SETTING OBJECTIVES,

BUSINESS STRATEGY AND

OPERATION MANAGEMENT

By: Dr Sharmini Perera

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 Annual Objectives
Annual objectives:
1.represent the basis for allocating resources
2.are a primary mechanism for evaluating managers
3.are the major instrument for monitoring progress
toward achieving long-term objectives
4.establish organizational, divisional, and departmental
priorities

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 Long-Term Objectives
Objectives – Long-term objectives represent
the results expected from pursuing certain
strategies.

Strategies represent the actions to be taken to

accomplish long-term objectives.
Quantifiable
Measurable
Realistic
Understandable
Challenging
 Time bound 3
 Financial vs. Strategic Objectives
Financial Objectives Strategic Objectives

Growth in revenues market share

Growth in earnings quicker on-time delivery
than rivals
Higher dividends
 lower costs than rivals
Higher profit margins
higher product quality
Higher earnings per share
achieving technological
Improved cash flow
leadership

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 Policies
• Policy
– specific guidelines, methods, procedures, rules, forms,
and administrative practices established to support and
encourage work toward stated goals
– instruments for strategy implementation
– set boundaries, constraints, and limits on the kinds of
administrative actions that can be taken to reward and
sanction behavior
– clarify what can and cannot be done in pursuit of an
organization’s objectives
– Policy Manual
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 Business Strategy / Competitive
strategy
• Competitive strategy is the means by which
organisations seek to achieve and sustain competitive
advantage

• Firms have discovered different approaches competitive

strategy -the best strategy for a firm should reflect its
particular circumstances

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 Operations Management
Definition
Can be defined as the process of marshalling
resources to produce output through the
transformation process.

3 main components in the operation

process:
Business input
Transformation system
Output
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 THE TRANSFORMATION PROCESS
External Environment Forces

INPUT
OUTPUT
LABOUR
RAW TRANSFORMATION SERVICES
MATERIAL PROCESS OR
MACHINE &
EQUIPMENT PRODUCT
TECHNOLOGY
& METHOD
CAPITAL

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 PROCESS PLANNING
 Before the entrepreneur can produce an output either in the
form of product or services, he will have to undertake process
planning.

 This planning will involve identifying the step by step

processes from beginning to end to make the product or to
provide the services.

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Flow chart of an event
management

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 PREPARATION OF A PROCESS
CHART
 First : identify all the operational activities
required for the production of the product or
for delivering the services.

 Then : entrepreneur arranges these activities

according to sequence and proceeds to draw
the process chart.
 Eg: Amazon

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 MATERIAL REQUIREMENT PLANNING
• Material management is an important component of
any production set-up as material often form a high
percentage of the total cost of the finished products
or services.

• An entrepreneur should plan and control his material

requirements so that he will get these materials at the
right quantity, quality time and cost.

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 4 steps in material requirement
planning
1) Identify and list down the raw materials required.

2) Prepare the bill of materials

3) Calculate the quantity of raw material required.

4) Identify supplier
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 Identify and list raw material
• List all the material required to
manufacture the product or to provide the
service.

• Restaurant: the raw materials required for

the day.
• Retail: fresh goods, sundry goods, canned
and condiments

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 Prepare the bill of materials
• After identifying the raw materials
required, the entrepreneur has to
prepare a bill of materials required for a
unit of product.
• According to the amount required by
e.g: per day unit production and per unit
production.

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 Calculate the quantity of raw
materials required
• With this bill of material, the entrepreneur can
estimate the raw material requirement by
multiplying the bill of materials with the total
number of cookies to be produced monthly.

• Number of units to be produced be based on the

sale forecast in the marketing plan.

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 Identify supplier
• The final step is to identify suppliers of
the raw materials.

• Entrepreneur can look through yellow

pages or similar publications by trade
associations, and then seek quotations
from suitable supplier.

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 Factors that should be taken into
consideration when choosing supplier
• Price and discount offered
• Quality of materials
• Sale terms and conditions
• After sale service and warranty
• Lead time ie the time between orders and
delivery
• Delivery term eg free transportation
• Reliability of supplier 18
 Capacity Planning
Refers to the amount of OUTPUT that
can be produced within a SPECIFIC time.
Calculation of machinery & manpower
requirements so that production
demand is based on sales forecast can
be met.

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 LAYOUT
• Refers to the arrangement of machinery,
equipment, workers and other facilities
used in the operation.

• Layout planning should take into

consideration the integration of several
factors including work station, tool room,
store, office, prayer room and toilet.
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When designing layout, the entrepreneur
must ensure that it will enable a smooth
flow of raw materials.
Layout must ensure a safe and conducive
working environment.
 Importance of layout
 Requires substantial investments of money and effort
 Involves long-term commitments
 Has significant impact on cost and efficiency of short-
term operations

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 Physical location
• Service business: located near customers and
facilities such as parking lot, public transport
services, visible and accessible to all.

• Manufacturing: should be located close to where

raw materials and manpower are easy to obtain.

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 In general, the factors are:
• Distance from the source of raw materials
• Availability of manpower
• Transportation facilities
• Distance from customer
• Price of premises
• Other factors such as: utilities, services available
such as banks, clinics, housing area and SAFETY.

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 HRM Planning
• Analyze the jobs that need to be performed
• What is the amount of workforce needed?
• Methods of recruiting and Selection
• Training and development
• Rewards and recognition

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Thank You

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