978-0134728391 Chapter 7 Part 2

Learning Objective 7-8:

Explain how a supply chain strategy differs from traditional strategies for coordinating

operations among firms.

Adding Value Through Supply Chains

A supply chain (or value chain) for any product is the flow of information, materials, and

services that starts with raw-materials suppliers and continues through other stages in the

network of firms until the product reaches the end customer.

A. The Supply Chain Strategy

Supply chain strategy is based on the idea that members of the chain, working as a

coordinated unit, will gain competitive advantage.

1. Supply Chain Management. Supply chain management (SCM) looks at the supply

chain as a whole in order to improve the overall flow through a system composed of

2. Reengineering Supply Chains for Better Results. The results often include lower

costs, faster service, and the coordination of flows of information and materials.

B. Outsourcing and Global Supply Chains

Outsourcing is the strategy of paying suppliers and distributors to perform certain business

processes or to provide needed materials or services. Global outsourcing creates new

operations jobs for supply chain management and, sometimes, the need for more or different

types of employee training.

QUICK QUESTIONS

 Who are the supply chain members for a manufacturer of baked goods?

 How can the reengineering of supply chains add value?

Learning Catalytics is a “bring your own device” student engagement, assessment,

and classroom intelligence system. It allows instructors to engage students in class

with realtime diagnostics. Students can use any modern, web-enabled device

(smartphone, tablet, or laptop) to access it. For more information on using

Learning Catalytics in your course, contact your Pearson Representative.

IN-CLASS ACTIVITIES

In-Class Activity 1: Ice-Breaker: Are You Getting What You Paid For?

Activity Overview:

This activity is designed to get students to think about how to perceive service quality.

Time Limit: 25 minutes

What to Do:

1. Divide the class into groups of two to four members and ask each group to think of three

2. Ask groups to think of ways in which buyers of those services measure the level of service

quality they are receiving. (10 minutes)

3. Reassemble the class and ask each group to reveal what they discussed. (10 minutes)

Don’t Forget:

Measuring the quality of manufactured goods—often through durability, functionality,

In-Class Activity 2: Up for Debate: Do You Really Have to be on Time for

That Meeting In Cairo?

Activity Overview:

This activity asks students to express their feelings about punctuality.

Time Limit: 20 minutes

What to Do:

1. Divide the class into four-member teams. Ask each team to discuss some real-life situations

that require them to be on time. Who benefits from punctuality? (5 minutes)

2. Ask the groups to discuss certain job fields that are time-clock driven. Why are they time-

clock driven? Are there any situations discussed in Step 1 that require punctuality but in

which punctuality is not entirely necessary? Relate punctuality to the concept of productivity

3. Reassemble the class as a whole and ask students to discuss each group’s input. (10 minutes)

Don’t Forget:

BUSINESS PLAN PROJECT

PART 2 THE BUSINESS OF MANAGING

Assignment Overview:

The second part of the business plan project asks students to think about goals of their business,

some internal and external factors affecting the business, as well as the organizational structure

of the business. As part of this assignment, students are asked to complete a simple SWOT

analysis, an organizational chart, and a floor plan. These analyses and charts will vary greatly

depending on the scope of the business. Encourage as much detail as possible so students can get

a clear picture of the true costs of owning a business. Make sure your expectations are clear as to

what format (for example, handwritten or electronic) you would like to see the organizational

charts and floor plans submitted.

Files to Provide Students:

For this part of the project, students will be asked to complete Part 2: The Business of

Managing. If students have already started working on the business plan project, they should

continue using the student template they began working on in Part 1.

Part 2 Estimated At-Home Completion Time:

If done well, this section will require a minimum of 2 to 3 hours. Instructor feedback will

improve the quality of student responses so you may wish to spend class time working on the

plan.

ANSWERS FOR END OF CHAPTER ACTIVITIES

QUESTIONS FOR REVIEW

7-1. Describe, in your own words, the meaning and significance of business operations. What do

we mean when we talk about operations? What does it encompass? What does it exclude? .

7-2. What are the major differences between goods-production operations and service

operations?

7-3. What are the major differences between high-contact and low-contact service systems?

Give an example of each, comparing and contrasting them.

In a low-contact system, customers are not in contact with the service provider; in a high–

7-4. Identify the three forms of utility and describe each one briefly.

The production process adds customer value through form, time, and place utility. Form

QUESTIONS FOR ANALYSIS

7-5. Apply the five major categories of operations planning to your college or to a local

business.

Capacity planning might include both the minimum and maximum number of students or

7-6. What type of business strategy does Disney use to attract customers to its theme parks?

What does the company do to implement its strategy? What are the key operational

characteristics?

7-7. Choose three different businesses that you frequent and rate the quality of their service or

product on a scale of 1–5, with 1 being poor quality and 5 being high quality. Explain the

standard that you applied for each business to determine quality. Was it the same standard, or

did you apply a different standard to each one? If so, why?

7-8. If you were a member of a quality improvement team at your college, what would be five

specific high-impact recommendations that you would support? Of those five, which two

would be the most important, and briefly explain what strategies you might employ as a

college administrator to implement those two recommendations.

Examples will vary, but should be specific, such as decreasing response time for financial

7-21

streamlined process along with a staff training program. (Learning Objective 7 – AACSB –

analytical thinking, application of knowledge)

APPLICATION EXERCISES

7-9. Map out the process for enrolling in classes at your school by drawing a process flowchart

that shows the stages in the activity, and then tell how you would use that flowchart as part of

a methods improvement approach to operations planning.

Answers will vary, but process charts should include a logical starting point, show all the

7-10. Interview the manager of a local service business, such as a restaurant or hair salon.

Identify the major decisions involved in planning that business’s service operations.

Answers will vary, but many managers will reveal that the top concern is delivering what the

BUILDING A BUSINESS: CONTINUING TEAM EXERCISE 7-11 TO 7-15

(Learning Objectives 2, 3, 4, 7 and 8 – AACSB – interpersonal relations and teamwork,

analytical and reflective thinking, application of knowledge)

Answers will vary but students should note regardless of the type of business, every business will

have a service component. Remind students that service quality is often measured by the tangible

evidence of the service and there will be different perceptions on service quality. When

analyzing the key operations characteristics, students should focus on operations planning and

the activities or processes that the business needs to consistently perform well to survive and

flourish.

In analyzing the planned production activities students should consider lean manufacturing

TEAM EXERCISE: CALCULATING THE COST OF CONSCIENCE 7-16 TO 7-19

(Learning Objective 2, 6, and 7 – AACSB – interpersonal relations and teamwork,

analytical and reflective thinking, application of knowledge, ethical understanding and

7-16. If you were a customer, what would you hope the company would do? Would your answer

be different if you were an investor or stockholder?

7-17. How might Ruth’s boss, the vice president for operations, view the situation differently

from Ruth?

7-18. Which is the best of the three options in the short-term? What about in the long-term?

7-19. How could the company have avoided this situation?

EXERCISING YOUR ETHICS: PROMISES, PROMISES

(Learning Objective 4 – AACSB – ethical understanding and reasoning, reflective

thinking)

7-20. What are the underlying ethical issues in this situation?

7-21. From an ethical standpoint, what is an appropriate response to the customer’s question?

What steps should you take in responding to it? Explain.

7-22. What would you say on the phone at this time to this customer?

CASES:

DESSERT IS ALWAYS A GREAT IDEA

(Learning Objectives 4 and 5 – AACSB – analytical and reflective thinking, application of

knowledge)

7-23. How would you define quality and how is quality measured in the restaurant industry? Are

some measurements more useful than others? Explain.

7-24. Would you categorize the Cheesecake Factory as a service provider or a provider of goods,

or both? How would your classification affect your quality control decisions? How would it

affect the way you approach operations?

7-25. Describe how process flowcharts may be helpful for methods improvement in restaurant

operations. What kinds of information would you hope to gain from the flowcharts?

7-26. Identify a major U.S. restaurant chain that has recently received poor-quality ratings. Who

are its customers, and what are the basic causes that led to declining quality?

7-27. U.S. restaurants must comply with local health regulations. The results of periodic

inspections have to be posted or published, or both. What actions would you recommend be

considered by restaurants to overcome negative perceptions from a less-than satisfactory

rating?

Restaurants with satisfactory ratings should prominently post them where customers can see

TELECOMMUTING BOOSTS QUALITY AND PRODUCTIVITY…OR DOES IT?

(Learning Objective 7 – AACSB – analytical and reflective thinking, application of

knowledge)

7-28. How would you define quality for Yahoo!’s situation in this case? Explain why.

7-29. To figure out if Yahoo!’s telecommuting is less productive than it should have been, Mayer

looked at the log of Yahoo!’s virtual private network to see how frequently employees

checked in. What do you think of this as a measure of productivity and quality? What other

measure(s) would you suggest instead of the one she used?

7-30. Go to Yahoo!’s career website (https://careers.yahoo.com) and look at the kinds of jobs

available at Yahoo. From these, identify two job descriptions that you recommend as

appropriate for telecommuting. Identify two others that are appropriate for office-based

employment. Explain the reasons for your recommendations.

Students will likely break the jobs into two categories: those requiring ―face‖ time, i.e.,

7-31. Consider businesses such as hotels, television broadcasting, or others that provide

services/products to consumers. Suppose you want to improve the quality of such a service

(choose one or two services). To do so, suppose you are considering allowing telecommuting

by some employees, but requiring others to be office-based employees. Identify two kinds of

work suitable for telecommuting and two kinds for office-only jobs. Explain your reasoning.

7-32. How do you feel about telecommuting? Would you rather have a job, like those at Yahoo,

where you have set office hours, or would you rather work from home? Do you think that

working from home would cause you to be more productive or less productive? Why?

CRAFTING A BUSINESS PLAN:

PART 2: THE BUSINESS OF MANAGING

MISSION STATEMENT

Provide a brief mission statement for your business.

you.

BUSINESS GOALS

Consider the goals for your business. What are three of your business goals for the first

year? What are two intermediate to long-term goals?

Hint: Refer to the discussion of goal setting in Chapter 5. Be as specific and realistic as possible

SWOT ANALYSIS

Perform a basic SWOT analysis for your business, listing its main strengths, weaknesses,

opportunities, and threats.

Hint: We explained previously what factors you should consider in your basic SWOT analysis.

MANAGEMENT

Who will manage the business?

Hint: Refer to the discussion of managers in Chapter 5. Think about how many levels of

management as well as what kinds of managers your business needs.

ORGANIZATION CHART

Show how the ―team‖ fits together by creating a simple organizational chart for your

business. Make sure your organizational chart indicates who will work for each manager

as well as each person’s job title.

Hint: Most businesses start off quite small. However, as you create your organizational chart,

consider what your business will look like in the future. What different tasks are involved in the

business? Who will each person report to in the organizational structure? Refer to the discussion

of organizational structure in Chapter 6 for information to get you started.

FLOOR PLAN

Create a floor plan of the business. What does it look like when you walk through the

door?

RAW MATERIALS AND SUPPLIES

Explain what types of raw materials and supplies you will need to run your business. How

will you produce your good or service? What equipment do you need? What hours will you

operate?

Hint: Refer to the discussion of operations earlier in this chapter for information to get you

started.

QUALITY ASSURANCE

What steps will you take to ensure that the quality of the product or service stays at a high

level? Who will be responsible for maintaining the quality of the product or service (or

both)?