,SOLUTION MANUAL FOR Operations and Supply
Chain Management for MBAs, 8th Edition
Meredith
Notes
1- The file is chapter after chapter.
2- We have shown you few pages sample.
3- The file contains all Appendix and Excel sheet
if it exists.
4- We have all what you need, we make update
at every time. There are many new editions
waiting you.
5- If you think you purchased the wrong file You
can contact us at every time, we can replace it
with true one.
Our email:
, Chapter 1
Operations Strategy and Global Competitiveness
Chapter Summary
This is one of the most important chapters in the text as it defines operations management
as the activities associated with transforming inputs into valued outputs. The chapter also
shows that the actual production system is defined in terms of its environment, inputs,
transformation system, outputs, and the mechanism used for monitoring and control. In
our definition of the production system, we define all transformation systems as
services—with or without facilitating goods (physical entities accompanying the
transformation process).
This chapter continues with a definition of customer value as perceived benefits divided
by costs. Customer costs include upfront monetary investment, other lifecycle costs for
maintenance, and the hassles involved in obtaining the product or service. Discussion of
customer benefits focuses on innovative products and services, functionality, quality,
customization, and responsiveness.
Following the discussion of customer value, the chapter continues with a discussion of
strategy and competitiveness. Global trade trends are discussed. Next, the chapter
provides an overview of the business strategy formulation process and includes timely
material on vision and mission statements, internal and external forces, business strategy,
the business model, and business unit strategies. After that, business unit strategic
frameworks are described: the life-cycle approach, the performance frontiers concept,
focus on one or two key areas of strength, and the sand cone model. Finally, the chapter
concludes with a discussion of core capabilities, outsourcing, and offshoring.
The chapter concludes with a discussion of productivity as a key measure to assess how
well the value-creating process is performing. Included in the discussion of productivity
are alternative productivity measures including single factor, multifactor, and total factor
productivity measures. After discussing these measures, the topic of productivity is
linked to the standard of living and the productivity of alternative countries discussed.
Chapter Teaching Tips
There are a number of ways to introduce the course material. Many MBA students work
at companies that have recently initiated a Lean/Six Sigma project, have outsourced
processes to suppliers in low-wage countries, or have implemented an Enterprise
Resource Planning system. Therefore, students naturally should be inquisitive about
operations management and the aforementioned topics.
Chapter 1 – Page 1
,One approach is to have the students read cases prior to first class. “Wyatt Earp – The
Buffalo Hunter” case is a short, but interesting case, that touches upon many aspects of
operations strategy. A second case, “American Outsourcing” discusses the outsourcing of
manufacturing and service jobs from the United States to Mexico, China, and India.
Citations for these cases can be found at the end of these notes.
Another useful approach for illustrating the importance of operations management is to
have students read the Harvard Business Review article “Fast Heat: How Korea Won the
Microwave War (January/February 1989). The article emphasizes a number of important
themes including:
A strong production orientation. Samsung emphasized production over
marketing.
Design done with manufacturing in mind.
Measures like payback and return on investment were not used.
The customer should never be kept waiting.
Engineers travel, not just the sales force.
Other benefits of using the Fast Article, is that it is a brand students are likely familiar as
it is a major player in smartphones and it has continued to achieve considerable success
in a number of other industries.
Another approach is to start with a movie or video that illustrates the operations activities
of some firm or organization and use this to lead to a discussion of the operations
function.
Then, the instructor can introduce the topics of global competiveness and strategy by
asking students for the slogans of firms they are familiar with (e.g., "Everyday low
prices—always!"). From this, the number of areas of strength that are in the operations
area can be counted. Typically, 80-90% will fall in the operations area indicating its
strategic importance. The discussion can then move to the Chinese successes in world
markets and American firms' often typical lack of attention to operational activities.
Chapter 1 – Page 2
,Illustrative Answers to Expand Your Understanding Questions
1. Services are typically more customized than products and thus less subject to
repetitive automation, which could increase their efficient production. Second, the
technology of service production is nowhere as advanced as that for products. Last,
because services cannot be stored, this makes their timely production more expensive.
2. Services do seem to be protected because of their high provider-customer interaction,
which is difficult for foreign firms to offer due to distance, language, culture, and
other such matters. It is commonly believed that, because services have less foreign
competition, domestic firms are better at providing services than products. This is
probably a great fallacy, as anyone who has experienced service offerings in multiple
foreign countries can tell you.
3. The Japanese work more diligently in designing and planning their operations and
exert less effort in controlling them. In fact, much of their design efforts are directed
toward eliminating the need to control their work, for example, by making errors or
mistakes more obvious and easily corrected. They thus offer better designed outputs
and also spend less on correcting, counting, monitoring, and controlling those outputs
with the result that they are often more competitive in global markets.
4. A manufacturer would see that the physical product was only a part of the total
package being sold to satisfy a customer, and that a service provider might consider
adding a facilitating good to their offerings to enhance the service.
5. Previous problems with acquisitions have been due to attempts to grow for purely
financial reasons instead of good business reasons; essentially playing a financial
game. Wise acquisitions are conducted slowly, with long and intensive analysis, and
bring true synergy to the firm's existing products, services, distribution network, or
other (and frequently multiple) aspects of their focus.
6. Some other potential areas of focus include being able to acquire and assimilate
companies, the use of data to gain a competitive advantage, and in the case of a non-
profit, fund raising.
7. China possesses a core capability of cheap, abundant labor. India possesses a core
capability of abundant and skilled, English-speaking labor. Japan has always had a
strong capability in teamwork and execution, while the U.S. has always been known
for its creativity, innovativeness, and flexibility.
8. Obviously, the student will have to choose a point of reference to determine if an
action is ethical, a topic worth discussion all by itself. That is, the student can look at
the action from the view of the one taking the action, from the one affected by the
action, or from a disinterested observer. Whose laws are relevant: home country,
foreign country, both?
Chapter 1 – Page 3
,9. The cost savings largely arise from the discipline required to produce quickly: Fewer
errors, fewer operations, smoother processes, less labor, fewer inventories. Other
savings also accrue to fast response, however, such as less time for engineering
changes to the product and, more important, less time for the customer to request
changes, or even cancel the order! Last, though not a cost, faster response means
faster revenue generation too.
10. One example of a company that has moved the performance frontier of its industry is
Southwest Airlines—Southwest offers delivery speed, dependability, and low costs.
A second example would be Dell in entering the market for plasma televisions by
offering televisions with high quality at a cost lower than competitors’ prices.
11. In Japan, protectionism was used to nurture infant industries and protect them from
foreign competition until they could compete on their own. In particular, after WWII,
Japan began to emphasize product and process quality. At the same time, U.S.
producers, believing that they already manufactured the world’s best products,
emphasized marketing of those products. The American proficiency in marketing
enables U.S. producers to continue to sell products/services that in some cases are of
lower quality than those sold by Japanese producers. The Japanese emphasis on
engineering enables their producers to introduce products faster, to improve processes
more dramatically, etc.
12. Based on Figure 1.4, we would expect between 1/5 and 3/5 of the reduction in the
response time, with an average of ½. Since a cut by a factor of ten means a 90%
reduction, we would thus expect a unit cost reduction between 18% and 54%, with an
average of 45%.
13. Walmart’s order winners are price and product variety. Walmart’s qualifiers include
quality and delivery reliability. Toyota’s order winners are quality, innovation,
product reliability, and performance. Toyota’s qualifiers include price and delivery
reliability. BMW’s order winners include performance and innovation while BMW’s
qualifiers include quality and delivery reliability. Sony’s order winners include
innovation and performance. Sony’s qualifiers include price and delivery reliability.
14. Given the recent trends in products and services, i.e. consumers demanding better
performance on all competitive dimensions, one could make a valid argument for use
of the Sand Cone model over the focus strategy because companies must be able to
deliver multiple core capabilities.
15. The systems perspective emphasizes the relationships between various system
components. Since the system boundary defines what is considered to be part of the
system and what is considered to be part of the environment and thus beyond the
decision maker’s control, the way the system boundary is defined profoundly affects
the results of systems analysis. On the one hand, if the boundary is defined too
narrowly, important relationships among the system components may be omitted.
Chapter 1 – Page 4
, Conversely, increasing the system boundary increases the complexity and costs
associated with developing and using the model. Unfortunately, determining the
system boundary is more of an art than a science and is based on the experience, skill,
and judgement of the analyst.
16. Since efficiency is output divided by input, the expected output increase due to the
new equipment might be less than the cost (an input) of the new equipment. Thus,
replacing labor with equipment only improves efficiency if the equipment is cheap
relative to the amount of labor it is displacing. Also, the organization needs to
consider the cost associated with setting up and maintaining the equipment. Systems
engineers tend to be a more expensive resource than shop floor workers.
17. One of the hardest decisions for a manager to make is laying off employees. Yet, this
is frequently basic to productivity improvements. For example, when demand drops,
the output will also drop and without a commensurate reduction in the inputs
productivity will also decline. Of course firms don’t like to lay off employees for a
number of reasons including reduced employee morale, negative publicity, and
because in the near future business may pick back up that will require hiring more
employees who are likely to be less experienced than the ones that were fired.
Therefore, organizations often delay layoffs. Obtaining desperately needed
equipment is another difficult situation if the capital is hard to acquire.
18. Pump: output divided by electricity cost. Warehouse: annual shipments (units or
dollars worth) divided by annual cost of maintaining the warehouse. $1000: output
obtained divided by $1000. Market survey: information obtained (subjective value or
increase in sales) divided by cost of survey. Kilowatt-hour: work accomplished
divided by cost of 1 kilowatt-hour.
19. Efficiency was defined as doing the thing right while effectiveness was defined as
doing the right thing. Since it makes little sense for an organization to do the wrong
thing efficiently, effectiveness is more important. Indeed there are numerous
examples of organizations that have obtained long-term success that are not efficient
(e.g., Steinway pianos, Rolls Royce cars). It is hard to identify organizations that
have obtained long-term success that were not effective.
20. The balanced scorecard does not monitor all of the elements of the production system
of Figure 1.1. The balanced scorecard is primarily directed inward, so it misses
changes in the economy, government regulations, competitors’ new initiatives, new
technologies, etc. But it does include aspects that are not covered in Figure 1.1 such
as organizational learning and growth, strategy, marketing plans, financial planning,
etc. The balanced scorecard overlaps with Figure 1.1 only on the elements of Strategy
and Control.
21. Strategy Maps complement (rather than replace) the balanced scorecard. The
balanced scorecard helps a company formulate a business strategy. The Strategy Map
helps the company implement the business strategy map by aiding in the development
Chapter 1 – Page 5
, of plans directed toward achieving their goals. By creating a map, the company
might be able to anticipate and thus avoid the negative consequences of some plans.
22. Given the problems our world is facing--climate change, war, pandemics—it seems
like even more projects are needed, but will they be projects that improve GDP or
reduce it? Hopefully, the former, which might lift the GDP of advanced economies
over 50% within a decade. But will this help improve the GDP of the remaining
countries?
23. Given the seriousness of global problems, new management will be needed who can
see the bigger picture and organize larger international responses to them. A few
countries going green, for example, is not going to solve climate change.
24. As it turns out, virtually all aspects of operations impact an organization’s
impact on the environment. Indeed, the decisions made in the operations area
likely have the largest impact on the environment in comparison to the other
areas. Below are some examples ways the decisions made in the operations
area impact the environment.
Project Management (Chapter 2). Organizations fund projects that deliver
sustainable outcomes. Projects can also minimize negative environmental
impacts by employing sustainable practices in completing the project.
Designing the Output and its Delivery Process (Chapter 3). The design of an
organization’s outputs and the materials used in their production, delivery, and
packaging have a significant impact the organization’s carbon footprint.
Likewise, an organization’s operations often require large amounts of energy
and water and as a byproduct may produce large quantities of emissions.
Supply Chain Management (Chapters 5 and 6). The design of the distribution
network, modes of transportation used, how warehouses are constructed, use of
handling equipment, use of JIT with its more frequent but smaller deliveries,
reverse logistics, and sourcing decisions each impact an organization’s
environmental impact.
Managing and Improving the Process (Chapters 7, 8, and 9). Higher quality
processes and more efficient processes result in less waste being sent to
landfills and results in using less energy (lower emissions) and raw materials.
Chapter 1 – Page 6
,APPLY YOUR UNDERSTANDING
Izmir National University (INU)
Teaching Tips for Case
This case illustrates the importance that a well-defined strategy plays in helping
coordinate and guide employees. In addition, the case provides students with an
opportunity to develop a strategic planning process for the Business School to reinforce
their understanding of the hierarchical nature of strategic planning. Instructors have a
great deal of flexibility in terms of the level of detail they wish to go into. For example,
instructors that want to go into more detail can require the students to develop a vision
and mission statement for the Business School. This exercise can be significantly
enhanced by asking the students to search the Web for existing Business School
vision/mission statements and then having the students evaluate and critique these
statements in terms of the language used and what their reaction would be to the
statements if they were a student, faculty member, or company that recruited students
from the school.
The case also exposes students to the difficulty of measuring productivity, especially in
organizations that produce multiple outputs and where one or more of these outputs is an
intangible service.
1. The variety of goals and concerns expressed by the professors indicates an absence of
a well-defined strategy. This can be illustrated by discussing the lack of consistency
in the faculty’s comments. For example, one docent/professor commented, “research
is our primary mission” while another stated “there is far too much emphasis placed
on research.” Another way to illustrate this is to list the wide range of priorities
expressed by the professors. The suggestions made by the professors range from
improving student/teacher ratios to getting a Ph.D. program approved to increasing
the travel budget to getting better secretarial support to allowing professors more time
for consulting. Thus, the comments suggest that the professors are pursuing their own
personal objectives and not supporting a common university or school-wide strategy.
After making this point, the instructor may want to spend some time discussing the
likely outcomes and problems associated with not having a well-defined strategy at
INU.
2. As the leader of a university operating division, one primary role of a Dekan
(administrative head, dean) is to ensure that the actions and decisions made at the
school level are consistent with and support the overall university strategy. Of course,
this may be complicated by the absence of a well-defined overall university strategy
or one that has not been effectively communicated. It is quite likely that this is the
Chapter 1 – Page 7
, case at INU given its short existence and overwhelming success. Administrators may
simply feel that INU is doing fine without having a formal strategic plan.
At any rate, the first step for the Dekan is to determine what the university’s overall
mission and strategy is. If it turns out that the university does not have a well-defined
mission, the Dekan can use this to the Business School’s advantage by convincing the
President and Provost of the need for a university strategy and then proactively
helping formulate the strategy so that the Business School’s interests are reflected in
the strategy.
Once the Dekan has a good understanding of the overall university mission and
strategy, she can initiate an effort to develop a strategic plan for the Business School.
To ensure buy-in and commitment to the school’s strategic plan, the Dekan should
include as many of the professors in the process as possible. Perhaps she may decide
to chair a committee composed of several of the full professors, a couple of the
docents, one or two staffers, one or more business professionals, and perhaps even a
student or two to begin drafting a vision/mission statement and strategic plan for the
Business School. In formulating a vision/mission statement that supports the
university’s mission, the committee needs to consider the school’s strengths and
weaknesses, its resources, its culture, the environment, and the desires of its faculty
and other stakeholders. Further, given the small size of the Business School, it would
be highly desirable to get feedback from all faculty members. One way to accomplish
this would be to invite all faculty members and staff to periodic meetings to solicit
their reactions and input to the vision/mission statement as it is being drafted.
After the vision/mission statement has been developed, the committee can turn its
attention to developing a strategic plan for achieving the school’s mission. One key
component of the strategic plan is the identification of the school’s core competencies
and how these competencies will be developed on an ongoing basis. In addition, the
committee needs to determine how the strategic planning process will be continued in
the future. One option would be to have the Dekan serve as the chair of a Priorities
and Goals Committee. Faculty could be selected or elected to serve on this committee
for a specified term. The committee could develop a list of priorities at the beginning
of each year and meet periodically during the year to assess the school’s progress.
3. There are a number of ways the productivity of the Business School could be
measured. Potential partial productivity measures include:
Total Student Credit Hours Taught/Professor and Instructor Salaries
Total Student Credit Hours Taught/Full Time Faculty Equivalents
Grants Received/Full Time Faculty Equivalents
Papers Published/Full Time Faculty Equivalents
The ability to develop a multifactor productivity measure is extremely difficult given
the absence of a common monetary unit with which to express the various outputs in,
such as Euros or Yeni Lira (Turkish currency). For example, there is no easy way to
Chapter 1 – Page 8
Chain Management for MBAs, 8th Edition
Meredith
Notes
1- The file is chapter after chapter.
2- We have shown you few pages sample.
3- The file contains all Appendix and Excel sheet
if it exists.
4- We have all what you need, we make update
at every time. There are many new editions
waiting you.
5- If you think you purchased the wrong file You
can contact us at every time, we can replace it
with true one.
Our email:
, Chapter 1
Operations Strategy and Global Competitiveness
Chapter Summary
This is one of the most important chapters in the text as it defines operations management
as the activities associated with transforming inputs into valued outputs. The chapter also
shows that the actual production system is defined in terms of its environment, inputs,
transformation system, outputs, and the mechanism used for monitoring and control. In
our definition of the production system, we define all transformation systems as
services—with or without facilitating goods (physical entities accompanying the
transformation process).
This chapter continues with a definition of customer value as perceived benefits divided
by costs. Customer costs include upfront monetary investment, other lifecycle costs for
maintenance, and the hassles involved in obtaining the product or service. Discussion of
customer benefits focuses on innovative products and services, functionality, quality,
customization, and responsiveness.
Following the discussion of customer value, the chapter continues with a discussion of
strategy and competitiveness. Global trade trends are discussed. Next, the chapter
provides an overview of the business strategy formulation process and includes timely
material on vision and mission statements, internal and external forces, business strategy,
the business model, and business unit strategies. After that, business unit strategic
frameworks are described: the life-cycle approach, the performance frontiers concept,
focus on one or two key areas of strength, and the sand cone model. Finally, the chapter
concludes with a discussion of core capabilities, outsourcing, and offshoring.
The chapter concludes with a discussion of productivity as a key measure to assess how
well the value-creating process is performing. Included in the discussion of productivity
are alternative productivity measures including single factor, multifactor, and total factor
productivity measures. After discussing these measures, the topic of productivity is
linked to the standard of living and the productivity of alternative countries discussed.
Chapter Teaching Tips
There are a number of ways to introduce the course material. Many MBA students work
at companies that have recently initiated a Lean/Six Sigma project, have outsourced
processes to suppliers in low-wage countries, or have implemented an Enterprise
Resource Planning system. Therefore, students naturally should be inquisitive about
operations management and the aforementioned topics.
Chapter 1 – Page 1
,One approach is to have the students read cases prior to first class. “Wyatt Earp – The
Buffalo Hunter” case is a short, but interesting case, that touches upon many aspects of
operations strategy. A second case, “American Outsourcing” discusses the outsourcing of
manufacturing and service jobs from the United States to Mexico, China, and India.
Citations for these cases can be found at the end of these notes.
Another useful approach for illustrating the importance of operations management is to
have students read the Harvard Business Review article “Fast Heat: How Korea Won the
Microwave War (January/February 1989). The article emphasizes a number of important
themes including:
A strong production orientation. Samsung emphasized production over
marketing.
Design done with manufacturing in mind.
Measures like payback and return on investment were not used.
The customer should never be kept waiting.
Engineers travel, not just the sales force.
Other benefits of using the Fast Article, is that it is a brand students are likely familiar as
it is a major player in smartphones and it has continued to achieve considerable success
in a number of other industries.
Another approach is to start with a movie or video that illustrates the operations activities
of some firm or organization and use this to lead to a discussion of the operations
function.
Then, the instructor can introduce the topics of global competiveness and strategy by
asking students for the slogans of firms they are familiar with (e.g., "Everyday low
prices—always!"). From this, the number of areas of strength that are in the operations
area can be counted. Typically, 80-90% will fall in the operations area indicating its
strategic importance. The discussion can then move to the Chinese successes in world
markets and American firms' often typical lack of attention to operational activities.
Chapter 1 – Page 2
,Illustrative Answers to Expand Your Understanding Questions
1. Services are typically more customized than products and thus less subject to
repetitive automation, which could increase their efficient production. Second, the
technology of service production is nowhere as advanced as that for products. Last,
because services cannot be stored, this makes their timely production more expensive.
2. Services do seem to be protected because of their high provider-customer interaction,
which is difficult for foreign firms to offer due to distance, language, culture, and
other such matters. It is commonly believed that, because services have less foreign
competition, domestic firms are better at providing services than products. This is
probably a great fallacy, as anyone who has experienced service offerings in multiple
foreign countries can tell you.
3. The Japanese work more diligently in designing and planning their operations and
exert less effort in controlling them. In fact, much of their design efforts are directed
toward eliminating the need to control their work, for example, by making errors or
mistakes more obvious and easily corrected. They thus offer better designed outputs
and also spend less on correcting, counting, monitoring, and controlling those outputs
with the result that they are often more competitive in global markets.
4. A manufacturer would see that the physical product was only a part of the total
package being sold to satisfy a customer, and that a service provider might consider
adding a facilitating good to their offerings to enhance the service.
5. Previous problems with acquisitions have been due to attempts to grow for purely
financial reasons instead of good business reasons; essentially playing a financial
game. Wise acquisitions are conducted slowly, with long and intensive analysis, and
bring true synergy to the firm's existing products, services, distribution network, or
other (and frequently multiple) aspects of their focus.
6. Some other potential areas of focus include being able to acquire and assimilate
companies, the use of data to gain a competitive advantage, and in the case of a non-
profit, fund raising.
7. China possesses a core capability of cheap, abundant labor. India possesses a core
capability of abundant and skilled, English-speaking labor. Japan has always had a
strong capability in teamwork and execution, while the U.S. has always been known
for its creativity, innovativeness, and flexibility.
8. Obviously, the student will have to choose a point of reference to determine if an
action is ethical, a topic worth discussion all by itself. That is, the student can look at
the action from the view of the one taking the action, from the one affected by the
action, or from a disinterested observer. Whose laws are relevant: home country,
foreign country, both?
Chapter 1 – Page 3
,9. The cost savings largely arise from the discipline required to produce quickly: Fewer
errors, fewer operations, smoother processes, less labor, fewer inventories. Other
savings also accrue to fast response, however, such as less time for engineering
changes to the product and, more important, less time for the customer to request
changes, or even cancel the order! Last, though not a cost, faster response means
faster revenue generation too.
10. One example of a company that has moved the performance frontier of its industry is
Southwest Airlines—Southwest offers delivery speed, dependability, and low costs.
A second example would be Dell in entering the market for plasma televisions by
offering televisions with high quality at a cost lower than competitors’ prices.
11. In Japan, protectionism was used to nurture infant industries and protect them from
foreign competition until they could compete on their own. In particular, after WWII,
Japan began to emphasize product and process quality. At the same time, U.S.
producers, believing that they already manufactured the world’s best products,
emphasized marketing of those products. The American proficiency in marketing
enables U.S. producers to continue to sell products/services that in some cases are of
lower quality than those sold by Japanese producers. The Japanese emphasis on
engineering enables their producers to introduce products faster, to improve processes
more dramatically, etc.
12. Based on Figure 1.4, we would expect between 1/5 and 3/5 of the reduction in the
response time, with an average of ½. Since a cut by a factor of ten means a 90%
reduction, we would thus expect a unit cost reduction between 18% and 54%, with an
average of 45%.
13. Walmart’s order winners are price and product variety. Walmart’s qualifiers include
quality and delivery reliability. Toyota’s order winners are quality, innovation,
product reliability, and performance. Toyota’s qualifiers include price and delivery
reliability. BMW’s order winners include performance and innovation while BMW’s
qualifiers include quality and delivery reliability. Sony’s order winners include
innovation and performance. Sony’s qualifiers include price and delivery reliability.
14. Given the recent trends in products and services, i.e. consumers demanding better
performance on all competitive dimensions, one could make a valid argument for use
of the Sand Cone model over the focus strategy because companies must be able to
deliver multiple core capabilities.
15. The systems perspective emphasizes the relationships between various system
components. Since the system boundary defines what is considered to be part of the
system and what is considered to be part of the environment and thus beyond the
decision maker’s control, the way the system boundary is defined profoundly affects
the results of systems analysis. On the one hand, if the boundary is defined too
narrowly, important relationships among the system components may be omitted.
Chapter 1 – Page 4
, Conversely, increasing the system boundary increases the complexity and costs
associated with developing and using the model. Unfortunately, determining the
system boundary is more of an art than a science and is based on the experience, skill,
and judgement of the analyst.
16. Since efficiency is output divided by input, the expected output increase due to the
new equipment might be less than the cost (an input) of the new equipment. Thus,
replacing labor with equipment only improves efficiency if the equipment is cheap
relative to the amount of labor it is displacing. Also, the organization needs to
consider the cost associated with setting up and maintaining the equipment. Systems
engineers tend to be a more expensive resource than shop floor workers.
17. One of the hardest decisions for a manager to make is laying off employees. Yet, this
is frequently basic to productivity improvements. For example, when demand drops,
the output will also drop and without a commensurate reduction in the inputs
productivity will also decline. Of course firms don’t like to lay off employees for a
number of reasons including reduced employee morale, negative publicity, and
because in the near future business may pick back up that will require hiring more
employees who are likely to be less experienced than the ones that were fired.
Therefore, organizations often delay layoffs. Obtaining desperately needed
equipment is another difficult situation if the capital is hard to acquire.
18. Pump: output divided by electricity cost. Warehouse: annual shipments (units or
dollars worth) divided by annual cost of maintaining the warehouse. $1000: output
obtained divided by $1000. Market survey: information obtained (subjective value or
increase in sales) divided by cost of survey. Kilowatt-hour: work accomplished
divided by cost of 1 kilowatt-hour.
19. Efficiency was defined as doing the thing right while effectiveness was defined as
doing the right thing. Since it makes little sense for an organization to do the wrong
thing efficiently, effectiveness is more important. Indeed there are numerous
examples of organizations that have obtained long-term success that are not efficient
(e.g., Steinway pianos, Rolls Royce cars). It is hard to identify organizations that
have obtained long-term success that were not effective.
20. The balanced scorecard does not monitor all of the elements of the production system
of Figure 1.1. The balanced scorecard is primarily directed inward, so it misses
changes in the economy, government regulations, competitors’ new initiatives, new
technologies, etc. But it does include aspects that are not covered in Figure 1.1 such
as organizational learning and growth, strategy, marketing plans, financial planning,
etc. The balanced scorecard overlaps with Figure 1.1 only on the elements of Strategy
and Control.
21. Strategy Maps complement (rather than replace) the balanced scorecard. The
balanced scorecard helps a company formulate a business strategy. The Strategy Map
helps the company implement the business strategy map by aiding in the development
Chapter 1 – Page 5
, of plans directed toward achieving their goals. By creating a map, the company
might be able to anticipate and thus avoid the negative consequences of some plans.
22. Given the problems our world is facing--climate change, war, pandemics—it seems
like even more projects are needed, but will they be projects that improve GDP or
reduce it? Hopefully, the former, which might lift the GDP of advanced economies
over 50% within a decade. But will this help improve the GDP of the remaining
countries?
23. Given the seriousness of global problems, new management will be needed who can
see the bigger picture and organize larger international responses to them. A few
countries going green, for example, is not going to solve climate change.
24. As it turns out, virtually all aspects of operations impact an organization’s
impact on the environment. Indeed, the decisions made in the operations area
likely have the largest impact on the environment in comparison to the other
areas. Below are some examples ways the decisions made in the operations
area impact the environment.
Project Management (Chapter 2). Organizations fund projects that deliver
sustainable outcomes. Projects can also minimize negative environmental
impacts by employing sustainable practices in completing the project.
Designing the Output and its Delivery Process (Chapter 3). The design of an
organization’s outputs and the materials used in their production, delivery, and
packaging have a significant impact the organization’s carbon footprint.
Likewise, an organization’s operations often require large amounts of energy
and water and as a byproduct may produce large quantities of emissions.
Supply Chain Management (Chapters 5 and 6). The design of the distribution
network, modes of transportation used, how warehouses are constructed, use of
handling equipment, use of JIT with its more frequent but smaller deliveries,
reverse logistics, and sourcing decisions each impact an organization’s
environmental impact.
Managing and Improving the Process (Chapters 7, 8, and 9). Higher quality
processes and more efficient processes result in less waste being sent to
landfills and results in using less energy (lower emissions) and raw materials.
Chapter 1 – Page 6
,APPLY YOUR UNDERSTANDING
Izmir National University (INU)
Teaching Tips for Case
This case illustrates the importance that a well-defined strategy plays in helping
coordinate and guide employees. In addition, the case provides students with an
opportunity to develop a strategic planning process for the Business School to reinforce
their understanding of the hierarchical nature of strategic planning. Instructors have a
great deal of flexibility in terms of the level of detail they wish to go into. For example,
instructors that want to go into more detail can require the students to develop a vision
and mission statement for the Business School. This exercise can be significantly
enhanced by asking the students to search the Web for existing Business School
vision/mission statements and then having the students evaluate and critique these
statements in terms of the language used and what their reaction would be to the
statements if they were a student, faculty member, or company that recruited students
from the school.
The case also exposes students to the difficulty of measuring productivity, especially in
organizations that produce multiple outputs and where one or more of these outputs is an
intangible service.
1. The variety of goals and concerns expressed by the professors indicates an absence of
a well-defined strategy. This can be illustrated by discussing the lack of consistency
in the faculty’s comments. For example, one docent/professor commented, “research
is our primary mission” while another stated “there is far too much emphasis placed
on research.” Another way to illustrate this is to list the wide range of priorities
expressed by the professors. The suggestions made by the professors range from
improving student/teacher ratios to getting a Ph.D. program approved to increasing
the travel budget to getting better secretarial support to allowing professors more time
for consulting. Thus, the comments suggest that the professors are pursuing their own
personal objectives and not supporting a common university or school-wide strategy.
After making this point, the instructor may want to spend some time discussing the
likely outcomes and problems associated with not having a well-defined strategy at
INU.
2. As the leader of a university operating division, one primary role of a Dekan
(administrative head, dean) is to ensure that the actions and decisions made at the
school level are consistent with and support the overall university strategy. Of course,
this may be complicated by the absence of a well-defined overall university strategy
or one that has not been effectively communicated. It is quite likely that this is the
Chapter 1 – Page 7
, case at INU given its short existence and overwhelming success. Administrators may
simply feel that INU is doing fine without having a formal strategic plan.
At any rate, the first step for the Dekan is to determine what the university’s overall
mission and strategy is. If it turns out that the university does not have a well-defined
mission, the Dekan can use this to the Business School’s advantage by convincing the
President and Provost of the need for a university strategy and then proactively
helping formulate the strategy so that the Business School’s interests are reflected in
the strategy.
Once the Dekan has a good understanding of the overall university mission and
strategy, she can initiate an effort to develop a strategic plan for the Business School.
To ensure buy-in and commitment to the school’s strategic plan, the Dekan should
include as many of the professors in the process as possible. Perhaps she may decide
to chair a committee composed of several of the full professors, a couple of the
docents, one or two staffers, one or more business professionals, and perhaps even a
student or two to begin drafting a vision/mission statement and strategic plan for the
Business School. In formulating a vision/mission statement that supports the
university’s mission, the committee needs to consider the school’s strengths and
weaknesses, its resources, its culture, the environment, and the desires of its faculty
and other stakeholders. Further, given the small size of the Business School, it would
be highly desirable to get feedback from all faculty members. One way to accomplish
this would be to invite all faculty members and staff to periodic meetings to solicit
their reactions and input to the vision/mission statement as it is being drafted.
After the vision/mission statement has been developed, the committee can turn its
attention to developing a strategic plan for achieving the school’s mission. One key
component of the strategic plan is the identification of the school’s core competencies
and how these competencies will be developed on an ongoing basis. In addition, the
committee needs to determine how the strategic planning process will be continued in
the future. One option would be to have the Dekan serve as the chair of a Priorities
and Goals Committee. Faculty could be selected or elected to serve on this committee
for a specified term. The committee could develop a list of priorities at the beginning
of each year and meet periodically during the year to assess the school’s progress.
3. There are a number of ways the productivity of the Business School could be
measured. Potential partial productivity measures include:
Total Student Credit Hours Taught/Professor and Instructor Salaries
Total Student Credit Hours Taught/Full Time Faculty Equivalents
Grants Received/Full Time Faculty Equivalents
Papers Published/Full Time Faculty Equivalents
The ability to develop a multifactor productivity measure is extremely difficult given
the absence of a common monetary unit with which to express the various outputs in,
such as Euros or Yeni Lira (Turkish currency). For example, there is no easy way to
Chapter 1 – Page 8
