With reference to RDM, describe how changes in operations management altered its relationship with two other business functions.

Explain how RDM’s transformation of its manufacturing process from traditional mass production to highly automated production affected the interests of internal stakeholders.

PLEASE NOTE: This content is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

The shift in operations management from a traditional industrial manufacturing process to an automated process altered its relationship with the following business functions:

• Human resources: RDM changed its recruitment from semi-skilled young people who had just completed their education at a local technical secondary school to university graduates with degrees in engineering or computer science. This shift almost certainly necessitated a shift in approaches to leadership and motivation.
• Marketing: In the process of becoming an automated manufacturing process, RDM fundamentally changed its marketing mix. Though the decision to shift from kerosene stoves was market driven (declining demand), the automated process allows RDM to customize products and make, as in the case of the aluminum water bottles, wholly new products.
• Accounting and Finance: Prior to automation, RDM made uniform products on a large scale. Pricing decisions would have been relatively rare – setting a fixed price for a product. Now that the business is making customized products, pricing decisions have to be made with virtually every order, which involves people from the accounting department. Whereas RDM had capital expenditures prior to full automation, it also had substantial revenue expenditures in the form of payroll.With automation, the mix of capital versus revenue expenditures shifted in the direction of more capital expenditures. This shift requires significantly different approaches to finance.

Candidates should name the functions, but they can be implicit.

N.B. R&D is not a business function.

Accept any other relevant changes.

Mark as a 2 + 2.

Award [1] for an appropriate business function identified and an additional [1] for some description of changes in context. Award a maximum of [2] for each function described.

Refer to Paper 1 markbands for May 2016 forward, available under the "Your tests" tab > supplemental materials.

• Employees – jobs will change, different skills, highly trained engineers and computer scientists.
• Managers – tasks will change, management role different.
• Shareholders – may have sacrificed dividends for investments but reaped benefits later.

Accept any other relevant internal stakeholders.

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.

Award a maximum of [3] for a theoretical answer, or for only considering one internal stakeholder.

Award a maximum of [5] if the answer is mainly descriptive but in context.

Award a maximum of [6].

Candidates were asked to describe how changes in operations management altered RDM’s relationship with two other business functions. Of those that did answer almost all candidates chose Human Resources, outlining the reduction in the workforce and the change to a more skilled workforce. Many candidates chose Finance and Accounting, describing the need for finance. Some candidates did not understand the term ‘business function’.

Candidates were asked to explain how the change from traditional mass production to highly automated production affected the interests of internal stakeholders. Nearly all candidates identified correctly internal stakeholders, usually employees and managers although some identified directors and/or owners. Most candidates identified more than one stakeholder. Weaker answers tended not to develop the context or kept their explanations to the simplistic without developing their ideas. The best answers developed the impact of the changes on both the stakeholders and the business and used the context well.

Some candidates just copied extracts from the case study in their answer; identifying the relevant case study material is important, but it should only be a starting point: the text written by candidates should go beyond what is stated in the case study and it should add value, showing the candidates’ knowledge and understanding in their own words; solely quoting the case study is not enough to be awarded marks in the higher mark questions.