Chap002 - Chapter 02 - Operations and Supply Strategy...

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Chapter 02 - Operations and Supply Strategy CHAPTER 2 OPERATIONS AND SUPPLY STRATEGY Review and Discussion Questions 1. Can a factory be fast, dependable, flexible, produce high-quality products, and still provide poor service from a customer’s perspective? Yes, if a customer’s needs are not considered and does not influence strategy development, an organization could be delivering the wrong service or product. Even though the product or service is delivered fast, dependable, and flexible in design and features and is of high technical quality, overall service could be rated “poor” by a customer who demands a different mix of features and attributes. It is often best not to be fastest to the market, but to be the best firm in the market as judged by the ultimate customer. 2. Why should a service organization worry about being world class if it does not compete outside its own national border? What impact does the Internet have on this? As the environment changes, firms can find themselves faced with competition from outside their industry or from outside their home country. Even if they do not, the principles of a world class firm can be applied to any and all manufacturing and service concerns. Benchmarking or rating your firm’s performance to the best in your industry or class can provide future strategic directions for improvements. The Internet is global by its very nature. Retail stores must now compete with Internet stores. Local auction houses will be in competition with Internet auction sites such as eBay. Virtually all organizations will be impacted in some form by the Internet. It is important that this impact be considered. 3. What are the major priorities associated with operations strategy? How has their relationship to each other changed over the years? The four major imperatives are cost, quality, delivery, and flexibility. In the sixties, these four imperatives were viewed from a tradeoff’s perspective. For example, this meant that improving quality would result in higher cost. However, more recent thought posits that these four imperatives can improve simultaneously, and in many industries may be necessary for success. The problem then becomes one of prioritizing and managing towards orderly improvement. 5
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Chapter 02 - Operations and Supply Strategy 4. For each of the different priorities in question 3, describe the unique characteristics of the market niche with which it is most compatible. Cost is most compatible with products that are commodities (i.e., highly standardized products with many alternative suppliers). Quality provides companies a means of (1) differentiating a product and winning orders or (2) competing in a market and qualifying for orders. Quality is now pervasive among all market niches in that customers now expect high quality. Speed and reliability of delivery are essential in those markets where there is a large degree of
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This note was uploaded on 07/17/2011 for the course MBA 587 taught by Professor None during the Spring '11 term at Missouri (Mizzou).

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Chap002 - Chapter 02 - Operations and Supply Strategy...

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