Business Strategy and Operations Quiz

Operations Management: Chapter 2

• Operations Strategy: A long-range plan for the operations function. It outlines the design and use of resources to support the business strategy. It's part of an organization's long-term plan.
• Business Strategy vs. Operational Efficiency: Operational efficiency is performing tasks well, better than competitors. Strategy is a plan for competing in the marketplace.
• Developing a Business Strategy: Involves considering:
  • The company's core business (mission)
  • Market understanding (environmental scanning)
  • Assessing company strengths (core competencies)
• Mission Statement: A statement that defines:
  • The company's core business
  • Its customers and their characteristics
  • How the company's values shape the business
• Environmental Scanning: The process of monitoring the external environment for trends and changes to identify opportunities and threats. This involves analyzing marketplace trends, economic conditions, political factors, and social trends.
• Core Competencies: Unique strengths of a business; for example:
  • Workforce: Highly trained, adaptable, and technically skilled personnel.
  • Facilities: Efficient and technologically advanced facilities.
  • Market Understanding: In-depth customer knowledge and market trend prediction.
  • Financial Know-how: Skill in attracting and managing capital.
  • Technology: Using the latest production and information technologies.
• Creating the Business Strategy: A framework for combining Environmental Scanning, Mission, and Core Competencies to develop a business strategy.
• Developing an Operations Strategy:
  • A plan for designing and managing operational functions that follows the business strategy.
  • It focuses on building competitive capabilities giving it a particular edge.
• Operations Strategy Components:
  • Competitive Priorities: Cost, quality, time, and flexibility, acting as a competitive edge.
  • Design of the Operations Function: Decisions related to structure, facilities, technology, and workflow to match the competitive priorities.

Competitive Priorities

• Cost: Prioritizing keeping costs low without sacrificing quality. Often involves limited customization and a focus on efficiency improvements.
• Quality: Meeting customer expectations for both product design (e.g. performance, durability, features) and consistency (e.g., quality standards adherence and error-free delivery).
• Time: Delivering goods/services quickly and on time to meet customer needs. Includes factors like order speed, fulfillment times and rapid delivery.
• Flexibility: Accommodating changes rapidly to create options for products/services and to customize demands. It encompasses offering a wide selection and the ability to adapt production easily.

Role of Technology in Operations

• Technology supports competitive priorities.
• Types of Technology Applications:
  • Product Technology: New technologies like Teflon, Gore-Tex, Apple Watch.
  • Process Technology: Improves processes like 3D printing, CAD, CAM.
  • Information Technology: Enables communication, processing, and information storage like Internet, e-commerce, and Enterprise Resource Planning (ERP).
• Technology as a Tool: Provides benefits like improved processes, maintaining standards, and gaining competitive advantage; but also carries risks such as high costs, overstating benefits and obsolescence.

Productivity

• Productivity: The ratio of organizational outputs to inputs
• Total Productivity: Total output produced divided by all inputs used.
• Partial Productivity: Output divided by a specific input, such as labor or capital.
• Multifactor Productivity: Output divided by a variety of inputs such as materials and capital.
• Productivity Measures Interpretation: Comparing productivity metrics to similar companies, different periods or other relevant standards.

Productivity and the Service Sector

• Measuring service productivity is challenging compared to products.
• Traditional measures of productivity often focus on tangible outputs while the services industry largely produces intangible outputs that are difficult to assign values to.

Operations Strategy within OM

• Strategic leadership guides tactical decisions.
• Business strategy sets long-term objectives.
• Operations strategy supports business strategy.
• Other areas -like marketing and finance - must understand operational capabilities to ensure effective planning.

Chapter Highlights (LO 1-2)

• Operations strategy is an important component of long-term planning for the use of a company’s resources.
• Business strategy shapes operations and is supported by operations. Organization defines its business strategy by understanding its mission and competencies.
• Environmental scanning provides the framework for defining the optimal business strategy.

Chapter Highlights (LO 3-5)

• Operations strategy focuses on competitive priorities.
• These competitive capabilities include cost, quality, time, and flexibility.
• Technology helps companies achieve a competitive edge and supports chosen priorities.
• Productivity measures how effectively an organization’s resources are utilized.