Production & Operation Management

1. CHAPTER 2: Operations Strategy
Response to Questions:
1. Corporate Strategy is a firm’s plan of action to stay competitive in the
given business environment. Operations strategy is an offshoot/product of
the corporate strategy.
2. Some of the operations strategies are: (i) improved responsiveness (ii)
reduced prices and (iii) improved quality. Several operations-related
supportive actions need to be taken.
3. A service has different characteristics as compared to a product. The
customer is generally present during the production of a service; a
defect/mistake in a service is much worse than a defective in
manufacturing. While the strategies for service would not be different, the
emphasis is much stronger in the case of services. Server is extremely
important in services, but a worker in manufacturing does not have same
level of impact.
4. Improved responsiveness could be tried to be achieved by various means:
location decisions, improved transport, better communication, wider
product/service choice, proactive decisions, etc. Each of this would,
naturally, have different results.
5. Key factors such as product performance, technology leadership, new
product introduction, and delivery service have manufacturing
ramifications. Delivery service would require logistics to be streamlined
along with strict adherence to the production schedule. This is just an
example.
6. Student does the SWOT analysis.
7. ‘Threat’ and ‘opportunity’ are based on perceptions. New competitors
could help us hone our skills. New technologies will give us a chance
(albeit forced) to check out these and upgrade our product. Thus, ‘threats’
could also be seen as ‘opportunities’. Weaknesses can also be improved
upon; they then cease to be weaknesses any more.
8. Porter analyzes the business environment into five forces that are
generally found to operate. His thesis is that an understanding of these
forces is necessary so as to devise an appropriate strategy to tilt the
competitive forces to the firm’s advantage.
9. Flexibility is the ability to quickly and economically respond to changes in
the business environment. For operations function, it is about how quickly
it can meet customer demand with little or no cost increases. Now, the

2. 2
customer demand can change in terms of the variety, volumes and
schedules. The operations flexibility should be available in these areas.
The other changes the operations function faces are in the area of inputs.
It should be able to absorb any changes in the inputs. Generally,
operations people would ensure the input or substitute input by various
means: supply chains, R&D assistance, and good HR policies.
10. It is the people who buy the product, use the product and make the
product. Their importance cannot be ever overemphasized. Strategic
response of a firm is for the people (customers – present & potential,
society). The effectiveness of the strategic response depends upon the
people (employees, business associates) inside the firm.
Indian industry is yet not as people-centric as a nation desirous of
becoming a world economic superpower should be.
11. A technology leader company needs its operations function to be capable
of producing new products or delivering new services all the time. Cost
may not be an important factor, but the quickness of change is very
important. Quality - consistent quality - is another important factor.
12. Accounting function, if it is a ‘control’ function, it needs to be in tune with
the operations strategy and be supportive of it. With a different operations
strategy, what is ‘efficient’, what is ‘standard’, etc would change.
Accounting for control purposes should control the right parameters.
13. Customer focus: Delivering the required quality products on time at right
cost will be the operations strategy.
Technology focus: The strategy will be to keep the production/operations
system flexible or open for experimentation and changes.
Product focus: If new product introduction is to be facilitated, the
operations system has to be flexible. It should also have the capacities
and capabilities of men, machine and materials.
14. Efficiency is mostly inward directed; whereas, effectiveness is generally
outward directed. Effectiveness has more to do with strategy because
strategies are, by definition, a response to the outside environment.
However, gains from efficiencies can be passed on to the customers and
business associates; in such a case, efficiencies are significant from the
strategic angle.
15. Competing on time means giving service/product on time – as contracted
or better still, just when any customer needs it. This could be a winning
strategy generally and particularly when the products cannot be
differentiated on any other basis such as physical performance, features

3. 3
or quality. There is another facet of competing on time: that of developing
and introducing a new product earlier than one’s competitors.
16. The movement of products, services and factors of production around the
world can be referred to as globalization. The market having widened, the
operations strategy has to be different.
The ‘five forces’, as mentioned by Porter in his model, have changed
because of the rapid pace of globalization. The risk of potential
competitors, the threat of substitute products, the power of buyers and the
power of suppliers and the rivalries have all increased and taken on a
different shape. The operations function has to respond to these
challenges.
17. There are several strategic actions possible linking up environmental
management with operations management.
Productivity increases in resource utilization is one such possibility. Thus,
‘lean production’ could serve the operations strategy as well as the
environmental requirements. Resources could be recycled as another
strategic action.
Non-waste technology, where no by-product is a waste, is another
response to environmental needs while meeting other operations
strategies.

4. 4
Chapter 2: Operations Strategy
Objective Questions:
1. Capabilities of equipment and employees in a firm could be :
a. a strength for the firm.
b. a weakness for the firm.
√ c. a & b
d. an opportunity for the firm.
2. The following could be the ‘key success factor/s’:
a. Technology leadership
b. Access to key decision-makers
c. Product performance
√ d. All of the above
3. The modern approach to cost reduction differs from the traditional approach
in the following aspect/s :
a. Traditional approach reduces indirect costs; modern approach
emphasizes the reduction of the direct costs.
√b. Modern approach emphasizes the concern for the customer; the
traditional approach does not.
c. Traditional approach emphasizes improving the processes and thus
increasing the yields; the modern approach does not.
d. All of the above.
4. For a globalized firm, as distinct from a non-globalized firm, the following
issue is important :
a. Management style and organizational culture
b. Logistics
c. Location
√ d. All the above
5. Competitors need to be studied for their :
a. markets
b. capabilities
c. capacities and locations
√ d. all the above
6. Time-based competition as an organizational strategy leads to the
manufacturing strategy of :
a. Deferring investment in machines, including the currently necessary
replacements.
b. Reducing inventories all over and instead focusing on scheduling of
operations.
√ c. Building flexibilities and adaptability in the operations system.
d. None of the above

5. 5
7. R&D function can help production/operations function by :
a. designing new processes.
b. process capability improvement.
c. designing new products.
√ d. all of the above.
8. An aggressive financing strategy is helpful for :
√ a. new product introduction.
b. the control of operations costs.
c. eliminating the non-value adding activities.
d. all of the above.
9. The operations strategy of improving customer responsiveness may consist
of :
a. timely response
b. geographical proximity to the customer
c. flexible manufacturing system
√ d. all of the above
10. The comparative advantage of nations may be captured by the operations
strategic action of :
a. Spreading facilities over different locations in the world.
b. Organizing the supply chain globally.
√ c. All of the above
d. None of the above
11. Operations strategy and environmental strategy meet at :
√ a. lean production
b. operations cost reduction
c. reduction in product-range
d. all of the above.
12. Which of the following is true?
a. A factor that contributes to ‘weakness’ cannot be viewed as a ‘strength’
b. A ‘threat’ cannot be viewed as an ‘opportunity’.
c. An ‘opportunity’ cannot be viewed as a ‘threat’.
√ d. None of the above.
13. The operations strategy of ‘improving quality’ can be attained through :
a. reduced complexity and confusion in the operations.
b. improved technology.
√ c. a & b
d. none of the above.

6. 6
14. Improved physical distribution management is :
a. a marketing strategy.
b. an operations strategy.
c. neither marketing nor operations strategy.
√ d. both marketing and operations strategy.