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Business Operations

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.

Business operations definition

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.

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.

There are differences in the operations processes of businesses offering goods and businesses offering services.

For goods that are produced in a factory, everything in the process of making those goods, from receiving the raw materials to the final output, is part of the business operations. Whatever it takes to produce a final product is counted as a business operation—even cleaning the factory afterward.

Services differ slightly from goods as they are intangible goods offered by a business. However, the principle remains the same. Everything that is involved with providing the service to customers is part of the business process.

For example, if you own a hotel and all the bookings are made by calling the receptionist, the receptionist is part of the business process.

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.

Business Operations: Production

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.

Business Operations: Procurement

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.

Business Operations: Quality assurance

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.

Business Operations: Customer service

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.

Business operations examples

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.

1. Online Store - Gym Equipment

Business Operations, Gym Equipment, StudySmarterGym equipment, pixabay.com

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.

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.

2. A Farm

Business Operations, Farming, StudySmarterFarming, Wikimedia Commons

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 leave them in a warehouse for too long.

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.

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 acquisitions, as well as quality control, materials handling, and maintenance standards.

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 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:

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 specific timetables and deadlines.

Having a target of increasing sales by 20%, for example, is more actionable than setting a goal of making more money in the next fiscal year.

The organization should next put a measuring system to establish how well the business is doing with the set goals and objectives. This helps the company find out whether its business operations are efficient or not. If the management finds out that the business did not meet the goals, it would indicate some flaws in the business operations. This would allow the company to make changes and develop more efficient 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 performance while reducing costs or ensure that the organization remains compliant with new rules as they emerge.

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 such as innovative equipment and tools to use in their business operations.

In summary, business operations are at the heart of a company's success. Business operations refer to the company's daily activities, from raw materials to the final product that is served to customers. Effective business operations enable firms to reduce their costs and maximize profits.

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.

Frequently Asked Questions about Business Operations

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.

Some challenges of business operations are:

  1. There will always be new ways for how companies can make their production process more efficient
  2. how companies could improve the marketing
  3. find new suppliers 
  4. New technology trends


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. 

  • For goods that are produced in a factory, everything in the process of making those goods, from receiving the raw materials to the final output, is part of the business operations, even cleaning the factory afterwards.

 

  • Services differ slightly from goods as they are intangible goods offered by a business. Everything that is involved with providing the service to customers is part of the business operations.

The main types of business operations are production, procurement, quality assurance, and customer service. 

Final Business Operations Quiz

Question

Name the 4 methods to enhance customer service.

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Answer

  1. Pre-sales customer service method

  2. Product knowledge method

  3. The sales process method

  4. Post-sales service method

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Question

What is the goal of customer service?

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Answer

The goal of customer service is to leave the customer satisfied. 

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Question

How does pre-sales service help a business?

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Answer

It helps in framing a potential customer's purchase decision, and the brand would have acquired a new sale or even a new customer.

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Question

Hows do pre-sales service help a customer?

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Answer

It helps a customer in finding answers to their queries about product dimensions, which will ultimately help them in their purchase decision.

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Question

Why is product knowledge important in customer service?

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Answer

Product knowledge helps salepeople to answer customer queries easily and makes the service process much smoother. It also helps them to present the product, and its benefits more accurately.

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Question

How can the absence of product knowledge affect customer service?

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Answer

When posed with a product query, an uninformed salesperson will have to consult others or refer to other mediums to answer. This is time-consuming and could be irritable for the customer. It also prevents the accurate presentation of the product.

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Question

What most important factors that help to satisfy a customer during the sales process?

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Answer

Offering:

  • High-quality products

  • Reliable products

  • Safe products

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Question

How do high-quality products help in customer satisfaction?

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Answer

The business needs to provide products that match the quality expectations of the people. If they succeed in doing this, customers will be satisfied.

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Question

Why is reliability important in customer satisfaction?

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Answer

Reliability of a product or service refers to it performing the task that is expected from it. If it fails to do so, the product will be deemed unreliable by the customers, resulting in unsatisfied customers.

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Question

What is product safety?

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Answer

Product safety refers to the product’s ability to be safe while being used for its intended use by the user

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Question

It is the responsibility of the customer service team to assure the customers about product safety. True or false?

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Answer

True

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Question

What is post-sales customer service?

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Answer

The post-sales customer service makes sure that all the problems the customer is facing after the purchase of the product are dealt with.

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Question

Name a few responsibilities of the post-sales customer service team.

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Answer

  • On-time delivery of products

  • Installation 

  • Repair goods 

  • Quick return or exchange process

  • Answer questions and complaints

  • Technical support, and so on

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Question

Post-sales customer service is also known as _________.

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Answer

After-sales customer service.

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Question

__________ plays an important role in building customer loyalty.

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Answer

Post-sales service.

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Question

Name a few channels through which after-sales services maintain customer relationships.

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Answer

  • E-mails

  • Memberships

  • Magazines

  • Newspapers, etc.

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Question

What is positive customer engagement?

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Answer

Positive customer engagement is when a customer has a positive experience about their interactions with the business. 

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Question

Define product knowledge.

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Answer

Product knowledge is the ability of a salesperson to completely understand all dimensions and functions of the product to better communicate about the product to the customers.  

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Question

Define quality.

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Answer

Quality is the standard of the product when it is compared to similar products.

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Question

Define reliability.

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Answer

Reliability of a product or service refers to it performing the task that is expected from it. 

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Question

What is the definition of poor customer service? 

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Answer

Poor customer service refers to the service that leads to customer dissatisfaction. 

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Question

Can you give an example of poor customer service?

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Answer

For instance, if a restaurant fails to manage its bookings properly, this may result in double bookings as well as incorrect timing in regards to table availability, causing customers to wait longer than expected. 


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Question

What are the main causes of poor customer service?

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Answer

The main causes of poor customer service are:

  • Businesses make too many promises.
  • Inefficient resource management.
  • External influences.
  • Insufficient communication.

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Question

Can you give an example of when businesses are making too many promises to customers?

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Answer

For example, if a business promises next-day delivery if customers order before 6pm, but cannot keep up with it consistently, this can cause consumer dissatisfaction.

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Question

What is meant by ineffective resource management?

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Answer

Ineffective resource management means that even if a business has the resources to attain its promises, if it is unable to manage its resources properly it may not meet customers' expectations and lead to customer dissatisfaction.

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Question

Can you give an example of how external influences can contribute to poor customer service?

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Answer

For example, if in the airplane some passengers have small children who may be loud this can result in an unpleasant experience for customers that are sitting nearby. 

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Question

What are the main consequences of poor customer service?

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Answer

The main consequences of poor customer service are: 

  • Customer dissatisfaction.
  • Difficulty of attracting new customers.
  • Encurring additional costs.
  • Losing revenue.

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Question

What may be the consequences for a business if customers are dissatisfied with the service?

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Answer

If the customers are dissatisfied with service they may not return to buy from the business again. Dissatisfied customers may also express their dissatisfaction to their family and friends or online, which leads to the next consequence – the difficulty of attracting new customers, and a damaged businesses reputation.

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Question

How can poor customer service lead to the occurrence of additional costs?

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Answer

If the businesses have provided the wrong information to customers, or have sold a wrong or damaged item, it has to provide customers with refunds which can result in additional costs for a business.

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Question

What may be the consequences if the business is struggling to attract new customers?

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Answer

The difficulty of attracting new customers can lead to business loss of revenue or even failures. 

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Question

What are the key signs of poor customer service?

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Answer

The key signs of poor customer service are:

  • Inflexibility in regards to the appointment times.
  •  Unfriendly welcome.
  •  Long wait times.

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Question

Can you give an example of when a business provides an unfriendly welcome to its customers?

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Answer

For example, if a customer enters a hotel that they have booked without being greeted or being smiled at, they may feel that the staff are rude.

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Question

How can businesses reduce long waiting times experienced by customers?

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Answer

In order to reduce customer wait times, the business should manage its capacity and hire more staff if needed.

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Question

Can you give an example of a long wait time experienced by consumers?

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Answer

For example, holding on the phone or in the store for more than two minutes. This may result in consumers hanging up the phone or leaving the store without receiving assistance.

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Question

Can you give an example of when businesses have inflexibility with regard to appointment times?

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Answer

An example of business inflexibility regarding appointment times is if it is only possible to schedule appointments at certain times of the day and it is not possible to reschedule appointments on the same day or week. 

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Question

What is meant by quality? 

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Answer

In business, quality refers to the products or services that meet or exceed consumers expectations.

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Question

What is the first step business should perform before starting to measure quality?

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Answer

Before businesses can start to measure the quality of a product or service they need to set targets/standards that will be aimed to achieve. These set standards should meet or exceed consumers expectations.

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Question

What is meant by setting quality targets?

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Answer

Businesses set quality targets that they will be aiming to achieve when measuring the quality of products or services. Set targets can highly vary depending on the nature of a business. 

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Question

Can you give an example on setting quality targets? 

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Answer

For example, the bank may set targets regarding the timings on how long it takes to answer consumers calls as well as support customers with an issue. 

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Question

What are the quality measurement methods that involve employees? 

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Answer

The quality measurement method done by employees involves staff themselves checking the quality of products.

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Question

What are the quality measurement methods that involve customers?

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Answer

The quality measurement methods that involve customers include:

  • Placing customer service telephone numbers on the back of the product's packaging, 
  • Sending feedback surveys
  • Encouraging consumers to complain wherever they are not satisfied with a product or service.

Show question

Question

What are the quality measurement methods that involve mystery shoppers?

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Answer

The mystery shopper method of quality measurement involves paying a visitor to test the service and evaluate its quality. 

Show question

Question

What are the consequences that may occur due to quality problems?

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Answer

The common consequences that may occur due to quality issues are:

  • Costs of a product recall, 
  • Expenses for faulty products replacement, 
  • Faulty products will go to waste and this can increase waste management costs, 
  • Additional expenses and no profit if there is no demand for a bad quality product, 
  • Bad quality products/services can cause consumer dissatisfaction and no-repeat purchases, 
  • Extra costs may be involved if someone sues the business.

Show question

Question

What does the quality measurement method that involves mystery shoppers includes?

Show answer

Answer

This method involves a paid visitor (mystery shopper) to test the service and evaluate its quality. It is usually used by larger businesses to see if the branch's service quality meets set benchmarks.

Show question

Question

What businesses should do to maintain the quality of their products and services? 

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Answer

To maintain the quality of products and services businesses should do the following:

  • Train employees and discuss with them how to improve quality,
  • Ensure that suppliers supply materials meeting business's standards, 
  • Invest in equipment and track products quality at every stage of the production process.

Show question

Question

What is meant by Total Quality Management (TQM)?

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Answer

Total Quality Management (TQM) is a quality control or measurement method which makes sure that the maximum quality is maintained at every stage in the production process.

Show question

Question

What are the key quality improvement costs/investments? 

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Answer

The key quality improvement costs/investments are:

  • Investing in staff, 
  • Quality control 
  • Selecting the best suppliers.

Show question

Question

What are the key benefits of improved quality?

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Answer

The key benefits of improved quality are: 

  • Charging more for a product or service, 
  • Improved company image,
  • Increased consumers loyalty, 
  • Businesses can save money as they do not have to recall bad products.

Show question

Question

What is meant by the costs of products' recall?

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Answer

if the products are sold to customers that have issues in their quality they need to be returned and the business must pay compensation to customers regarding that. 

Show question

Question

What can be the consequences if consumers are dissatisfied due to products' quality?

Show answer

Answer

Products that consumers bought and have bad quality may make them dissatisfied and not want to buy not only the product from the company but also the brand.

Show question

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