Production and Operations Management

Unit 3

Unit 3

Operations Strategy

Structure: 3.1 Introduction Objectives 3..2 Operations Strategy 3. 3 Competitive Capabilities and Core Competencies 3. 4 Operations Strategy as a Competitive Weapon Product/service expertise Quick delivery Flexibility in production Low cost production and processes Product variety and product mix Quality 3.5 Linkage Between Corporate, Business, and Operations Strategy 3.6 Developing Operations Strategy 3.7 Elements or Components of Operations Strategy Designing of the production system Facilities for production and services Product or service design and development Technology selection and process development Allocation of resources Facility, capacity, and layout planning 3.8 Competitive Priorities Cost Quality Time Flexibility 3.9 Manufacturing Strategies Make-to-stock strategy Assemble-to-order strategy Make-to-order strategy 3.10 Service Strategies 3.11 Global Strategies and Role of Operations Strategy Strategic alliance Locating the operations abroad and after sales support 3.12 Case-let 1
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3.13 3.14 3.15 3.16 3.17

Case-let 2 Summary Glossary Terminal Questions Answers

3.18 Answers to Caselets 1 & 2

3.1 Introduction
In the previous unit, we dealt with operations management and strategy, tools for implementation of operations, and industry best practices. In this unit, we will deal with operations strategy as a competitive weapon; competitive capabilities and core competencies; linkage between corporate, business, and operations strategy; developing operations strategy; elements or components of operations strategy; competitive priorities; manufacturing strategies; service strategies; and global strategies and role of operations strategy. To succeed in a competitive business environment, organisations should evolve sound strategies with which they can achieve their business objectives. The strategies that are planned for implemention should be long term and broad based to achieve the set of objectives. The normal practice is to develop organisational strategies at three levels of operations namely a) corporate level, b) business level, and c) functional level. While the corporate strategy looks into organisational goals, developing the core competence and achieving the competitive advantage for their products, the business level strategy looks at market segmentation and competitive priorities to be considered for their products or services. The functional level strategy looks at operations to produce these products by managing the capability, productivity, quality, flexibility, cost of production, delivery, and finally after sales and services. Organisations achieve competitive advanatge over its competitors by providing products or services that meet the customer requirements of cost, quality, performance, durability, etc. The corporate strategy determines the customers to be served, the new products or services to be produced, and the suitable strategies to be met in competitions from both domestic and international markets.
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Hence, the operations strategy is a set of decisions taken across the organisation to help support the implementation of the competitive business strategies. The operations strategy links both its long-term and short-term operational decisions to corporate strategy. Operations strategy is a process by which the key operations decisions are made and should always be consistent with the overall strategic objectives of the organisation. Objectives: Affter studying this unit, you should be able to: explain why organisations formulate and develop startegies to gain competitive advantage describe the linkage that exists between corporate strategy, business level strategy, and functional and operations strategy outline the role of operations strategy as a competitive weapon in domestic and global markets explain the formation and development of operations strategy describe the elements of operations strategy and linking operations and marketing strategy explain how to set competitive priorities identify the operations strategies in manufacturing and services describe global strategies

3.2 Operations Strategy

Operations strategy is defined as the set of decisions that are warranted in the operational processes in order to support the competitive strategies of the business. The objectives stated above will give the firm a competitive advanatage in the products or services that are served to the customers. Operations strategy is a long-range business plan for the companys products and will provide a road map for the operational functions to be pursued. Therefore, the strategic decisions include the capacity to be built into the production system, the type of processess and manufacturing technology to be adopted, the nature of products to be produced, and the type of material flow and other logistics required to achieve the level of performance.

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Planning of operations strategy is very essentail as it will enable the organisation to respond to the market needs in an effective manner. It also gives the opportunity to align the resources and manufacturing activities to produce and deliver the products and become successful in the market.

3.3 Competitive Capabilities and Core Competencies

The operations strategies are evolved based on the business strategies. Some of the business strategies that has a direct bearing to manufacture are: To serve a defined product to the stable market To provide high product variety and customise the design to meet the specific requirements To provide rapid response to the market through in-built flexibility and produce different products to keep abreast with the environmental changes To serve these business strategies, the firm should emphasise on achieving quality, productivity, flexibility, low cost, constant innovation in designs, and short development cycle for introducing new products and being highly responsive to the changes in that competitive environment. Building core competencies and gaining competitive advantage for its products are great strategies. The core competencies are the unique resources and strengths that are required to be developed, practised, and constantly improved upon. This competence becomes the capability when the strategy is successful and the set objectives of competing is met. To achieve the competitive advantage, the organisations must provide the customers with what they want, know when they want, what quality they prefer and what cost, and how better they serve the customer than their competitors.

3.4 Operations Strategy as a Competitive Weapon

The important objective of any business is to occupy a position from where the organisation is able to attract more customers than its competitors. For this, they should identify the distictive competencies that will give the leading position in the market segments.
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Competitiveness is one of the crucial factors that decides the survival and growth of a firm. This competitiveness is how effectively an organisation meets the needs of its consumers as compared to its immediate competitors. For such competitions, the organisations look into their operational strengths and equip themselves effectively to use their strengths and opportunities as competitive weapons. These competitive weapons are explained below in detail. 3.4.1 Product/services expertise Expertise gained through operational strengths in the areas of functionalities and process capabilities will make them the market leaders for such products. 3.4.2 Quick delivery The flexible capacity built into the production line and the process adopted to produce and supply in time will all together provide the much desired customer satisfaction. This strategy will help sustain the product and its market lead. 3.4.3 Flexibility in production The organisation has to develop a capability for change. The adaptation to change begins with environmental scanning by which trends can be monitored to suit the needs of the society. There may be a threat to the product if competotors gain an edge over the broadening product lines, improved quality, or lowering costs. New entrants into the market or competiitors offering substitute product may also throw challenges to the dominant product. To counter this, the desired flexibilty in production must be built in and operations strategy must be modified accordingly. 3.4.4 Low cost production and processes The unit cost of each product is required to be lowered to meet the competition. The cost review on labour, material, and overhead costs of production lines are to be assessed. An organisation with an efficient and effective production system will provide such feasibilities to reduce costs. The operations strategy should also facilitate the processing of products at lower costs.

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3.4.5 Product variety and product mix The organisations are producing multiple products to provide variety to customers. Here the size of operations matters. Higher the volume, lower the production costs. Accordingly, operational strategy is to be fine tuned to suit the desired product mix. 3.4.6 Quality The operations strategy should ensure that the desired quality level is maintained, and it meets the customer needs. Competing in the quality of the product is one of the most important corporate strategies.

3.5 Linkage Between Corporate, Business, and Operations Strategy

The mission statement is unique to an organisation. It contains a set of longrange goals. It details the kind of business the company wants to be in, the type of customers they serve, the basic beliefs of their business, and the expected goals and profitability. Similarly, business strategy is a long-range plan and serves as a raod map to achieve the above-said corporate mission. These plans encompass many functional areas like production, marketing, finance, human resources, etc. Operations strategy translates all the decision processes that supports the business strategy. How these operating strategies work under the corporate strategies and serve the business strategy is explained in Developing Operations Strategy below.

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3.6 Developing Operations Strategy

Fig. 3.1: Developing Operations Strategy

Figure 3.1 above depicts how the operations strategy is developed under the umbrella of the corporate strategy. It shows the factors that go into the operations strategy and shows the link between the corporate, business, and the competitive priorities under the operations strategy. Here, the longterm operations strategic decisions are directly connected to developing new products, determining production capacity, establishing facilities, adopting new technologies, locating plants appropriately, and taking suitable decisons on building and sustaining the quality of products. The operations strategy translates the product plans and competitive priorities into decision making processes. The operation decisions determine the processes required to handle the volume and variety to be
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produced for each market segement. Hence, these decisions govern the design of the processes, systems, and the procedures that help the operations strategy. Selection of the market is another key element. To suit the market requirements, operation managers develop appropriate processes and designs to achieve the set objectives. The operations strategy should be flexible enough to support a product or service throughout its life cycle and for future changes in the market demand. The operations strategy should also be consistent with the other functional strategies of marketing, finance, and human resources.

3.7 Elements or Components of Operations Strategy

The six elements of operations strategy are: 1) Designing of the production system 2) Facilities for production and services 3) Product or service design and development 4) Technology selection, development, and process development 5) Allocation of resources 6) Focus on facilities planning 3.7.1 Designing of the production system The designing of the production system involves the selection of the type of product design, processing system, inventory plan for finished goods, etc. The product design has two varieties. They are: Customised product design The design is customised when the volume is low and special features are inbuilt. Examples: Industrial products like turbines, boilers, air compressors, etc. Standard product design The designer adopt a universal design so that the product will have wide acceptance across the customers. Also the demand is more and quantity is high. Examples: Air conditioners, TV, fans, etc.

There are two types of production systems. They are product focussed and process focussed. Product-focussed system is adopted where there is mass production by using a group of machines. For example, products like
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automobiles, computers, etc. In the process-focussed system, the design is based on a single task like painting, packing, heat treatment, etc. 3.7.2 Facilities for production and services Certain specialisation in production allows the firm to provide the customers with products of lower cost, faster delivery, on-time delivery, high product quality, and flexibility. Here, overheads will be less and the firm can outperform compared to the competitors. While planning the specialised lines, the economies of scale and the continuous demand are to be looked into. For example, Nikon Cameras plan and establish special lines for each model and manufacture huge quantities for the global market. Here, the economies of scale and the continuous demand matters. 3.7.3 Product or service design and development The stages followed in developing a product are: 1. Generating the idea 2. Creating the feasiblity reports 3. Designing the prototype and testing 4. Preparing a production model 5. Evaluating the economies of scale for production 6. Testing the product in the market 7. Obtaining feedback 8. Creating the final design and starting the production. Any product designed and introduced into the market has its own life cycle. The various stages of life cycle are: 1) Introduction stage 2) Growth stage 3) Maturity stage 4) Decline stage Let us now discuss these stages in brief. In the introduction stage, the sales depends on promotion and marketing efforts. The product which is successful at this stage will enter the next stage of growth, where the organisation takes the decisions on the capacity to be augmented and the investments to be made. During the maturity stage, the organisation focuses on improving the efficiency of the processes, minimising the costs, etc. At declining stage, the product may
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meet the obsolesence both in technology and in customer requirments, thus warranting the stop of production. There are many products that lost its market after going through athe above stages. For example, pagers, floppy drives, tapes for recording and palying, click-type cameras, typewriters, etc. 3.7.4 Technology selection and process development A product selected for production will be analysed for the process and the applicable technology for optimal production. There are many challenges faced by the operations managers in this decision as the alternatives are many. The techno-economic analysis for each alternatives will help to decide the required technology. Combining high technology production equipments with conventional machines and using robotics, flexible manufacturing systems, automated devices for material movements, etc have given an edge to the production units to excel in quality, flexibility, production at economic costs, etc thus enabling the firm to meet the competitions. 3.7.5 Allocation of resources The production units face continuous problems of allocating the scarce resources like capital, machines, equipments, materials, manpower, services, etc. Allocation at the right time to the right place of production indicates the efficiency of the production planners. Optimal use of resources will enable economical production. Minimising waste, optimal utilisation of resources, and the best quality product demand a sound operations strategy. 3.7.6 Facility, capacity, and layout planning The location, layout, and facilities creation for the production are the key decision areas for the operations manager. These are critical for achieving the competitiveness. The decision also influences the future expansion of the plant. While evaluating the aternatives, the operations manager will consider the availbility of raw materials, access to market, etc. Enormous capital requirement is required and the planning is always long range. Here, the production process adopted and the technology pursued dictates the volume, quality, and cost of production.

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3.8 Competitive Priorities

Operations stategy reflects the long-term goals of an organisation in its corporate strategy. To achive good results, a clear understanding of the operating advantages and a good cross functional coordination between functional areas of marketing, production, finance, and human resources departments are required. Operating advantages depend on its processes and competitive priorities considered while establishing the capabilities. The basic competitive priorities are: Cost Quality Time Flexibility 3.8.1 Cost Cost is one of the primary considerations while marketing a product or a service. Being a low cost producer, the product accepted by the customer offers sustainability and can outperform competitors. Lower price and better quality of a product will ensure higher demand and higher profitability. To estimate the actual cost of production, the operations manager must address labour, materials, scrap generations, overhead and other initial cost of design and development, etc. 3.8.2 Quality Quality is defined by the customer. The operations manager looks into two important aspects namely high performance design and consisitent quality. High performance design includes superior features, greater durability, convenience to services, etc where as consistent design measures the frequency with which the product meets its design specifications and performs best. 3.8.3 Time Faster delivery time, on-time delivery, and speedy development cycle are the time factors that operations strategy looks into. Faster delivery time is the time lapsed between the customer order and the delivery. On-time delivery is the frequecy with which the product is delivered on time. The developemnt speed is the elapsed time from the idea generation up to the final design and production of products.
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3.8.4 Flexibility Flexibility is the ability to provide a wide variety of products, and it measures how fast the manufacturer can convert its process line used for one product to produce another product after making the required changes. The two types of flexibilities are: Customisation Volume flexibility While customisation is the ability of the firm to satisfy the specific needs of each its customer, the volume flexibility is the ability to accelerate or decelerate the rate of production to handle the fluctuations in demand. For example, the production of fertilisers of different specifications and applications.

3.9 Manufacturing Strategies

There are many types of competitive priorities for processes used in the manufacturing of products. The manufacturing industry adopts systems based on demand. The production systems practised are: Batch production Mass production Customised production Assemble products, test them, and supply For these, the manufacturing strategies adopted are decided by the operations manager. The manufacturing strategies differ from industry to industry and the applicable situations demand and supply. The following are the three dominant manufacturing strategies: Make-to-stock Assemble-to-order Make-toorder Let us now discuss these strategies in detail. 3.9.1 Make-to-stock strategy The manufacturing firms adopt this strategy to ensure immediate delivery of the products, thereby minimising the delivery times. This straegy is feasible for standardised products with high volumes and where forecast is reasonably accurate. To accomplish this, the production units should hold
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good inventory of stocks. For example, chemicals, soft drinks, electronic components, etc. 3.9.2 Assemble-toorder strategy This strategy serves as a competitive priority of customisation and ensures fast delivery. This goes with the apporoach to produce customised products from sub-assemblies and components after the customer orders are received. This involves assembly processes, fabrication processes, painting, cleaning, etc. Here, the appropriate inventory of parts and aggregates are created for smooth functioning of processes. The operations manager should ensure that the optimal finsihed goods inventory is mainatained as excess inventory increases the inventory carrying cost and less finished goods inventory may hamper the delivery of products in time to the customers. For example, paints to colours, furnitures, fabricated structures, etc. 3.9.3 Make-to-order strategy When products are manufactured to the customer specification, the tendency is to follow the strategy of make-to-order. The firms evolve a set of processes that suits the manufacture based on the customer requirements. This strategy gives a higher degree of customisation, one of the major competitive priority. The firm can accommodate flexibility and offer variety. For example, special medical equipments, forgings and castings, house construction, etc.

3.10 Service Strategies

Here too, the standardised services, customised services, and assemble-toorder strategies are used for processing as in the case of manufacturing. The service strategy is the use of processes that provides little variety in high volumes and mostly customised. For example, FedEx, postal servcies, etc. The strategy adopted for designing the operations is to include the processes that produce a set of standardised services to specific customers. For example, credit cards, Internet, etc.

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3.11 Global Strategies and Role of Operations Strategy

A global strategy pursued by organisations at the corporate level may include buying foriegn parts or servcies and combat traditional domestic competitions. The firms should also ward off threats from foreign markets as they can directly supply to the domestic customers. Hence, identifying the opportunities and threats and evolving the operations strategy require a global perspective. The other factors to be analysed are the market segmentation like demographic factors, psychological factors, industry factors, etc and also identify the needs of product, delivery, volume, and any other need of the customer. While evolving the business strategy, the business units considers the prevailing global conditions along with their existing strengths, weaknesses, and competencies. The global conditions include factors like market potential; existing competitions; and economic, political, technological, and social developments across the countries being considered for their business strategy. Two effective strategies adopted by the firms exposed to products being marketed world over are strategic alliance and locating operations abroad and after sales service. 3.11.1 Strategic alliance A strategic alliance is an agreement between the two parties as joint partners to promote the products. This alliance may be in any form, but widely accepted are 1) collaboration, 2) joint venture, and 3) technology transfer and licencing. Collaboration A collaboration arrangement beween two parties arises when one firm is having core competency in a particular product which the other firm wants to promote in its country. Instead of duplicating the product with their own design, the local firm and the collobarator join together for their mutual interest and promote the product. Invariably, the operations strategy followed by the collaborated company is followed by the domestic company to keep up the reputation of products. For example, Nikon, IBM, HP, etc.

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Joint venture Joint venture is an agreement between the two firms to produce jointly. This approach is used to gain access to foreign markets and quickly promote their interest. Here, the outside firm supplies the technology and expertise and the local firm provide the required resources for the operations, processing, human resoucres, infrastructure, etc. For example, Maruti Suzuki, Hero Honda, etc. Technology transfer and licencing Technology transfer is the term used to describe the processes by which technological knowledge moves within or between organisations. The technological knowledge that is transferred can assume various forms. It can be embodied in goods (including physical goods, plant and animal organisms), services and people, and organisational arrangements, or codified in blueprints, designs and technical documents. Licensing is a business arrangement in which one company gives another company permission to manufacture its product for a specified payment. While licensing agreements are mainly used in commercialization of a technology, they are also used by franchisers to promote sales of goods and services. 3.11.2. Locating the operations abroad and after sales support Locating the manufacturing operation in a foreign country is another way of penetrating the new markets. Since economical and political environment will be different and the customers needs vary, it is essential for firms to have a detailed techno-economic survey before planning the entry. The operations strategy will be different from what the company is presently practising. If it is a standardised product to be sold in the foriegn country, the methodology and operational strategy could be the same. For example, McDonalds, Dominos Pizza, etc. Self Assessment Questions 1. Select correct answer out of the alternatives given i. While formulating the corporate objectives, the manager considers a) Market conditions b) Political and social environments c) Economic environment d) all the above
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ii. Nirma manufactures different varieties of soaps for the market and the production system followed is a a) Customised production b) Standardised production c) Stock-to-order d) Assemble-to-order iii. When products are produced well in advance and stored for marketing, the operations strategy is known as a) Produce-to-stock b) Produce-to-order c) Custom-to-order 2. Which of these is not an operation strategy? a) Production systems b) Product plans c) Collaboration for production d) Process decisions e) Capacity decisions 3. Fill up the blanks with appropriate word/words i. Operations strategy is defined as the set of decisions that are warranted in the operational processes, which supports the _____________ of the business. ii. The six elements of operations strategy that has a direct bearing on the corporate strategy are: 1) Designing of the production system 2) Facilities for production and services 3) ________________________________ 4) Technology selection, development, and process development 5) Allocation of resources 6) Focus on facilities planning iii. The following three manufacturing strategies are dominant in industries: 1) Make-to-stock strategy 2) ____________________ 3) Make-to-order strategy
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iv. A strategic alliance is an agreement betwen the two parties as joint partners to promote the products. This alliance may be in any of the forms, but widely accepted are: 1) Collaboration 2) ______________ 3) Technology transfer and licencing

3.12 Case-let 1
Strategic Decisions of Microsoft Microsoft operates in a very competitive industry. It was dominating in the DOS and held almost 90% of the market in PC operating system. It invested futher in developing the next generation OS like Windows 95, Windows NT, etc to keep the lead and to take advantage of the profitability in this evergreen DOS segment. Before the competition builds up for DOS, Microsoft had two thoughts whether to harvest the existing DOS as it is like a cash cow or bring in different systems to keep away the competitors. Bill Gates, the co-founder and CEO of Microsoft realised that if his company is not replacing its own product with a better product, some other company like IBM would come out and they may loose the market leadership position. They decided to go forward aggressively to the next competitive advantage before any other competitors does and introduced many new products. Microsoft still enjoys the market leadership position in the operating system. Discussion Questions: a) The strategic decision to develop new products to keep the market leadership - is it a corporate strategy or a business strategy? Discuss b) The strategy of developing new products to counter the anticipated competition instead of harvesting their existing cash cow product - is this correct and in this decision, what is the strategy that is involved? c) Explain briefly why Bill Gates believed in the aggressive strategy to gain the competitive advantage and how has it benefitted the company?

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3.13 Case-let 2
Tata Motors-Development of New Products to Gain Competitive Advantage Designing indegenously, building and marketing a new car is a very complex process and very few corporates take such a decision. Tata motors, one of the leading manufacturers of automobiles in India, took this drive forward in developing the first indegenously designed and developed car in Indica as a competing model to the then prevailing cars like Maruti 800 and Zen. This strategy by Tata was a tradeoff between the price and the features. Indica car was a success story, and it did give the desired competition to Maruti Suzuki. The target audiance for Tata was the middle class and fuel efficiency and price were the other primary considerations to woo the customers. After the design and test runs were satisfactorily done, benchmarking Indica car for final pricing and positioning in the market was again a big challenge. Here, the operations strategy adopted was to offer the first indigenous car at the lowest price possible and with the best quality. Hence the investment, processes, systems, and procedures for manufacture of such a car required a total relook by their operations manager, it was a really big task for the entire Tata Motors. With the confidence reposed after the success of designing, developing, and marketing Indica cars to Indian roads, Tata Motors embarked on another ambitious project of their chairman in bringing the prestigious peoples car, Nano, to Indian roads. Here, the decision to bring out a peoples car from Tata Motors stable was purely based on the sale price of Rs. one lakh per car. This challenge was taken up seriously by the operations managers and the task was accomplished successfully by offering Nano cars at the declared price. In the above two success stories, a) What do you feel are the corporate strategies? b) What manufacturing priorities might have been pursued by the operation managers?

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3.14 Summary
Let us recapitulate the important concepts discussed in this unit: Operations strategy is a decision making process of selecting the suitable manufacturing strategies and manufacturing priorities. This exercise will enable the organisation to respond to the market needs in the most effective manner by aligning the resources and activities of the organisation to deliver the products that are likely to succeed in the market. Operations strategy involves planning, organising, and allocating of all the resources to gain the competitive advantage. Operations strategy is defined as the set of decisions that are warranted in the operational processes which supports the competitive strategies of the business. It is a long-range business plan for the companys products and will provide a road map for the operational functions to be pursued for achieving business strategies. Strategic decisions include capacity building; evolving production systems, type of processes, manufacturing technology to be adopted, nature of products to be produced, type of material flow and other logistics, and the means to achieve the required level of performance. Corporate strategy involves monitoring and making changes to suit the external environment and exploiting the core competencies. Competitiveness is one of the crucial factors that decides the survival and growth of a firm. Organisations will look into their operational strengths and use them effectively as competitive weapons. There are six elements of operations. They are designing of the production system; facilities for production and services; product or service design and development; technology selection, development, and process development; allocation of resources; and focus on facilities planning. Operating strategy should also analyse the competitive priorities like cost, quality, time, and flexibility which are the capabilities to be built in to meet the market expectations. The three dominant manufacturing strategies are make-to-stock strategy, assemble-to-order strategy, and make-to-order strategy. These systems are practised for categories of batch production; mass
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production; customised production; and assemble the product, test it, and supply. A global strategy pursued at the corporate level may include buying foriegn parts or servcies and combat traditional domestic competitions. Other factors analysed here are the market segmentation like demographic factors, psychological factors, industry factors, etc and identify the needs of product, delivery, volume, and any other requirement of the customer.

3.15 Glossary
Cash cow products: Cash cow products provide lots of cash for the firms. They have high market share, and they are always in the growing market. Competitive advantages: Organisations achieve competitive advantages by providing their customers what they want and better or more effective products than their competitors and take the lead Core competence: The organisations resources and capabilities are the sources of their unique competencies Customisation: Customisation is the ability of a firm to satisfy the specific needs of each customer.

3.16 Terminal Questions

1. What is meant by operations strategy? How is it related to corporate strategy? 2. What is meant by core competence and competitive advantage? 3. What are the types of competitive weapons that a firm can use to meet the objectives of the operations strategy? 4. How do you develop operations strategy? Explain briefly the relationship that exists between corporate strategy, business strategy, and operations strategy. 5. Explain briefly the elements of operations strategy. 6. Explain the basic competitive priorities considered while formulating operations strategy by a firm? 7. What are the manufacturing strategies that can be applied by a firm to meet the operations strategy?
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8. Under global strategies, explain the salient features of the collaboration arrangement and the joint venture policies for gaining competitive advantage.

3.17 Answers
Self Assessment Questions 1. (i) d. All the above (ii) b. Standardised production (iii) a. Produce-to-stock 2. c. Collaboration for production 3. (i) Competitive strategies (ii) 3. Product design and development (iii) 2. Assemble-to-order (iv) 2. Joint venture Terminal Questions 1. 2. 3. 4. 5. 6. 7. 8. Refer section 3.2 Refer section 3.3 Refer section 3.4 Refer section 3.5 & 3.6 Refer section 3.7 Refer section 3.8 Refer section 3.9 Refer section 3.11

3.18 Answers to Caselets 1 & 2

Caselet-1 a It is a corporate strategy, planned with a long-term vision, not only to sustain the existing business but also to keep the competitive advantage. Todays cash cow product may not be so in the future. The development lead time required to immediately bring new product should be borne in mind. Hence, the decision taken to bring new versions made Microsoft to
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keep the competitive edge over its competitors.

Bill Gates aggressive policy of keeping the competitive advantage has benefitted the company as they are, even today, the front runners and has many first-mover products to their credit. The vital decision to indigenously design and develop a new car, Indica and compete with the existing models and also bringing out similarly the Nano as the peoples car with the price band fixed at Rs. one lakh per car are the corporate strategies. Low cost, high volume production of cars to suit the Indain roads, and also build with many features for satisfying the customer, that too, within the price band fixed were all the challenges faced by the operations manager. To achieve this, they created facilities, production systems, and all other procedures.

Caselet-2

Reference:

Frazier, G., and Gaither, N. (2002. Operations Management South Western/Thomson Learning. Ronald, E. J. And Everett, A.E. (2009). Production & Operations Management Phi Learning.

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