krm8_ism_ch02 - Chapter 2 Operations Strategy DISCUSSION...

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Chapter 2 Operations Strategy DISCUSSION QUESTIONS 1. Amazon.com offers a very broad range of services and products at competitive prices. Its competitive priorities would include fast delivery time, on-time delivery, customization, variety and low-cost operations. As a business, Amazon.com is actually assembling a customized basket of goods that must be delivered in a short window of time in a dependable fashion. Low-cost operations are needed to remain competitive. To remain in business, Amazon.com needs to maintain high volumes of traffic. Operations strategy must focus on stock availability and quick, economical, and dependable delivery. 2. The hospital’s commitment to provide attention to patients arriving to the emergency unit in less than 15 minutes and never to turn away patients who need to be hospitalized implies that the facility must be designed to have extra capacity in both beds and emergency room facilities. It must plan on having extra personnel in the emergency room and also plan on having additional emergency personnel on call to take care of unprecedented heavy loads. In line with the mission statement, maximum utilization of the facilities (i.e., beds and emergency room personnel) would not be one of the performance objectives for the hospital. 3. FedEx traditionally competed on the basis of fast, dependable delivery. Before the boom in Internet applications, many businesses relied on FedEx to get things to other businesses overnight. Now, this need is beginning to diminish as sophisticated systems are being installed to assist companies in planning operations better. And, the dot-com companies are adding more demands for ground deliveries to specific customer doors, at low cost. FedEx, to remain competitive with companies such as UPS, will have to move into the door-to-door delivery business, perhaps through acquisition. Nonetheless, it will require changes to this company’s competitive priorities. 4. A service package consists of the supporting facilities, facilitating goods, explicit services, and implicit services. The responses below are indicative of the four major components of a service package in each situation. a. For an insurance company, the supporting facilities would include the office space and equipment and the insurance agents and support staff. Some insurance companies have their own accident repair estimate facilities. The facilitating goods would include all of the office supplies as well as the damaged automobile, which sets the service in motion. The explicit services would include financial support in case of an accident, creating a policy fitting the client’s needs, and servicing damage claims (sometimes representing a client in a court case). Implicit services include the courtesy of the agents, the promptness of response, and convenient access to agents.
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22 l PART 1 l Using Operations to Compete b. The supporting facilities for a dental service would include the office and equipment for repairing a crown and the dentist and supporting staff. The facilitating goods
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krm8_ism_ch02 - Chapter 2 Operations Strategy DISCUSSION...

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