Retail

Franchising
Manufacturing
Services

Prof. R.S.Mathur

Unit I
Entrepreneurial rvolution and entrepreneurial
process, Analysing and evaluating business
opportunities.,Structural analysis of
industries.,Criteria for new venture screening,
Unit II
Resources one needs to start a new business, Forms
of business ventures, Retail, Franchising,
Manufacturing Service enterprise
Unit III
Financial issues and resources in new venture
development, New venture team, The role of teams in
entrepreneurial process.

February 5, 2015

Prof. R.S.Mathur

February 5, 2015

Prof. R.S.Mathur

The

Science of
Reproducing Success

February 5, 2015

Prof. R.S.Mathur

 Franchisee
An entrepreneur whose power is limited

by a contractual agreement with a

franchisor

Franchisor

The party in the contract that specifies

the methods to be followed and the

terms to be met by the other party

February 5, 2015

Prof. R.S.Mathur

A franchise operation is a contractual

relationship between the franchisor and
franchisee in which the franchisor offers or
is obliged to maintain a continuing interest
in the business of the franchisee in such
areas as know-how and training; wherein
the franchisee operates under a common
trade name, format and/or procedure owned
or controlled by the franchisor, and in which
the franchisee has or will make a substantial
capital investment in his business from his
own resources.
- Definition by International Franchise Association

A franchise is the agreement or license between

two legally independent parties which gives:
A person or group of people (franchisee) the
right to market a product or service using the
trademark or trade name of another business
(franchisor)
The franchisee the right to market a product or
service using the operating methods of the
franchisor
The franchisee the obligation to pay the
franchisor fees for these rights
The franchisor the obligation to provide rights
and support to franchisees
February 5, 2015

Prof. R.S.Mathur

February 5, 2015

Prof. R.S.Mathur

Product and Trade Name Franchise

Grants the right to use a widely
recognized product or name
Business Franchise
Provides an entire marketing system and
ongoing guidance.
Piggyback Franchising
The operation of a retail franchise within
the physical facilities of a host store

February 5, 2015

Prof. R.S.Mathur

Owning a franchise allows the franchisee to go into business for

yourself, but not by yourself.
A franchise provides an established product or service which
already enjoys widespread brand name recognition. This gives
the franchisee the benefits of customer awareness which would
ordinarily take years to establish.
A franchise increases your chances of business success
because you are associating with proven products and methods.
Franchises may offer consumers the attraction of a certain level
of quality and consistency because it is mandated by the
franchise agreement.
A franchise provides franchisees with a certain level of
independence where they can operate their business.
February 5, 2015

Prof. R.S.Mathur

10

Franchises offer important pre-opening

support:
site selection
design and construction
financing (in some cases)
Standardized operating procedures
Training
Advertising
grand-opening program

February 5, 2015

Prof. R.S.Mathur

11

Franchises offer ongoing support

training
national and regional advertising
operating procedures and operational
assistance
ongoing supervision and management
support
increased spending power and access to
bulk purchasing (in some cases)

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Prof. R.S.Mathur

12


1.

2.

The franchisee is not completely independent.

Franchisees are required to operate their
businesses according to the procedures and
restrictions set forth by the franchisor in the
franchise agreement. These restrictions usually
include the products or services which can be
offered, pricing and geographic territory. For
some people, this is the most serious
disadvantage to becoming a franchisee.
In addition to the initial franchise fee, franchisees
must pay ongoing royalties and advertising fees.

February 5, 2015

Prof. R.S.Mathur

13

3.

4.

5.

Franchisees must be careful to balance

restrictions and support provided by the
franchisor with their own ability to manage their
business.
A damaged, system-wide image can result if
other franchisees are performing poorly or the
franchisor runs into an unforeseen problem.
The term (duration) of a franchise agreement is
usually limited and the franchisee may have little
or no say about the terms of a termination

February 5, 2015

Prof. R.S.Mathur

14

 Lack

of support
Cost of the Franchise
Unfulfilled promises
Restrictions of the Contract
Product or Service Offered
Line Forcing
Termination

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Prof. R.S.Mathur

15

 Saturation of the market

Lack of Security
Excessive cost of operation
Ineffectiveness of promotion
Exaggeration of claims of success

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Prof. R.S.Mathur

16

There are two main types of franchises:1. Product Distribution Franchises.

2. Business Format Franchises.

February 5, 2015

Prof. R.S.Mathur

17

Simply sell the franchisors products and are supplier-dealer

relationships.
In product distribution franchising, the franchisor licenses its
trademark and logo to the franchisees but typically does not
provide them with an entire system for running their business.
The industries where you most often find this type of franchising
are soft drink distributors, automobile dealers and gas stations.
Some familiar product distribution franchises include:
Pepsi
Ford Motor Company
Although product distribution franchising represents the largest
percentage of total retail sales, most franchises available today
are business format opportunities
February 5, 2015

Prof. R.S.Mathur

18

On the other hand, not only the franchisee uses a franchisors

product, service and trademark, but also the complete method
to conduct the business itself, such as the marketing plan and
operations manuals.
Business format franchises are the most common type of
franchise.
10 most popular franchising opportunities are in these
industries:
fast food
retail
service
automotive
restaurants
maintenance
building and construction
retailfood
business services
lodging
February 5, 2015

Prof. R.S.Mathur

19

Single-unit (direct-unit) franchise.

2.
Multi-unit franchise:
Area development.
Master franchise (sub-franchising).

Single-unit (direct-unit) franchise is an

agreement where the franchisor grants a franchisee
the rights to open and operate ONE franchise unit.
This is the simplest and most common type of
franchise.

It is possible, however, for a franchisee to

purchase additional single-unit franchises once the
original franchise unit begins to prosper. This is then
considered
aProf.
multiple,
single-unit relationship.
February
5, 2015
R.S.Mathur
20
1.

 is

an agreement where the

franchisor grants a franchisee the
rights to open and operate MORE
THAN ONE unit.
There are two ways a multi-unit
franchise can be achieved:
1. An Area Development franchise or
2. A Master franchise.

February 5, 2015

Prof. R.S.Mathur

21

 Under

an franchise development,
the franchisee has has the right To
open more than one unit during a
specified time, within a specified
area. For instance a franchise may
be allowed to open five units within
a period of three years in a specified
territory

February 5, 2015

Prof. R.S.Mathur

22

Gives the franchisee more rights than an area

development agreement.
In addition to having the right and obligation to open
and operate a certain number of units in a defined area,
the master franchisee also has the right to sell franchises
to other people within the territory, known
as sub-franchises.
Therefore, the master franchisee takes over many of the
tasks, duties and benefits of the franchisor, such as
providing support and training, as well as receiving fees
and royalties

February 5, 2015

Prof. R.S.Mathur

23

The two main franchising legal

documents are the:
the Disclosure Document, which
may be in the format known as the
UFOC.(uniform franchise offering
circular)
franchise agreement.

February 5, 2015

Prof. R.S.Mathur

24

The purpose of the UFOC is to provide prospective

franchisees with information about the franchisor, the
franchise system and the agreements they will need
to sign so that they can make an informed decision.
In addition to the disclosure part of the document, the
UFOC includes the actual franchise agreement as
well as other agreements the franchisee will be
required to sign, along with the franchisors financial
statements.
The UFOC is designed to give you some of the
information you need in order to make an informed
decision about investing in a particular franchise
February 5, 2015

Prof. R.S.Mathur

25

The franchisor
The companys key staff
Managements experience in franchise
management
Franchisors bankruptcy and litigation history
Initial and ongoing fees involved in opening and
running the franchise
Required investment and purchases
Territory rights
Responsibilities of the franchisor and franchisee
Other franchisees in the system with contact
information

February 5, 2015

Prof. R.S.Mathur

26

The franchise agreement is more

specific than the UFOC about the terms of the
relationship between the franchisor and franchisee. A
typical franchise agreement may include specifics
about:
The franchise system, such as use of trademarks and
products
Territory
Rights and obligations of the parties: standards,
procedures, training, assistance, advertising, etc.
Term (duration) of the franchise
Payments made by the franchisee to the franchisor
Termination and/or the right to transfer the franchise

February 5, 2015

Prof. R.S.Mathur

27

1. Use of trademarks. One of the main

benefits you receive when purchasing a
franchise is the use of well-known
trademarks. This section lists the
trademarks, service marks or logos the
franchisee is entitled to use.
Has the trademark been in operation for a
significant amount of time and is it well
known?
Are there any restrictions on its use by the
franchisor or franchisee?
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Prof. R.S.Mathur

28

Location of the franchise. This

section describes the exclusive area
or territory granted to the
franchisee.
Do you have exclusive rights in a
certain territory?
2.

February 5, 2015

Prof. R.S.Mathur

29

3. Term of the franchise. In this

section, the duration of the
agreement is specified.
How long does the agreement last?
Can the franchisor purchase the
franchise before the agreement
expires?
Do you have the right to renew the
agreement
February 5, 2015

Prof. R.S.Mathur

30

4. Renewal, termination and

transfer of franchise agreement.
This section includes:
The rights and obligations of a
franchisee upon termination.
Descriptions about the transfer of
the franchise agreement.
Descriptions about the renewal of
the franchise agreement.
February 5, 2015

Prof. R.S.Mathur

31

Franchisees fees and other

payments. In this section, all the
mandatory fees are described:
Initial fee and what the franchisee
receives for that fee.
Royalty payment, what it is based
on and when it is due.
5.

February 5, 2015

Prof. R.S.Mathur

32

Obligations and duties of the

franchisor. This section describes,
in detail, all the services which the
franchisor will provide:
Training.
Operations support.
Advertising.
6.

February 5, 2015

Prof. R.S.Mathur

33

Obligations and duties of

the franchisee. This section
describes the franchisees
responsibilities:
Requirements for training
Requirements for participation in the
business
Requirements for keeping and
submitting adequate records
7.

February 5, 2015

Prof. R.S.Mathur

34

Restriction on goods and services

offered. This section describes any
restrictions placed on the goods or
services offered, including:
Required quality standards
Approved suppliers
Approved advertising
Hours of operation
Pricing
8.

February 5, 2015

Prof. R.S.Mathur

35

Make sure you have enough money.

Follow the system.
Dont neglect your family and friends.
Be an enthusiastic franchisee.
Recruit the best and treat them with respect.
Teach your employees.
Give customers great service.
Get involved with the communitycustomers like to
shop in places that support them.
Stay in touch with your franchisor and other franchisees.
Watch the details.

February 5, 2015

Prof. R.S.Mathur

36

 Franchisor
Industry
Professionals
Other

Franchisees
Government Agencies
Additional areas to Investigate

February 5, 2015

Prof. R.S.Mathur

37

Make sure you have enough money.

Follow the system.
Dont neglect your family and friends.
Be an enthusiastic franchisee.
Recruit the best and treat them with respect.
Teach your employees.
Give customers great service.
Get involved with the communitycustomers like
to shop in places that support them.
Stay in touch with your franchisor and other
franchisees.
Watch the details.

February 5, 2015

Prof. R.S.Mathur

38

 Not

reading, understanding and/or asking

questions about the franchisee agreement
and other legal documents
Not understanding the responsibilities of a
franchisee and the rights and obligations of a
franchisor
Not seeking sound legal and financial advice
Not verifying oral representations of franchisor

 Not

analyzing the local market in

advance
Not analyzing the competition
Not making thorough due diligence of
the franchisor
Not choosing the right location

 What

February 5, 2015

businesses can be franchised?

Prof. R.S.Mathur

41

 How

does one become a franchisor?

1. Establish a prototype.
2. Prepare the necessary information.
3. Investigate the legal requirements.
4. Develop a planned and standardized
program of operations.
5. Obtain adequate financing.

February 5, 2015

Prof. R.S.Mathur

42

February 5, 2015

Prof. R.S.Mathur

43

One of the most important keys to

starting a business successfully is
capital.
However, one of the best low cost; yet
profitable business opportunities any
entrepreneur can tap into is a service
business.
Most aspiring entrepreneurs shy away from
service businesses; even though it is the
easiest to start because it requires
specialized knowledge or skill.

Fundamentally, there are no

differences
between service and manufacturing
operations! Both are concerned with:
Efficiency
Effectiveness
Quality
Cost

Effectiveness
Right prescription
Right advice
Service availability
Efficiency
No. of servers
Use of resources

Cost
Inventory management
Tradeoffs
Purchasing
Quality
Training
Error prevention
Continuous Improvement

 You

can start a service business

right from home; with little or no
inventory and operational cost.
Special areas of focus in service
industries:
1.Human skills
2.Service quality issues and
3.Capacity management
February 5, 2015

Prof. R.S.Mathur

47

Service Industries
(communications, health care, transportation, banking, insurance etc)

Manufacturing
Distribution

R&D

Design

Commercial

Supporting
Services
(legal)

Private business
supporting services

Intermediary
Repair

Government Support Services

(roads, education, public safety)

Consumer

consulting

hotels
% services

autos

100%
Goods

groceries

% goods

retail

Products Are Bundles of

Goods and Services
100%
Services

Repair
Service

Consulting
Service

Core
Product
Training

Augmented Product

Other
Services

Tangibility
Concurrent Production and Consumption
of Service Product
Heterogeneity & Variability

Tasks
Products

Perishability
Role of the Customer
Process = Product

Managements
tasks differ greatly
between goods
production and
service production

l
e
v
e
L
y
og
l
o
n
h
c
Te
Mass

High

Service (films,
company
canteens)
Service Shop
(college class)

Volume
Low

Professional Service
(doctors, lawyers)

Low
Figure 2.4
02/05/15

Service Factory
(elect. supply, cell
phone network

Standardization
Prof. R.S.Mathur

High
52

Often direct interaction

between the employee
and the customer/client
Often frontline
employees are from
lower rung.
Adds to the traditional
relationship between
employer and employee
In manufacturing often
buffers exist.

cy

on

Services

.
vs

c ti
fa

Co
nt

Pe
rc
eiv
ed

n
cie

tis
Sa

Employer

Customer/
client

fi
Ef

ro
l

Employee

Efficiency vs. Autonomy

53

Converting Human Capital into

Tangible Wealth
Human Capital
Human
Capital

Conversion
Process

Intellectual Capital
Products
and
services
which have
market value

Employee
Knowledge
Skills
Experience
Role of HR practices
in this conversion
process

54

Nature of
Work

Intangible

Knowledge
based

Customised

Professional

Managerial
problem
Measurement

Renewal

Standardisation

Organisational
commitment

HRM issue
Performance
management
/reward
Training and
Development

Staff
allocation
Recruit and
retain

55

 Defining

service quality is more

difficult than defining manufacturing
quality.
Expectation vs Perception
Expectation vs Performance

 Consumer's

opinion of a products (or a

brand's) ability to fulfill his or her
expectations.
It may have little or nothing to do with
the actual excellence of the product, and
is based on the firm's (or brand's) current
public image, consumer's experience
with the firm's other products, and the
influence of the opinion leaders,
consumer's peer group, and others.
February 5, 2015

Prof. R.S.Mathur

57

Quality of the Delivery Process versus

Quality of the Technical Outcome
Elements of the process may cue technical proficiency

Dimensions of Service Quality

Reliability: Delivering on Promises
Responsiveness: Being Willing to Help
Assurance: Inspiring Trust and
Confidence
Empathy: Treating Customers as
Individuals
Tangibles: Representing the Service
Physically

Customer Expectations
Customer

Satisfaction Outcome Gap

Gap 1

Customer Perceptions

Gap 4

Service Delivery

Communications
to Customers

Gap 3

Service Delivery Designs

Gap 2

Perceptions of Customer Expectations

Source: Zeithaml & Bitner

Company

Customer Expectations
Customer

Gap 5

Gap 1

Customer Perceptions

Gap 4

Service Delivery

Communications
to Customers

Gap 3

Service Delivery Designs

Gap 2

Perceptions of Customer Expectations

Source: Zeithaml & Bitner

Company

Gap 5: Customer Perceptions - Customer

Expectations
Gap 1: Not Knowing What Customers Expect
Company Perception of Customer Expectations - Actual

Gap 2: Not Selecting the Right Design

Standards
Service Design Standards - Company Perception of

Customer Expectations

Gap 3: Not Delivering to Service Standards:

The Operations Gap

Actual Service Performance - Standards

Gap 4: Not Matching Performance to

Promises
Actual Service Performance - Promised Performance

Gap 3a: Operational Design

People: Employees, Managers, & Customers
Process: Role of Service Blueprinting
Equipment/Facilities, i.e., Tangibles Plus a

Whole Lot More

Gap 3b: Operational Control

Ensuring the Quality of the Outcome,

Especially When Using Intermediaries

Enhancing the Operational Design Through

Feedback

Staffing and Scheduling Shortcomings

Ineffective Recruitment
Role Ambiguity & Role Conflict
Wrong Skills for Process - Equipment
Elements
Flaws in Evaluation & Compensation
Systems
Lack of Empowerment & Teamwork
Hire - Retain - Develop - Support

11

Customers Not Performing Their Role in the

Process

Lack of Understanding
Lack of Ability
Lack of Willingness
Ambiguity & Uncertainty About What They Want

No Reward for Good Performance

Interaction with Other Customers
Impact: Customers Introduce Variability to an

Operation
Solution: Limit & Control Customer
Involvement Through Process Design &
Technology

13

Service Blueprinting: An Extended Process

Map
Design & Diagnostic Tool

Effectively Handling Demand

Impact of Random Arrival Pattern
Waiting Line (Queue) Configurations
Waiting Line (Queue) Management

Matching Demand to Capacity Through

Demand Management

Pricing: Yield Management

Customer Communication
Alternative Service Delivery Processes
Complementary Products

14

Quality Control Procedures

Measure Outcomes
Measure Processes

Controlling Quality through the Supply

Chain
Intermediaries
Distributed Delivery Network

Enhancing the Operational Design Through

Feedback
Properly measuring customer perceptions

 Hire the right people.

Educate and train them well.
Allow them to fix anything.
Recognize and reward them

regularly.
Tell them everything, every day.

 Measure the costs

Listen closely for complaints
Anticipate needs for recovery
Act fast
Train employees
Empower front line
Close the loop

Service Encounters = Transactions =

Tasks
Poor quality in one task can taint the
perception of quality for the entire
sequence
-- Service Encounter -

Service
Transaction
1

Service Transaction 2

Initiation Diagnosis Service

Verify

Service
Transaction
3

 Front-office

work requires customer

presence.
Back-office work does not require
customer presence.
Decoupling: separating work into
high-contact/low-contact jobs.
Ultimate = outsourcing/offshoring

 Customer Actions
Line of Interaction
On-Stage Contact Employee Actions
Line of Visibility
Backstage Contact Employee Actions
Line of Internal Interaction
Support Processes

Company
(Management)
Efficiency vs.
Autonomy

Employees

Efficiency vs.
Satisfaction

Perceived Control

Customers
Adapted from Gronroos & Kotler

Total Cost
Cost of
providing
service
Expected
Cost

Cost of
Waiting
Low

Optimal Solution
Level of Service

High

Cost of
providing
service

Waiting time

Acceptable levels of service

Maximum
acceptable cost
of providing
service

Maximum
acceptable
waiting time

Low

High
Level of Service
Source: Davis, 1991

Unoccupied time feels longer than occupied time

Provide magazines, a TV, or coffee in a waiting area
DJs for music while on hold on telephone

Pre-process waits feel longer than in-process waits

Have an initial reception take some data

Anxiety makes waits seem longer

Tell customers how long the plane will be late

Uncertain waits feel longer than known finite waits

Tell customers on a support hot line how long the wait

will be.

 Long

Term Fixed Capacity

Facilities, Equipment.

Short

Term Variable
Capacity
Workers.

Product Variations over time

Ski manufacturer vs. Ski Area

Modifying Timing and Location of Delivery

Have the facility open when there is demand

for it (banks!).
Use mobile units to bring the service to the
demand

Pricing

For different market segments based on

demand
Danger of cannibalizing sales

Communication with Customers

Peak times.
Off-peak special offers.

 Pricing.
Advertising

and Promotion.

Reservations.
Change

the Nature of Demand.

Location of Capacity
Back-of-the-House Front-of-the-House
Fixed Capacity add equipment
cooking equipment
data entry stations
Variable Capacity cooks
typists
baggage handlers

tables in a restaurant
checkout station
telephone lines
cashiers
bank tellers
waitstaff

 New service development

Managing service experiences
Front-office/Back-office
Analyzing processes
Service quality
Yield management
Inventory management
Waiting time management

 Service

Blueprinting
Focus on moments of truth
Servicescapes
Utility-based Service Design
Perceived utility to customer
Relative importance of Dimensions of
Service Quality

 Reliability
Responsiveness
Assurance
Empathy
Tangibles

ACSI Site:
http://www.theacsi.org/index.php?option=com_content&task=view&id=15&Itemid=172

Parasuraman, et al., 1985

 Customer
Context
Time
Service

Engagement

Blueprinting
Focus on moments of truth

 Front-office

work requires customer

presence.
Back-office work does not require
customer presence.
Decoupling: separating work into
high-contact/low-contact jobs.
Ultimate = outsourcing/offshoring

People across the world need a vast variety of goods

and shall continue to do so in all times to come
Manufacturing is the most important value adding
activity that produces products of all kinds: from a pin
to a plane and a brick to a battle ship
The modern times witness addition of new and
innovative products with an astonishing pace

It, therefore, follows that manufacturing will

continue to offer opportunities to
entrepreneurs for starting new ventures.
February 5, 2015

Prof. R.S.Mathur

85

 Manufacturing

activity is sub
set of OPERATIONS
Along with Marketing Operations
is identified as any firms CORE
function

February 5, 2015

Prof. R.S.Mathur

86

 It

is a management function

Organizations

core function that

converts inputs to outputs of value

Every

organization has

OM function
Service or Manufacturing
For profit or Not for profit
Wiley 2007

87

 Manufacturing Services

Tangible product
Product can be
inventoried
Low customer
contact
Longer response
time
Capital intensive

Wiley 2007

Intangible product
Product cannot be
inventoried
High customer
contact
Short response
time
Labor intensive

88

Both use technology

Both have quality, productivity, &
response issues
Both must forecast demand
Both will have capacity, layout, and
location issues
Both have customers, suppliers,
scheduling and staffing issues
Manufacturing often provides services
Services often provides tangible goods

Wiley 2007

89

The business function responsible

for planning, coordinating, and
controlling the resources needed to
produce a companys products

Wiley 2007

90

 OM

Transforms inputs to outputs

Inputs are resources such as

People, Material, and Money

Outputs are goods

Wiley 2007

91

 Wiley 2007

92

 Global Competition
Quality, Customer Service,

and Cost

Challenges
Rapid Expansion of Advanced
Technologies
Continued Growth of the Service Sector
Scarcity of Operations Resources
Social-Responsibility Issues
Producing world-class products is now
an imperative

 To

add value

Increase product value at each stage

Value added is the net increase between

output product value and input material

value
Provide

an efficient transformation

Efficiency perform activities well at lowest

possible cost
Wiley 2007

94

Finance
Sales

HRM

OM
QA

Marketing

Engineering

MIS

Accounting

 Wiley 2007

96

Marketing
Customer
Demand

Production
Capacity
Inventory
Procurement
Supplier
Performance

Aggregate
Production
Plan

Management
Return on
Investment
Capital
02/05/15 00:37

Finance
Cash Flow
Human
Resources
Manpower
Planning

Engineering
Design
Completion

Mgmt Concepts/ Prof R S Mathur

97

 Strategic Decisions
Operating Decisions
Control Decisions

98

 These

decisions are of strategic

importance: set the direction, broad in
scope and have long-term significance
for the organization.
Examples include deciding:
What should be the design for a new

products production process?

where to locate a new factory?
whether to launch a new-product
development plan?
99

These decisions are: frequent, specific, day-today

and necessary if the ongoing production of goods
and services is to satisfy market demands(that
are vulnerable to variations) and provide profits.
Tactical decisions must align with
strategic decisions

Examples

include deciding:

how much finished-goods inventory to carry

the amount of overtime to use next week
the details for purchasing raw material

next month
100

 These

decisions concern the day-to-day

activities of workers, quality of products
and services, production and overhead
costs, and machine maintenance.
Examples include deciding:
labour cost standards for a new product
frequency of preventive maintenance
new quality control acceptance criteria

101

 Information

about :

Outputs,
Conversion process and
Inputs
is fed back to management.
This information is matched with
managements expectations
When there is a difference, management
must take corrective action to maintain
control of the system
1.
2.
3.

102

 Wiley 2007

103

 Industrial revolutionLate 1700s

Scientific management Early 1900s
Human relations/Human Resources

1930s Management science

Computer age
Environmental Issues

Wiley 2007

Mid-1900s
1970s
1970s

104

 Just-in-Time
Total

Systems (JIT)

1980s

quality management (TQM)

Reengineering
Global

competition

Flexibility

1980s

1990s
1980s

1990s

Wiley 2007

105

1. Textiles
2. Food processing
3. Auto- parts
4. Ayurved and conventional
5. Packaging
6. Sericulture
7. Floriculture
8. Toys
9. Recycling materials
10.Energy saving products
February 5, 2015

Prof. R.S.Mathur

medicines

106

 Purchasing planner/buyer
Production (or operations)
Production (or operations)

supervisor

scheduler/controller
Production (or operations) analyst
Inventory analyst
Quality specialist

107

OM has the most diverse organizational

function
Manages the transformation process
OM has many faces and names such as;

V. P. operations, Director of supply chains,

Manufacturing manager
Plant manger, Quality specialists, etc.

All business functions need information

from OM in order to perform their tasks

Wiley 2007

108

 Some

organizations are a blend of

service/manufacturing/ QuasiManufacturing (QM) organizations
QM characteristics include
Low customer contact & Capital

Intensive

Wiley 2007

109

 Wiley 2007

110

 Most

businesses are supported

by the functions of operations,
marketing, and finance
The major functional areas must
interact to achieve the
organization goals

Wiley 2007

111

Marketing is not fully capable of meeting

customer needs if they do not understand
what operations can produce
Finance cannot judge the need for capital
investments if they do not understand
operations concepts and needs
Information systems enables the
information flow throughout the
organization
Human resources must understand job
requirements and worker skills
Accounting needs to consider inventory
management, capacity information, and
labor standards

Wiley 2007

112