A CASE STUDY: OPERATIONS STRATEGY ANALYSIS

Prepare an “Operations Strategy” analysis for a small or medium sized business organization (preferably a company with a limited or single product/service line produced at a single or limited number of sites).

The overall purpose of the analysis is to determine, with some specificity, how the company competes in the marketplace through its operations. It is not particularly important for this project whether the company is doing a good job or poor job in operations.

The outline below should be followed in developing and writing the report. Other formats may be used but check with the instructor before deviating significantly from the outline. For the grading criteria, emphasis will be placed on the supporting logic and evidence presented in the report. An innovative, professional presentation style will also be considered positively in grading. As a general guideline, the report should not be significantly longer than 20 pages (double-spaced) or shorter than 15 pages (double-spaced). Appendices may be used to support your analysis.

The outline below tends to “cover the waterfront”. For a particular firm, several of the topics may be irrelevant or of very minor importance. It is also normal to expect that information may be unattainable in a few of the areas. Simply make a statement to this effect. In the outline below, the use of the term “product” does not imply that a manufacturing company should be selected. Substitute “service” for “product” if a service organization is selected.

I. GENERAL INTRODUCTION(2 or 3 pages).

A. Name of the firm, location, major product(s), market segment served.

B. Apparent product strategy of the company (60 or less words).

C. General financial posture (financial report not necessary).

D. Major competitors. Position of company in the industry (estimated market share, etc.).

E. Substitutes for company’s products.

F. Nature of entry/exit constraints (barriers!) to the industry.

G. Importance of industry suppliers/power of customers.

H. Intensity of rivalry in the industry.

II. OPERATIONS (6 to 10 pages).

A. Product(s): Where is the firm’ product(s) on the product life cycle? What is the breath of product line relative to competitors? Is product change/development a factor in the industry?

B. Process: General classification. Identify significant inputs/outputs. Level of automation? Estimate of position on the product/process matrix. Industry leader or follower in process technology? Is process technology important in the industry?

C. Level of Vertical Integration: Does the company practice vertical integration to the industry? What is the apparent motivation – cost? control? quality? risk?

D. Demand Management: Does demand for the firm’s products vary significantly? Does this present significant problems? How is the varying demand met – varying employee work hours, subcontracting, inventory, backorders, hiring/firing? Does the firm attempt to control/alter demand patterns? If so, how?

E. Capacity: Does the company have a small/large range of volume output capability? Do unit costs vary significantly with volume? If so, how? Has the firm periodically in the past increased capacity? If so, do capacity increases lead/lag demand?

F. Facility Location: What motivated the company to locate where it did? Is location of firms in the industry dictated more by customer location, raw material/labor? politics? other factors? Does the firm’ location provide any advantages/disadvantages over competitors in the marketplace? Are firms in this industry sensitive to location?

G. Use of Inventories: Does this company produce “to-stock” or “to-order”? What relative advantages are offered by this choice? What general level of inventories are maintained in finished goods, raw materials, work-in-process?

H. Organization/Work Force/Management: Is job specialization prevalent? Job enlargement? Job enrichment? Is worker motivation a problem with this type of production process?

I. Quality: Define briefly the important “dimensions of product quality”. Is there significant staff involvement in quality management? Is there a quality differential among the products sold by industry members?

J. Productivity/Efficiency: Are any formal measures of productivity used in the firm? Are they computed for each organization unit? For the firm as a whole? For each product? Is a formal productivity improvement program in place?

K. Cost Measurement: What cost/profit measures are routinely available and used by operations management? Is a formal cost accounting system used?

L. Overall Operations Posture in the Firm: Choose one of the following “stages” as the most representative of the operations function and justify/explain. (1 page maximum).

1. Internally Neutral: Operations is primarily reactive to internal pressures placed upon it – does not have its own planning mechanism.

2. Externally Neutral: Operations works hard to keep up with the industry practice and maintain “neutrality” or parity with competitors.

3. Internally Supportive: Operations does work consciously to be compatible with and supportive of the firm’s business unit strategy.

4. Externally Supportive: Operations actively seeks ways to develop competitive advantages for the firm – operation is a leading factor in the firm’s attempt to develop a competitive advantage.

M. Other Factors: Are there other specialized factors that are not covered elsewhere in this outline that significantly impact the operations posture of this firm, e.g., government regulations, worker safety, international issues, social responsibility, etc.

III. CONCLUSIONS (Two pages maximum)

Do the firm’s operations activities appear to be compatible with the firm’s product strategy for competing in the marketplace? Are significant incompatibilities noted (i.e., incompatibilities between the operations strategy and the business strategy, between the operations strategy and the other functional strategies, or between the decision categories within operations)? Does operations make a significant contribution to this firm’s competitive advantage or success in the marketplace – or is the firm more driven by marketing, etc.? Are there significant environmental changes that could arise in the future that will impact operations?