Im including the part of the chapter these questions refer to, I need help with the 2 questions Underlined in bold below please. 1. Operations
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Im including the part of the chapter these questions refer to, I need

help with the 2 questions Underlined in bold below please.
1. Operations management (Connect, Perform)


Use your understanding of how organizations transform resources into products and services to complete the sentence.


E*Trade facilitates stock transactions for its customers. Because E*Trade is a service organization, its manufacturing process transforms resources into _____?

-CAPACITY
-INTANGIBLE OUTPUT
-TANGIBLE OUTPUT
-A PRODUCT-SERVICE MIX



Management at Work
Imagine that you have been hired as a consultant for a large public utility. The company sells and distributes electricity and natural gas to residential and commercial customers. It also repairs household appliances throughout its service area. Customers can pay to have a particular appliance repaired as needed, or they can subscribe to the repair service for a monthly fee, which is added to their utility bill. The CEO is examining the role of operations management in the company and has some questions for you.


Should the utility's strategy drive operations, or should operations determine strategy?
1.) Strategy and operations need to work together.
2.) Operations should drive strategy.
3.) Strategy should drive operations.
4.) Financial management should drive both strategy and operations.


Chapter these questions are refering too.
15-1
The Nature of Operations Management
Operations management is at the core of what organizations do as they add value and create products and services. But what exactly are operations? And how are they managed? Operations management is the set of managerial activities used by an organization to transform resource inputs into products and services. When Hewlett-Packard buys electronic components, assembles them into PCs, and then ships them to customers, it is engaging in operations management. When a Domino's employee orders food ingredients and paper products and then combines dough, cheese, and tomato sauce to create a pizza, he or she is also engaging in operations management.
The Importance of Operations


Operations are an important functional concern for organizations because the efficient and effective management of operations goes a long way toward ensuring competitiveness and overall organizational performance, as well as quality and productivity. Inefficient or ineffective operations management, on the other hand, will almost inevitably lead to poorer performance and lower levels of both quality and productivity.
In an economic sense, operations management creates value and utility of one type or another, depending on the nature of the firm's products or services. If the product is a physical good, such as a Honda motorcycle, operations create value and provide form utility by combining many dissimilar inputs (sheet metal, rubber, paint, internal combustion engines, and human skills) to make something (a motorcycle) that is more valuable than the actual cost of the inputs used to create it. The inputs are converted from their incoming form into a new physical form. This conversion is typical of manufacturing operations and essentially reflects the organization's technology.
In contrast, the operations activities of Delta Airlines create value and provide time and place utility through its services. The airline transports passengers, luggage, and freight according to agreed-upon departure and arrival places and times. Other service operations, such as a Budweiser beer distributorship or an American Eagle retail store, create value and provide place and possession utility by bringing together the customer and products made by others. Although the organizations in these examples produce different kinds of products or services, their operations processes share many important features.




Manufacturing and Production Operations
Because manufacturing once dominated U.S. industry, the entire area of operations management used to be called production management. Manufacturing is a form of business that combines and transforms resources into tangible outcomes that are then sold to others. Firestone is a manufacturer because it combines rubber and chemical compounds and uses blending equipment and molding machines to create tires. Broyhill is a manufacturer because it buys wood and metal components, pads, and fabric and then combines them to make furniture.
During the 1970s, manufacturing entered a long period of decline in the United States, primarily because of foreign competition. U.S. firms had grown lax and sluggish, and new foreign competitors came onto the scene with better equipment and much higher levels of efficiency. For example, steel companies in Asia were able to produce high-quality steel for much lower prices than U.S. companies such as Bethlehem Steel and U.S. Steel (now USX Corporation). Faced with a battle for survival, many companies underwent a long and difficult period of change by eliminating waste and transforming themselves into leaner and more efficient and responsive entities. They reduced their workforces dramatically, closed antiquated or unnecessary plants, and modernized their remaining plants. In the last decade, their efforts have started to pay dividends, as U.S. businesses have regained their competitive positions in many different industries. Although manufacturers from other parts of the world are still formidable competitors, and U.S. firms may never again be competitive in some markets, the overall picture is much better than it was just a few years ago. And prospects continue to look bright.


Service Operations
During the decline of the manufacturing sector, a tremendous growth in the service sector helped keep the U.S. economy from declining at the same rate. A service organization is one that transforms resources into an intangible output and creates time or place utility for its customers. For example, E*Trade makes stock transactions for its customers, Hertz leases cars to its customers, and local hairdressers cut clients' hair. In 1947, the service sector was responsible for less than half of the U.S. gross national product (GNP). By 1975, however, this figure reached 65 percent, and by 2017, it was over 80 percent. The service sector has been responsible for creating approximately 44.5 million new jobs in the United States since 1990. Managers have come to see that many of the tools, techniques, and methods that are used in a factory are also useful to a service firm. For example, managers of automobile plants and hair salons both have to decide how to design their facilities, identify the best locations for them, determine optimal capacities, make decisions about inventory storage, set procedures for purchasing raw materials, and set standards for productivity and quality.




The Role of Operations in Organizational Strategy
It should be clear by this point that operations management is very important to organizations. Beyond its direct impact on factors such as competitiveness, quality, and productivity, it also directly influences the organization's overall level of effectiveness. For example, the deceptively simple strategic decision of whether to stress high quality regardless of cost, lowest possible cost regardless of quality, or some combination of the two has numerous important implications. A highest-possible-quality strategy will dictate state-of-the-art technology and rigorous control of product design and materials specifications. A combination strategy might call for lower-grade technology and less concern about product design and materials specifications. Just as strategy affects operations management, operations management affects strategy. Suppose that a firm decides to upgrade the quality of its products or services. The organization's ability to implement the decision is dependent in part on current production capabilities and other resources. If existing technology will not permit higher-quality work and if the organization lacks the resources to replace its technology, increasing quality to the desired new standards will be difficult.

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