow the firm's value and
increase profits. These actions
involve ensuring that raw materials
are turned into final goods that meet
the customer's demands.
Alternatively, if a business
is providing services, every step
involved in providing the service to
customers is part of the business
process. 3
A company's business operations are
adjusted to create
sufficient revenue to pay for
expenditures while also generating a
profit for the business's proprietors
and shareholders. Employees
contribute to the business operations
by performing specific tasks that are
important to the process as a whole.
These roles could be in marketing,
finance, or production.
4
• For goods that are produced in • Services differ slightly from
a factory, everything in the goods as they
process of making those are intangible goods offered
goods, from receiving the raw by a business. However, the
materials to the final output, is principle remains the same.
part of the business Everything that is involved
operations. Whatever it takes with providing the service to
to produce a final product is customers is part of
counted as a business the business process.
operation—even cleaning the
factory afterward. 5
• Production is the process of • Economic welfare is created in a
combining various inputs, production process, meaning all
both material (such as metal, economic activities that aim directly or
indirectly to satisfy human wants
wood, glass, or plastics) and and needs. The degree to which the
immaterial (such as plans, needs are satisfied is often accepted
or knowledge) in order to create as a measure of economic welfare. In
output. Ideally this output will be production there are two features
a good or service which which explain increasing economic
has value and contributes to welfare. The first is improving quality-
the utility of individuals. The area price-ratio of goods and services and
of economics that focuses on increasing incomes from growing and
production is called production more efficient market production, and
theory, and it is closely related to the second is total production which
the consumption (or consumer) help in increasing GDP. The most
theory of economics. important forms of production are: 6
•In economics, a market is a composition
of systems, institutions, procedures, social
relations or infrastructures whereby parties engage
in exchange. While parties may exchange goods and
services by barter, most markets rely on sellers offering their
goods or services (including labour power) to buyers in
exchange for money. It can be said that a market is the
process by which the prices of goods and services are
established. Markets facilitate trade and enable the
distribution and allocation of resources in a society. Markets
7

allow any tradeable item to be evaluated and priced.

•Public economics (or economics of the public
sector) is the study of government policy
through the lens of economic
efficiency and equity. Public economics builds
on the theory of welfare economics and is
ultimately used as a tool to improve social
welfare. Welfare can be defined in terms of well-
being, prosperity, and overall state of being.8
•"Household production" is an economic category for
activities including homemaking. It is defined as "the
production of the goods and services by the members of a
household, for their own consumption, using their own
capital and their own unpaid labor. Goods and services
produced by households for their own use include
accommodation, meals, clean clothes, and child care. The
process of household production involves the transformation
of purchased intermediate commodities into final
consumption commodities. Households use their own capital
9

and their own labor."

Types of Business Operations

Business operations include all the

steps involved to provide a good or
service to the client. The main
types of business operations are
production, procurement, quality
assurance, and customer service.
10
Production refers to the
business operations that
involve changing inputs
into final goods ready to
be purchased by
customers.
Additionally, the production process
also includes the service part of a
business. All the activities involved in
maintaining an office or ensuring that
every worker is doing the right job in
providing a service is also part of the
production in a business operation.

Business operations ensure that all the

parts of a production process are
managed to provide the most
efficient outcome for a company.
In the business
world, procurement refers to
any activity that takes place to
obtain all the goods and services
needed for a business to run its
daily operations.
The procurement of supplies is a critical
component of business operations. In large
corporations, millions of pounds may be spent
on suppliers and procurement specialists may
be assigned to procuring goods
regularly. Managers will want to ensure that
their money is spent properly, that it is not
misused and that the appropriate suppliers are
selected. Procurement includes:
• The selection of suppliers
• The establishment of payment conditions
• The negotiation of the contract.
Quality assurance is a type of
business operation that makes
sure that the goods and services
produced are of high quality.
This business operation makes
sure that customer requirements
are met. It measures the quality
of the product regularly via
different methods and uses
different approaches to ensure
that the quality of what the
business provides is maintained.
Customer service ensures that
all the concerns of a customer
are addressed.
Customer service often involves
answering all the questions a
customer might have about a
product or assisting them when
they have an issue with a
product. It’s a type of business
operation that is critical to
business success.
Depending on the type of business
you’re considering, you might find
different business operations activities
involved. Below are some examples of
business operations involved in two
different types of business.
19
1. Online Store – GYM Equipment
An online store has different business operations
compared to other types of businesses. Think of an
online store that sells gym equipment. Their main
business operation is order management. They should
ensure that each and every order of gym equipment is
appropriately managed and reaches the customer on
time. They also have to do a lot of marketing via
different social media channels or Google ads to sell
their products. 20
1. Online Store – GYM Equipment
Then there is inventory management, which ensures
that the business doesn’t have too much stock in their
inventory, but also it should have enough to cover for
unexpected demand. Then there is supply chain
management which involves ordering the products,
choosing the suppliers and finding a way of routes that
makes the delivery faster and more efficient.

21
2. A Farm
On the other hand, if you think about the business
operations of a farm, they are pretty different. Farms are
involved in the production process, and as a result, they are
faced with different business operations. A farm has to be
concerned with physical labor, which is one of the main
inputs in the production process. A farm also has to also deal
with the distribution of its goods to other businesses. Then
they need to manage their inventory carefully, so goods are
not wasted. Imagine what happens to cucumbers if you 22

leave them in a warehouse for too long.

What do business operations mean?
Business operations refer to the activities and tasks that
organizations use to produce goods and services. This
includes planning, organizing, directing, coordinating and
controlling the various aspects of production, such as
procurement, manufacturing, distribution and marketing. In
order to run an efficient and successful business, operations
must be well planned, organized and managed.

23
What are business operations examples?
• Accounting and finance: Accounting and finance activities such as budgeting,
forecasting, and payroll processing.
• Human resources: Hiring, training, and managing employees.
• Manufacturing: Producing goods or services.
• Marketing and sales: Developing and executing marketing strategies to attract
customers and promote products or services.
• Supply chain: Managing the flow of materials and goods from suppliers to
customers.
• Information technology: Developing, maintaining, and managing technology
infrastructure and systems.
• Customer service: Handling customer inquiries, complaints, and feedback. 24

• Regulatory compliance: Ensuring compliance with local, state, and federal laws
and regulations.
The operations of a business vary across industries, and they are
structured according to the requirements of the specific industries.
Mastering the operations of a specific industry can help the business
achieve success. Here is an analysis of business operations in
different industries:

25
1. Retail industry
One of the main goals of a retail business is to stock products that customers
are looking for and at a price that the customers are willing to pay. This means
that the business must maintain an efficient inventory system so that it knows
what is in stock at any given time, while reducing instances of dead stock.
Deadstock refers to products that the company has in stock but that are not in
high demand.
In order to maximize revenues, the business should stock fast-moving items that
customers are willing and happy to pay for. The business should also negotiate
friendly credit terms with suppliers so that they can get the required products on
credit to prevent stock-outs.
26
2. Service industry
The business operations of a service business are divided into the front-end and
back-end side of the business. The management must ensure that the two
divisions are running efficiently to prevent laxity on one side, which can hinder
the achievement of the company’s objectives. On the front end, the business
should focus on streamlining the service delivery to customers to increase their
satisfaction. It should also formulate a means of receiving feedback and
complaints from customers to know their expectations and how to improve
service delivery.
On the back end, the management should employ the right people in each
department. For example, the company should appoint trained and experienced
27
staff to prepare forecasts for client projects to prevent the actual costs from
exceeding client budgets.
3. Manufacturing industry
Manufacturing companies are involved in turning raw materials into physical
products, which are then sold to consumers. One of the things that a
manufacturing company can do to achieve efficiency is to source quality raw
materials from credible suppliers. For perishable and edible products, the
business should look into how raw materials are stored, processed, and shipped
to consumers.

The company can also eliminate bottlenecks that increase processing times to
save time during manufacturing and shipping. If the company is struggling with
shipping logistics, it can outsource shipping and concentrate on other areas of
28
the business that it excels in.
4. Technology industry
The key to streamlining operations of a technology company is hiring the right
staff and training them on how to execute the tasks they are assigned. This
means that the company should put a hiring criterion in place that helps them
hire the best candidates for the job. The company should also come up with an
internal training and mentorship program where senior staff works hand-in-hand
with junior staff to help them perfect their skills.

Another way of increasing efficiency is by collaborating the different tools such

as apps, websites, and systems that the company uses. The company’s
management should continually monitor internal and external processes to spot
29
any glitches and address these issues quickly.
Business Operations Management

Managing business operations includes using

various resources such as employees, raw
materials, and equipment to develop an efficient
production of the final good or services. Business
operations managers ensure that the volume of
production is in accordance with the
customer's demand.
30
Business Operations Management

They are responsible for a wide range of strategic

concerns, including selecting the size of
manufacturing facilities or choosing from which
suppliers to get their raw materials. Some other
operational concerns include the management of
inventory levels, including the management of
work-in-process levels and raw material
31
acquisitions, as well as quality control, materials
handling, and maintenance standards.
Business Operations Management

Managing business operations might be very

challenging, but it is one of the most important
aspects of a business. Proper business operations
management leads to growth and helps the
business receive more sales and profits. If a
firm lacks efficient business operations
management, they might see costs increasing
32
shortly and might even face bankruptcy.
Improving Business Operations

There will always be room for improving a

company's business operations. There will always
be new ways of how companies can make their
production process more efficient or how they
could improve the marketing or find new suppliers.
These are the three main ways to improve a
company's business operations:
33
Improving Business Operations

1 - Evaluate performance
Keeping track of a business's performance and evaluating it
on a regular basis is one of the most important ways to
improve business operations. To evaluate its business
performance, a company needs to develop practical and
actionable methods. A business should assess how well it
did from the moment it set its objectives. The company's
management should define attainable objectives with
34
specific timetables and deadlines.
Improving Business Operations

2 - Stay up to date with recent trends

A business should always stay up to date with the recent trends
and developments in the industry. This provides insights on what
they can change in their business operations to keep the
competition going and outperform their competitors. Innovative
technologies and development in the local and state economies
are examples of trends that may be observed and utilized.
Knowing the most recent trends and changes in operations may
assist the firm in developing new systems that increase 35
performance while reducing costs or ensure that the organization
remains compliant with new rules as they emerge.
Improving Business Operations

3 - Look for new technologies

Productivity is one of the most important ways a business
can improve its operations. Productivity usually increases
when new technologies arrive. These technologies make
the production process more efficient, which results in more
output produced whilst the cost goes down. This
significantly contributes to the business' revenue and profit.
Business owners should always look for new technologies
36
such as innovative equipment and tools to use in their
business operations.
 Improving Business Operations
Conclusion
Every business has vital tasks and activities that keep them
running. These are the processes that are essential to survival,
growth, and success. Put together, they’re known as business
operations.
Getting your business operations as efficient and effective as
possible is essential. It’s how you can achieve a level of
productivity to outstrip your rivals. When trying to make
improvements, look both inward and outward. That way, you can 37

find those small tweaks that can make a big difference.

Business Operations - Key takeaways
Business operations are the actions that companies carry out daily to grow the
firm's value and increase profits.
The main types of business operations are production, procurement, quality
assurance, and customer service.
Managing business operations includes using various resources such as
employees, raw materials, and equipment to develop an efficient production of the
final good or service.
Business operations managers ensure that the volume of production is in
accordance with the customer's demand.
Proper business operations management leads to growth and helps the business
receive more sales and profits.
These are the three main ways to improve a company's business operations:
evaluate performance, stay up to date with recent trends, look for new
technologies.
38