University of the Cordilleras

College of Engineering & Architecture

Architecture Department
2nd Semester AY 2022-2023
SEAT WORK

AR-BUSINESS MANAGEMENT 2: BUSINESS MANAGEMENT AND

APPLICATION FOR ARCHITECTURE 2
SW MT 01:
TITLE: BUSINESS APPLICATIONS
1. OPERATIONS MANAGEMENT
2. FINANCIAL MANAGEMENT

DATE GIVEN: February 08, 2023

DATE DUE: February 09, 2023
DATE SUBMITTED: February 09, 2023

REFERENCES:
 Luther, D. (2022). Operations Management: Processes & Best Practices. Retrieved
February 09, 2023 from
https://www.netsuite.com/portal/resource/articles/erp/operations-
management.shtml
 Vaidya, D. Operations Management. Retrieved February 09, 2023 from
https://www.wallstreetmojo.com/operations-management/
 Strutner, S. (2022). Financial Management Explained: Scope, Objectives and
Importance. Retrieved February 09, 2023 from
https://www.netsuite.com/portal/resource/articles/financial-management/financial-
management.shtml
 Vaidya, D. Financial Management. Retrieved February 09, 2023 from
https://www.wallstreetmojo.com/financial-management/

STUDENT: Ganaden Mera D.

INSTRUCTOR: Ar. Rojayne Q. Sibayan, uap
 BUSINESS APPLICATIONS

Operations Management

Operations management is the practice of handling day-to-day business

functions in a manner that is efficient and that maximizes profitability. This
discipline focuses on formulating strategies and taking actions to optimize
production and supply chain performance.
 Operations management focuses on multiple aspects of an
organization’s day-to-day operations, not just resolving the inevitable
one-off problems that arise.
 Without operations management, critical business functions like R&D,
client service delivery, information technology and inventory control are
prone to mismanagement and underfunding.
 Behind most successful supply chains is solid operations management
because it provides managers the means to direct resources toward
desired results.

Purpose of Operations Management

The purpose of operations management is to promote and support efficient

business processes. The practice focuses on the staff, processes and physical
resources required to operate a business.
Operations management also refers to how an organization coordinates and
oversees the flow of information among its departments; how successful it is at
complying with business and regulatory requirements; how well it ensures
customer satisfaction; and how efficiently it manages daily operations, not just
resolving problems that occasionally arise.

Goals of Operation Management

The goals of operations management are about maximizing the organization’s

efforts, mainly around producing goods and/or services and managing the
supply chain and infrastructure. The focus is on controlling costs, maximizing
profitability and properly allocating resources.

Operations managers seek to reduce operating costs by coordinating business

tasks, ensuring qualified people are in the right positions and continuously
monitoring performance metrics.

Importance of Operations Management

An effective operations management practice makes a business more

competitive and prevents it from wasting time and money on activities that
don’t forward the company’s strategic vision. An effective operations
manager ensures the organization meets business goals.
Operations management is necessary for companies to stay competitive in
any industry, but healthcare, technology and manufacturing firms often have
a particular focus. Without efficient operations management, critical business
functions like research, client service delivery, IT and inventory control may fall
prey to mismanagement.

Types of Operations Management

The three main types of operations management focus on the objective, the
task or the individual employee. Which you use depends on your company’s
needs and goals, and a manager might use different types based on the
situation.

 Objectives management:
Setting priorities, making operational decisions based on business goals
and aligning operations to support overall company objectives.
 Task management:
Managing daily operations based on work in progress and linear
workflows to assign tasks before moving to the next phase.
 Individual supervision:
 Using real-time information from managers and employees on the
ground performing the work to optimize operations.

Some facets of operations management may require additional functions. For

example, tasks may consist of planning and researching; creating operational
budgets; and managing physical inventory, supply chains and vendors.
In addition to the types of business functions, there are three categories of
modern operations management environments:
 Centralized:
Shops with centralized operations management typically use one
central control system to manage essential supply chain functions and
oversee multiple employees who work in one location.
 Decentralized:
Decentralized operations management uses multiple systems, including
advanced infrastructure and technology like web applications and
cloud databases, to coordinate work across global supply chains and
multiple locations.
 Hybrid:
A hybrid operations management environment leverages the
advantages of centralized and decentralized operations. For example,
you might have a centralized production center with unified
manufacturing and warehousing capabilities and equipped with an
automated infrastructure connected to cloud-based networks for real-
time monitoring.

Roles and Responsibilities of Operations Management

The various functions of operations management are listed below:
1. Forecasting

Forecasting is an attempt at predicting the future with the help of systematic

analysis and scientific methods. It is an essential part of operations
management as it assesses the controllable and uncontrollable factors and
makes predictions for the organization. It may also involve provisions or
suggestions for dealing with those predicted scenarios.
2. Capacity Planning

Capacity measures the rate of the production capability of a facility. One of

the most important operations management responsibilities is finding out the
kind and quantity of capacity needed and the time by which it needs to be
produced. It involves assessing the facility’s current capacity, forecasting
future needs, identifying and analyzing possible resources to fulfill those needs,
evaluating alternative resources, and selecting the best among them.

3. Location Facility
It is important to determine a location facility of the plant that can ensure
maximum operating efficiency. For example, a coal plant is best located near
a water source with the availability of coal near; it provides efficiency, cost
control, and profit.
But the selection of facilities is based on the easy and regular supply of labor,
resources, and raw materials. Factors like nearness to the market, power
availability, transportation facilities, climate suitability, and government rules
are also considered. An ideal location contributes to an organization’s smooth
working, the opposite of which will hinder its growth.
4. Layout

A good plant layout plans for placement of machines, pieces of equipment,

utilities, service areas, storage areas, and arrangement of other facilities. In
addition, it ensures a safe workspace, ease of maintenance, fulfillment of
requirements, and long-run efficiency in its operations with minimal investment.

5. Integration of Activities
Successful execution of an organization’s operations includes cordial and
efficient workflow between various departments such as sales, production,
and accounting. The Operations management system ensures the allocation
of financial resources for purchases from the accounting department,
receiving products from the production department, making the product
reach the sales department, and effective delivery of goods or services from
the customer service department. In addition, it ensures there is uninterrupted
functioning of the organization through back and forth communications,
continuous coordination, and feedback.

Main Functions of Operations Management

The main functions of operations management are developing effective

processes, ensuring production is efficient and determining the most cost-
effective way to achieve goals. Operations managers help organize resources
using sound HR concepts, the right technology and up-to-date best practices.

Functions often are cross-departmental and include:

 Budgeting
 Planning
 Process analysis
 Financial oversight
 Risk management
 Data privacy and security
 Quality assurance
 Preparing and disseminating reports
 Scheduling staff
 Providing technical support
 Managing equipment and supplies
 Controlling inventory
 Overseeing external vendors

Best Practices for Operations Management

Operations management best practices start with modern methods that allow
employees to do their jobs efficiently and deliver a desirable product or service
to customers. However, best practices may vary by company and need to
evolve in tandem with changing priorities.
While there is no single path to efficient operations, organizations and
individuals have found effective ways to improve modern operations
management. These include:
 Use technology to gain efficiency.
As workforce automation eliminates more and more routine business
processes, modern operations managers optimize operational
capabilities using data-led design and engineering.
 Turn to data for decision-making.
 Modern ops management strategies focus on making sound business
decisions based on data-driven analysis rather than relying solely on past
results, employee and customer behavior and personal biases.
 Use operations management for business processes.
Use operations management methods for business process redesign
(BPR) and business process automation (BPA) projects.

BPR for ops management refers to overhauling your critical business processes
using information and data gleaned from operations management
performance metrics. BPR can improve return on investment, reduce
operational costs, increase production capacity and enhance service
capabilities.

BPA for ops management refers to using technology to assist with or replace
manual tasks and processes. BPA can increase efficiency, save time and
money, reduce errors and increase transparency. Automating ops
management is most effective when replacing tasks that involve inefficient use
of time and resources.

Financial Management

At its core, financial management is the practice of making a business plan

and then ensuring all departments stay on track. Solid financial management
enables the CFO or VP of finance to provide data that supports creation of a
long-range vision, informs decisions on where to invest, and yields insights on
how to fund those investments, liquidity, profitability, cash runway and more.

ERP software can help finance teams achieve these goals: A financial
management system combines several financial functions, such as
accounting, fixed-asset management, revenue recognition and payment
processing. By integrating these key components, a financial management
system ensures real-time visibility into the financial state of a company while
facilitating day-to-day operations, like period-end close processes.

Objectives of Financial Management

Building on those pillars, financial managers help their companies in a variety

of ways, including but not limited to:

 Maximizing profits
Provide insights on, for example, rising costs of raw materials that might
trigger an increase in the cost of goods sold.
 Tracking liquidity and cash flow
Ensure the company has enough money on hand to meet its obligations.
 Ensuring compliance
Keep up with state, federal and industry-specific regulations.
 Developing financial scenarios
These are based on the business’ current state and forecasts that
assume a wide range of outcomes based on possible market conditions.
 Manage relationships
Dealing effectively with investors and the boards of directors.

Scope of Financial Management

Financial management encompasses four major areas:

1. Planning

The financial manager projects how much money the company will need in
order to maintain positive cash flow, allocate funds to grow or add new
products or services and cope with unexpected events, and shares that
information with business colleagues.

Planning may be broken down into categories including capital expenses, T&E
and workforce and indirect and operational expenses.
2. Budgeting
The financial manager allocates the company’s available funds to meet costs,
such as mortgages or rents, salaries, raw materials, employee T&E and other
obligations. Ideally there will be some left to put aside for emergencies and to
fund new business opportunities.

Companies generally have a master budget and may have separate sub
documents covering, for example, cash flow and operations; budgets may be
static or flexible.
3. Managing and assessing risk

Line-of-business executives look to their financial managers to assess and

provide compensating controls for a variety of risks, including:

 Market risk
Affects the business’ investments as well as, for public companies,
reporting and stock performance. May also reflect financial risk
particular to the industry, such as a pandemic affecting restaurants or
the shift of retail to a direct-to-consumer model.
 Credit risk
The effects of, for example, customers not paying their invoices on time
and thus the business not having funds to meet obligations, which may
adversely affect creditworthiness and valuation, which dictates ability to
borrow at favorable rates.
 Liquidity risk
Finance teams must track current cash flow, estimate future cash needs
and be prepared to free up working capital as needed.
 Operational risk
This is a catch-all category, and one new to some finance teams. It may
include, for example, the risk of a cyber-attack and whether to purchase
cybersecurity insurance, what disaster recovery and business continuity
plans are in place and what crisis management practices are triggered
if a senior executive is accused of fraud or misconduct.
4. Procedures
The financial manager sets procedures regarding how the finance team will
process and distribute financial data, like invoices, payments and reports, with
security and accuracy. These written procedures also outline who is responsible
for making financial decisions at the company — and who signs off on those
decisions.
Companies don’t need to start from scratch; there are policy and procedure
templates available for a variety of organization types, such as this one for
nonprofits.
Importance of Financial Management
Solid financial management provides the foundation for three pillars of sound
fiscal governance:
 Strategizing
 Identifying what needs to happen financially for the company to
achieve its short- and long-term goals. Leaders need insights into current
performance for scenario planning, for example.
 Decision-making
 Helping business leaders decide the best way to execute on plans by
providing up-to-date financial reports and data on relevant KPIs.
 Controlling
 Ensuring each department is contributing to the vision and operating
within budget and in alignment with strategy.
With effective financial management, all employees know where the
company is headed, and they have visibility into progress.

Three Types of Financial Management

The functions above can be grouped into three broader types of financial
management:
1. Capital budgeting

Relates to identifying what needs to happen financially for the company to

achieve its short- and long-term goals. Where should capital funds be
expended to support growth?

2. Capital structure
Determine how to pay for operations and/or growth. If interest rates are low,
taking on debt might be the best answer. A company might also seek funding
from a private equity firm, consider selling assets like real estate or, where
applicable, selling equity.
3. Working capital management

As discussed above, is making sure there’s enough cash on hand for day-to-
day operations, like paying workers and purchasing raw materials for
production.
Functions of Financial Management

1. Evaluating capital requirements – The finance manager evaluates

capital requirements to optimize a company’s revenue. The such
evaluation considers needs-based finances, determined by
anticipated expenses plus earnings and the company’s plan.

2. Evaluating capital constitution – The capital constitution can be

determined after gauging capital requirements. It includes long-term
and short-term debt-equity analyses based on the company’s equity
capital ratio and any funds to be sourced from outside.

3. Determining the source of capital – There are multiple sources of

acquiring funds. Sourcing funds is the most significant risk in financial
management, so the finance manager considers each source’s
relative merits and demerits. Major sources are as follows:
 Issuance of both shares and debentures
 Credit from financial and banking institutions
 Withdrawal of government bonds from government deposits

4. Taking investment decisions – Financial managers will decide on

relevant projects and investment opportunities for the company to
provide safe and lucrative returns.

5. Managing surplus money – In the event of a company’s net gains, a

financial manager manages excess funds by:
  Declaring dividends to investors after establishing the dividend
and bonus rate
 The company’s goals for diversification, innovation, or market
expansion

6. Managing liquidity – Cash is essential for a company’s day-to-day

operations, such as paying employees, purchasing raw materials,
acquiring inventory, paying creditors, adjusting current liabilities,
maintaining inventory, and making monthly or annual payments such
as the electricity – water bills, salaries, rent, and marketing costs. A
finance manager balances liquidity and replowing funds in the
business.

7. Financial control – Monitoring and controlling financing activities is

vital to financial management. It is possible to accomplish financial
control using cost and profit control, ratio analysis, and financial
forecasting methods.