Developing good business sense
Operating costs are the day to day expenses which are in relations to the functioning of a business . These costs include materials , services small repairs , minor tools , training expenses etc . These expenses also include money for monitoring and maintaining the company . Companies try to reduce these costs in to achieve competitive advantage and a larger share of the profit to be grabbed . They adapt to different methods of operations to attain cost effectiveness EXAMPLE NO 1 McDonald 's has the largest chain of restaurants around the globe . The employees know that
EXAMPLE NO 1
McDonald 's has the largest chain of restaurants around the globe . The employees know that
their priority is to serve the customer with zero latency ' so they perform all their tasks speedily and with extensive training this is made possible for McDonald 's employees . McDonald 's inputs include their machinery , poultary products , meat , spices , cooking utencils , investment ,etc . The inputs are transformed by the process of cooking , deepfrying , cleaning , maintaining and monotorind which leads to the output of HYPERLINK "http /en .wikipedia .org /wiki /Hamburger " \o "Hamburger " hamburgers , HYPERLINK "http /en .wikipedia .org /wiki /French_fried_potatoes " \o "French fried potatoes " french fries , HYPERLINK "http /en .wikipedia .org /wiki /Breakfast " \o "Breakfast " breakfast items , HYPERLINK "http /en .wikipedia .org /wiki /Milkshake " \o "Milkshake " milkshakes and HYPERLINK "http /en .wikipedia .org /wiki /Dessert " \o "Dessert " desserts . McDonald doesn 't start preparing the burgers until and unless it gets an to do so . Previously in the manual system McDonald 's would cook the hamburgers and place them beneath heating lamps . The burgers were stored as long as they could be and when they couldn 't be sold off they are trashed . But since the application of the JIT system the wastage for the company has decreased and the customers get freshly made burgers , which in turns delights them . With the new system McDonald has less burgers as raw material and gives the customer quick service and make it truly a fast food restaurant . So the JIT system had turned the burger assembly ' into an efficient system that has reduced the ing cost for the company . Previously McDonald had a high holding cost because the burgers become spoil very quickly and then cant be used but because of the JIT inventory system the holding cost is seem to take a slump . The competitive advantage that Mc Donald gets is that it doesn 't have to charge its customers with high cost because of reduced spoilage cost and this in turn won 't be transferred on the customers . Previously McDonald carried high inventory because they wanted to have food when the customer demanded for it whereas now it carries less inventory due to its efficient inventory management system . Moreover due to s being prepared at the spot the customers are also satisfied as attention is paid to every detail in their and the alterations the customer asks for can be easily implemented
EXAMPLE NO 2
Dell Corporations sells a wide variety of computers and modified services to cater to individual customer needs . The company sells its products...
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