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Recap
Chapter 1 & 2
CHAPTER 1
The 3 Basic Functions of Business Organizations
Operations FinanceMarketing
Organization
Operations Function
Inputs•Land•Labor•Capital•Materials•Information
Outputs•Goods•Services
Transformation/Conversion
Process
Control
Measurementand Feedback
Measurementand Feedback
Measurementand Feedback
Value-Added
Feedback = measurements taken at various points in the transformation process
Control = The comparison of feedback against previously established standards to determine if corrective action is needed.
Supply and Demand
Supply Demand>
Supply Demand<
Supply Demand=
WastefulCostly
Opportunity LossCustomer
Dissatisfaction
Ideal
Operations & Supply Chains
Sales & Marketing
Role of the Operations Manager
• Recap:– Operations: The part of a business organization that is
responsible for producing goods or services– Operations management: The management of systems
or processes that create goods and/or provide services
• A primary function of the operations manager is to guide the system by decision making.– System Design Decisions– System Operation Decisions
Key Issues For Today’s Business Operations
• Economic conditions• Management of technology (Innovating)
– The Internet, e-commerce, e-business• Competing in a global economy
– Globalization, outsourcing• Quality Problems• Risk Management
CHAPTER 2
Competitiveness
• Product and service design• Cost• Location• Quality• Quick response• Flexibility• Inventory management• Supply chain management• Service• Managers and workers
Hierarchical Planning and Decision Making
Mission
Goals
Organizational Strategies
Functional Goals
Finance Strategies
MarketingStrategies
OperationsStrategies
Tactics Tactics Tactics
Operatingprocedures
Operatingprocedures
Operatingprocedures
Porter’s Five Forces ModelSUPPLIER POWER
Supplier concentration Importance of volume to supplier
Differentiation of inputs Impact of inputs on cost or differentiation Switching costs of firms in the industry
Presence of substitute inputs Threat of forward integration
Cost relative to total purchases in industry
THREAT OF NEW ENTRANTS
Barriers to Entry Absolute cost advantages Proprietary learning curve
Access to inputs Government policy Economies of scale Capital requirements
Brand identity Switching costs
Access to distribution
DEGREE OF RIVALRY Exit barriers
Industry concentration Fixed costs/Value added
Industry growth Intermittent overcapacity
Product differences Switching costs Brand identity
Diversity of rivals Corporate stakes
THREAT OF SUBSTITUTES Switching costs
Buyer inclination to substitute Price-performance
trade-off of substitutes
BUYER POWER Bargaining leverage
Buyer volume Buyer information
Brand identity Price sensitivity
Product differentiation Substitutes available
Buyers' incentives
SWOT
• Environmental scanning (SWOT)– Internal Factors
• Strengths and Weaknesses
– External Factors• Opportunities and Threats
Measure of Productivity
Partial Measures Output
Single Input;
Ouput
Labor;
Output
Capital
Multifactor Measures Output
Multiple Inputs;
Ouput
Labor +Machine;
Output
Labor +Capital +Energy
Total Measure Goods or services produced
All inputs used to produce them
Input
Output=tyProductivi
Warm-up
• Microsoft Cuts 18,000 Cuts: What Nadella's Thinking
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