Business SL

IB Business Chapter 5.1: Operations Management – Summary/Review/Study Guide

Input-output model

  • A diagram which represents how an operation works transforming raw materials which is the input and turning it into the output which is the finished product that could then be commercialized.



  • Operations refer the most important activities of an organization from what the business does and the processes of the business.
  • Even though it is not easy to identify where the operations of the business takes place, there is always going to be operations as it is essential for the business to run at all.
  • Operations are closely linked into the other functions of the business.
  • Essentially the operations of the business is how the business is managed to run the day to day functions and activities with the end purposes of generating profits.

“operations MANAGEMENT”

Operation Management

  • Operations management refers to the planning, organizing, and controlling the different elements and stages of the production process.
  • Operations management is required to ensure the finished product passes the quality standard.
    • Essentially managing the production to get the best product possible.

Operations Manager

  • Since a good relationship between all the business functions and departments should be achieved to successfully operate the business, the operations manager is responsible to work with other departments to help the organization achieve the proper standards for their operations.
  • The operations manager is responsible with multiple tasks such as overlooking the economies or diseconomies of scale, the HR, production department, and other departments
  • Operations manager is responsible for ensuring the finished product surpasses the quality and production is correctly planned and executed and prevent failure of operations.
  • When the product fails to deliver its expectations the manager needs to identify whether there is an error occurred and help recommend ways to fix it.

Operations and the production of goods or services


  • The creation of physical products (goods) or non-physical products (services)

Range of Goods and services

  • Some products may contain both goods or service
  • The range goes from:

“Pure goods” ——à Combination of goods and services —— -> “Pure services”

Goods Combination of goods and services Pure services
Books University Theatre (Play/Opera)
The consumer will get the product quicker. Usually books do not need a sales service after the sales. The consumer will earn knowledge from the teachers and staff doing the service. On the other hand consumers will need to purchase books, stationery, uniform, and other materials needed. Assuming that the consumers do not buy merchandise, and since usually food is not allowed while in the theatre, viewers only pay to watch the show.



Economic Sustainability Using resources to the best advantage to ensure the maximum profitability of the business

·         Budgets must be respected and wastage kept to the minimum

Social Sustainability Running the business while considering the workers and employees of the business allowing the business to run properly and work better as a team.
Ecological Sustainability Running the business while considering and respecting the environmental factors.

·         A business should also care about the environment it benefits from the air pollution the businesses did to all sorts of pollution such as to noise pollution should be considered .

Tripple Bottom Line All three sustainability combined together is called the triple bottom line or also called the three pillars of sustainable development.

·         The point is that an ideal business should not only aim to make as much money possible but also to consider all the three sustainability for the operations of the business (which doesn’t always happen in all businesses).

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