Unit02

Unit 2: Operations Strategy <span id="2"></span>  The most significant aspect of operations management is the process itself.  How does Apple take a pile of chips, glass, and plastic, and turn it into an iPhone?  Their manufacturer in China is responsible for this process, but Apple is involved every step of the way in order to ensure quality, reliability, and consistency.  Process flow structures are the different methods of production deemed appropriate for various manufacturing contexts.  Does it make sense for Apple to wait for 1 million orders, then make and ship them?  Or should they instead produce iPhones based on current demand and try to balance inventory?  These are decisions that the COO must make as each process flow has various costs associated with it.

Additionally, not every operations department is producing a good we can consume.  Wall Street traders receive orders from clients and must execute trades on open markets.  The order itself may pass through dozens of people before confirmation of the trade is sent back to the client.  If you consider that “actual trade” to be the product, you can design an operations process around the goal of executing the trade.  The result is a process remarkably similar to production.  In this unit, you will learn how operations managers use long-term, strategic planning to manage internal and external influences on the organization’s resource base.

Unit 2 Time Advisory
This unit should take you approximately 9 hours to complete.

☐    Introductory Reading: 2 hours

☐    Subunit 2.1: 1 hour

☐    Subunit 2.2: 2.5 hours

☐    Subunit 2.3: 2.5 hours

☐    Subunit 2.4: 1 hour

Unit2 Learning Outcomes
Upon successful completion of this unit, students will be able to:

• Define “Operations Strategy” and identify its three main levels within an organization.

• Explain the role of operations in developing long-term, strategic objectives.

• Discuss the operational competencies that contribute to the development of a competitive advantage for an organization.

• Reading: Book Boon: Albert Porter’s "Operations Management:" Chapter 2: “Operations Strategy” Link: Book Boon: Albert Porter’s "Operations Management:" Chapter 2: “Operations Strategy” (PDF)
   
  Instructions:  Read Chapter 2 of Porter’s Operations Management text.  You will find this chapter in the text that you downloaded for the reading in Unit 1.  If you need to download the text again, click on the link above to go to the Bookboon.com website.  After entering your location and email address, you will be able to download the text in PDF format directly from the webpage.  Make sure to select the country from which you are accessing this resource from the drop-down menu after “You are in.”  Save this PDF file, as the initial reading from each subsequent unit in this course will come from this text.
   
  Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

2.1 What Is Strategy? <span id="2.1"></span> 

• Lecture: YouTube: Worcester Polytechnic Institute: Dr. John Morecroft’s “Reflections on System Dynamics and Strategy”

  <span class="title1">Link: YouTube: Worcester Polytechnic Institute: Dr. John Morecroft’s “Reflections on System Dynamics and Strategy” (YouTube)</span>

  Instructions: Watch Dr. Morecroft’s 1-hour lecture on using a systems approach to strategic modeling.

  Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

2.2 Levels of Strategy <span id="2.2"></span> 

• Reading: Wikibooks: “Business Strategy/Approaches to Strategic Management” Link: Wikibooks: “Business Strategy/Approaches to Strategic Management” (PDF)
   
  Instructions: Read this article, making sure to pay particular attention to the “The strategy hierarchy” section.
   
  Reading this article and taking notes should take approximately 15 minutes.
   
  Terms of Use: This resource is licensed under a Creative Commons Attribution-ShareAlike 3.0 United States License. It is attributed to Wikibooks, and the original version can be found here.

• Lecture: iTunesU: Yale University’s “Green to Gold: An Interview with Dan Esty”; YouTube: Dr. Eric W. Ford’s “Corporate-Level Strategy:” Parts One, Two, Three, Four, Five, and Six Link: iTunesU: Yale University’s “Green to Gold: An Interview with Dan Esty” (iTunes U) series; YouTube: Dr. Eric Ford’s “Corporate-Level Strategy:” Parts One, Two, Three, Four, Five, and Six
   
  Note: All Eric Ford videos are in YouTube.
   
  Instructions: Listen to Yale University’s 22-minute audio lecture outlining the use of Corporate Social Responsibility as a framework for corporate strategy.  Watch Dr. Ford’s 1-hour, 3-minute series on using a diversification strategy to create value.  This series contains six parts.  You must click on a new link to launch each part as listed above.
   
  Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

2.3 The Role of Operations in Strategy Development <span id="2.3"></span> 

• Reading: California State University, Northridge: Rex C. Mitchell’s “Strategy Formulation” Link: California State University, Northridge: Rex C. Mitchell’s “Strategy Formulation” (PDF)
   
  Instructions: Read Mitchell’s article on formulating strategy in which he describes three phases of strategy development.  To download the article, click on the above link to view a list of resources.  Under the heading “Strategic Management,” select the link for “Formulating Strategy.”
   
  Terms of Use: This resource has been reposted with the kind permission of Dr. Rex C. Mithcell, and the original version can be found here. Please note that this material is under copyright and cannot be reproduced in any capacity without the explicit permission from the copyright holder.   

• Lecture: YouTube: Kellogg School of Business: Sunil Chopra’s “A New Channel Strategy for Dell”

  <span class="title1">Link: YouTube: Kellogg School of Business: Sunil Chopra’s “A New Channel Strategy for Dell” (YouTube)</span>

  Also available in:
  iTunes U (Lecture 5)

  Instructions: Watch this 22-minute lecture about the need to evaluate the organization’s strategy environment to stay on top of changes over time.

  Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

2.4 Operations Competitive Priorities <span id="2.4"></span> 

• Reading: Production and Operations Management: Kenneth Boyer and Marianne Lewis’ “Competitive Priorities: investigating the Need for Trade-offs in Operations Strategy” Link: Production and Operations Management: Kenneth Boyer and Marianne Lewis’ “Competitive Priorities: investigating the Need for Trade-offs in Operations Strategy” (PDF)
   
  Instructions: Click on the link to download the PDF.  Read this article, which discusses how manufacturers seek trade-offs to become more effective at what they do, to save costs, or both. 
   
  Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

• Activity: The Saylor Foundation's "Operations Strategy Unit 2 Activity and Grading Rubric" Link: The Saylor Foundation's "Operations Strategy Unit 2 Activity and Grading Rubric" (PDF)

  Instructions**:** For this activity, you will write a 2-3 page paper on the development of an operation management plan that focuses on your business concept that you developed for the Unit 1 Activity.   A minimum of four scholarly resources should be used in order to support your plan, citing your sources in APA format.  Make sure to include a References section that also lists the sources used in APA format.  As you write your paper, you should address the following questions and topics:1. Purchasing procedures**: **Identify the necessary input (raw materials necessary to generate the output, or product). Who will or can you buy the raw materials from?  If you are providing a service, what supplies will you need to begin and where will they be purchased from?

  2. What accounting and/or purchasing system(s) will you need to accomplish buying either a product line or a service-based business? 

  3. Quality control procedures: Identify what quality control measures you will use in order to make sure the product or service meets consumer standards. 
     For example, if your business concept was to open a bed and breakfast, to answer question 1, you will want to estimate how many rooms you will need; how many guests [on average] you intend to host; and where you will obtain your groceries, paper items, soap, and other guest necessities?  Will you shop at a grocery store, use a shopping club like Costco or Sam’s Club, or obtain your inputs through some other means?
      
     Question 2 would include a review of accounting software or systems such as: Sage Peachtree Accounting, Quickbook or Netsuite Financials (or another you may feel comfortable with).  Identify why you chose this system or software for your particular business in order to justify its applicability.
      
     Question  3 would need a similar discussion as you identify your quality assurance/control measures that you intend to use to help minimize defects or errors as you produce a product or provide a service.  Your review of quality control measures will include a discussion such as:  Will there be a quality control manager named for your business?  Why, or why not?  Will your business use Six Sigma processes in its operation?  Why, or why not?  Is there a need to utilize ISO 9000 quality standards? Why, or why not?
      
     Be specific in your essay. It may be helpful to “brainstorm your needs” on a separate sheet of paper and once done, create an outline for this section (numbers 1, 2, and 3), using topical headings.  Then, note how you will address each requirement of these sections with specific content. 
      
     Please score your paper or have a friend score your paper using the "rubric," or "scoring guide" on the following page. The levels will equate to the following letter grades:
     4 = A; 3 = B; 2 = C; 1 = D; and 0 = F.