Production/Operations Strategy
Georgia State University
CRN 12217
MGT 4740
Production/Operations Strategy
Spring, 2004
Instructor: Walter L. Wallace, Instructor,
Department of Management,
Robinson College of Business,
35 Broad Street, 10th Floor, Suite1006
Atlanta, GA 30303-3083
Mgt. Dept.: 404 651-3400
Office: 404 651-2893
E-mail:
Web Site: www.gsu.edu/~mgtwlw
Class: Location: 201 Classroom South
CRN 12217
Prerequisites: MGT 4700
Class Hours: Wed. 7:15pm-9:45pm
Credit Hours: 3.0
Text: Operations Strategy: (First edition),Nigel Slack, Michael Lewis; Prentice Hall, Inc.2003.
Logistics: All classes are in 201 Classroom South. My office hours are very flexible. I am in my office Tuesday through Thursday during normal business hours, except for class time. Please call my office to schedule an appointment at a mutually convenient time. If I am not in the office, please don’t hesitate to leave a voicemail message. I check my voicemail regularly.
Course Description:
The course addresses the development and implementation of production/operations strategy and the integration of this strategy with the corporate/business strategies and with those of other functional areas. Operations strategy is concerned less with individual processes and more with the total transformation process that is the core business. It is concerned with its relationship with other parts of the corporation to which it belongs and with the commercial environment outside the business. It is concerned with how the competitive environment is changing and what the operation has to do in order to meet current and future challenges. It is also concerned with the long-term development of its operations resources, capabilities and processes so that they can provide the basis for a sustainable advantage.
The decisions taken as part of a company’s operations strategy are considered strategic because:
· They are widespread in their effect and so are significant in the part of the organization to which the strategy refers.
· They define the position of the organization relative to its environment.
· They are the potential basis for sustainable competitive advantage.
· They move the organization closer to its long-term goals.
But a strategy is more than a single decision, it is a total pattern of the decisions. A company’s operational strategy, therefore, is shown in the pattern of decisions that the organization takes to develop its operations resources. These decisions include the magnitude and nature of its total capacity; the way in which it relates to customers, competitors, suppliers, and partner operations; its approach to acquiring or developing process technology, and the way in which it organizes and develops its resources.
Grading: Classroom Case Presentations/Discussions…………..20%*
Test 1……………………….…….………………..….25%
Test 2…………………………………...... 25%
Comprehensive Final Exam……………....….…….....30%
I do not give additional projects or extra credit work to increase one’s pending
grade.
*Class attendance is strongly advised. I intend to start each class session on time; please avoid being tardy. I will take roll each class period. You must make every effort to be available when your team is doing a case presentation. You have no excused absences! Leaving class early counts as an absence.
A = 90 - 100%
B = 80 – 89%
C = 70 – 79%
D = 60 – 69%
F = Below 60%
Grading/ Testing Approach:
All tests/exam will be closed book, closed notes, and closed neighbor. There will be no trick questions or surprises on the tests/exam. For a clear understanding of the material, you must read the assigned chapter readings. Case studies will be presented in class as a team effort. Occasionally, there is a request to take a test early. If I approve the earlier testing date, the individual is not at liberty to discuss or reveal anything regarding the test/exam. Evidence of this occurring will result in a “zero” on the test/exam.
Homework Assignment -Team Based Case Studies Presentations:
Teams will be made up of six members each and will be expected to meet together periodically in order to work, review and collaborate their responses to assigned case studies. Reference CASE WORK ASSIGNMENTS for specific case studies and presentation dates. All cases will be presented in class by the full team on the designated date. Workload balance is critical to ensure that each team member participates in the assigned case study presentations. Your presentations are worth 20% of your grade. Please ensure you are an active participant on your team’s four presentations. Your grade depends on your participation.
Syllabus: CRN 12217
This is a tentative schedule which will guide us through 12 Chapters discussions and testing.
-Date- -Text Section- -Topics and Assignments-
Jan 14th Preface Review Review Syllabus and Discuss “Customer Value Model”
Jan 21st Chap 1 Discuss Chapter 1 & Case Presentations
Jan 28th Chap 2 Discuss Chapter 2 & Case Presentations
Feb 4th Chap 3 Discuss Chapter 3 & Case Presentations
Feb 11th Chap 4 Discuss Chapter 4 & Case Presentations
Feb 18th Test 1 Test 1 on Chapters 1-4 and “Customer Value Model”
Feb 25th Chap 6 Discuss Chapter 6 & Case Presentations
Mar 3rd Chap 8 Discuss Chapter 8 & Case Presentations
Mar 10th --- Spring Break: March 8 – 14 -- No Classes
Mar 17th Chap10 Discuss Chapter 10 & Case Presentations
Mar 24th Chap11 Discuss Chapter 11 & Case Presentations
Mar 31st Chap12 Discuss Chapter 12 & Case Presentations
Apr 7th Test 2 Test 2 on Chapters 6, 8, 10, 11, and 12
Apr 14th Chap 13 Discuss Chapter 13 & Case Presentations
Apr 21st Chap 14 Discuss Chapter 14 & Case Presentations
Apr 28th Chap 15 Discuss Chapter 15 & Case Presentations
May 5th Final Exam Comprehensive Final: Wednesday @ 7:15pm
Additional Readings:
What Is Strategy?
Michael E. Porter, Harvard Business Review. Boston: Nov-Dec1996. Vol 74, Iss. 6
pg. 61, 18 pgs
MGT4740
PRODUCTION/OPERATIONS STRATEGY
CASE WORK ASSIGNMENTS
Text: Case Presentations: Team:
Chapter 1: Singapore Airlines
Nestle & Wal-Mart 1
Market Segmentation (TB)
Case: Hagen Style
Chapter 2: Performance Objectives at Burger King
General Motor’s Puts Its Eggs In One Basket 2
Operations Strategy Decisions Areas at
Burger King
Case: Dresding Medical
Chapter 3: Emergent Strategies (TB)
Low Cost Airlines Focus on … Low Cost 3
Burning Your Bridges (Or Boats) (TB)
Case: “Call-Us” Banking Services
Chapter 4: Utilization and Efficiency
What Drives Scale Economics 1
Clustering for Comfort
Case: Freeman BioTest, Inc.
Chapter 6: Transaction Cost Economics
Samsung’s Subcontracted Success 2
Game Theory (TB)
Case: Aztec Component Supplies
Chapter 8: The Product/Process Innovation Life Cycle
Micropower 3
What Computers Can’t Do
Case: Bonkers Chocolate Factory
Chapter 10: Perspectives on Organizations (TB)
Dow’s History of the Matrix 1
Yamazaki Mazak
Case: The Thought Space Partnership
Chapter 11: Business Process Reengineering (TB)
The Balanced Scorecard Approach (TB) 2
The Sand Cone Theory (TB)
Case: Customer Service at Kaston Pyral
Chapter 12: Modular Design and Mass Customization
Quality Function Deployment 3
Product Development of Microsoft
Case: Project Orlando at Dreddo Dan’s
Chapter 13: International business Machine (A)
Remember New Coke? 1
International business Machine (B)
Case: The Focused Bank
Chapter 14: The Red Queen Effect (TB)
Changing the Game at Royal Dutch/Shell 2
Autoelectrics
Case: Clever Consulting
Chapter 15: Take a Tablet and a Glass of Water…
Monsanto: Building Capabilities for the Future? 3
Prospect Theory (TB)
Case: Sanders Industrial Services
THE DISCIPLINE OF MARKET LEADERS
CUSTOMER VALUE MODEL
q Value Discipline:
There are three desirable ways in which an organization offers a differentiated strategy for delivering economic value:
§ Operational Excellence
Middle of the market products or services at the best price with the least inconvenience of doing business. Low price/ hassle-free service.
Operational efficiencies are critical. (Cost control)
§ Product Leadership
Offer the best products and services
available. Product leaders continue
to innovate year after year, product
cycle after product cycle. A mastery
of absolute advantage; the ability to
produce a good/service using fewer
resources than other producers use.
Continually striving for an absolute
advantage over the competition.
§ Customer Intimacy
Customer-intimate organizations do
not pursue one-time transactions;
they cultivate enterprise relationships
through a collaborative approach.
- Identify and understand
their customers issues
- Generate options/alternatives
- Select a solution where both parties are winners.
They specialize in satisfying unique
interest. Intimate knowledge of the
customer is required. They offer the
best solution for the customer and
support needed to achieve optimum
results and/or value by their product
and service offering.
Michael Porter has argued persuasively that three generic competitive strategies exist:
Overall Cost Leadership-an overall costs leadership strategy requires efficient-scale facilities,
tight cost and overhead control, standardized customer offerings, reduced network costs and an
low-cost operational model. (Similar to Operational Excellence)
Differentiation-the essence of the differentiation strategy lies in creating products and services that
are perceived as being unique. The primary thrust lies in creating customer loyalty. (Product Leadership)
Focus-the focus strategy is built around the idea of serving a particular target market very well by
addressing the customers’ specific needs. (Customer Intimacy)
q Value Proposition:
Implicit promise made to a customer to deliver a particular combination of core benefits consisting of the following:
§ Price
§ Quality
§ Performance
§ Convenience
§ Value analysis*
§ Delivery options
§ Process mapping
§ Pro forma savings
§ Market intelligence
§ Paperwork accuracy
§ Electronic interchange
§ Ease of doing business
§ Inventory management
§ Flexible payment terms
§ Business process reengineering**
Based on the customer’s needs and interest, a core benefit package is developed for a particular customer or group of similar customers. This becomes their individual value proposition, by which the organization goes to market with these customers.
* A method for comprehensively analyzing the cost of each manufacturing step to identify the steps that have a critical effect on cost and to figure out how to make them less expensive.
**The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in strategically important measures of performance, such as quality, speed, dependability, flexibility, and cost.
q Value Delivery System:
The value discipline (primary operating model) is the basis for determining the structure of the value delivery system. The value delivery system is the collective integration of all operating resources, capabilities and processes, logistical systems, service-delivery systems, management systems, business structure, ethics & culture, supplier partnerships and customer alliances that give an organization the capacity to deliver its committed obligations (value proposition) to each and every customer that fits the organization’s value discipline. The value delivery system is an integral part of the value discipline. The value delivery system must be in alignment at all levels of the organization…operations, finance, marketing, procurement, credit, accounting, sales and service…at all levels of management.
Without an integrated and comprehensive value delivery system, the value discipline will not work and commitments to key customers cannot be consistently executed. The value delivery system should embrace key performance objectives… quality, speed, dependability, flexibility and cost as primary design criteria. Efficiency, effectiveness and productivity are all critical outputs in the development of the processes/systems embodied in the value delivery system.
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