Business operations
Business operations
Business operations are the activities a business carries out to produce goods and provide services that satisfy consumer needs and wants. They turn inputs, such as materials or labour, into something a customer will pay for, and happen in every business, whether it sells physical items or provides a service.
Production is the process of making goods or providing services. Goods are physical things you can touch and own; services are activities carried out for a customer that you pay for but do not own. Both count as production: a workshop building a wooden bookcase is producing a good, and a mobile bike mechanic repairing a puncture is providing a service.
What affects the process a business chooses
A business can organise production in different ways, such as job, batch or flow production. Which suits it depends on four things:
| Factor | Why it matters |
|---|---|
| The product | The size, weight and nature of the item affect how it can be made and moved. Small, light items are easier to pass along a line than bulky or delicate ones. |
| Amount of customisation | If every customer wants something different, the same steps cannot be repeated exactly each time, so a flexible approach is needed. |
| Size of the market | Lots of customers wanting the same thing means production can be repeated. A small, specialist market keeps volumes low. |
| Skills and equipment required | Skilled craft work suits unique products, while expensive machinery is only worth buying when high volumes spread its cost. |
For example, a small firm printing names onto leavers' hoodies for local schools faces lots of customisation and a small market, so it makes each order separately. A firm making plain reusable water bottles sold in thousands of shops faces the opposite situation, so identical bottles can be made continuously and cheaply.
The choice matters because it affects how much each worker produces and how much each unit costs to make. Getting that right helps a business charge competitive prices and still make a profit.
Practise this
Edexcel GCSE Business · 2.3.1 Business operations