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Chapter 4—Operations Strategy
Multiple Choice
1. A firm’s ability to achieve market and financial superiority over its competitors is
called _____.
a.
operations strategy
b.
strategic planning
c.
competitive advantage
d.
competitive priority
2. Basic customer expectations are considered the minimum performance level
required to stay in business and are often called _____.
a.
order qualifiers
b.
order satisfiers
c.
order exciters
d.
order winners
3. Goods and service features and performance characteristics that differentiate one
customer benefit package from another and win a customer’s business are called _____.
a.
order qualifiers
b.
order satisfiers
c.
order exciters
d.
order winners
4. In an automobile, which of the following would NOT be considered an order winner?
a.
Self-parking capability
b.
Voice-activated music system
c.
Front-seat airbags
d.
Collision avoidance system
5. _____ are those that a customer can determine prior to purchasing goods or services.
a.
Search attributes
b.
Experience attributes
c.
Credence attributes
d.
Variant attributes
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6. The style and fit of a jacket can be classified as a(n) _____.
a.
search attribute
b.
experience attribute
c.
credence attribute
d.
variant attribute
7. With regard to the three types of attributes customers use in evaluating the quality of
goods and services, a vacation would best be classified as high in _____.
a.
search attributes
b.
experience attributes
c.
credence attributes
d.
competitive advantage attributes
8. _____ are any aspects of a good or a service that a customer must believe in but
cannot personally evaluate even after purchase and consumption.
a.
Search attributes
b.
Experience attributes
c.
Credence attributes
d.
Variant attributes
9. The knowledge of a finance consultant can be classified as a(n) _____.
a.
search attribute
b.
experience attribute
c.
credence attribute
d.
variant attribute
10. With regard to the three types of attributes customers use in evaluating the quality of
goods and services, medical diagnosis would best be classified as high in _____.
a.
variant attributes
b.
experience attributes
c.
credence attributes
d.
search attributes
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11. Which of the following does NOT describe how customers evaluate services in a
manner that differs from the way they evaluate goods?
a.
Customers rely more on information from nonpersonal sources when evaluating
services prior to purchase.
b.
Customers perceive greater risks when buying services than when buying goods.
c.
Customers can form prior expectations of expected service quality.
d.
Dissatisfaction often results from a customer’s inability to properly perform or co–
produce his or her part of a service.
12. With regard to ways customers evaluate services compared to goods, which of the
following is NOT true?
a.
For services, customers seek and rely more on personal sources of information.
b.
Customers normally adopt innovations in services faster.
c.
Customers perceive greater results when buying services.
d.
Dissatisfaction with services is often the result of a customer’s inability to
properly perform or co-produce their part of the service.
13. _____ represent the strategic emphasis that a firm places on certain performance
measures and operational capabilities within a value chain.
a.
Competitive priorities
b.
Order satisfiers
c.
Value chain processes
d.
Order winners
14. Which of the following is considered a competitive priority?
a.
Sustainability
b.
Flexibility
c.
Reliability
d.
Durability
15. Which of the following is a key competitive priority based on which organizations
can compete?
a.
Sustainability
b.
Reliability
c.
Innovation
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d.
Infrastructure
16. Which of the following is NOT generally considered a competitive priority?
a.
Sustainability
b.
Flexibility
c.
Innovation
d.
Quality
17. Which competitive priority is most often ranked #1 for Southwest Airlines?
a.
Time
b.
Flexibility
c.
Innovation
d.
Cost
18. Identify a true statement about the role of quality in gaining a competitive
advantage.
a.
Quality is unrelated to return on investment for most kinds of market situations.
b.
A strategy of quality improvement is usually accompanied by increased short-run
profitability.
c.
Producers of high-quality goods usually charge low prices.
d.
Businesses offering premium-quality goods usually have large market shares.
19. _____ is being able to make whatever goods and services a customer wants, at any
volume, at any time for anybody, and for a global organization, from any place in the
world.
a.
Strategic planning
b.
Mass customization
c.
Enterprise resource planning
d.
Business analytics
20. Which of the following statements is NOT true of mass customization?
a.
Mass customization involves the commercialization of a device, method, or idea
that differs from existing norms.
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b.
Flexibility is manifest in mass-customization strategies that are becoming
increasingly prevalent today.
c.
Mass customization requires companies to design goods, services, and operations
around flexibility.
d.
Mass customization requires companies to align their activities around
differentiated customer segments.
21. _____ is the discovery and practical application or commercialization of a device,
method, or idea that differs from existing norms.
a.
Measurement
b.
Learning
c.
Innovation
d.
Diversity
22. Which competitive priority is most often ranked #1 for Apple?
a.
Time
b.
Flexibility
c.
Innovation
d.
Cost
23. _____ is a pattern that integrates an organization’s major goals, policies, and action
sequences into a cohesive whole.
a.
Strategy
b.
Core competency
c.
Sustainability
d.
Vision statement
24. The _____ of a firm are the strengths that are unique to that organization.
a.
strategy developments
b.
strategic missions
c.
vision statements
d.
core competencies
25. Identify a true statement about corporate strategy at the top level of management.
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a.
It defines the focus for strategic business units of an organization.
b.
It provides the means by which business strategies are accomplished.
c.
It is necessary to define the businesses in which an organization will participate.
d.
It defines how an organization’s processes are designed and organized.
26. Families of goods or services having similar characteristics or methods of creation
are called _____.
a.
core competencies
b.
corporate strategies
c.
strategic business units
d.
customer benefit packages
27. A(n) _____ defines how an organization will execute its chosen business strategies.
a.
operations strategy
b.
functional strategy
c.
competitive strategy
d.
corporate strategy
28. Environmental sustainability is driven by _____.
a.
charitable organizations
b.
the government
c.
ethics committees
d.
the media
29. _____ sustainability is driven by ethics and human ideals of protecting the planet
and its people for the well-being of future generations.
a.
Environmental
b.
Social
c.
Economic
d.
Political
30. Sustainability is best described as _____.
a.
design flexibility
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b.
mass customization
c.
an organizational strategy
d.
a competitive priority
31. Operations design choices include all of the following EXCEPT _____.
a.
operating plans and controls
b.
type of processes
c.
value chain integration and outsourcing
d.
inventory and service capacity
32. Which of the following would NOT constitute an element of operations
infrastructure?
a.
Market segmentation
b.
Workforce
c.
Quality control
d.
Learning and innovation systems
33. Using the four key decision loops in Professor Terry Hill’s generic strategy
framework, which of the following statements is TRUE of the first loop?
a.
It ties together an organization’s corporate strategy and marketing strategy.
b.
It describes how operations evaluate the implications of competitive priorities in terms of
process choice.
c.
It determines if process choice decisions are consistent with infrastructure decisions.
d.
It represents operations’ input into the corporate and marketing strategy.
34. Professor Terry Hill has presented a four-loop framework for operations strategy
through an iterative and integrated process. Decision loop #2:
a.
describes how operations evaluate the implications of competitive priorities in terms of
process choices and infrastructure.
b.
involves determining if process choice decisions and capabilities are consistent with
infrastructure capabilities.
c.
represents operations’ input into corporate and marketing strategy.
d.
ties together an organization’s corporate strategy and marketing strategy.
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35. Which of the following statements best represents McDonald’s vision?
a.
To be the world’s best quick-service restaurant experience
b.
To be the most innovate organization in the world
c.
To develop and maintain a diverse workforce
d.
To be the most efficient process-oriented organization in the world
36. McDonald’s defines four sustainability initiatives. Which of the following is NOT
an example of one of its four sustainability initiatives?
a. Environmental scorecard
b. Service-encounter design
c. Supplier audits for animal welfare
d. Packaging from renewable materials
37. Which one of the following statements is TRUE with respect to McDonald’s
operations and strategy?
a.
McDonald’s #1 competitive priority is demand flexibility.
b.
Professor Terry Hill’s strategy framework cannot be applied to a company such as
McDonald’s.
c.
There is only one standardized way (process) to make french fries in 32,000 stores
worldwide.
d.
McDonald’s vision is to produce the world’s best hamburger.
38. Professor Terry Hill’s generic strategy framework can be applied to McDonald’s.
The operating design choices of resource scheduling, inventory placement and control,
and standardized operational and job procedures best relate to the corporate objective of
_____.
a.
profitable growth
b.
operational excellence
c.
operational sustainability
d.
operational diversity
True/False Questions
1. A firm’s ability to achieve market and financial superiority over competitors is called
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strategic planning.
2. Operational capabilities must be built before a firm identifies competitive priorities.
3. Although it may be difficult to change the structure of a value chain, operations
managers can make strategic choices about technology and human resources.
4. Customer segments might be based on sales volume and profitability.
5. The customer benefit package that a firm designs is meant to appeal to all customers.
6. Formal marketing research, such as surveys and focus groups, is the only useful
approach to learn about customer needs and expectations.
7. Order qualifiers are goods and service features and performance characteristics that
differentiate one customer benefit package from another and win a customer’s business.
8. A clean bed in a hotel would be considered an order qualifier.
9. Order winners are goods and service features and performance characteristics that
differentiate one customer benefit package from another and win a customer’s business.
10. Being able to access the Internet in an automobile at any speed and in any location
would be considered an order qualifier.
11. Eventually, order qualifiers become order winners.
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12. The color and size of an iPod would be considered credence attributes.
13. The ease with which one can create original music compositions using a software
package, such as Band in a Box or Apple’s GarageBand, is an example of an experience
attribute.
14. Of the three types of attributes customers use to evaluate goods and services, goods
are high in search attributes, while services are high in experience and credence
attributes.
15. Customers generally perceive greater risk when buying goods than when buying
services.
16. Employee training is an example of a key competitive priority.
17. Southwest Airlines has gained a competitive advantage by focusing on innovation
as a key competitive priority.
18. Quality improvement initiatives generally increase market share in the long term
and also increase profitability in the short term.
19. Apple’s primary competitive priority would probably be innovation, while Dell’s
would be flexibility.
20. Improving design quality usually allows a firm to charge higher prices and thus
increase revenue and profit.
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21. Reductions in flow time generally lead to a deterioration of quality.
22. A flexibility strategy requires a capacity for both design and demand flexibility.
23. In today’s global market, mass customization has become less important than it was
in the past.
24. Innovation does not necessarily involve practical application or commercialization.
25. A creative workforce and a strong supply chain can be considered as an
organization’s core competency.
26. An operations strategy provides the direction on which corporate strategy is based.
27. Operating decisions must be aligned with achieving the desired competitive
priorities.
28. As McDonald’s and Pal’s Sudden Service are both in the quick-service restaurant
business, one would expect their operations strategies to be nearly identical.
29. Professor Terry Hill’s operations strategy framework provides a systems
perspective of how operations are linked to corporate and marketing strategies.
30. The infrastructure of an organization must support process choices and provide
managers with timely and accurate information to make good decisions.
OM5 C4
Test Bank
Case Study Questions (To reward students who attend class, listen and learn, and
take good class notes on the case discussion and/or student team presentation.)
1. Which one of the following statements in the Lawn Care Company (LCC) case study
is TRUE?
a.
The LCC already had experience and capabilities in the residential lawn
application service and market segment, and was considering using this expertise
to enter the golf and park market segment.
b.
The gross margin on grass seed and fertilizer were higher than on the lawn
application service.
c.
Service management skills play a major role in the LCC current strategy and
vision of the business at the time of the case.
d.
The order winner for the current strategy at LCC is the high quality of physical
goods.
2. Identify a TRUE statement about the Lawn Care Company (LCC) case study.
a.
The LCC already had experience and capabilities in the residential lawn
application service and market segment, and was considering using this
expertise to enter the golf and park market segment.
b.
The gross margin on grass seed and fertilizer was higher than on the lawn
application service.
c.
Service management skills play a major role in the LCC current strategy
and vision of the business at the time of the case.
d.
The application service for parks and golf courses provided by a competitor
of Lawn Care can be considered the competitor’s competitive advantage.
3. Which of the following statements in the Lawn Care Company (LCC) case study is
TRUE?
a.
The LCC already had experience and capabilities in the residential lawn
application service and market segment, and was considering using this expertise
to enter the golf and park market segment.
b.
The gross margin on grass seed and fertilizer were higher than on the lawn
application service.
c.
Service management skills play a major role in the LCC current strategy and
vision of the business at the time of the case.
d.
Social sustainability is an important issue for this business in today’s market.
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4. With regard to the Lawn Care Company case study, which one of the following
statements is TRUE?
a. If the Lawn Care Company adopts a service view of their business and adds an
application service, one strategic option is to buy someone else’s application
service.
b. The current managers of the Lawn Care Company had complete control of their
value chain.
c. If the Lawn Care Company adopts a service view of their business and adds an
application service, resource scheduling becomes less important.
d. If the Lawn Care Company adopts a service view of their business and adds an
application service, call centers become less important.
Problems for Manual Grading, Take-Home Exams and Partial Credit (Also,
review the OM Instructor’s Manual for end-of-chapter questions/problems)
1. What do managers need to understand in order to create a sustainable competitive
advantage?
2. To correctly identify what customers expect requires being “close to the customer.”
Discuss.
3. Explain the difference between an order qualifier and an order winner. Provide some
examples.
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4. Explain the concepts of search, experience, and credence attributes.
5. How do customers evaluate services differently from manufacturing, and what
implications do these have for operations?
6. What are competitive priorities? Provide some examples of how OM influences the
five major types of competitive priorities.
7. Explain core competencies with examples.
8. What is the difference between corporate, business and functional strategy?
9. Explain how sustainability is related to operations strategy.
10. Explain Professor Hill’s strategy development framework. What are the key
elements of operations strategy within this framework?