Jason Yearwood
OMGT-310
05 October 3013
Chapter1-2 Summaries
Mr. Shaun Stewart
Chapter-1 Summary
Chapter 1 opens with the definition of Operations Management (OM). It talks about
operations management affecting work that is done in an office, hospital, restaurant, department
store, or even a factory, basically the production of goods and services requires operations
management. To create goods and services, all organizations require three functions which are
marketing, productions/operations and financial/accounting. Every business needs these three
functions to be successful. Through these functions value for the customer is created. However,
firms seldom create this value by themselves. Instead, they rely on a variety of suppliers who
provide everything from raw materials to accounting services and help develop a supply chain.
Competition in the 21st century is no longer between companies; it is between supply chains. We
study OM for four reasons starting with learning how people organize themselves for productive
enterprise, learn how goods are produced, understand what operations managers do, and because
it is a costly and vital part of an organization.
All good operations managers perform the basic functions of the management process.
The management process consists of planning, organizing, staffing, leading, and controlling.
Operations managers apply this management process to the decisions they make in the OM
function. There are ten strategic operations management decisions. There were several important
figures in the establishment and enhancement of OM. Manufacturers produce a tangible product,
while service products are often intangible. The operation activities for both goods and services
are often very similar. They have quality standards, are designed and produced on a schedule that
meets customer demand, and are made in a facility where people are employed. Similarly, the
sale of most goods includes a service. Service constitutes the largest economic sector in
postindustrial societies. The operations manager’s job is to enhance the ratio of outputs to inputs.
Improving productivity means improving efficiency. Management creates the production system,
which provides the conversion of inputs to outputs. Production is the making of goods and
services. Measurement of productivity is an excellent way to evaluate a country’s ability to
provide an improving standard of living for its people. There is single-factor and multifactor
productivity that is used to measure productivity. Productivity increases depend on three
productivity variables, labor, capital, and management. Identifying ethical and socially
responsible responses while developing sustainable process that are effective and efficient
productive system is not easy. Managers are also challenged to develop and produce safe, highquality green products, train, retain, and motivate employees in a safe workplace, honor
stakeholder commitments while meeting the demands of a very dynamic world marketplace.
Chapter-1 Questions
1. Who are considered stakeholders? (pg. 19)
Those with vested in an organization, including customers, distributors, suppliers,
owners, lenders, employees, and community members.
2. Historically, about ______ of the annual improvement in productivity is attributed to
improvement in the quality of labor. (pg. 16)
a. 21%
b. 18%
c. 10%
d. 12%
3. T or F the three productivity variables are labor, customers, and management? (pg. 15)
(F)
4. What is the difference between effective and efficiency? (pg 13)
Efficiency means doing the job well and effective means doing the right thing.
5. Services constitute the ________________ economic sector in postindustrial societies.
Largest (pg.11)
Chapter-2 Summary
Chapter 2 starts with the impact of having a global view and supply chains. Operations
managers must have a global view of operations strategy. Firms find that their customers and
suppliers are located around the world. The unsurprising result is the growth of world trade,
global markets and the international movement of people. The supply chain can be improved by
locating facilities in countries where unique resources are available. Many international
operations seek to take advantage of the tangible opportunities to reduce their costs. Operations
learn from better understanding of differences in the way business is handled in different
countries. Because international operations require interaction with foreign customers, suppliers,
and other competitive businesses, international firms inevitably learn opportunities for new
products and services. Learning does not take place in isolation. Firms serve themselves and their
customers well when they remain open to the free flow of ideas. Global organizations can attract
and retain better employees by offering more employment opportunities. In spite of cultural and
ethical differences, we live in a period of extraordinary mobility of capital, information, goods,
and even people. An effective operations management effort must have a mission so it knows
where it is going and a strategy so it knows how to get there. Firms achieve missions in three
conceptual ways, differentiation, cost leadership, and response. This means operations managers
are called on to deliver goods and services that are better, or at least different, cheaper, and more
responsive.
The idea is to create customer value in an efficient and sustainable way. Pure forms of
these strategies may exist, but operations managers will more likely be called on to implement
some combination of them. In the competitive environment, operations managers need to
understand that the firm is operating in a system with many other external factors. The more
thorough the analysis and understanding of both the external and internal factors, the more likely
that a firm can find the optimum use of its resources. The five forces models are immediate
rivals, potential entrants, customers, suppliers, and substitute products. Firms need to conduct a
SWOT analysis which analyzes the strengths, weaknesses, external opportunities and threats.
The idea is to maximize opportunities and minimize threats in the environment while
maximizing the advantages of the organization’s strengths and minimizing the weaknesses. The
idea is to build Key Success Factors (KSF) and core competencies that provide a competitive
advantage and support a successful strategy and mission. KSF supports operations and in turn are
supported by other activities. The activities fit together and reinforce each other. In this way, all
supported activities support the company’s objectives. Non-core activities, which can be a
sizeable portion of an organization’s total business, are good candidates for outsourcing.
Outsourcing is not a new concept, but it does add complexity and risk to the supply chain.
Chapter2 Questions
1. Transnational describes a condition in which material, people, and ideas cross
_________________.
National boundaries (pg. 48)
2. The __________________________ provides an objective way to evaluate outsource
providers.
Factor-rating method (pg. 45)
3. T or F Companies only outsource the core activities to external suppliers. (pg. 42)
(F)
4. What is the purpose of an activity map? (pg. 41)
It is a graphical link of competitive advantage, KSFs, and supporting activities.
5. The acronym SWOT means that a company must analyze the _________ (pg. 39)
a. Strengths
b. Weaknesses
c. External Opportunities
d. Threats
e. All the Above