OM5 Chapter 4: Operations Strategy
Discussion Questions
1. Select a business with which you are familiar and identify examples of customers using
search, experience, and credence quality to evaluate the good or service. You might also
look up the businesses on the Internet or visit the library.
This question allows students to apply the concepts to their own purchasing decisions and
helps them understand the nature of goods and services. Ask them how the shop for and
2. Select a business with which you are familiar and identify examples of order qualifiers and
winners. You might also look up the businesses on the Internet or visit the library.
For goods-producing businesses often the order qualifier is physical goods quality while
innovation, time, price (cost), flexibility or service quality are the order winners. What’s the
3. Explain the interlinking model of quality and profitability (Exhibit 4.2). How does it connect
to business and operations strategy? Can you provide any examples of goods and services
that support and add credibility to this model?
The value of a good or service in the marketplace is influenced by the quality of its design.
Improvements in performance, features, and reliability will differentiate the good or service
from its competitors, improve a firm’s quality reputation, and improve the perceived value of
4. Is it possible for a world-class organization to achieve superiority in all five major
competitive priorities—price (cost), quality, time, flexibility, and innovation? Explain your
reasoning.
Generally not, as tradeoffs usually exist among these priorities. For example, Dell competes
on quality, time, and flexibility, and therefore mass customization. However, Dell is not
5. Why is sustainability a strategy and not a competitive priority? Explain your reasoning.
Competitive priorities represent the strategic emphasis that a firm places on certain
performance measures and operational capabilities within a value chain. Time, cost,
quality, flexibility, and innovation are the five competitive priorities defined in the chapter.
Sustainability is defined in previous chapters using three dimensions—environmental,
social, and economic sustainability. Stakeholders such as the community, green advocacy
groups, or the government drive environmental sustainability. Social sustainability is driven
by ethics and human ideals of protecting the planet and its people for the well being of future
Problems and Activities
1. Research and write a short paper (two pages maximum) about your cell phone provider.
What are their mission, strategy, and competitive priorities? How is sustainability
incorporated into their strategy, value chain, and operations?
The corporate web sites for Verizon, AT&T, Sprint, etc. offer much information on these
2. What might the competitive advantage be for each of the following companies?
a. eBay
Competitive advantage denotes a firm’s ability to achieve market and financial superiority
over its competitors. (cost/price, quality, time, flexibility, innovation)
Some possible responses:
a. eBay – flexibility, technology (innovation), worldwide market reach, self-service and
b. Southwest Airlines – low price (cost), only one type of plane to reduce maintenance,
c. Starbucks – value of convenience (service quality), product quality, flexibility
3. Choose an organization with which you are familiar that falls into one of the following
categories:
sporting goods store
haircut salon
Define the firm’s strategic mission, strategy, and competitive priorities. What are the order
The objective of this question is to get students to think about and discuss strategy, mission
statements, order winners, the role of operations and operational capability, and so on. OM
4. Research and explain the logic behind the statement, “General Electric discovered that 75
percent of its manufacturing costs are determined by design.”
Design drives material and component purchasing requirements, processing and assembly
equipment needs, and other resources needed to produce the good. A small change in design
5. How does a package delivery service such as UPS or FedEx use the competitive priority
“time” to its competitive advantage? Research, then explain and provide examples in a short
paper. (Maximum of two typed pages).
Go to www.fedex.com or Google it and your students will have plenty of material to write a
paper on. FedEx competitive priorities are inherent in the following:
Managing “time” is their business—package delivery, meeting customer promise dates and
6. How does Wal-Mart use the competitive priority “cost” to its competitive advantage?
Research, then explain and provide examples in a short paper (maximum of two typed
pages).
A good place to start is — http://walmartstores.com/
Students may draw the supply chain and discuss how retail point of sale capability tied to
factories, supplier cooperation, Wal-Mart trucking and GPS, cross-dock warehouse load and
7. How does Procter & Gamble use the competitive priority “quality” to its competitive
advantage? Research, then explain and provide examples in a short paper (maximum of two
typed pages).
Go to www.pg.com or Google it and your students will have plenty of material to write a
P&G Arabian Peninsula, which produces a wide range of premier products that improve
consumers’ daily lives, today announced that its plant in Dammam, Saudi Arabia has received
The Dammam Plant is a multi-category site where a variety of well-known Dry Laundry,
The P&G Quality Excellence Award recognizes sustained excellence in quality performance
and requires at least two consecutive 100% Quality Assurance Capability scores
In addition, Quality Excellence Award recipients must meet or exceed Category Product
P&G Arabian Peninsula applies innovation, customer service and strict product quality and
8. How does your cell phone provider use the competitive priority “flexibility” to its
competitive advantage? Research, then explain and provide examples in a short paper
(maximum of two typed pages).
The corporate web sites for Verizon, AT&T, Sprint, etc. offer much information on these
9. How does General Electric use the competitive priority “innovation” to its competitive
advantage? Research, then explain and provide examples in a short paper (maximum of two
typed pages).
A good place to start is — http://www.ge.com/
10. Explore the Web sites for several competing companies on the Fortune 500 list. Based on the
information you find, on which competitive priorities do these firms appear to focus? What
can you say about their operations strategy (either explicit or implied)? Report your findings
in a short paper (maximum of two typed pages).
11. Research and write a short paper on a company that has a clear strategy based on social and
ethical sustainability.
The chapter write-up on sustainability at McDonald’s is a good benchmark for what you
should expect from students. Companies you might suggest to students that they will be
12. Apply Hill’s strategy framework to one of the companies in question 2. This will require
research to identify corporate objectives and competitive priorities. See the McDonald’s
example in the chapter for guidance and make sure that you emphasize OM concepts,
capabilities, and execution. Report your findings in a short paper (maximum of two typed
pages).
This question is designed to force students to think independently and apply the principles in
this chapter. This question might best be assigned to small teams or as a project. Responses
13. Identify two competing organizations (for example, AT&T and Verizon, Taylor Made and
Callaway golf club manufacturers, or Starbucks and McDonalds). Explain the differences in
their missions, strategies, and competitive priorities, and how their operations strategies
might differ. Use the Internet or business magazines to research the information you need.
Report your findings in a short paper (maximum of two typed pages).
Taylor is more innovation (design) and flexibility (customization) while Callaway is more
minimize cost and production efficiency, and standardization for the average golfer. Students
will provide a wide range of examples. The instructor may want to have teams present their
14. Research Apple and define its strategic mission, vision, corporate strategy, competitive
priorities, and operations strategy. What can you say about Apple’s strategy and practices
regarding sustainability? You might use the Internet or visit the library. Report your findings
in a short paper (maximum of two typed pages).
15. Using the information about Pal’s Sudden Service provided in this chapter, apply Hill’s
generic strategy framework in a similar fashion as the McDonald’s example. How do the
strategies of Pal’s and McDonald’s appear to differ? What differences exist in their
operations strategies and decisions? Report your findings in a short paper (maximum of two
typed pages).
The objective of this question is to help students learn Prof. Hills strategy framework using a
business they are all familiar with–fast food. Exhibits 4.3 and 4.4 and the subsequent text
discussion summarize the application of Hill’s strategy framework to McDonald’s global
business. The application to Pal’s Sudden Service would be similar to McDonald’s but
localized with less emphasis and resources focused on social responsibility and innovation.
Responses to this question should be limited to no more than 1 (an exhibit like 4.8) to 3 typed