Business Operations: Production, Procurement, and Communication Strategies

Production: Definition and Objectives

Production is the process by which certain significant items, work, machines, working people, or knowledge are transformed into consumer products, goods, or services.

Production Goals

• Ensure that delivered products or provided services are requested, both in the amounts and on the dates agreed upon with the customer.
• Ensure that these products or services are manufactured or provided within the expected costs, and that these costs are minimal, for greater profit.

Description of Output

This is to determine in detail the procedure to be followed and the means employed to produce the products or services.

Stages of the description of the production:

• Define the parameters of the production process
• Determine the necessary production materials
• Establish the needs for human resources

Production Costs

The cost of a product or service is the value of the factors involved in the production process. Production costs are classified into three categories:

• Raw materials: These are consumed in the production process.
• Labor force: This is involved in the manufacture of the product (autonomous).
• Manufacturing expenses: These are the other expenses that occur where the product is manufactured or service is provided, such as power and depreciation of machinery and buildings.

Breakdown of Costs

This is the document that establishes the composition of the production costs of a product or service, taking into account the factors involved.

Study of Costs

The cost study is threefold:

1. Assess the costs of the company against each phase of its activities.
2. Take them into account when setting selling prices. The purchase price may be below the cost price, thus marking the cost price.
3. Analyze and monitor the profitability of the company, comparing the results with the resources used.

Costing Models

• Direct Costing: A method in which the product is charged only variable costs. We recommend using it in companies that manufacture various products.
• Total Cost (Full-Cost): A method in which all costs are charged against the company's products.
• Industrial Cost: A method that attributes to the products that lead manufacturing. All other costs of the company are accounted for in the income statement without becoming part of the value of products.

Defining Procurement

Procurement involves making a set of operations available to the company under the best conditions (quantity, quality, price, and time) for all exterior materials and products needed for its operation and in accordance with the proposed objectives.

Key Aspects of Procurement

• Relationship between supply and market needs
• Procurement operations
• Vendor selection

Organization and Management of Stocks

Stocks are present in any organization, especially in manufacturing companies, trade, and services.

Stock Types

Raw materials, products during manufacturing, finished products, spare parts.

Inventory Management

• Stock for maneuver: This meets expected consumer demand in one period and evolves between a maximum and minimum.
• Stock up: This coincides with the entry into a store of a game to purchase.
• Stock minimum: This is the level prior to the entrance of the next game.
• Stock environment: This is the average value of stock held.

Communication Strategies

Communication is used in our project to transmit messages to the outside that we deem necessary to achieve the following objectives: to present the company, to publicize the products or services, to convey a certain image, and to achieve other objectives.

Instruments of Communication

Advertising, public relations, and advocacy.

Advertising Plan

An advertising plan is a tool that the company uses to communicate.

Types of Advertising

• Direct: Addressed to a person who is known, with sufficient data to target the customer.
• Indirect: Addresses a large group of anonymous recipients. It is impersonal and uses mass media.

Instruments of advertising: newspapers, magazines, yellow pages, radio, television, outdoor, mail, mailings, Internet, direct mail, catalog.

Advertising Communication Process

Defining Advertising Goals

• Encourage and boost sales
• Report
• Create and modify the image
• Enhance the recollection of the product or brand
• Customer loyalty
• Facilitate the entry of the product on the market
• Educate consumers to change their behavior

Identify the Target Market Segment