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SOLUTIONS MANUAL
OPERATIONS AND SUPPLY CHAIN MANAGEMENT FOR
MBAS
8TH EDITION
CHAPTER NO. 01: OPERATIONS STRATEGY AND GLOBAL
COMPETITIVENESS
ILLUSTRATIVE ANSWERS TO EXPAND YOUR UNDERSTANDING
QUESTIONs
1. Services are typically more customized than products and thus less subject to repetitive
automation, which could increase their efficient production. Second, the technology of
service production is nowhere as advanced as that for products. Last, because services
cannot be stored, this makes their timely production more expensive.
2. Services do seem to be protected because of their high provider-customer interaction,
which is difficult for foreign firms to offer due to distance, language, culture, and other
such matters. It is commonly believed that, because services have less foreign
competition, domestic firms are better at providing services than products. This is
probably a great fallacy, as anyone who has experienced service offerings in multiple
foreign countries can tell you.
3. The Japanese work more diligently in designing and planning their operations and exert
less effort in controlling them. In fact, much of their design efforts are directed toward
eliminating the need to control their work, for example, by making errors or mistakes
more obvious and easily corrected. They thus offer better designed outputs and also
spend less on correcting, counting, monitoring, and controlling those outputs with the
result that they are often more competitive in global markets.
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4. A manufacturer would see that the physical product was only a part of the total package
being sold to satisfy a customer, and that a service provider might consider adding a
facilitating good to their offerings to enhance the service.
5. Previous problems with acquisitions have been due to attempts to grow for purely
financial reasons instead of good business reasons; essentially playing a financial game.
Wise acquisitions are conducted slowly, with long and intensive analysis, and bring
true synergy to the firm's existing products, services, distribution network, or other (and
frequently multiple) aspects of their focus.
6. Some other potential areas of focus include being able to acquire and assimilate
companies, the use of data to gain a competitive advantage, and in the case of a non-
profit, fund raising.
7. China possesses a core capability of cheap, abundant labor. India possesses a core
capability of abundant and skilled, English-speaking labor. Japan has always had a
strong capability in teamwork and execution, while the U.S. has always been known
for its creativity, innovativeness, and flexibility.
8. Obviously, the student will have to choose a point of reference to determine if an action
is ethical, a topic worth discussion all by itself. That is, the student can look at the
action from the view of the one taking the action, from the one affected by the action,
or from a disinterested observer. Whose laws are relevant: home country, foreign
country, both?
9. The cost savings largely arise from the discipline required to produce quickly: Fewer
errors, fewer operations, smoother processes, less labor, fewer inventories. Other
savings also accrue to fast response, however, such as less time for engineering changes
to the product and, more important, less time for the customer to request changes, or
even cancel the order! Last, though not a cost, faster response means faster revenue
generation too.
,3|Page
10. One example of a company that has moved the performance frontier of its industry is
Southwest Airlines—Southwest offers delivery speed, dependability, and low costs. A
second example would be Dell in entering the market for plasma televisions by offering
televisions with high quality at a cost lower than competitors’ prices.
11. In Japan, protectionism was used to nurture infant industries and protect them from
foreign competition until they could compete on their own. In particular, after WWII,
Japan began to emphasize product and process quality. At the same time, U.S.
producers, believing that they already manufactured the world’s best products,
emphasized marketing of those products. The American proficiency in marketing
enables U.S. producers to continue to sell products/services that in some cases are of
lower quality than those sold by Japanese producers. The Japanese emphasis on
engineering enables their producers to introduce products faster, to improve processes
more dramatically, etc.
12. Based on Figure 1.4, we would expect between 1/5 and 3/5 of the reduction in the
response time, with an average of ½. Since a cut by a factor of ten means a 90%
reduction, we would thus expect a unit cost reduction between 18% and 54%, with an
average of 45%.
13. Walmart’s order winners are price and product variety. Walmart’s qualifiers include
quality and delivery reliability. Toyota’s order winners are quality, innovation, product
reliability, and performance. Toyota’s qualifiers include price and delivery reliability.
BMW’s order winners include performance and innovation while BMW’s qualifiers
include quality and delivery reliability. Sony’s order winners include innovation and
performance. Sony’s qualifiers include price and delivery reliability.
14. Given the recent trends in products and services, i.e. consumers demanding better
performance on all competitive dimensions, one could make a valid argument for use
, 4|Page
of the Sand Cone model over the focus strategy because companies must be able to
deliver multiple core capabilities.
15. The systems perspective emphasizes the relationships between various system
components. Since the system boundary defines what is considered to be part of the
system and what is considered to be part of the environment and thus beyond the
decision maker’s control, the way the system boundary is defined profoundly affects
the results of systems analysis. On the one hand, if the boundary is defined too
narrowly, important relationships among the system components may be omitted.
Conversely, increasing the system boundary increases the complexity and costs
associated with developing and using the model. Unfortunately, determining the
system boundary is more of an art than a science and is based on the experience, skill,
and judgement of the analyst.
16. Since efficiency is output divided by input, the expected output increase due to the new
equipment might be less than the cost (an input) of the new equipment. Thus, replacing
labor with equipment only improves efficiency if the equipment is cheap relative to the
amount of labor it is displacing. Also, the organization needs to consider the cost
associated with setting up and maintaining the equipment. Systems engineers tend to
be a more expensive resource than shop floor workers.
17. One of the hardest decisions for a manager to make is laying off employees. Yet, this
is frequently basic to productivity improvements. For example, when demand drops,
the output will also drop and without a commensurate reduction in the inputs
productivity will also decline. Of course firms don’t like to lay off employees for a
number of reasons including reduced employee morale, negative publicity, and because
in the near future business may pick back up that will require hiring more employees
who are likely to be less experienced than the ones that were fired. Therefore,
organizations often delay layoffs. Obtaining desperately needed equipment is another
difficult situation if the capital is hard to acquire.
SOLUTIONS MANUAL
OPERATIONS AND SUPPLY CHAIN MANAGEMENT FOR
MBAS
8TH EDITION
CHAPTER NO. 01: OPERATIONS STRATEGY AND GLOBAL
COMPETITIVENESS
ILLUSTRATIVE ANSWERS TO EXPAND YOUR UNDERSTANDING
QUESTIONs
1. Services are typically more customized than products and thus less subject to repetitive
automation, which could increase their efficient production. Second, the technology of
service production is nowhere as advanced as that for products. Last, because services
cannot be stored, this makes their timely production more expensive.
2. Services do seem to be protected because of their high provider-customer interaction,
which is difficult for foreign firms to offer due to distance, language, culture, and other
such matters. It is commonly believed that, because services have less foreign
competition, domestic firms are better at providing services than products. This is
probably a great fallacy, as anyone who has experienced service offerings in multiple
foreign countries can tell you.
3. The Japanese work more diligently in designing and planning their operations and exert
less effort in controlling them. In fact, much of their design efforts are directed toward
eliminating the need to control their work, for example, by making errors or mistakes
more obvious and easily corrected. They thus offer better designed outputs and also
spend less on correcting, counting, monitoring, and controlling those outputs with the
result that they are often more competitive in global markets.
,2|Page
4. A manufacturer would see that the physical product was only a part of the total package
being sold to satisfy a customer, and that a service provider might consider adding a
facilitating good to their offerings to enhance the service.
5. Previous problems with acquisitions have been due to attempts to grow for purely
financial reasons instead of good business reasons; essentially playing a financial game.
Wise acquisitions are conducted slowly, with long and intensive analysis, and bring
true synergy to the firm's existing products, services, distribution network, or other (and
frequently multiple) aspects of their focus.
6. Some other potential areas of focus include being able to acquire and assimilate
companies, the use of data to gain a competitive advantage, and in the case of a non-
profit, fund raising.
7. China possesses a core capability of cheap, abundant labor. India possesses a core
capability of abundant and skilled, English-speaking labor. Japan has always had a
strong capability in teamwork and execution, while the U.S. has always been known
for its creativity, innovativeness, and flexibility.
8. Obviously, the student will have to choose a point of reference to determine if an action
is ethical, a topic worth discussion all by itself. That is, the student can look at the
action from the view of the one taking the action, from the one affected by the action,
or from a disinterested observer. Whose laws are relevant: home country, foreign
country, both?
9. The cost savings largely arise from the discipline required to produce quickly: Fewer
errors, fewer operations, smoother processes, less labor, fewer inventories. Other
savings also accrue to fast response, however, such as less time for engineering changes
to the product and, more important, less time for the customer to request changes, or
even cancel the order! Last, though not a cost, faster response means faster revenue
generation too.
,3|Page
10. One example of a company that has moved the performance frontier of its industry is
Southwest Airlines—Southwest offers delivery speed, dependability, and low costs. A
second example would be Dell in entering the market for plasma televisions by offering
televisions with high quality at a cost lower than competitors’ prices.
11. In Japan, protectionism was used to nurture infant industries and protect them from
foreign competition until they could compete on their own. In particular, after WWII,
Japan began to emphasize product and process quality. At the same time, U.S.
producers, believing that they already manufactured the world’s best products,
emphasized marketing of those products. The American proficiency in marketing
enables U.S. producers to continue to sell products/services that in some cases are of
lower quality than those sold by Japanese producers. The Japanese emphasis on
engineering enables their producers to introduce products faster, to improve processes
more dramatically, etc.
12. Based on Figure 1.4, we would expect between 1/5 and 3/5 of the reduction in the
response time, with an average of ½. Since a cut by a factor of ten means a 90%
reduction, we would thus expect a unit cost reduction between 18% and 54%, with an
average of 45%.
13. Walmart’s order winners are price and product variety. Walmart’s qualifiers include
quality and delivery reliability. Toyota’s order winners are quality, innovation, product
reliability, and performance. Toyota’s qualifiers include price and delivery reliability.
BMW’s order winners include performance and innovation while BMW’s qualifiers
include quality and delivery reliability. Sony’s order winners include innovation and
performance. Sony’s qualifiers include price and delivery reliability.
14. Given the recent trends in products and services, i.e. consumers demanding better
performance on all competitive dimensions, one could make a valid argument for use
, 4|Page
of the Sand Cone model over the focus strategy because companies must be able to
deliver multiple core capabilities.
15. The systems perspective emphasizes the relationships between various system
components. Since the system boundary defines what is considered to be part of the
system and what is considered to be part of the environment and thus beyond the
decision maker’s control, the way the system boundary is defined profoundly affects
the results of systems analysis. On the one hand, if the boundary is defined too
narrowly, important relationships among the system components may be omitted.
Conversely, increasing the system boundary increases the complexity and costs
associated with developing and using the model. Unfortunately, determining the
system boundary is more of an art than a science and is based on the experience, skill,
and judgement of the analyst.
16. Since efficiency is output divided by input, the expected output increase due to the new
equipment might be less than the cost (an input) of the new equipment. Thus, replacing
labor with equipment only improves efficiency if the equipment is cheap relative to the
amount of labor it is displacing. Also, the organization needs to consider the cost
associated with setting up and maintaining the equipment. Systems engineers tend to
be a more expensive resource than shop floor workers.
17. One of the hardest decisions for a manager to make is laying off employees. Yet, this
is frequently basic to productivity improvements. For example, when demand drops,
the output will also drop and without a commensurate reduction in the inputs
productivity will also decline. Of course firms don’t like to lay off employees for a
number of reasons including reduced employee morale, negative publicity, and because
in the near future business may pick back up that will require hiring more employees
who are likely to be less experienced than the ones that were fired. Therefore,
organizations often delay layoffs. Obtaining desperately needed equipment is another
difficult situation if the capital is hard to acquire.
