Operations Management for MBAs, 5th Edition Solution Manual
Operations Management for MBAs, 5th Edition Solution Manual helps you stay ahead with clear explanations and well-organized study materials.
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Chapter 1 – Page 1
Chapter 1
Operations Strategy and Global Competitiveness
Chapter Summary
This is one of the most important chapters in the text as it defines operations management
as the activities associated with transforming inputs into valued outputs. The chapter also
shows that the actual production system is defined in terms of its environment, inputs,
transformation system, outputs, and the mechanism used for monitoring and control. In
our definition of the production system, we define all transformation systems as
services—with or without facilitating goods (physical entities accompanying the
transformation process). Another key aspect of the chapter is the discussion of the move
away from traditional functional-based to process-based organizational structures.
This chapter continues with a definition of customer value as perceived benefits divided
by costs. Customer costs include upfront monetary investment, other lifecycle costs for
maintenance, and the hassles involved in obtaining the product or service. Discussion of
customer benefits focuses on innovative products and services, functionality, quality,
customization, and responsiveness.
The final part of this chapter continues with a discussion of strategy and competitiveness.
Global trade trends are discussed. Next, the chapter provides an overview of the business
strategy formulation process and includes timely material on vision and mission
statements, internal and external forces, business strategy, the business model, and
business unit strategies. After that, business unit strategic frameworks are described: the
life-cycle approach, the performance frontiers concept, focus on one or two key areas of
strength, and the sand cone model. Finally, the chapter concludes with a discussion of
core capabilities, outsourcing, and offshoring.
Chapter 1
Operations Strategy and Global Competitiveness
Chapter Summary
This is one of the most important chapters in the text as it defines operations management
as the activities associated with transforming inputs into valued outputs. The chapter also
shows that the actual production system is defined in terms of its environment, inputs,
transformation system, outputs, and the mechanism used for monitoring and control. In
our definition of the production system, we define all transformation systems as
services—with or without facilitating goods (physical entities accompanying the
transformation process). Another key aspect of the chapter is the discussion of the move
away from traditional functional-based to process-based organizational structures.
This chapter continues with a definition of customer value as perceived benefits divided
by costs. Customer costs include upfront monetary investment, other lifecycle costs for
maintenance, and the hassles involved in obtaining the product or service. Discussion of
customer benefits focuses on innovative products and services, functionality, quality,
customization, and responsiveness.
The final part of this chapter continues with a discussion of strategy and competitiveness.
Global trade trends are discussed. Next, the chapter provides an overview of the business
strategy formulation process and includes timely material on vision and mission
statements, internal and external forces, business strategy, the business model, and
business unit strategies. After that, business unit strategic frameworks are described: the
life-cycle approach, the performance frontiers concept, focus on one or two key areas of
strength, and the sand cone model. Finally, the chapter concludes with a discussion of
core capabilities, outsourcing, and offshoring.
Chapter 1 – Page 1
Chapter 1
Operations Strategy and Global Competitiveness
Chapter Summary
This is one of the most important chapters in the text as it defines operations management
as the activities associated with transforming inputs into valued outputs. The chapter also
shows that the actual production system is defined in terms of its environment, inputs,
transformation system, outputs, and the mechanism used for monitoring and control. In
our definition of the production system, we define all transformation systems as
services—with or without facilitating goods (physical entities accompanying the
transformation process). Another key aspect of the chapter is the discussion of the move
away from traditional functional-based to process-based organizational structures.
This chapter continues with a definition of customer value as perceived benefits divided
by costs. Customer costs include upfront monetary investment, other lifecycle costs for
maintenance, and the hassles involved in obtaining the product or service. Discussion of
customer benefits focuses on innovative products and services, functionality, quality,
customization, and responsiveness.
The final part of this chapter continues with a discussion of strategy and competitiveness.
Global trade trends are discussed. Next, the chapter provides an overview of the business
strategy formulation process and includes timely material on vision and mission
statements, internal and external forces, business strategy, the business model, and
business unit strategies. After that, business unit strategic frameworks are described: the
life-cycle approach, the performance frontiers concept, focus on one or two key areas of
strength, and the sand cone model. Finally, the chapter concludes with a discussion of
core capabilities, outsourcing, and offshoring.
Chapter 1
Operations Strategy and Global Competitiveness
Chapter Summary
This is one of the most important chapters in the text as it defines operations management
as the activities associated with transforming inputs into valued outputs. The chapter also
shows that the actual production system is defined in terms of its environment, inputs,
transformation system, outputs, and the mechanism used for monitoring and control. In
our definition of the production system, we define all transformation systems as
services—with or without facilitating goods (physical entities accompanying the
transformation process). Another key aspect of the chapter is the discussion of the move
away from traditional functional-based to process-based organizational structures.
This chapter continues with a definition of customer value as perceived benefits divided
by costs. Customer costs include upfront monetary investment, other lifecycle costs for
maintenance, and the hassles involved in obtaining the product or service. Discussion of
customer benefits focuses on innovative products and services, functionality, quality,
customization, and responsiveness.
The final part of this chapter continues with a discussion of strategy and competitiveness.
Global trade trends are discussed. Next, the chapter provides an overview of the business
strategy formulation process and includes timely material on vision and mission
statements, internal and external forces, business strategy, the business model, and
business unit strategies. After that, business unit strategic frameworks are described: the
life-cycle approach, the performance frontiers concept, focus on one or two key areas of
strength, and the sand cone model. Finally, the chapter concludes with a discussion of
core capabilities, outsourcing, and offshoring.
Chapter 1 – Page 2
Discussion Outline
I. Introduction
II. Operations
A. Systems Perspective
B. Inputs
C. Transformation Processes
D. Outputs
E. Control
F. Operations Activities
G. Trends in Operations
III. Customer Value
A. Costs
B. Benefits
C. Innovativeness
D. Functionality
E. Quality
1. Quality Dimensions
2. Quality’s Benefits and Costs
3. Evolution of Quality: Japan vs. America
F. Customization
1. Flexibility
2. Mass customization
G. Example: Hewlett-Packard
H. Responsiveness
IV. Strategy and Competitiveness
A. Global Trends
B. Strategy
C. Strategic Frameworks
1. The Life Cycle
2. Performance Frontiers
3. Focus
4. The Sand Cone
D. Core Capabilities
Discussion Outline
I. Introduction
II. Operations
A. Systems Perspective
B. Inputs
C. Transformation Processes
D. Outputs
E. Control
F. Operations Activities
G. Trends in Operations
III. Customer Value
A. Costs
B. Benefits
C. Innovativeness
D. Functionality
E. Quality
1. Quality Dimensions
2. Quality’s Benefits and Costs
3. Evolution of Quality: Japan vs. America
F. Customization
1. Flexibility
2. Mass customization
G. Example: Hewlett-Packard
H. Responsiveness
IV. Strategy and Competitiveness
A. Global Trends
B. Strategy
C. Strategic Frameworks
1. The Life Cycle
2. Performance Frontiers
3. Focus
4. The Sand Cone
D. Core Capabilities
Chapter 1 – Page 2
Discussion Outline
I. Introduction
II. Operations
A. Systems Perspective
B. Inputs
C. Transformation Processes
D. Outputs
E. Control
F. Operations Activities
G. Trends in Operations
III. Customer Value
A. Costs
B. Benefits
C. Innovativeness
D. Functionality
E. Quality
1. Quality Dimensions
2. Quality’s Benefits and Costs
3. Evolution of Quality: Japan vs. America
F. Customization
1. Flexibility
2. Mass customization
G. Example: Hewlett-Packard
H. Responsiveness
IV. Strategy and Competitiveness
A. Global Trends
B. Strategy
C. Strategic Frameworks
1. The Life Cycle
2. Performance Frontiers
3. Focus
4. The Sand Cone
D. Core Capabilities
Discussion Outline
I. Introduction
II. Operations
A. Systems Perspective
B. Inputs
C. Transformation Processes
D. Outputs
E. Control
F. Operations Activities
G. Trends in Operations
III. Customer Value
A. Costs
B. Benefits
C. Innovativeness
D. Functionality
E. Quality
1. Quality Dimensions
2. Quality’s Benefits and Costs
3. Evolution of Quality: Japan vs. America
F. Customization
1. Flexibility
2. Mass customization
G. Example: Hewlett-Packard
H. Responsiveness
IV. Strategy and Competitiveness
A. Global Trends
B. Strategy
C. Strategic Frameworks
1. The Life Cycle
2. Performance Frontiers
3. Focus
4. The Sand Cone
D. Core Capabilities
Chapter 1 – Page 3
Chapter Teaching Tips
There are a number of ways to introduce the course material. Many MBA students work
at companies that have recently initiated a Lean/Six Sigma project, have outsourced
processes to suppliers in low-wage countries, or have implemented an Enterprise
Resource Planning system. Therefore, students naturally should be inquisitive about
operations management and the aforementioned topics.
One approach is to have the students read cases prior to first class. “Wyatt Earp – The
Buffalo Hunter” case is a short, but interesting case, that touches upon many aspects of
operations strategy. A second case, “American Outsourcing” discusses the outsourcing of
manufacturing and service jobs from the United States to Mexico, China, and India.
Citations for these cases can be found at the end of these notes.
Another useful approach for illustrating the importance of operations management is to
have students read the Harvard Business Review article “Fast Heat: How Korea Won the
Microwave War (January/February 1989). The article emphasizes a number of important
themes including:
A strong production orientation. Samsung emphasized production over
marketing.
Design done with manufacturing in mind.
Measures like payback and return on investment were not used.
The customer should never be kept waiting.
Engineers travel, not just the sales force.
Another approach is to start with a movie or video that illustrates the operations activities
of some firm or organization and use this to lead to a discussion of the operations
function.
Then, the instructor can introduce the topics of global competiveness and strategy by
asking students for the slogans of firms they are familiar with (e.g., "Everyday low
prices—always!"). From this, the number of areas of strength that are in the operations
area can be counted. Typically, 80-90% will fall in the operations area indicating its
strategic importance. The discussion can then move to the Chinese successes in world
markets and American firms' often typical lack of attention to operational activities.
Chapter Teaching Tips
There are a number of ways to introduce the course material. Many MBA students work
at companies that have recently initiated a Lean/Six Sigma project, have outsourced
processes to suppliers in low-wage countries, or have implemented an Enterprise
Resource Planning system. Therefore, students naturally should be inquisitive about
operations management and the aforementioned topics.
One approach is to have the students read cases prior to first class. “Wyatt Earp – The
Buffalo Hunter” case is a short, but interesting case, that touches upon many aspects of
operations strategy. A second case, “American Outsourcing” discusses the outsourcing of
manufacturing and service jobs from the United States to Mexico, China, and India.
Citations for these cases can be found at the end of these notes.
Another useful approach for illustrating the importance of operations management is to
have students read the Harvard Business Review article “Fast Heat: How Korea Won the
Microwave War (January/February 1989). The article emphasizes a number of important
themes including:
A strong production orientation. Samsung emphasized production over
marketing.
Design done with manufacturing in mind.
Measures like payback and return on investment were not used.
The customer should never be kept waiting.
Engineers travel, not just the sales force.
Another approach is to start with a movie or video that illustrates the operations activities
of some firm or organization and use this to lead to a discussion of the operations
function.
Then, the instructor can introduce the topics of global competiveness and strategy by
asking students for the slogans of firms they are familiar with (e.g., "Everyday low
prices—always!"). From this, the number of areas of strength that are in the operations
area can be counted. Typically, 80-90% will fall in the operations area indicating its
strategic importance. The discussion can then move to the Chinese successes in world
markets and American firms' often typical lack of attention to operational activities.
Chapter 1 – Page 4
Illustrative Answers to Expand Your Understanding Questions
1. Services are typically more customized than products and thus less subject to
repetitive automation, which could increase their efficient production. Second, the
technology of service production is nowhere as advanced as that for products. Last,
because services cannot be stored, this makes their timely production more expensive.
2. Some other differences will be pointed out in future chapters. These include the low
barriers to entry for service businesses, the (typically) reduced capital required for a
service, the infinite variability of a service, etc.
3. Services do seem to be protected because of their high provider-customer interaction,
which is difficult for foreign firms to offer due to distance, language, culture, and
other such matters. It is commonly believed that, because services have less foreign
competition, domestic firms are better at providing services than products. This is
probably a great fallacy, as anyone who has experienced service offerings in multiple
foreign countries can tell you.
4. The Japanese work more diligently in designing and planning their operations and
exert less effort in controlling them. In fact, much of their design efforts are directed
toward eliminating the need to control their work, for example, by making errors or
mistakes more obvious and easily corrected. They thus offer better designed outputs
and also spend less on correcting, counting, monitoring, and controlling those outputs
with the result that they are often more competitive in global markets.
5. A manufacturer would see that the physical product was only a part of the total
package being sold to satisfy a customer, and that a service provider might consider
adding a facilitating good to their offerings to enhance the service.
6. Previous problems with acquisitions have been due to attempts to grow for purely
financial reasons instead of good business reasons; essentially playing a financial
game. Wise acquisitions are conducted slowly, with long and intensive analysis, and
bring true synergy to the firm's existing products, services, distribution network, or
other (and frequently multiple) aspects of their focus.
7. As the U.S. trade deficit increases, U.S. dollars will accumulate overseas. One
potential adverse effect is a run on the U.S. currency. A gradual devaluation of the
dollar should, in theory, make U.S. exports cheaper and U.S. imports more expensive,
thereby reducing the trade deficit. Some experts have estimated that the dollar is
overvalued by about 40%; however, in 1987 a coordinated effort among the U.S. and
the central banks of many of the developed nations was able to cut the value of the
dollar by 50% against some currencies without a serious impact on the economy.
8. The text notes that other areas of focus may lie outside the operations function, such
as in marketing or finance. However, even in operations there may be a focus on the
Illustrative Answers to Expand Your Understanding Questions
1. Services are typically more customized than products and thus less subject to
repetitive automation, which could increase their efficient production. Second, the
technology of service production is nowhere as advanced as that for products. Last,
because services cannot be stored, this makes their timely production more expensive.
2. Some other differences will be pointed out in future chapters. These include the low
barriers to entry for service businesses, the (typically) reduced capital required for a
service, the infinite variability of a service, etc.
3. Services do seem to be protected because of their high provider-customer interaction,
which is difficult for foreign firms to offer due to distance, language, culture, and
other such matters. It is commonly believed that, because services have less foreign
competition, domestic firms are better at providing services than products. This is
probably a great fallacy, as anyone who has experienced service offerings in multiple
foreign countries can tell you.
4. The Japanese work more diligently in designing and planning their operations and
exert less effort in controlling them. In fact, much of their design efforts are directed
toward eliminating the need to control their work, for example, by making errors or
mistakes more obvious and easily corrected. They thus offer better designed outputs
and also spend less on correcting, counting, monitoring, and controlling those outputs
with the result that they are often more competitive in global markets.
5. A manufacturer would see that the physical product was only a part of the total
package being sold to satisfy a customer, and that a service provider might consider
adding a facilitating good to their offerings to enhance the service.
6. Previous problems with acquisitions have been due to attempts to grow for purely
financial reasons instead of good business reasons; essentially playing a financial
game. Wise acquisitions are conducted slowly, with long and intensive analysis, and
bring true synergy to the firm's existing products, services, distribution network, or
other (and frequently multiple) aspects of their focus.
7. As the U.S. trade deficit increases, U.S. dollars will accumulate overseas. One
potential adverse effect is a run on the U.S. currency. A gradual devaluation of the
dollar should, in theory, make U.S. exports cheaper and U.S. imports more expensive,
thereby reducing the trade deficit. Some experts have estimated that the dollar is
overvalued by about 40%; however, in 1987 a coordinated effort among the U.S. and
the central banks of many of the developed nations was able to cut the value of the
dollar by 50% against some currencies without a serious impact on the economy.
8. The text notes that other areas of focus may lie outside the operations function, such
as in marketing or finance. However, even in operations there may be a focus on the
Chapter 1 – Page 5
distribution system, purchasing capabilities (especially for difficult-to-obtain
materials), or the use of advanced technologies.
9. China possesses a core capability of cheap, abundant labor. India possesses a core
capability of abundant and skilled, English-speaking labor. Japan has always had a
strong capability in teamwork and execution, while the U.S. has always been known
for its creativity, innovativeness, and flexibility.
10. Obviously, the student will have to choose a point of reference to determine if an
action is ethical, a topic worth discussion all by itself. That is, the student can look at
the action from the view of the one taking the action, from the one affected by the
action, or from a disinterested observer. Whose laws are relevant: home country,
foreign country, both?
11. The cost savings largely arise from the discipline required to produce quickly: Fewer
errors, fewer operations, smoother processes, less labor, fewer inventories. Other
savings also accrue to fast response, however, such as less time for engineering
changes to the product and, more important, less time for the customer to request
changes, or even cancel the order! Last, though not a cost, faster response means
faster revenue generation too.
12. One example of a company that has moved the performance frontier of its industry is
Southwest Airlines—Southwest offers delivery speed, dependability, and low costs.
A second example would be Dell in entering the market for plasma televisions by
offering televisions with high quality at a cost lower than competitors’ prices.
13. In Japan, protectionism was used to nurture infant industries and protect them from
foreign competition until they could compete on their own. In particular, after WWII,
Japan began to emphasize product and process quality. At the same time, U.S.
producers, believing that they already manufactured the world’s best products,
emphasized marketing of those products. The American proficiency in marketing
enables U.S. producers to continue to sell products/services that in some cases are of
lower quality than those sold by Japanese producers. The Japanese emphasis on
engineering enables their producers to introduce products faster, to improve processes
more dramatically, etc.
14. Based on Figure 1.6, we would expect between 1/5 and 3/5 of the reduction in the
response time, with an average of ½. Since a cut by a factor of ten means a 90%
reduction, we would thus expect a unit cost reduction between 18% and 54%, with an
average of 45%.
15. With the increasing trend of offshoring, workers in the U.S. should expect that they
will be forced to accept lower wages, will lose their jobs, and/or they will need to
prepare themselves for new jobs demanding core capabilities not found offshore.
However, the cost of living should also decrease with lower prices for goods and
perhaps some services also. Yet, some economists who have always favored free
distribution system, purchasing capabilities (especially for difficult-to-obtain
materials), or the use of advanced technologies.
9. China possesses a core capability of cheap, abundant labor. India possesses a core
capability of abundant and skilled, English-speaking labor. Japan has always had a
strong capability in teamwork and execution, while the U.S. has always been known
for its creativity, innovativeness, and flexibility.
10. Obviously, the student will have to choose a point of reference to determine if an
action is ethical, a topic worth discussion all by itself. That is, the student can look at
the action from the view of the one taking the action, from the one affected by the
action, or from a disinterested observer. Whose laws are relevant: home country,
foreign country, both?
11. The cost savings largely arise from the discipline required to produce quickly: Fewer
errors, fewer operations, smoother processes, less labor, fewer inventories. Other
savings also accrue to fast response, however, such as less time for engineering
changes to the product and, more important, less time for the customer to request
changes, or even cancel the order! Last, though not a cost, faster response means
faster revenue generation too.
12. One example of a company that has moved the performance frontier of its industry is
Southwest Airlines—Southwest offers delivery speed, dependability, and low costs.
A second example would be Dell in entering the market for plasma televisions by
offering televisions with high quality at a cost lower than competitors’ prices.
13. In Japan, protectionism was used to nurture infant industries and protect them from
foreign competition until they could compete on their own. In particular, after WWII,
Japan began to emphasize product and process quality. At the same time, U.S.
producers, believing that they already manufactured the world’s best products,
emphasized marketing of those products. The American proficiency in marketing
enables U.S. producers to continue to sell products/services that in some cases are of
lower quality than those sold by Japanese producers. The Japanese emphasis on
engineering enables their producers to introduce products faster, to improve processes
more dramatically, etc.
14. Based on Figure 1.6, we would expect between 1/5 and 3/5 of the reduction in the
response time, with an average of ½. Since a cut by a factor of ten means a 90%
reduction, we would thus expect a unit cost reduction between 18% and 54%, with an
average of 45%.
15. With the increasing trend of offshoring, workers in the U.S. should expect that they
will be forced to accept lower wages, will lose their jobs, and/or they will need to
prepare themselves for new jobs demanding core capabilities not found offshore.
However, the cost of living should also decrease with lower prices for goods and
perhaps some services also. Yet, some economists who have always favored free
Loading page 6...
Chapter 1 – Page 6
trade for the improved overall efficiency of global production are now worried that
the great majority of the fruits of that efficiency may accrue to the owners of the
businesses instead of the public.
16. Wal-Mart’s order winners are price and product variety. Wal-Mart’s qualifiers
include quality and delivery reliability. Toyota’s order winners are quality,
innovation, product reliability, and performance. Toyota’s qualifiers include price and
delivery reliability. BMW’s order winners include performance and innovation while
BMW’s qualifiers include quality and delivery reliability. Sony’s order winners
include innovation and performance. Sony’s qualifiers include price and delivery
reliability.
17. Given the recent trends in products and services, i.e. consumers demanding better
performance on all competitive dimensions, one could make a valid argument for use
of the Sand Cone model over the focus strategy because companies must be able to
deliver multiple core capabilities.
18. We do not see more mass customization in products and services because some
products and services do not lend themselves to this practice. Examples include
commodities such as sugar, delivery of electricity, gas, chemicals, flour, etc. In
addition, companies must develop the ability to deliver high quality outputs at low
cost and at the same time increase flexibility.
APPLY YOUR UNDERSTANDING
Incident 1: Taracare, Inc.
Teaching Tips for Case
This case is designed to illustrate the problem of sub-optimization. The case can also be
used to demonstrate how individual components of a system interact and/or the roles
played by various functional departments. In addition, the case can be referred to when
the topic of strategy is discussed in the next chapter. For example, the case can be
discussed in conjunction with the strategy formulation process to demonstrate how a
vision and mission statement might help align the decisions being made in different
functional areas. In addition, appropriate core competencies for Taracare can be
identified and discussed.
1. On the surface, it might appear as though outdoor furniture and replacement windows
have very little in common. Therefore, it might be argued that Jorge made a mistake
in hiring a new manufacturing manager without the proper qualifications. Thus, some
students may argue that Alfredo be given some period of time to familiarize himself
with the operations of the new production facility. However, the evidence in the case
trade for the improved overall efficiency of global production are now worried that
the great majority of the fruits of that efficiency may accrue to the owners of the
businesses instead of the public.
16. Wal-Mart’s order winners are price and product variety. Wal-Mart’s qualifiers
include quality and delivery reliability. Toyota’s order winners are quality,
innovation, product reliability, and performance. Toyota’s qualifiers include price and
delivery reliability. BMW’s order winners include performance and innovation while
BMW’s qualifiers include quality and delivery reliability. Sony’s order winners
include innovation and performance. Sony’s qualifiers include price and delivery
reliability.
17. Given the recent trends in products and services, i.e. consumers demanding better
performance on all competitive dimensions, one could make a valid argument for use
of the Sand Cone model over the focus strategy because companies must be able to
deliver multiple core capabilities.
18. We do not see more mass customization in products and services because some
products and services do not lend themselves to this practice. Examples include
commodities such as sugar, delivery of electricity, gas, chemicals, flour, etc. In
addition, companies must develop the ability to deliver high quality outputs at low
cost and at the same time increase flexibility.
APPLY YOUR UNDERSTANDING
Incident 1: Taracare, Inc.
Teaching Tips for Case
This case is designed to illustrate the problem of sub-optimization. The case can also be
used to demonstrate how individual components of a system interact and/or the roles
played by various functional departments. In addition, the case can be referred to when
the topic of strategy is discussed in the next chapter. For example, the case can be
discussed in conjunction with the strategy formulation process to demonstrate how a
vision and mission statement might help align the decisions being made in different
functional areas. In addition, appropriate core competencies for Taracare can be
identified and discussed.
1. On the surface, it might appear as though outdoor furniture and replacement windows
have very little in common. Therefore, it might be argued that Jorge made a mistake
in hiring a new manufacturing manager without the proper qualifications. Thus, some
students may argue that Alfredo be given some period of time to familiarize himself
with the operations of the new production facility. However, the evidence in the case
Loading page 7...
Chapter 1 – Page 7
suggests that Jorge is not overly concerned with the plant’s performance and that the
pressure for improvement is coming from Alfredo himself. On the other hand, it
should be noted that in actuality both products do have much in common. For
example, both products are assembled from extruded aluminum. Second, aluminum
and glass are key raw materials of both products. Finally, both products are sold to
similar customers. Thus, to the contrary, it would appear that Alfredo’s previous
experience does qualify him for the position at Taracare (assuming he performed well
in his previous position).
2. Given Alfredo’s responsibility and concern for meeting delivery commitments and
product quality he would likely make recommendations such as the following:
Have the purchasing agent consult with someone in production before switching
suppliers to determine the impact on operations of such a switch.
Include someone from production on product design teams.
Get the accounting and finance people off his back so he can do his job.
3. Given Jorge’s background in sales, it is reasonable to assume that this is the area with
which he is most concerned. The evidence in the case certainly supports this view.
For example, Jorge’s first initiative was to triple the sales force. Also, he did not seem
to be overly concerned with production’s performance:
Rather than address the issues Alfredo raised in the meeting, he deferred them
to be resolved at a later date.
He gave no indication that he believed the issues were important and that he
would deal with the issues (“Then perhaps I will call a meeting…”)
In actuality, it appeared that he was inclined to dismiss the problem (“… our
production is no worse than our competitors…” “we don’t expect you to solve
all our problems overnight…” “Keep up the good work…” “send me that
memo at your earliest convenience” not as soon as possible).
Although Jorge may be giving sales his highest priority, it is a reasonable assumption
that his real objective is to maximize his wealth. Clearly, the way to do this is by
maximizing Taracare’s profits given his 75 percent stake. Thus, given Jorge’s
previous experience and background in sales, it is not surprising that he has chosen to
focus his efforts on the sales function.
For Alfredo to get Jorge to buy into improving operations, he first needs to
demonstrate the connection between operations and Taracare’s profits. Jorge must
recognize that maximizing profits is his primary objective and that each functional
area contributes to this objective. Based on this broader perspective, Alfredo can
demonstrate that optimizing one area can negatively affect the overall organization.
The issues he raised in the meeting can be used to demonstrate this point (e.g., buying
cheaper raw materials that ultimately cost the company more, designing products that
are difficult to produce, and so on). Employing a broader system perspective, Jorge
can consider the way each functional area can best contribute to the overall
organizational goals.
suggests that Jorge is not overly concerned with the plant’s performance and that the
pressure for improvement is coming from Alfredo himself. On the other hand, it
should be noted that in actuality both products do have much in common. For
example, both products are assembled from extruded aluminum. Second, aluminum
and glass are key raw materials of both products. Finally, both products are sold to
similar customers. Thus, to the contrary, it would appear that Alfredo’s previous
experience does qualify him for the position at Taracare (assuming he performed well
in his previous position).
2. Given Alfredo’s responsibility and concern for meeting delivery commitments and
product quality he would likely make recommendations such as the following:
Have the purchasing agent consult with someone in production before switching
suppliers to determine the impact on operations of such a switch.
Include someone from production on product design teams.
Get the accounting and finance people off his back so he can do his job.
3. Given Jorge’s background in sales, it is reasonable to assume that this is the area with
which he is most concerned. The evidence in the case certainly supports this view.
For example, Jorge’s first initiative was to triple the sales force. Also, he did not seem
to be overly concerned with production’s performance:
Rather than address the issues Alfredo raised in the meeting, he deferred them
to be resolved at a later date.
He gave no indication that he believed the issues were important and that he
would deal with the issues (“Then perhaps I will call a meeting…”)
In actuality, it appeared that he was inclined to dismiss the problem (“… our
production is no worse than our competitors…” “we don’t expect you to solve
all our problems overnight…” “Keep up the good work…” “send me that
memo at your earliest convenience” not as soon as possible).
Although Jorge may be giving sales his highest priority, it is a reasonable assumption
that his real objective is to maximize his wealth. Clearly, the way to do this is by
maximizing Taracare’s profits given his 75 percent stake. Thus, given Jorge’s
previous experience and background in sales, it is not surprising that he has chosen to
focus his efforts on the sales function.
For Alfredo to get Jorge to buy into improving operations, he first needs to
demonstrate the connection between operations and Taracare’s profits. Jorge must
recognize that maximizing profits is his primary objective and that each functional
area contributes to this objective. Based on this broader perspective, Alfredo can
demonstrate that optimizing one area can negatively affect the overall organization.
The issues he raised in the meeting can be used to demonstrate this point (e.g., buying
cheaper raw materials that ultimately cost the company more, designing products that
are difficult to produce, and so on). Employing a broader system perspective, Jorge
can consider the way each functional area can best contribute to the overall
organizational goals.
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Chapter 1 – Page 8
Discussion Outline for Case
I. The Current Situation
A. Discuss Alfredo Diaz's primary concerns
B. Discuss Jorge Gonzalez’s reaction to Alfredo’s concerns
C. These are really symptoms of larger problem
D. The real problem is sub-optimization
II. Jorge’s Approach
A. Sales background
B. Most likely interested in maximizing his wealth
C. Seems to be focusing on what he knows best
III. Need Systems Approach
A. Goal of entire organization (system) needs to be made clear
B. Each functional area must consider how it can contribute to the
accomplishment of the overall organizational goal
Incident 2: Izmir National University (INU)
Teaching Tips for Case
This case illustrates the importance that a well-defined strategy plays in helping
coordinate and guide employees. In addition, the case provides students with an
opportunity to develop a strategic planning process for the Business School to reinforce
their understanding of the hierarchical nature of strategic planning. Instructors have a
great deal of flexibility in terms of the level of detail they wish to go into. For example,
instructors that want to go into more detail can require the students to develop a vision
and mission statement for the Business School. This exercise can be significantly
enhanced by asking the students to search the Web for existing Business School
vision/mission statements and then having the students evaluate and critique these
statements in terms of the language used and what their reaction would be to the
statements if they were a student, faculty member, or company that recruited students
from the school.
The case also exposes students to the difficulty of measuring productivity, especially in
organizations that produce multiple outputs and where one or more of these outputs is an
intangible service.
Discussion Outline for Case
I. The Current Situation
A. Discuss Alfredo Diaz's primary concerns
B. Discuss Jorge Gonzalez’s reaction to Alfredo’s concerns
C. These are really symptoms of larger problem
D. The real problem is sub-optimization
II. Jorge’s Approach
A. Sales background
B. Most likely interested in maximizing his wealth
C. Seems to be focusing on what he knows best
III. Need Systems Approach
A. Goal of entire organization (system) needs to be made clear
B. Each functional area must consider how it can contribute to the
accomplishment of the overall organizational goal
Incident 2: Izmir National University (INU)
Teaching Tips for Case
This case illustrates the importance that a well-defined strategy plays in helping
coordinate and guide employees. In addition, the case provides students with an
opportunity to develop a strategic planning process for the Business School to reinforce
their understanding of the hierarchical nature of strategic planning. Instructors have a
great deal of flexibility in terms of the level of detail they wish to go into. For example,
instructors that want to go into more detail can require the students to develop a vision
and mission statement for the Business School. This exercise can be significantly
enhanced by asking the students to search the Web for existing Business School
vision/mission statements and then having the students evaluate and critique these
statements in terms of the language used and what their reaction would be to the
statements if they were a student, faculty member, or company that recruited students
from the school.
The case also exposes students to the difficulty of measuring productivity, especially in
organizations that produce multiple outputs and where one or more of these outputs is an
intangible service.
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Chapter 1 – Page 9
1. The variety of goals and concerns expressed by the professors indicates an absence of
a well-defined strategy. This can be illustrated by discussing the lack of consistency
in the faculty’s comments. For example, one docent/professor commented, “research
is our primary mission” while another stated “there is far too much emphasis placed
on research.” Another way to illustrate this is to list the wide range of priorities
expressed by the professors. The suggestions made by the professors range from
improving student/teacher ratios to getting a Ph.D. program approved to increasing
the travel budget to getting better secretarial support to allowing professors more time
for consulting. Thus, the comments suggest that the professors are pursuing their own
personal objectives and not supporting a common university or school-wide strategy.
After making this point, the instructor may want to spend some time discussing the
likely outcomes and problems associated with not having a well-defined strategy at
INU.
2. As the leader of a university operating division, one primary role of a Dekan
(administrative head, dean) is to ensure that the actions and decisions made at the
school level are consistent with and support the overall university strategy. Of course,
this may be complicated by the absence of a well-defined overall university strategy
or one that has not been effectively communicated. It is quite likely that this is the
case at INU given its short existence and overwhelming success. Administrators may
simply feel that INU is doing fine without having a formal strategic plan.
At any rate, the first step for the Dekan is to determine what the university’s overall
mission and strategy is. If it turns out that the university does not have a well-defined
mission, the Dekan can use this to the Business School’s advantage by convincing the
President and Provost of the need for a university strategy and then proactively
helping formulate the strategy so that the Business School’s interests are reflected in
the strategy.
Once the Dekan has a good understanding of the overall university mission and
strategy, she can initiate an effort to develop a strategic plan for the Business School.
To ensure buy-in and commitment to the school’s strategic plan, the Dekan should
include as many of the professors in the process as possible. Perhaps she may decide
to chair a committee composed of several of the full professors, a couple of the
docents, one or two staffers, one or more business professionals, and perhaps even a
student or two to begin drafting a vision/mission statement and strategic plan for the
Business School. In formulating a vision/mission statement that supports the
university’s mission, the committee needs to consider the school’s strengths and
weaknesses, its resources, its culture, the environment, and the desires of its faculty
and other stakeholders. Further, given the small size of the Business School, it would
be highly desirable to get feedback from all faculty members. One way to accomplish
this would be to invite all faculty members and staff to periodic meetings to solicit
their reactions and input to the vision/mission statement as it is being drafted.
After the vision/mission statement has been developed, the committee can turn its
attention to developing a strategic plan for achieving the school’s mission. One key
1. The variety of goals and concerns expressed by the professors indicates an absence of
a well-defined strategy. This can be illustrated by discussing the lack of consistency
in the faculty’s comments. For example, one docent/professor commented, “research
is our primary mission” while another stated “there is far too much emphasis placed
on research.” Another way to illustrate this is to list the wide range of priorities
expressed by the professors. The suggestions made by the professors range from
improving student/teacher ratios to getting a Ph.D. program approved to increasing
the travel budget to getting better secretarial support to allowing professors more time
for consulting. Thus, the comments suggest that the professors are pursuing their own
personal objectives and not supporting a common university or school-wide strategy.
After making this point, the instructor may want to spend some time discussing the
likely outcomes and problems associated with not having a well-defined strategy at
INU.
2. As the leader of a university operating division, one primary role of a Dekan
(administrative head, dean) is to ensure that the actions and decisions made at the
school level are consistent with and support the overall university strategy. Of course,
this may be complicated by the absence of a well-defined overall university strategy
or one that has not been effectively communicated. It is quite likely that this is the
case at INU given its short existence and overwhelming success. Administrators may
simply feel that INU is doing fine without having a formal strategic plan.
At any rate, the first step for the Dekan is to determine what the university’s overall
mission and strategy is. If it turns out that the university does not have a well-defined
mission, the Dekan can use this to the Business School’s advantage by convincing the
President and Provost of the need for a university strategy and then proactively
helping formulate the strategy so that the Business School’s interests are reflected in
the strategy.
Once the Dekan has a good understanding of the overall university mission and
strategy, she can initiate an effort to develop a strategic plan for the Business School.
To ensure buy-in and commitment to the school’s strategic plan, the Dekan should
include as many of the professors in the process as possible. Perhaps she may decide
to chair a committee composed of several of the full professors, a couple of the
docents, one or two staffers, one or more business professionals, and perhaps even a
student or two to begin drafting a vision/mission statement and strategic plan for the
Business School. In formulating a vision/mission statement that supports the
university’s mission, the committee needs to consider the school’s strengths and
weaknesses, its resources, its culture, the environment, and the desires of its faculty
and other stakeholders. Further, given the small size of the Business School, it would
be highly desirable to get feedback from all faculty members. One way to accomplish
this would be to invite all faculty members and staff to periodic meetings to solicit
their reactions and input to the vision/mission statement as it is being drafted.
After the vision/mission statement has been developed, the committee can turn its
attention to developing a strategic plan for achieving the school’s mission. One key
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Chapter 1 – Page 10
component of the strategic plan is the identification of the school’s core competencies
and how these competencies will be developed on an ongoing basis. In addition, the
committee needs to determine how the strategic planning process will be continued in
the future. One option would be to have the Dekan serve as the chair of a Priorities
and Goals Committee. Faculty could be selected or elected to serve on this committee
for a specified term. The committee could develop a list of priorities at the beginning
of each year and meet periodically during the year to assess the school’s progress.
3. There are a number of ways the productivity of the Business School could be
measured. Potential partial productivity measures include:
Total Student Credit Hours Taught/Professor and Instructor Salaries
Total Student Credit Hours Taught/Full Time Faculty Equivalents
Grants Received/Full Time Faculty Equivalents
Papers Published/Full Time Faculty Equivalents
The ability to develop a multifactor productivity measure is extremely difficult given
the absence of a common monetary unit with which to express the various outputs in,
such as Euros or Yeni Lira (Turkish currency). For example, there is no easy way to
combine total student credit hours taught and papers published into a meaningful
measure of output. Therefore, more than likely, the Business School will need to
develop a number of partial productivity measures including separate ones for
tracking teaching productivity and research productivity. Of course, the problem is
still complicated by qualitative differences that exist in the inputs and outputs. For
example, not all journal publications are equal. Journal publications can differ in
terms of the rigor of the research, the impact the paper has on research, the impact the
paper has on practice, the number of pages in the article, and the respectability of the
journal the paper is published in. As another example, how does teaching a 5-hour
survey course with 250 undergraduate students compare to teaching an advanced 5-
hour graduate class with 20 students? Alternatively, for that matter, how does
teaching a Principles of Management course compare to teaching the Statistics
course, assuming an equal number of students?
The impact that a 10% raise will have on productivity is also difficult to assess.
According to the first partial productivity measure above, increasing salaries while
holding everything else constant would appear to lower productivity. On the other
hand, if the second partial productivity measure is used, the raise in salaries would
appear to have no effect on productivity. In actuality, assessing the change in
productivity is again influenced by a number of qualitative factors. For example,
although the first partial productivity measure appears to indicate a reduction in
productivity, it does not allow for the fact that the professors may become more
effective over time and that the students learn more as a result. In addition, the
measure does not consider the fact that once a teacher preps a course the first time,
teaching the same course requires less effort and therefore the professor may have
more time to devote to other activities. In other words, once a professor preps a
course, considerably less effort is typically required to teach the course at a later date.
component of the strategic plan is the identification of the school’s core competencies
and how these competencies will be developed on an ongoing basis. In addition, the
committee needs to determine how the strategic planning process will be continued in
the future. One option would be to have the Dekan serve as the chair of a Priorities
and Goals Committee. Faculty could be selected or elected to serve on this committee
for a specified term. The committee could develop a list of priorities at the beginning
of each year and meet periodically during the year to assess the school’s progress.
3. There are a number of ways the productivity of the Business School could be
measured. Potential partial productivity measures include:
Total Student Credit Hours Taught/Professor and Instructor Salaries
Total Student Credit Hours Taught/Full Time Faculty Equivalents
Grants Received/Full Time Faculty Equivalents
Papers Published/Full Time Faculty Equivalents
The ability to develop a multifactor productivity measure is extremely difficult given
the absence of a common monetary unit with which to express the various outputs in,
such as Euros or Yeni Lira (Turkish currency). For example, there is no easy way to
combine total student credit hours taught and papers published into a meaningful
measure of output. Therefore, more than likely, the Business School will need to
develop a number of partial productivity measures including separate ones for
tracking teaching productivity and research productivity. Of course, the problem is
still complicated by qualitative differences that exist in the inputs and outputs. For
example, not all journal publications are equal. Journal publications can differ in
terms of the rigor of the research, the impact the paper has on research, the impact the
paper has on practice, the number of pages in the article, and the respectability of the
journal the paper is published in. As another example, how does teaching a 5-hour
survey course with 250 undergraduate students compare to teaching an advanced 5-
hour graduate class with 20 students? Alternatively, for that matter, how does
teaching a Principles of Management course compare to teaching the Statistics
course, assuming an equal number of students?
The impact that a 10% raise will have on productivity is also difficult to assess.
According to the first partial productivity measure above, increasing salaries while
holding everything else constant would appear to lower productivity. On the other
hand, if the second partial productivity measure is used, the raise in salaries would
appear to have no effect on productivity. In actuality, assessing the change in
productivity is again influenced by a number of qualitative factors. For example,
although the first partial productivity measure appears to indicate a reduction in
productivity, it does not allow for the fact that the professors may become more
effective over time and that the students learn more as a result. In addition, the
measure does not consider the fact that once a teacher preps a course the first time,
teaching the same course requires less effort and therefore the professor may have
more time to devote to other activities. In other words, once a professor preps a
course, considerably less effort is typically required to teach the course at a later date.
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Chapter 1 – Page 11
Discussion Outline for Case
I. The Current Situation
A. Discuss what the faculty comments tell you about INU’s strategy
1. Comments often contradictory and lack consistency
2. Professors pursuing own objectives not supporting school’s or university’s
objectives
B. Major problem is there appears to be no well defined or articulated strategy
II. What Should the Dekan Do
A. Dekan’s Role
1. As leader of Business School, he must formulate vision and mission for
school
2. Dekan’s vision and mission must support overall university strategy
B. Developing a Vision/Mission Statement
1. How much and who should be involved
C. Developing Strategic Plan
1. Core competencies
D. Developing Strategic Planning Process
III. Measuring Productivity at the Business School
A. Partial Measures
B. Multifactor Measures
C. Difficulties
1. No aggregate measure of output
2. Qualitative differences difficult to account for
D. Effect of 10% Raise on Productivity
1. Different measures give different results
2. Influence of qualitative factors
E. Productivity Measures Should be Tracked Over Time
Discussion Outline for Case
I. The Current Situation
A. Discuss what the faculty comments tell you about INU’s strategy
1. Comments often contradictory and lack consistency
2. Professors pursuing own objectives not supporting school’s or university’s
objectives
B. Major problem is there appears to be no well defined or articulated strategy
II. What Should the Dekan Do
A. Dekan’s Role
1. As leader of Business School, he must formulate vision and mission for
school
2. Dekan’s vision and mission must support overall university strategy
B. Developing a Vision/Mission Statement
1. How much and who should be involved
C. Developing Strategic Plan
1. Core competencies
D. Developing Strategic Planning Process
III. Measuring Productivity at the Business School
A. Partial Measures
B. Multifactor Measures
C. Difficulties
1. No aggregate measure of output
2. Qualitative differences difficult to account for
D. Effect of 10% Raise on Productivity
1. Different measures give different results
2. Influence of qualitative factors
E. Productivity Measures Should be Tracked Over Time
Loading page 12...
Chapter 1 – Page 12
Suggested Cases/Readings
Case: Wyatt Earp – The Buffalo Hunter (F. Robert Jacobs, Irwin/McGraw-Hill, 1998)
This case discusses Wyatt Earp’s innovations in operations to hunt and hide buffalos. Issues
discussed in this case touch upon process choice, capacity, quality control, compensation, work structuring,
and organizational structure. This case also lends itself well to a lively discussion of sustainable
competitive advantage and sustainable operations management.
Case: American Outsourcing (2005) (Hvd 9-705-037)
This case includes a review of the Mexican Maquilodoras, special economic areas in China, and
service outsourcing to India. The case also considers General Electric’s outsourcing of jobs to these
countries.
Case: Copeland Corporation (A) (Hvd. 9-686-088, TN 5-688-074))
Perhaps the penultimate operations strategy case, this situation describes the typical plant
producing everything for everyone in one mixed up mess. A new manager arrives and begins to focus
production by moving particular types of jobs to other plants and thereby obtains tremendous
improvements in quality, productivity, market share, volumes, and margins. Focus is by product in some
cases and by process in others. Finally, the original plant is left and a decision about how to focus its
production remains.
Case: Intel Systems Group (Hvd. 9-691-040, TN 5-692-034))
The Intel Systems group is facing a shift from producing large customized computer systems in
small batches to small standardized desktop systems in very large batch sizes. The case provides students
with the opportunity to analyze this shift on both product development and manufacturing. Case also lends
itself to an analysis of issues related to handing off products from product design to process design to
manufacturing.
Case: Taco Bell (Hvd. 9-692-058, TN 5-692-091 and 5-196-073)
This excellent case involves issues of layout, quality, labor staffing, product design, and
information systems, all coordinated with a unique strategy driven from the top. Moreover, the strategy is
misleading to an outside observer and is only successful because of its totally integrated nature. Rich
enough to do some quantitative data analysis also.
Case: The Great Nuclear Fizzle at Old B&W (H.B. Meyers, Fortune, Nov. 1969)
This article provides an excellent illustration of the many potential problems of applying the same
production strategy to a new product that appears to be simply the next evolutionary step of the current
product. The article has no numbers to analyze but on the other hand can be read in class in a short period.
Thus, it can be discussed en masse or by dividing the class into small groups and having group leaders
address one of the many relevant issues. Note: this case is particularly appropriate for a first meeting of the
term when the class has not yet had an assignment to prepare.
Case: Eli Lilly and Company: Manufacturing Process Technology Strategy (1991) (Hvd 9-692-056,
TN 5-692-109)
Case can be used to illustrate the stages of operational effectiveness framework, the link between
operations strategy and product development, and the importance of developing a manufacturing capability.
Case: Eli Lilly and Company: The Flexible Facility Decision (1993) (Hvd 9-694-074, TN 5-696-041)
Key issues concerns whether Lilly should continue to build highly specialized facilities or develop
more flexible facilities that can produce a wider range of outputs. Case provides students with opportunities
to perform discounted cash flow analysis and breakeven analysis. Case also ties in nicely with performance
frontier framework. Case can be combined with Eli Lilly and Company (9-692-056) to create module on
technology and facilities strategies.
Suggested Cases/Readings
Case: Wyatt Earp – The Buffalo Hunter (F. Robert Jacobs, Irwin/McGraw-Hill, 1998)
This case discusses Wyatt Earp’s innovations in operations to hunt and hide buffalos. Issues
discussed in this case touch upon process choice, capacity, quality control, compensation, work structuring,
and organizational structure. This case also lends itself well to a lively discussion of sustainable
competitive advantage and sustainable operations management.
Case: American Outsourcing (2005) (Hvd 9-705-037)
This case includes a review of the Mexican Maquilodoras, special economic areas in China, and
service outsourcing to India. The case also considers General Electric’s outsourcing of jobs to these
countries.
Case: Copeland Corporation (A) (Hvd. 9-686-088, TN 5-688-074))
Perhaps the penultimate operations strategy case, this situation describes the typical plant
producing everything for everyone in one mixed up mess. A new manager arrives and begins to focus
production by moving particular types of jobs to other plants and thereby obtains tremendous
improvements in quality, productivity, market share, volumes, and margins. Focus is by product in some
cases and by process in others. Finally, the original plant is left and a decision about how to focus its
production remains.
Case: Intel Systems Group (Hvd. 9-691-040, TN 5-692-034))
The Intel Systems group is facing a shift from producing large customized computer systems in
small batches to small standardized desktop systems in very large batch sizes. The case provides students
with the opportunity to analyze this shift on both product development and manufacturing. Case also lends
itself to an analysis of issues related to handing off products from product design to process design to
manufacturing.
Case: Taco Bell (Hvd. 9-692-058, TN 5-692-091 and 5-196-073)
This excellent case involves issues of layout, quality, labor staffing, product design, and
information systems, all coordinated with a unique strategy driven from the top. Moreover, the strategy is
misleading to an outside observer and is only successful because of its totally integrated nature. Rich
enough to do some quantitative data analysis also.
Case: The Great Nuclear Fizzle at Old B&W (H.B. Meyers, Fortune, Nov. 1969)
This article provides an excellent illustration of the many potential problems of applying the same
production strategy to a new product that appears to be simply the next evolutionary step of the current
product. The article has no numbers to analyze but on the other hand can be read in class in a short period.
Thus, it can be discussed en masse or by dividing the class into small groups and having group leaders
address one of the many relevant issues. Note: this case is particularly appropriate for a first meeting of the
term when the class has not yet had an assignment to prepare.
Case: Eli Lilly and Company: Manufacturing Process Technology Strategy (1991) (Hvd 9-692-056,
TN 5-692-109)
Case can be used to illustrate the stages of operational effectiveness framework, the link between
operations strategy and product development, and the importance of developing a manufacturing capability.
Case: Eli Lilly and Company: The Flexible Facility Decision (1993) (Hvd 9-694-074, TN 5-696-041)
Key issues concerns whether Lilly should continue to build highly specialized facilities or develop
more flexible facilities that can produce a wider range of outputs. Case provides students with opportunities
to perform discounted cash flow analysis and breakeven analysis. Case also ties in nicely with performance
frontier framework. Case can be combined with Eli Lilly and Company (9-692-056) to create module on
technology and facilities strategies.
Loading page 13...
Chapter 1 – Page 13
Case: McDonald’s Corporation (Hvd 9-693-028, TN 5-693-106)
Addresses challenges to McDonald’s operational strategy resulting from growing range of
products. Also addresses issues related to the development of a corporate environmental strategy and
provides students with an opportunity to analyze environmental management issues.
Case: Nucleon, Inc. (Hvd 9-692-041, TN 5-692-095)
Case addresses key strategic issue, namely, whether a R&D intensives start-up should
manufacture its products in-house or outsource. Case lends ties in very nicely with topic of core
competencies/capabilities. Case also provides students to perform discounted cash flow analysis of the
options.
Case: Whistler Corporation (A) (Hvd 9-690-011, TN 5-692-108)
This case also ties in nicely with topic of core competencies/capabilities. Whistler previously
achieved competitive success through R&D and marketing but is encountering problems because of
weaknesses in manufacturing. Students must first determine the basis on which Whistler should choose to
compete. Once this decision is made, more detailed analysis of the options on the table can be undertaken.
A (B) case is also available (9-692-072)
Case: Managing Orthopaedics at Rittenhouse Medical (Hvd 607152)
This case presents an overview of an orthopaedics department at a medical center that is running a
private business practice and an academic faculty practice. The case lends itself to discussion of operational
focus within a service setting.
Case: Daewoo Shipbuilding and Marine Engineering (Hvd 609018)
This case discusses the ability of a major Korean shipbuilder to develop its learning capability.
The firm is faced with a competitive threat from Chinese competitors and must decide what parts of its
operations to outsource.
Case: New Balance Athletic Shoe, Inc. (Hvd 606094)
This case analyzes aspects of New Balance’s strategy of employing domestic manufacturing when
most of its competitors outsource production to Asian suppliers. The case requires that students determine
which aspects of its operations strategy New Balance should change.
Reading: Plant and Service Tours in Operations Management (R. Schmenner, Pearson Custom
Publishing, 2004)
This paperback book contains a nice variety of both manufacturing and service facility tours
featuring job shops, assembly lines, mass services, professional services, etc. Does an excellent job of
giving students who are less experienced in the variety of ways that production can be organized some
insight into what we mean by each.
Reading: Welcome to the Experience Economy (B. J. Pine, II and J. Gilmore, Harvard Business
Review, July-Aug. 1998, pp. 97-105, Reprint # 98407)
This article describes the evolution of the economy from one of products to services to
experiences and what it means for both providers as well as consumers. Prognosticates about the future of
services in terms of experiences.
Reading: A Glossary of TOM Terms (Hvd. 9-687-019)
This brief 4-page note introduces the student to terms such as cycle time, bottleneck, capacity,
utilization, throughput time, lot size, run time, etc.
Reading: Fast Heat: How Korea Won the Microwave War (I.C. Magaziner and M. Patinkin, Harvard
Business Review, Jan.-Feb. 1989, pp. 83-92, Reprint # 89114)
Although the microwave was invented in the U.S., Korea's Samsung is now the largest producer of
microwave ovens. A story of world-class competition and how third-world countries are winning markets.
Case: McDonald’s Corporation (Hvd 9-693-028, TN 5-693-106)
Addresses challenges to McDonald’s operational strategy resulting from growing range of
products. Also addresses issues related to the development of a corporate environmental strategy and
provides students with an opportunity to analyze environmental management issues.
Case: Nucleon, Inc. (Hvd 9-692-041, TN 5-692-095)
Case addresses key strategic issue, namely, whether a R&D intensives start-up should
manufacture its products in-house or outsource. Case lends ties in very nicely with topic of core
competencies/capabilities. Case also provides students to perform discounted cash flow analysis of the
options.
Case: Whistler Corporation (A) (Hvd 9-690-011, TN 5-692-108)
This case also ties in nicely with topic of core competencies/capabilities. Whistler previously
achieved competitive success through R&D and marketing but is encountering problems because of
weaknesses in manufacturing. Students must first determine the basis on which Whistler should choose to
compete. Once this decision is made, more detailed analysis of the options on the table can be undertaken.
A (B) case is also available (9-692-072)
Case: Managing Orthopaedics at Rittenhouse Medical (Hvd 607152)
This case presents an overview of an orthopaedics department at a medical center that is running a
private business practice and an academic faculty practice. The case lends itself to discussion of operational
focus within a service setting.
Case: Daewoo Shipbuilding and Marine Engineering (Hvd 609018)
This case discusses the ability of a major Korean shipbuilder to develop its learning capability.
The firm is faced with a competitive threat from Chinese competitors and must decide what parts of its
operations to outsource.
Case: New Balance Athletic Shoe, Inc. (Hvd 606094)
This case analyzes aspects of New Balance’s strategy of employing domestic manufacturing when
most of its competitors outsource production to Asian suppliers. The case requires that students determine
which aspects of its operations strategy New Balance should change.
Reading: Plant and Service Tours in Operations Management (R. Schmenner, Pearson Custom
Publishing, 2004)
This paperback book contains a nice variety of both manufacturing and service facility tours
featuring job shops, assembly lines, mass services, professional services, etc. Does an excellent job of
giving students who are less experienced in the variety of ways that production can be organized some
insight into what we mean by each.
Reading: Welcome to the Experience Economy (B. J. Pine, II and J. Gilmore, Harvard Business
Review, July-Aug. 1998, pp. 97-105, Reprint # 98407)
This article describes the evolution of the economy from one of products to services to
experiences and what it means for both providers as well as consumers. Prognosticates about the future of
services in terms of experiences.
Reading: A Glossary of TOM Terms (Hvd. 9-687-019)
This brief 4-page note introduces the student to terms such as cycle time, bottleneck, capacity,
utilization, throughput time, lot size, run time, etc.
Reading: Fast Heat: How Korea Won the Microwave War (I.C. Magaziner and M. Patinkin, Harvard
Business Review, Jan.-Feb. 1989, pp. 83-92, Reprint # 89114)
Although the microwave was invented in the U.S., Korea's Samsung is now the largest producer of
microwave ovens. A story of world-class competition and how third-world countries are winning markets.
Loading page 14...
Chapter 1 – Page 14
Reading: Deep Change: How Operational Innovation Can Transform Your Company (M. Hammer,
Harvard Business Review, April 2004, pp. 84-93)
This article focuses on breakthrough operational innovations and the strategic, marketplace, and
operational benefits that result from those innovations.
Reading: Manufacturing Strategy: At the Intersection of Two Paradigm Shifts (R.H. Hayes and G.P.
Pisano, Production and Operations Management, 5(1), 1996, pp. 25-41)
Nice overview of the evolution of manufacturing strategy. Also discusses performance frontier
framework.
Reading: Competing Through Manufacturing and The New Manufacturing Paradigm: Is
Manufacturing Strategy Passe? (K.B. Clark, Production and Operations Management, 5(1), 1996, pp.
42-58)
Nice discussion of performance frontiers and advanced manufacturing systems.
Readings: What Really Makes Factories Flexible? (D.M. Upton, Harvard Business Review, Reprint
95410) and The Management of Manufacturing Flexibility (California Management Review, Winter
1994, pp. 72-89)
Two excellent articles on flexibility.
Reading: Manufacturing—Missing Link in Corporate Strategy (W. Skinner, Harvard Business
Review, May-June 1969, pp. 136-145, Reprint # 69312)
Probably THE classic operations strategy article. Old but still valuable.
Reading: The Focused Factory (W. Skinner, Harvard Business Review, May-June 1974, pp. 113- 121,
Reprint # 74308)
Probably the second classic article. Details the original conception of “focus.”
Reading: A Strategic Approach to Evaluating Manufacturing Performance (P.R. Richardson,
Interfaces, Nov.-Dec. 1985, pp. 15-27)
An excellent analysis of the different forms of operations strategies and the actions that managers
should take to implement these strategies.
Reading: Beyond Products: Services-Based Strategy (J.B. Quinn et al., Harvard Business Review,
Mar.-Apr. 1990, pp. 58-67, Reprint # 90212)
Describes the process of identifying a firm’s competitive strength(s) and focusing on that while
outsourcing everything else.
Reading: The Icarus Paradox: How Exceptional Companies Bring About Their Own Downfall (D.
Miller, Business Horizons, Jan.-Feb. 1992, pp. 24-35)
The article insightfully illustrates how four different types of competitive strengths can easily turn
into four different types of competitive liabilities. Examples of such firms are given and guidelines to avoid
these perils of success are described.
Reading: Mass Customization at Hewlett-Packard: The Power of Postponement (E. Feitzinger and
H. L. Lee, Harvard Business Review, Mar.-Apr. 1997, pp. 116-121, Reprint # 97101)
Describes the power of the concept of postponing the addition of product differentiating
characteristics until as late as possible in the supply chain. This allows the producer to achieve the
marketing benefits of customization while still reaping the cost benefits of high-volume, standardized
production.
Reading: Innovation and Efficiency: It Is Possible to Have It All (M. Sarkees and J. Hulland,
Business Horizons, Jan.-Feb., 2009, pp. 45-55).
This article discusses a strategy of pursuing both innovation and efficiency simultaneously. The
authors provide the results of a cross-industry survey of marketing managers in U.S. firms to support the
viability of this strategy.
Reading: Deep Change: How Operational Innovation Can Transform Your Company (M. Hammer,
Harvard Business Review, April 2004, pp. 84-93)
This article focuses on breakthrough operational innovations and the strategic, marketplace, and
operational benefits that result from those innovations.
Reading: Manufacturing Strategy: At the Intersection of Two Paradigm Shifts (R.H. Hayes and G.P.
Pisano, Production and Operations Management, 5(1), 1996, pp. 25-41)
Nice overview of the evolution of manufacturing strategy. Also discusses performance frontier
framework.
Reading: Competing Through Manufacturing and The New Manufacturing Paradigm: Is
Manufacturing Strategy Passe? (K.B. Clark, Production and Operations Management, 5(1), 1996, pp.
42-58)
Nice discussion of performance frontiers and advanced manufacturing systems.
Readings: What Really Makes Factories Flexible? (D.M. Upton, Harvard Business Review, Reprint
95410) and The Management of Manufacturing Flexibility (California Management Review, Winter
1994, pp. 72-89)
Two excellent articles on flexibility.
Reading: Manufacturing—Missing Link in Corporate Strategy (W. Skinner, Harvard Business
Review, May-June 1969, pp. 136-145, Reprint # 69312)
Probably THE classic operations strategy article. Old but still valuable.
Reading: The Focused Factory (W. Skinner, Harvard Business Review, May-June 1974, pp. 113- 121,
Reprint # 74308)
Probably the second classic article. Details the original conception of “focus.”
Reading: A Strategic Approach to Evaluating Manufacturing Performance (P.R. Richardson,
Interfaces, Nov.-Dec. 1985, pp. 15-27)
An excellent analysis of the different forms of operations strategies and the actions that managers
should take to implement these strategies.
Reading: Beyond Products: Services-Based Strategy (J.B. Quinn et al., Harvard Business Review,
Mar.-Apr. 1990, pp. 58-67, Reprint # 90212)
Describes the process of identifying a firm’s competitive strength(s) and focusing on that while
outsourcing everything else.
Reading: The Icarus Paradox: How Exceptional Companies Bring About Their Own Downfall (D.
Miller, Business Horizons, Jan.-Feb. 1992, pp. 24-35)
The article insightfully illustrates how four different types of competitive strengths can easily turn
into four different types of competitive liabilities. Examples of such firms are given and guidelines to avoid
these perils of success are described.
Reading: Mass Customization at Hewlett-Packard: The Power of Postponement (E. Feitzinger and
H. L. Lee, Harvard Business Review, Mar.-Apr. 1997, pp. 116-121, Reprint # 97101)
Describes the power of the concept of postponing the addition of product differentiating
characteristics until as late as possible in the supply chain. This allows the producer to achieve the
marketing benefits of customization while still reaping the cost benefits of high-volume, standardized
production.
Reading: Innovation and Efficiency: It Is Possible to Have It All (M. Sarkees and J. Hulland,
Business Horizons, Jan.-Feb., 2009, pp. 45-55).
This article discusses a strategy of pursuing both innovation and efficiency simultaneously. The
authors provide the results of a cross-industry survey of marketing managers in U.S. firms to support the
viability of this strategy.
Loading page 15...
Chapter 1 – Page 15
Reading: Process Completeness: Strategies for Aligning Service Systems with Customers’ Service
Needs (G. Piccoli, M. Brohman, R. Watson, and A. Parasuraman, Business Horizons, July-Aug.,
2009, pp. 367-376).
This article discusses developing strategies for service businesses. The authors argue that those
strategies should strive to achieve process completeness, i.e., linking the service system to the customer’s
expectations.
Reading: Going “Purple”: Can Military Jointness Principles Provide a Key to More Successful
Integration at the Marketing-Manufacturing Interface? (M. Douglas and D. Strutton, Business
Horizons, May-June, 2009, pp. 251-263).
This article discusses the U.S. armed services’ ability to integrate quickly the strategies, strengths,
and capabilities of two or more branches of the armed services. The authors provide a methodology for a
firm’s marketing and manufacturing functions to use this same type of integration to meet the global
challenges they face.
Reading: Process Completeness: Strategies for Aligning Service Systems with Customers’ Service
Needs (G. Piccoli, M. Brohman, R. Watson, and A. Parasuraman, Business Horizons, July-Aug.,
2009, pp. 367-376).
This article discusses developing strategies for service businesses. The authors argue that those
strategies should strive to achieve process completeness, i.e., linking the service system to the customer’s
expectations.
Reading: Going “Purple”: Can Military Jointness Principles Provide a Key to More Successful
Integration at the Marketing-Manufacturing Interface? (M. Douglas and D. Strutton, Business
Horizons, May-June, 2009, pp. 251-263).
This article discusses the U.S. armed services’ ability to integrate quickly the strategies, strengths,
and capabilities of two or more branches of the armed services. The authors provide a methodology for a
firm’s marketing and manufacturing functions to use this same type of integration to meet the global
challenges they face.
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Operations Management