Question Tag: Capacity Management

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  • 8 Marks

BMIS – May 2017 – L1 – Q7b – Operations strategy

Identify the key differences between service and manufacturing organizations concerning capacity management.

Both service and manufacturing companies have goals of satisfying customer demand. However, service organizations differ from manufacturing organizations when considering capacity management. Maintaining sufficient capacity to meet demand is one of the great challenges of operations management.

Required: Identify FOUR differences between service and manufacturing organizations in relation to capacity management. (8 marks)

  • Production and Consumption Occur Simultaneously:
    In service organizations, production and consumption happen at the same time. Inventories of services cannot be built up during quieter times, making it more challenging to balance capacity and demand. (2 marks)
  • Greater Customer Interaction:
    The customer plays an active role in the delivery process in service organizations. The quality of customer service is integral to the customer experience, which affects capacity management. (2 marks)
  • Variability in Output:
    Each customer service interaction is different, making the output variable each time. Achieving consistently high levels of output is more challenging compared to manufacturing organizations. (2 marks)
  • Reliance on Staff:
    Service delivery heavily depends on the people delivering the service. The mood and attitude of staff on the front line can significantly impact the customer experience, which in turn affects capacity management. (2 marks)
  • 12 Marks

BMIS – May 2017 – L1 – Q7a – The external environment

Explain the concept of globalization, its key features, and the factors encouraging its spread in world trade.

The concept of globalization has become a major discussion theme in both professional and business environments. A number of factors have been identified as encouraging globalization of world trade.

Required:

i) Explain globalization. (2 marks)

ii) Identify any FOUR features of globalization.     (4 marks)

iii) Explain any FOUR factors encouraging the globalization of world trade. (6 marks)

(Total: 12 marks)

i) Globalization:
Globalization refers to the growing convergence of national cultures, economies, and political systems, and the growing interdependence of countries worldwide. It is characterized by increased trade, capital flows, and the rapid diffusion of technology, leading to a more interconnected global economy.
(2 marks)

ii) Features of Globalization:

  1. The ability of individuals to enter into transactions with individuals and organizations based in other countries.
  2. The increased importance of global economic policy relative to domestic policy.
  3. The rise of globally linked and dependent financial markets.
  4. The reduction in the importance of local manufacturing due to global supply chains.
  5. Reduced transaction costs through developments in communications and transport.
  6. The rise of emerging, newly industrialized nations.
    (4 marks)

iii) Factors Encouraging the Globalization of World Trade:

  1. Financial Factors: Developing world debt often leads to economic reforms required by lenders, promoting globalization.
  2. Country/Continent Alliances: Alliances like ECOWAS and AU foster trade and tourism among member countries.
  3. Government Policy: Policies that seek to control the balance of payments by discouraging imports can encourage globalization.
  4. Legal Factors: Patents and trademarks encourage the development and global spread of technology and design.
  5. International Commodity Markets: Efficient systems of trading and communication facilitate global transactions in commodities.
    (6 marks)

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