MEI608 Study Guide
Unit 3: Operations Planning
3a. Evaluate operational methods and operational considerations in a start-up business
- What are the most important aspects of operations planning?
- What are the foundations of operations management?
Operations in entrepreneurship, specifically the operations plan, addresses five areas: money, methods, machines, people, and leadership. Ultimately, this section of the plan focuses on product production processes or workflows when developing services.
To produce a product, operations needs include things like:
- determining a legal structure for a business;
- deciding on a name;
- filing necessary governmental paperwork;
- opening bank accounts;
- obtaining insurance; and
- ordering inventory.
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3b. Explain operational elements, such as legal considerations, technology, and production methods, when creating an operational business plan
- What is the meaning of capital?
- What operations elements should be considered for different types of business?
- How might an entrepreneur use a risk matrix?
Entrepreneurs need capital to start or grow a business. Capital refers to money or cash, which allows purchases of the tools and raw materials needed to produce a product. While sources of capital will normally be addressed in the financial plan of a business, understanding operations costs, such as the cost of equipment that needs to be purchased, will be part of the operations plan.
Understanding risk is also an important part of operations. Many entrepreneurs use a risk matrix to assess the likelihood and severity of different business risks. The matrix consists of the probability of something happening and the impact it would make.
In terms of technology, small businesses need to be concerned about the risks of viruses, spyware, and other malicious code, along with cyber-attacks. The operations plan usually addresses the technology needs, including technology used to avoid cyberattacks. Other forms of technology used might include websites, email lists, systems to manage human resources, and transaction processing systems.
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3c. Choose an appropriate business structure for a business
- How does the span of control impact organizational design?
- What is centralization?
- What elements go into determining organizational structure?
When designing an organizational structure, there are a few important considerations. First, determining the span of control, which is the number of employees a manager directly supervises, can help determine the organizational structure.
Another consideration for organizational structures includes the degree of centralization, that is, the degree to which formal authority is concentrated in one area within levels of the organization. In a highly centralized structure, top management makes most of the decisions.
Most smaller organizations will utilize an organic structure, but as the business grows, the structure will become more mechanistic as departmentalization becomes more rigid and decision-making authority is centralized. Once decisions are made on how work activities are divided, how people will be grouped, and how authority will be managed, a company can determine the best organizational structure.
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Unit 3 Vocabulary
This vocabulary list includes terms you will need to know to successfully complete the final exam.
- capital
- centralization
- operations plan
- risk matrix
- span of control