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 15 pages (double-spaced) or shorter than 10 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?
Recommendations?
Suggestions?