ARSI UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE
COURSE : OM

GROUP ASSIGNMENT

GROUP MEMBERS ID NO

1. SALADIN MUME ………………………………………….UGR/12467/14

2. SALI ABDELLA .. ……………………………………….UGR/10090/13

3. AHMED AMIN …..………………………………………….UGR/12497/14

4. AZARIA ADMASU………………………………………….UGR/12436/14

5. TAMIRAT KEBADA……………………………………….UGR/12288/14
 1. Describe how operation is vital for the success of today’s organizations (consider current issues
such as technological development/automation, sustainability, consistent supply chain, globalization
etc

Operations management is crucial for the success of contemporary organizations, especially in the
context of current issues such as technological development, automation, sustainability, supply chain
consistency, and globalization. Here’s how operations play a vital role in addressing these challenges:

1. Technological Development and Automation

• Efficiency and Productivity: The integration of advanced technologies, such as artificial intelligence (AI),
machine learning, and robotics, streamlines operations, reduces human error, and enhances
productivity. Automated systems can handle repetitive tasks, allowing employees to focus on more
strategic activities.

• Data-Driven Decision Making: Operations management leverages data analytics to gain insights into
performance metrics, customer preferences, and market trends. This enables organizations to make
informed decisions that can improve operational efficiency and customer satisfaction.

2. Sustainability

• Resource Management: Operations are essential in implementing sustainable practices, such as

reducing waste, optimizing resource usage, and minimizing carbon footprints. Organizations that
prioritize sustainable operations can reduce costs and enhance their brand reputation.

• Circular Economy: Many companies are adopting circular economy principles within their operations,
focusing on recycling, reusing materials, and designing products for longevity. This shift not only meets
consumer demand for sustainable practices but also prepares organizations for future regulatory
requirements.

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3. Consistent Supply Chain

• Resilience and Flexibility: A robust operations strategy ensures that supply chains are resilient to
disruptions (e.g., natural disasters, pandemics). Organizations need to develop flexible supply chains
that can quickly adapt to changes in demand or supply constraints.

• Inventory Management: Effective operations management involves optimizing inventory levels to

balance supply and demand. This minimizes excess stock and stockouts, ensuring that products are
available when needed without incurring unnecessary costs.

4. Globalization

• Market Expansion: Operations enable organizations to expand into global markets by establishing
efficient processes that can be replicated across different regions. This includes adapting products to
local tastes while maintaining operational efficiency.

• Cultural Sensitivity: Global operations require an understanding of diverse cultures and business
practices. Effective operations management fosters collaboration among international teams and
ensures that local regulations and market conditions are respected.

5. Customer-Centricity

• Quality Control: Operations management ensures that products and services meet quality standards,
which is essential for customer satisfaction and brand loyalty. Implementing quality management
systems helps organizations consistently deliver high-quality offerings.

• Agility in Response: In today’s fast-paced environment, organizations must be agile in responding to

changing customer needs. Efficient operations enable quick adjustments in production schedules,
product offerings, and service delivery.

6. Cost Management

• Lean Operations: By adopting lean principles, organizations can eliminate waste and reduce costs
throughout the production process. This not only improves profitability but also allows for competitive
pricing strategies.

• Strategic Partnerships: Collaborating with suppliers and partners can enhance operational efficiency
through shared resources and knowledge. Strong relationships can lead to better pricing, improved
quality, and faster delivery times.

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 Conclusion

In summary, effective operations management is fundamental to addressing the complexities of modern

business environments. By leveraging technology, promoting sustainability, ensuring supply chain
resilience, navigating globalization, prioritizing customer satisfaction, and managing costs efficiently,
organizations can position themselves for success in an increasingly competitive landscape.
Organizations that invest in their operations are better equipped to adapt to changes and seize new
opportunities as they arise.

2.Describe organizational intents (vision, mission, goals, objectives, targets and

strategies) and how they are essential for organizational profitability/success.
Organizational intents encompass a framework of guiding principles and aspirations that define the
direction and purpose of an organization. These elements—vision, mission, goals, objectives, targets,
and strategies—are crucial for profitability and overall success. Here’s a detailed breakdown of each
component and its significance:

1. Vision

• Definition: The vision statement articulates the long-term aspirations of the organization. It describes
what the organization aims to become in the future.

• Importance: A clear vision inspires and motivates employees, aligns their efforts toward a common
goal, and serves as a guiding star for decision-making. It helps in establishing a strong organizational
culture and identity, which can enhance employee engagement and retention.

2. Mission

• Definition: The mission statement defines the organization's purpose and primary objectives. It
outlines what the organization does, who it serves, and how it delivers value.

• Importance: A well-defined mission provides clarity to employees and stakeholders about the
organization’s core activities and values. It helps in differentiating the organization from its competitors
and guides strategic planning, ensuring that all actions align with the organization's fundamental
purpose.

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 3. Goals

• Definition: Goals are broad, high-level outcomes that the organization aims to achieve over a specific
time frame. They are often aligned with the vision and mission.

• Importance: Goals provide direction and serve as benchmarks for success. They help organizations
prioritize initiatives and allocate resources effectively. Clear goals also facilitate communication within
the organization, ensuring that everyone understands what is being aimed for.

4. Objectives

• Definition: Objectives are specific, measurable steps that support the achievement of broader goals.
They are typically time-bound and quantifiable.

• Importance: Objectives break down goals into actionable components, making it easier for teams to
understand their roles in achieving larger outcomes. They provide a framework for performance
evaluation and accountability, enabling organizations to track progress and make necessary adjustments.

5. Targets

• Definition: Targets are specific performance metrics or milestones that indicate the expected level of
achievement for objectives. They provide concrete numbers or deadlines.

• Importance: Setting targets creates a sense of urgency and focus within the organization. They help in
measuring success quantitatively, allowing organizations to assess performance regularly and make
data-driven decisions. Targets also drive motivation among employees as they work towards achieving
specific outcomes.

6. Strategies

• Definition: Strategies are comprehensive plans that outline how an organization will achieve its
objectives and goals. They encompass the methods and approaches used to allocate resources
effectively.

• Importance: Effective strategies are essential for navigating competitive landscapes and responding to
market changes. They provide a road map for decision-making, ensuring that all organizational activities
are aligned with the overarching vision and mission. Well-crafted strategies also help organizations
capitalize on opportunities while mitigating risks.

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 Importance for Organizational Profitability/Success

• Alignment and Focus: The alignment of vision, mission, goals, objectives, targets, and strategies
ensures that all levels of the organization are working toward common purposes. This focus enhances
operational efficiency, reduces wasted resources, and improves overall performance.

• Performance Measurement: Clear objectives and targets allow organizations to measure progress
regularly, facilitating timely adjustments to strategies when necessary. This adaptability is crucial for
maintaining competitiveness in dynamic markets.

• Employee Engagement: When employees understand the organizational intents, they are more likely
to feel connected to the company’s purpose. This connection fosters higher levels of engagement,
motivation, and productivity, ultimately contributing to profitability.

• Informed Decision-Making: A well-defined framework allows leaders to make informed decisions that
align with organizational priorities. This coherence minimizes confusion and enhances strategic
execution.

• Stakeholder Confidence: Clear organizational intents build trust among stakeholders (investors,
customers, suppliers) by demonstrating a commitment to long-term success. This trust can lead to
increased investment, customer loyalty, and stronger partnerships.

Conclusion

summary, organizational intents—comprising vision, mission, goals, objectives, targets, and strategies—
are essential for guiding an organization toward profitability and success. They create a cohesive
framework that aligns efforts across all levels of the organization, fosters engagement among employees,
facilitates informed decision-making, and builds stakeholder confidence. By clearly articulating these
elements, organizations can navigate challenges effectively while pursuing growth and sustainability in
their operations.

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 3.Explain the following terms and clearly indicate how they affect organizational performance.
Support your answer by taking any manufacturing/service firm from Asella town (hotel, hospital,
college, dairy farm, poultry farm, college, university, flour factory etc)

 Product design

 Process selection

 Competitive priorities

 Capacity determination/utilization

 Facility location

 Facility layout

 Operation planning & control

 Quality control

Understanding the key terms related to operations management is crucial for enhancing organizational
performance, especially in a manufacturing or service firm. Here, I will explain each term and illustrate
its impact on organizational performance using a hypothetical example of a dairy farm in Asella town.

1. Product Design

• Definition: Product design refers to the process of creating a new product to be sold by a business to
its customers. It involves defining the product's features, functionality, and aesthetics.

• Impact on Performance: Effective product design can lead to higher customer satisfaction and loyalty.
For example, if the dairy farm develops a unique yogurt flavor or packaging that appeals to local tastes,
it can capture more market share and increase sales.

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 2. Process Selection

• Definition: Process selection involves choosing the appropriate method for producing goods or
delivering services. This can range from job shops to assembly lines or continuous processes.

• Impact on Performance: The right process selection affects efficiency and cost. For the dairy farm,
selecting a batch processing method for cheese production may allow for flexibility in production
volumes and flavors, leading to better responsiveness to market demands.

3. Competitive Priorities

• Definition: Competitive priorities are the critical dimensions that an organization chooses to compete
on, such as cost, quality, speed, flexibility, and innovation.

• Impact on Performance: A dairy farm focusing on quality over cost may invest in premium feed and
animal welfare practices, leading to higher-quality milk and dairy products. This can differentiate it from
competitors and justify higher prices, ultimately improving profitability.

4. Capacity Determination/Utilization

• Definition: Capacity determination involves assessing the maximum output that a facility can produce
under normal conditions, while capacity utilization measures how much of that capacity is being used.

• Impact on Performance: High capacity utilization indicates efficient use of resources. For the dairy
farm, if it operates at 85% capacity during peak seasons (like summer), it can meet demand without
incurring excessive costs. However, underutilization during off-peak times could lead to wastage of
resources.

5.Faclity Location

• Definition: Facility location refers to the geographical placement of a business operation. It considers
factors such as proximity to suppliers, customers, labor availability, and transportation.

• Impact on Performance: A well-chosen location can reduce transportation costs and improve service
delivery. If the dairy farm is located near major urban centers in Asella, it can quickly distribute fresh
products to markets, enhancing customer satisfaction and reducing spoilage.

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 6. Facility Layout

• Definition: Facility layout involves the arrangement of physical resources within a facility to optimize
work flow and efficiency.

• Impact on Performance: An efficient layout minimizes movement and reduces processing time. For the
dairy farm, an optimized layout that positions milking stations close to processing areas can streamline
operations, reduce labor costs, and enhance productivity.

7. Operation Planning Control

• Definition: Operation planning and control involve scheduling production activities, managing
resources, and ensuring that operations align with strategic objectives.

• Impact on Performance: Effective planning ensures that production meets demand without
overproducing or under producing. For instance, if the dairy farm accurately forecasts demand for its
products during holidays, it can schedule production accordingly, minimizing waste and maximizing sales.

8. Quality Control

• Definition: Quality control refers to the processes implemented to ensure that products meet specified
quality standards.

• Impact on Performance: Consistent quality enhances brand reputation and customer loyalty. If the
dairy farm implements rigorous quality control measures (e.g., testing milk for contaminants), it can
ensure product safety and quality, reducing returns and complaints while increasing customer trust.

Conclusion

In summary, each of these terms plays a vital role in shaping organizational performance. For a dairy
farm in Asella town, effective product design can lead to market differentiation; process selection
influences operational efficiency; competitive priorities determine market positioning; capacity
utilization affects cost management; facility location impacts logistics; facility layout enhances workflow;
operation planning ensures alignment with demand; and quality control safeguards product integrity.
Together, these elements contribute to the overall success and profitability of the organization.

4.Visit any firm (manufacturing or service rendering) which can be micro/small/medium/big

one. Write 2 pages on its input acquiring activities, production process used, output handling,
control mechanisms and identified core competencies (and how its environment is affecting
its operation). You can access the data through observation, dialogues/interview etc.

Include your conclusions & recommendations based on your understanding of operations.

Operations Analysis of Asella Dairy Farm

Introduction

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Asella Dairy Farm, located in Asella town, is a medium-sized dairy farm that produces a variety of dairy
products, including milk, yogurt, and cheese. This analysis explores the farm's input acquiring activities,
production processes, output handling, control mechanisms, and core competencies while considering
how the external environment impacts its operations.

Input Acquiring Activities

Asella Dairy Farm sources its inputs primarily from local suppliers to ensure freshness and quality. The
key inputs include:

• Raw Materials: The primary raw material is fresh milk from its herd of Holstein cows. The farm
employs a nutritionist to ensure that the cows receive a balanced diet, which includes locally sourced
feed such as alfalfa, corn silage, and minerals.

• Equipment and Machinery: The farm utilizes modern milking machines, pasteurizers, and packaging
equipment. These are acquired through local suppliers or leased from manufacturers. Regular
maintenance is conducted to ensure operational efficiency.

• Labor: The farm employs skilled labor for milking, processing, and quality control. Workers are trained
regularly on best practices in animal husbandry and dairy processing.

Production Process Used

The production process at Asella Dairy Farm follows a systematic flow:

1. Milking: Cows are milked twice daily using automated milking machines to ensure efficiency and
hygiene.

2. Processing: The raw milk is transported to the processing facility where it undergoes pasteurization to
eliminate harmful bacteria. The farm produces various products:

• Milk: Bottled and sold directly to consumers and retailers.

• Yogurt: Made by fermenting milk with specific bacterial cultures.

• Cheese: Produced through curdling milk and separating whey.

3. Quality Control: Samples from each batch are tested for quality parameters such as fat content,
bacterial load, and flavor before packaging.

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Output Handling

Once the products are processed, they are packaged in environmentally friendly containers to appeal to
eco-conscious consumers. The output handling process includes:

• Storage: Finished products are stored in a temperature-controlled environment to maintain freshness.

• Distribution: The farm employs a fleet of refrigerated trucks to distribute products to local markets,
grocery stores, and restaurants. They have established partnerships with retailers for regular deliveries.

Control Mechanisms

Asella Dairy Farm employs several control mechanisms to ensure operational efficiency and product
quality:

• Quality Control Systems: Regular testing of raw materials and finished products ensures compliance
with health standards.

• Inventory Management: The farm uses inventory management software to track raw materials and
finished goods, minimizing waste and ensuring timely restocking.

• Performance Metrics: Key performance indicators (KPIs) such as production yield, waste reduction,
and customer satisfaction are monitored regularly to identify areas for improvement.

Identified Core Competencies

Asella Dairy Farm has developed several core competencies that contribute to its competitive advantage:

• Quality Assurance: A strong emphasis on quality control distinguishes their products in the market.

• Sustainability Practices: The farm implements sustainable farming practices, such as recycling water
used in processing and utilizing organic waste as fertilizer.

• Customer Relationships: Building strong relationships with local customers through community
engagement initiatives helps enhance brand loyalty.

Environmental Impact on Operations

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 The external environment significantly affects Asella Dairy Farm's operations:

• Regulatory Environment: Compliance with local health and safety regulations necessitates ongoing
investment in quality control measures.

• Market Demand: Increasing consumer preference for organic and locally sourced products has
prompted the farm to adapt its product offerings accordingly.

• Economic Factors: Fluctuations in feed prices due to market conditions can impact operational costs.
The farm is currently exploring alternative feed sources to mitigate this risk.

Conclusion

Asella Dairy Farm exemplifies effective operations management through its input acquisition,
production processes, output handling, control mechanisms, and core competencies. By focusing on
quality and sustainability while adapting to environmental changes, the farm has positioned itself as a
leader in the local dairy market.

Recommendations

1. Invest in Technology: To further enhance efficiency, the farm should consider investing in advanced
technologies such as IoT for real-time monitoring of cow health and production metrics.

2. Expand Product Line: Introducing new product lines, such as lactose-free or plant-based dairy
alternatives, could attract a broader customer base.

3. Strengthen Online Presence: Developing an e-commerce platform can help reach more customers
directly and improve sales channels.

4. Continuous Training Programs: Implementing ongoing training for employees on best practices in
dairy farming and processing can enhance productivity and product quality.

By adopting these recommendations, Asella Dairy Farm can continue to thrive in a competitive market
while maintaining its commitment to quality and sustainability.

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