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

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