How are operations strategies used to achieve business objectives?
Operations strategies, including performance objectives (quality, speed, dependability, flexibility, customisation, cost), new product or service design and development, supply chain management, outsourcing, technology, inventory management, quality management and overcoming resistance to change
A focused answer to the HSC Business Studies dot point on operations strategies. The six performance objectives (quality, speed, dependability, flexibility, customisation, cost), supply chain management, outsourcing, technology, inventory management (JIT, FIFO, LIFO), and quality management (TQM, quality control, quality assurance), with worked Australian examples.
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What this dot point is asking
NESA wants you to know the six performance objectives, the eight or so operations strategies in the syllabus, how each strategy advances one or more performance objectives, and how to manage resistance to operations change. This is the heaviest dot point in Topic 1 by mark allocation - Section II and III questions on operations strategies appear in almost every HSC paper.
The answer
The six performance objectives
Operations performance is measured against six objectives. Different businesses prioritise different combinations.
| Objective | What it measures | Strong example |
|---|---|---|
| Quality | Fitness for purpose, durability, accuracy | Cochlear implants, Toyota |
| Speed | Time from order to delivery | Domino's pizza, Uber Eats |
| Dependability | Consistency, on-time, reliability | Australia Post (parcels), Telstra mobile uptime |
| Flexibility | Ability to change product or volume | Atlassian software releases, custom kitchen joinery |
| Customisation | Ability to tailor to the customer | Apple's online iMac configurator, JB Hi-Fi computer build |
| Cost | Cost per unit produced | Aldi, Bunnings, Jetstar |
Some objectives trade off. Driving cost down (Aldi, Jetstar) typically constrains customisation. Pushing for high quality and customisation (a high-end joiner) raises cost. Strategy is largely about which objectives you choose to lead on.
Operations strategies in the syllabus
New product or service design and development
New product or service design and development brings new outputs to market. Good operations design considers the four Vs (volume, variety, variation, visibility) at the outset, and integrates with marketing (what the customer wants), finance (what it costs to build), and HRM (skills required).
Cochlear releases a new implant or sound processor every two to three years. Each design is the output of a multi-year operations design process integrating R&D, manufacturing pilot, regulatory submission and global service-centre training.
Supply chain management
Supply chain management is the strategic coordination of suppliers, internal operations and distribution channels. Components include:
- Logistics (transport, warehousing, distribution).
- Supplier management (supplier selection, contracts, audits, payment terms).
- E-commerce and inventory visibility (real-time stock data across the network).
Bunnings runs five Wesfarmers-owned distribution centres in NSW, VIC, QLD, WA and SA, each consolidating inbound supplier deliveries and re-routing them to the closest stores. The result is lower per-unit freight cost and faster store-replenishment cycles.
Outsourcing
Outsourcing is contracting an external provider to perform a function previously done in-house. Common targets are non-core activities (IT support, payroll, cleaning, freight). Benefits: lower cost, access to specialised skills, conversion of fixed to variable cost. Risks: loss of control over quality, dependency on the provider, IP leakage.
Telstra outsourced significant chunks of its IT infrastructure to global cloud providers (AWS, Microsoft Azure) through the 2020s, converting capex into opex and gaining scale economics. The cost is partial loss of bespoke configuration.
Technology
Technology covers leading-edge equipment (robotics, AI), established technology (ERP systems, point-of-sale), and customer-facing systems (apps, self-service kiosks). Technology investment lowers per-unit cost and improves customer experience but requires capital and risks obsolescence.
Coles's automated distribution centres in Kemps Creek (Sydney) and Truganina (Melbourne) - both built with Ocado robotic-grid technology - replaced traditional manual pick-and-pack DCs. The cost saving over a 25-year life is substantial; the upfront cost was about $1 billion and the project went live in 2023-2024.
Inventory management
Inventory management controls stock levels and stock flow. The three named approaches are:
- JIT (just in time). Stock arrives just before it is needed in the process. Pioneered by Toyota. Minimises holding cost and obsolescence; vulnerable to supply disruption.
- FIFO (first in, first out). Oldest stock used or sold first. Standard for perishables (Coles fresh produce, milk).
- LIFO (last in, first out). Newest stock used first. Rare in Australia (less tax-favourable than other jurisdictions); used by some bulk-commodity businesses.
JIT is the most exam-tested. Be ready to explain its benefits (lower working capital, lower obsolescence) and risks (supplier disruption can stop production, as the 2020-2022 pandemic supply-chain shocks demonstrated).
Quality management
Three approaches in the syllabus.
Quality control is inspection at the end of the process. Defects are caught and removed but not prevented. Cheap to start but reactive.
Quality assurance is independent process certification (commonly ISO 9001) that builds quality into the process. Suppliers to large customers (Coles, Woolworths, Bunnings) typically need quality assurance certification to even be considered.
Total Quality Management (TQM) is a whole-organisation culture of continuous improvement. Components include:
- Continuous improvement (kaizen).
- Employee empowerment to stop the line.
- Customer focus.
- Data-driven decisions.
Toyota uses TQM as its cultural foundation. Many Australian businesses adopt TQM language without the full cultural commitment, which limits the impact.
Overcoming resistance to change
Resistance to change is common in operations because new technology, automation or process change threatens jobs, skills or routine. Strategies:
- Communication of the why, what and how, ahead of implementation.
- Training and development for the new skills required.
- Financial incentives for adoption, or transition support (relocation, redundancy) for the displaced.
- Participation and consultation through enterprise bargaining or formal employee engagement.
Coles's automated DC rollout managed change by giving manual-pick warehouse staff first preference for re-training to new roles in the automated facility, plus generous voluntary redundancy for those choosing to leave.
Global factors
Global factors include global sourcing, economies of scale, scanning and learning, and R&D. Cochlear is the textbook Australian example - global sourcing of components, scale economies from being a world-leading hearing-implant manufacturer, scanning emerging hearing-loss research, and high R&D intensity.
Past exam questions, worked
Real questions from past NESA papers on this dot point, with our answer explainer.
2022 HSC8 marksDiscuss how supply chain management and quality management contribute to achieving the performance objectives of a business.Show worked answer →
An 8-mark answer needs both strategies, the performance objectives they shift and a worked example.
- Performance objectives recap
- The six are quality, speed, dependability, flexibility, customisation and cost. Different strategies move different objectives.
- Supply chain management (SCM)
- Strategic coordination of suppliers, logistics and distribution. Improves cost (better purchasing, lower freight), speed (faster delivery), dependability (fewer stock-outs). Coles uses direct-from-grower fresh produce supply chains that reach shelf in under 48 hours. Result: lower wastage cost, higher freshness quality and faster speed-to-shelf.
- Quality management
- Three approaches - quality control (end-of-line inspection), quality assurance (process certification, ISO 9001) and TQM (organisation-wide continuous-improvement culture). Quality management raises the quality objective and indirectly raises dependability and lowers cost (less rework, fewer warranty claims). Toyota uses TQM with jidoka and kaizen as cultural foundations.
- Worked example
- JB Hi-Fi combines SCM (centralised DC, supplier consolidation, bulk agreements with Apple, Samsung, LG) with quality management (return-rate tracking, supplier-quality scorecards, in-store demo checks). The combined effect: cost leadership in consumer electronics (cost objective) and "JB price guarantee" backed by reliable delivery (dependability objective).
Markers reward (1) accurate definition of both strategies, (2) explicit mapping to two or more performance objectives, (3) worked Australian example, (4) acknowledged trade-off (cost discipline can constrain customisation).
2018 HSC4 marksIdentify and describe three operations strategies a business could use to overcome resistance to change.Show worked answer →
A 4-mark answer needs three identified strategies, each briefly described.
Resistance to change is common in operations because new technology, automation or process change threatens jobs, skills or routine. Three established strategies.
- 1. Communication
- Provide employees with clear information about why the change is needed, what it involves, and what it means for them. Coles used internal briefings, town halls and shift-leader cascades to explain its automated distribution centre rollout, reducing rumour and fear.
- 2. Training and development
- Equip employees with new skills required by the changed operation. When ANZ moved to a cloud-native ANZ Plus platform, it ran a multi-year retraining program for branch staff and call-centre operators to handle the new digital-first product set.
- 3. Financial incentives or transition support
- Tangible incentives reduce resistance. Bunnings offered relocation allowances and retraining grants when consolidating regional store back-of-house functions to a central support centre. Voluntary redundancy packages give staff a graceful exit when their role no longer exists.
Markers reward three distinct strategies, each with a brief mechanism and ideally a named business example.
Related dot points
- The strategic role of operations management, including cost leadership and goods and/or services differentiation, and the interdependence with other key business functions
A focused answer to the HSC Business Studies Topic 1 dot point on the strategic role of operations management. Cost leadership and differentiation, interdependence with marketing, finance and HRM, and worked examples from Bunnings, Woolworths and Atlassian.
- Operations processes - inputs (transformed and transforming resources), transformation processes (the influence of volume, variety, variation in demand, and visibility), and outputs (customer service, warranties)
A focused answer to the HSC Business Studies dot point on operations processes. Distinguishes transformed and transforming resources, explains the four Vs (volume, variety, variation, visibility), and connects outputs and customer service to performance objectives, with worked examples from Qantas, Bakers Delight and Atlassian.
- Influences on operations - globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability, and corporate social responsibility (the difference between legal compliance and ethical responsibility)
A focused answer to the HSC Business Studies dot point on influences on operations. Globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability and CSR, with the difference between legal compliance and ethical responsibility worked through Coles, Qantas and Atlassian.