Business Operations: Meaning, Examples & Types | StudySmarter

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 all activities that a company performs to grow in value and make more money. This includes production processes as well as managing finances and resources.

Business operations are the actions that companies carry out daily to grow the firm’s value and increase profits.

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.

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.

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.

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.

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

Fig. 1 – The main business operation of this store is the order management

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

Fig. 2 – The main business operations of a farm would include the production processes

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.

Examples of business operations in real-world companies

Let’s take a look at examples of business operations in these three well-known companies:

• Amazon’s business operations examples include: managing a vast network of warehouses, processing customer orders, shipping products, and handling returns
• Coca-Cola’s business operations examples include: managing a complex supply chain, from sourcing raw materials to manufacturing and distributing finished products to retail outlets.
• Walmart’s business operations examples include: managing a large and diverse workforce and ensuring the efficient flow of goods and supplies into and out of their store

Business operations management

Managing business operations, also referred to as operations management, 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.