Financial Markets Operations Management

CHAPTER 1 Introduction to Operations

1.1 INTRODUCTION

For every action there is a reaction. For every transaction, there has to be an appropriate sequence of processes such as a payment, a delivery of an asset, an exchange of information or a combination of these. We refer to this as an operational process. In this introductory chapter, we will see how an investment company's Operations Department relates to other departments within the company and other external organisations.

Firstly, we need to distinguish the operations of an organisational entity and the entity's post-transactional operations.

What do the following types of business actually do?

• Vineyard?
• Publisher?
• Hotel?
• Insurance company?

In simple terms, these businesses produce something (often referred to as outputs):

• Vineyards produce wine;
• Publishers produce books, newspapers and computer software;
• Hotels produce satisfied customers;
• Insurance companies help customers reduce their financial risks.

These outputs are the results of the transformation of a variety of inputs, including some of the following (the list is not exhaustive):

• Vineyard – grapes, yeast, water, sugar, etc.
• Publisher – authors, ideas, paper, digital resources, etc.
• Hotel – premises (rooms, dining areas), food, staff (front of house, catering, cleaning), ambiance, etc.
• Insurance company – products, sales staff, research & development staff, distribution channels, etc.

This is what businesses “do”; we know this as the business operations ...