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Operations management refers to the administration of business practices to create the highest level of efficiency possible within an organization. Operations management is concerned with converting materials and labor into goods and services as possible to maximize the profit of an organization and also to meet customer requirements.

They can only produce small batches. Scale economies have brought down the unit costs of production and have fed through to lower prices for consumers. Economies of scale are a key advantage for a business that is able to grow. Most firms find that, as their production output increases, they can achieve lower costs per unit. Economies of scale are the cost advantages that a business can exploit by expanding their scale of production. The effect of economies of scale is to reduce the average (unit) costs of production.

Operations management is in regard to all operations within the organization responsible for creating goods and services that organizations pass to their customers. This function is at the heart of all organizations, giving the means of achieving their aims and reason for their existence. These activities include: managing purchases, inventory control, quality control, storage and logistics. A great deal of focus in operations is on efficiency and effectiveness of such a process.

The cost leadership strategy seeks to improve profit margins by bringing down the costs of producing while enabling the organization to still charge market prices. They also focus on increasing the market shares through lower pricing, enabling the organization to continue to reach profits because of reduced costs. As with any organization the goal is to minimize cost directly to the organization providing the delivery of products or services. According to Barney (2007) low cost leadership strategy takes pride in initiating its costs advantage abilities to charge lower prices while reaping the rewards of higher profits.

O: Organising (How well the company allocates tasks to achive best and most efficient final product)

Organizations can significantly reduce their supply costs via cost reduction. Raw materials and supplies are business expenses that can - and should - be minimized to increase revenue. Engage with the suppliers or vendors to create a cost effective strategy for your organization by using managed inventory programs, reducing shipping and transactional costs, decreasing lead times, and reducing the amount of inventory you carry at any given time.

Riordan’s organization sells heart valves, plastic bottles, fans, and medical stents. Clearly, they have a large variety of products. According to Valdehueza, cost leadership is a competitive strategy with which the organization aggressively seeks efficient facilities, cuts costs, and employs tight cost controls to be more efficient than the competition. Decreasing business costs

Cost efficiency is the first factor in the figure shown above. The customers wish to buy the lowest priced product, all the other things equal, by keeping low costs and to be cost efficient, it gives an advantage to the organization. Because of the competition increasing day by day

Economies of Scale the economics of the aviation industry which requires a large labour strength and large reserves of capital have made strategic alliances necessary. Qantas is a member of the Oneworld Alliance “Figure 2 is visual depict Oneworld Alliance” which features 12 of the world’s

Operations processes refers to the acquisition of inputs which are transformed in a business through the addition of value into outputs of goods and services. Businesses use operational processes involving inputs and transformation processes to increase efficiency and output. The operations management focuses on carefully and managing processes to produce and distribute products and services based on the nature of the business. To achieve objectives in a business, the quality of products are monitored regularly using customer services and warranties. Both Qantas and McDonalds, utilise operation process in order to gain maximum efficiency and productivity.

Operations management focuses on managing the processes of producing and distributing products and services. Operations activities often include product creation, development, production and distribution. It deals with all operations within the organization. Related activities include managing purchases, inventory control, quality control, storage, logistics and evaluations. The nature of how operations management is carried out in an organization depends very much on the nature of products or services in the organization, for example, retail, manufacturing, wholesale, etc.

Economies of scale; this term refers to the lower costs per unit of output as a result of operating on a larger scale.

It involves planning, organizing, coordinating, and controlling all the resources needed to produce a company’s goods and services. Because operations management is a management function, it involves managing people, equipment, technology, information, and all the other resources needed in the production of goods and services . The Transformation Role of Operations Management We say that operations management performs a transformation role in the process of converting inputs such as raw materials into finished goods and services. These inputs include human resources, such as workers, staff, and managers; facilities and processes, such as buildings and equipment; they also include materials, technology, and information. In the traditional transformation model outputs are the goods and services a company

Operations are the activities that transform inputs into finished products (e.g. machining, testing, packaging, equipment maintenance, etc.).

The goal of a cost-leadership strategy is to reduce the firm’s cost below that of its competitors. The cost leader, as the name implies, focuses its attention and resources on reducing the cost at which it is able to offer a product or service (and still make a profit in the long term). The cost leader optimizes all of its value chain activities to achieve a low-cost position. Although staking out the lowest-cost position in the industry is the overriding strategic objective, a cost leader still needs to offer products and services of acceptable value.