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Operations Management
8th edition
Chapter 3
Operations Strategy
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Slack et al.â??s model of operations management
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Key questions
In Chapter 3 â?? Operations strategy â?? Slack et al. identify the
following key questionsâ?¦
 What is strategy and what is operations strategy?
 What is the difference between a â??top-downâ?? and a â??bottomupâ?? view of operations strategy?
 What is the difference between a â??market requirementsâ??
and â??operations resourcesâ?? view of operations strategy?
 How can operations strategy form the basis for operations
improvement?
 How can an operations strategy be formulated? The
process of operations strategy
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
What is strategy?
 Setting broad objectives that direct an enterprise towards its
overall goal.
 Planning the path (in general rather than specific terms) that
will achieve these goals.
Stressing long-term rather than short-term objectives.
 Dealing with the total picture rather than stressing individual
activities.
 Being detached from, and above, the confusion and
distractions of day-to-day activities.
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Strategic decisions
Strategic decisions are those decisions which are
widespread in their effect on the organization to which the
strategy refers, define the position of the organization
relative to its environment and move the organization
closer to its long-term goals.
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
â??Operationsâ?? is not the same as â??operationalâ??
â??Operationsâ?? are the resources that create products and
services.
â??Operationalâ?? is the opposite of strategic, meaning day-today and detailed.
So, one can examine both the operational and the
strategic aspects of operations.
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
The strategic role of the operations function
The three key
attributes
of operations strategy
Implementing
Operations contribution
Be dependable
Operationalize strategy
Explain practicalities
Supporting
Be appropriate
Understand strategy
Contribute to decisions
Driving
Be innovative
Provide foundation of strategy
Develop long-term capabilities
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
The 4 stage model of operations contribution
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Figure 3.3
The four perspectives on operations strategy
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
The strategy hierarchy
Key strategic
decisions
Influences on
decision making
Corporate
strategy
What business to be in?
What to acquire?
What to divest?
How to allocate cash?
Economic environment
Social environment
Political environment
Company values and ethics
Business
strategy
What is the mission?
What are the strategic
objectives of the firm?
How to compete?
Customer/market dynamics
Competitor activity
Core technology dynamics
Financial constraints
Functional
strategy
How to contribute to the
strategic objectives?
How to manage the
functionâ??s resources?
Skills of functionâ??s staff
Current technology
Recent performance of the
function
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Top-down and bottom-up perspectives on
operations strategy can reinforce each other
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Different competitive factors and performance
objectives
Competitive factors
If the customers value these …
Low price
Performance objectives
Then, the operations will need to
excel at these …
Cost
High quality
Quality
Fast delivery
Speed
Reliable delivery
Dependability
Innovative products and services
Flexibility (products/services)
Wide range of products and
services
Flexibility (mix)
The ability to change the timing
or quantity of products and
services
Flexibility (volume and/or
delivery)
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Order-winning competitive factors
Order-winning factors

Competitive
benefit
Neutral
â??ve
Performance
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Qualifying competitive factors
Qualifying factors

Competitive
benefit
Neutral
â??ve
Performance
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Less important competitive factors
Less important factors

Competitive
benefit
Neutral
â??ve
Performance
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
The effects of the product/service life cycle
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Some typical structural and infrastructural
operations strategy decisions
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
In operations improvement should achieve â??fitâ?? between market requirements
and operations performance, but deviation from the line of â??fitâ?? between market
requirements and operations performance can expose the operation to risk
(1 of 2)
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
In operations improvement should achieve â??fitâ?? between market requirements
and operations performance, but deviation from the line of â??fitâ?? between market
requirements and operations performance can expose the operation to risk
(2 of 2)
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Nine-point performance scale
For this product/service is achieved performance â?¦
Better than
competitors
1 – Consistently considerably better than our nearest competitor
2 – Consistently clearly better than our nearest competitor
3 – Consistently marginally better than our nearest competitor
Same as
competitors
4 – Often marginally better than most competitors
5 – About the same as most competitors
6 – Often close to main competitors
Worse than
competitors
7 – Usually marginally worse than main competitors
8 – Usually worse than most competitors
9 – Consistently worse than most competitors
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
The importanceâ??performance matrix
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Strategic resources and sustainable competitive
advantage
Operations resources can give sustainable competitive
advantage if they areâ?¦
 Scarce
 Not very mobile
 Difficult to imitate
 Difficult to substitute for
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
The four stages of the process of operations
strategy
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
The challenge of operations strategy formulation
(1 of 2)
An operations strategy should pass the following
questionsâ?¦
Is it comprehensive?
Is it coherent?
Does it correspond with strategic objectives?
Does it identify critical issues?
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
The challenge of operations strategy formulation
(2 of 2)
An operations strategy should pass the following
questionsâ?¦
Is it comprehensive?
Is it coherent?
Does it correspond with strategic objectives?
Does it identify critical issues?
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Operations Management
8th edition
Chapter 4
Product and
Service Innovation
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Key questions
In Chapter 4 â?? Product and service innovation â?? Slack et al.
identify the following key questionsâ?¦
 What is product and service innovation?
 What is the strategic role of product and service
innovation?
 What are the stages of product and service innovation?
 What are the benefits of interactive product and service
innovation?
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Figure 4.2
The relationship between creativity, innovation
and design
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Nature and purpose of the design activity
Products, services and the processes which produce
them all have to be designed.
Decisions taken during the design of a product or
service will have an impact on the decisions taken
during the design of the process which produces those
products or services and vice versa.
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Figure 4.3
The S-shaped curve of innovation
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Innovation in primary healthcare exampleâ?¦
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
The product and service design innovation activity
as a process
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Figure 4.7
The stages of product/service design innovation
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Concept generationâ?¦
Ideas from customers formally through marketing
activities.
Listening to customers â?? on a day-to-day basis.
Ideas from competitor activity â?? For example, reverse
engineering.
Ideas from staff â?? Especially those who meet
customers every day.
Ideas from research and development.
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
The funnel of development
Large number of
design options
CONCEPT
Choice and
evaluation
screens
Uncertainty
regarding the
final design
TIME
Certainty
regarding the
final design
One design
FINAL DESIGN
SPECIFICATON
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Preliminary designâ?¦
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
A delay in the â??time to marketâ?? disproportionally
delays the financial breakeven point
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Figure 4.12
Sorting out problems early saves greater disruption later
in the design activity
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Figure 4.13
Organizational structures for the design innovation
process
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
ITS 631: Paper #2
Summer 2018 IG
Dr. Ward
______________________________________________________________________________
Chapter 3: Operations Strategy & Ch. 4: Product & Service Innovation
Any company, regardless of size, product or service, is one to which you can apply the principles
of operational excellence. The basis for this paper will be either a factual case from your own
work experience or a published case. For this paper, you will describe the situation in the case
and then apply appropriate principles of operations strategy (Ch. 3) and product and service
innovation (Ch. 4). The case should be treated as a problem presented to you by your
companyâ??s top management for analysis and a recommended course of action. In the paper,
you will discuss and make a recommendation for improvement in the operations of the
company based on the concepts you learned in chapters three and four.
Your paper should be at minimum 8 double-spaced paragraphs. Each paragraph should
contain at minimum 4 sentences.
Your paper will include the following.
Paragraph 1: Company Overview
Paragraph 2: Situation/Problem
Paragraphs 3-5: Recommendations from Ch. 3: Operations Strategy
Paragraphs 6-8: Recommendations from Ch. 4: Product & Service Innovation
References must be formatted in APA. Plagiarism will not be tolerated and will result in a
zero grade. Please review the Academic Dishonesty Policy outlined in the syllabus and in your
student handbook.
Rubric for
Criteria for Grading Papers 1-6
Criteria
A
B
C
F
Student showed depth
Student showed
Student showed
of knowledge of subject
Student showed little
knowledge of subject knowledge of subject
matter well beyond
knowledge of subject
matter beyond citing matter primarily limited
citing the textbook;
matter; writer may not
the textbook; writer
to the textbook; writer
writer cited more than
have cited the minimum
Knowledge
cited the minimum
cited the minimum
the minimum number of
number of references;
of Subject
number of references; number of references;
references; all
many statements and
Matter
most statements and some statements and
statements and
opinions were not
(40 pts)
opinions were
opinions were not
opinions were
supported by
supported by
supported by
supported by
appropriate citations
appropriate citations
appropriate citations
appropriate citations
from the literature.
from the literature.
from the literature.
from the literature.
27 points
35 â?? 32 points
31 â?? 28 points
40 â?? 36 points
Comments
Points
Earned
ITS 631: Paper #2
Summer 2018 IG
Dr. Ward
______________________________________________________________________________
Quality of
Research
(30 pts)
Student did an
exceptional job of
integrating course
readings with additional
research. Sources
listed were all scholarly
or practitioner journals,
newspapers, or
academic books from
the last ten years.
30 â?? 27 points
Student did a
satisfactory job of
integrating course
readings with additional
research. Sources
listed were primarily
scholarly or practitioner
journals, newspapers,
or academic books
from the last ten years.
26 â?? 24 points
Student did a less than
satisfactory job of
integrating course
readings with additional
research. Some
sources listed were not
scholarly or practitioner
journals, newspapers,
or academic books
from the last ten years.
23 â?? 21 points
Student did an
inadequate job of
integrating course
readings with additional
research. Many of the
sources listed were not
scholarly or practitioner
journals, newspapers,
or academic books
from the last ten years.
20 points
Comments
Student presented
Student presented
Student presented
Student presented
ideas in a poorly
ideas in a compelling
ideas presented in a
ideas in a coherent
organized or incoherent
manner with no
clear, coherent manner manner with several
Presentation
manner with many
distracting writing,
with few distracting
distracting writing,
of Ideas and
distracting writing,
grammar, or spelling
writing, grammar, or
grammar, or spelling
Mechanics
grammar, or spelling
problems; the page
spelling problems; the
problems; the page
(20 pts)
problems; the page
length requirement was
page length
length requirement may
length requirement may
met.
requirement was met.
not have been met.
not have been met.
20 â?? 19 points
18 â?? 16 points
15 â?? 14 points
13 points
Comments
Most citations,
All citations, quotations,
quotations, and
Some citations,
Most citations,
APA
and references were
references were
quotations, and
quotations, and
formatting
properly formatted or
properly formatted or
references were not
references were not
(10 pts)
contained one or two contained several minor properly formatted or
properly formatted or
minor errors.
errors.
contained major errors. contained many errors.
10 – 9 points
8 points
7 points
6 points
Comments
Total Points Earned
(100 points max)

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