Chapter 2: Operations Strategy and Competitiveness

Overview This chapter explains the role and development of business strategy. It also explains the role and development of the operations strategy and how the operations and business strategy are interrelated. Next, the chapter describes the competitive priorities, the strategic role of technology, and finally, productivity. Answers to Discussion Questions in Textbook 1. Explain the importance of a business strategy. It is important for a company to have a clear plan of action since we are in a highly competitive, global environment. 2. Explain the role of operations strategy in a business. The role of operations strategy is to provide a plan for the best usage of resources in order to reach the objectives set in the corporate strategy. These resources include employees, machines, technology and information. 3. Describe how a business strategy is developed. A business strategy is developed after the companys mission, an understanding of the mar et !environmental scanning" and the core competencies of the company have been identified. The mission involves the determination of what business to be in, who the customers will be and how the companys beliefs will define the business. #nvironmental scanning includes an examination of the current mar et trends in the mar et, economy, political environment and in society, resulting in an identification of opportunities and threats. $inally, core competencies are the strengths of the company. The company should match its strengths to its business strategy. 4. Describe how an operations strategy is formulated from the business strategy. The operations strategy is formulated by first determining the competitive priorities of the firm. Then, these priorities are translated into production re%uirements related to the structure and infrastructure of the firm. The structure involves the decisions related to the design of the production process, while the infrastructure involves decisions related to the planning and control of the operation. &. Explain what is meant by the term competitive priority and describe the four categories of competitive priorities discussed in the chapter. The competitive priority is the way in which we will compete in the mar etplace. $or example, will we be nown for low prices or high %uality' The categories of

competitive priorities are cost, %uality, time and flexibility. (ost involves a focus on eeping costs low. )uality focuses on the ability of the product or service to meet specifications or the re%uirements of the customer. The competitive priority of time focuses on speed of delivery and*or on+time delivery performance. $lexibility relates to the ability to customi,e the product or %uic ly change the production %uantity. 6. ind an example of a company that ma!es "uality its competitive priority. ind another company that ma!es time its competitive priority. #ompare these strategies. Toyota focuses on producing a %uality car. It has one of the lowest defect rates in the industry. -ens(rafters promises to ma e your glasses in one hour or less. .o they have focused on the speed of delivery. /. $hat is meant by the terms order %ualifiers and order winners% Explain why they are important. 0rder %ualifiers are competitive priorities for which we must reach some minimum target in order to be %ualified to sell in that mar et. 0rder winners are those competitive priorities that will help us win orders. It is important to understand whether competitive priorities are order %ualifiers or order winners since our decisions about priorities will determine our level of success. &. Describe the three types of technologies. Explain the strategic role of technology. The three primary types of technologies are1 product technology, process technology, and information technology. 2roduct technology, new technology developed by a firm, allows it to offer improved products. New generations of cellular telephones are a current example. 2rocess technology allows a firm to create goods and services more effectively. (ash register scanners are an example where supermar ets can process customers through the chec out line faster and eep better records of items sold. Information technology impacts communication and information collection and processing. An example of improved operations through this technology would be cross doc ing. These technologies improve products, processes, and coordination. #ffective use of emerging technologies can give a firm a competitive advantage. As competitive approach is a strategic decisions, so is the use of technology. '. Describe the meaning of productivity. $hy is it important% 2roductivity measures how well we turn our inputs into outputs. $or example, can one automobile manufacturer produce more cars of the same si,e per factory employee' 2roductivity is important because it determines our cost structure. 1(. Explain the three types of productivity measures.

The three types of productivity measures are total productivity, partial productivity and multifactor productivity. Total productivity utili,es all inputs and outputs in the calculation. Therefore, we are calculating the entire organi,ations productivity. 2artial productivity involves calculating the productivity for only one type of input, such as machines, labor or materials. $inally, multifactor productivity is the ratio of outputs to inputs for several, but not all, types of inputs.