MGT-530: Operation Management. Discussion1 Carrefour is a French owned hypermarket operating in many places including Saudi Arabia. Consider Carrefour in S

MGT-530: Operation Management. Discussion1 Carrefour is a French owned hypermarket operating in many places including Saudi Arabia. Consider Carrefour in Saudi Arabia when you, as a customer, judge the quality of the hypermarket. 
Explain how quality is evaluated, and the role of technology in the customer perception of quality. Compare Carrefour’s quality and technology to another hypermarket in the area. Order the following criteria as most to least important for the successful operation of a hypermarket, and for a different industry (not a hypermarket) and explain why there are any differences and the implications for operations:

Customer satisfaction
Forecasting
Capacity planning
Location
Inventory management
Store layout
Scheduling

Embed course material concepts, principles, and theories, which require supporting citations along with at least two scholarly, peer-reviewed references in supporting your answer. Keep in mind that these scholarly references can be found in the Saudi Digital Library by conducting an advanced search specific to scholarly references.
You are required to reply to at least two peer discussion questions and post answers to this weekly discussion question and/or your instructor’s response to your posting. These post replies need to be substantial and constructive in nature. They should add to the content of the post and evaluate/analyze that post answer. Normal course dialogue doesn’t fulfill these two peer replies but is expected throughout the course. Answering all course questions is also required.
Discussion Rubric Competitiveness, Strategy, and Productivity
Chapter 2
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You should be able to:
LO 2.1 List several ways that business organizations compete
LO 2.2 Name several reasons that business organizations fail
LO 2.3 Define the terms mission and strategy and explain why they are important
LO 2.4 Discuss and compare organization strategy and operations strategy, and explain why it is important to link the two
LO 2.5 Describe and give examples of time-based strategies
LO 2.6 Define the term productivity and explain why it is important to organizations and to countries
LO 2.7 Describe several factors that affect productivity
Chapter 2: Learning Objectives
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A Cold Hard Fact
Better quality, higher productivity, lower costs, and the ability to respond quickly to customer needs are more important than ever, and…
the bar is getting higher
LO 2.1
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This chapter focuses on three separate, but related ideas that are vitally important to business organizations
Competitiveness
Strategy
Productivity
Chapter Focus
LO 2.1
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Competitiveness
Competitiveness:
How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services
Organizations compete through some combination of their marketing and operations functions
What do customers want?
How can these customer needs best be satisfied?
LO 2.1
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Identifying consumer wants and/or needs
Pricing and quality
Advertising and promotion
Marketing’s Influence
LO 2.1
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Product and service design
Cost
Location
Quality
Quick response
Flexibility
Inventory management
Supply chain management
Service
Managers and workers
Businesses Compete Using Operations
LO 2.1
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Neglecting operations strategy
Failing to take advantage of strengths and opportunities and/or failing to recognize competitive threats
Too much emphasis on short-term financial performance at the expense of R&D
Too much emphasis in product and service design and not enough on process design and improvement
Neglecting investments in capital and human resources
Failing to establish good internal communications and cooperation
Failing to consider customer wants and needs
Why Some Organizations Fail
LO 2.2
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Hierarchical Planning

Mission
Goals
Organizational strategies
Tactics

Functional strategies
LO 2.3
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Mission
The reason for an organization’s existence
It answers the question “What business are we in?”
Goals
Provide detail and the scope of the mission
Goals can be viewed as organizational destinations
Strategy
A plan for achieving organizational goals
Serves as a roadmap for reaching the organizational destinations
The organizational strategy guides the organization by providing direction for, and alignment of, the goals and strategies of the functional units
The organizational strategy is a major success/failure factor

Mission, Goals, and Strategy
LO 2.3
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Mission
Mission
The reason for an organization’s existence
Mission statement
States the purpose of the organization
The mission statement should answer the question of “What business are we in?”
LO 2.3
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FedEx Mission Statement
FedEx Corporation will produce superior financial returns for its shareowners by providing high value-added logistics, transportation and related information services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. FedEx Corporation will strive to develop mutually rewarding relationships with its employees, partners and suppliers. Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical and professional standards.
LO 2.3
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Goals
The mission statement serves as the basis for organizational goals
Goals
Provide detail and the scope of the mission
Goals can be viewed as organizational destinations
Goals serve as the basis for organizational strategies
LO 2.3
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Strategies
Strategy
A plan for achieving organizational goals
Serves as a roadmap for reaching the organizational destinations
Organizations have
Organizational strategies
Overall strategies that relate to the entire organization
Support the achievement of organizational goals and mission
Functional level strategies
Strategies that relate to each of the functional areas and that support achievement of the organizational strategy
LO 2.3
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Tactics and Operations
Tactics
The methods and actions taken to accomplish strategies
The “how to” part of the process
Operations
The actual “doing” part of the process
LO 2.3
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Core Competencies
Core competencies
The special attributes or abilities that give an
organization a competitive edge
To be effective core competencies and strategies need to be aligned
LO 2.3
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Organizational Strategy Operations Strategy Examples of Companies or Services

Low Price Low cost U.S. first-class postage
Wal-Mart

Responsiveness Short processing times
On-time delivery McDonald’s restaurants
FedEx

Differentiation:
High Quality High performance design and/or high quality processing
Consistent quality Sony TV

Coca-Cola

Differentiation:
Newness Innovation 3M, Apple

Differentiation:
Variety Flexibility
Volume Burger King (Have it your way”)
McDonald’s (“Buses Welcome”)

Differentiation:
Service Superior customer service Disneyland
IBM

Differentiation:
Location Convenience Supermarkets; mall stores

Sample Operations Strategies
LO 2.4
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Effective strategy formulation requires taking into account:
Core competencies
Environmental scanning
SWOT
Successful strategy formulation also requires taking into account:
Order qualifiers
Order winners
Strategy Formulation
LO 2.4
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Order qualifiers
Characteristics that customers perceive as minimum standards of acceptability for a product or service to be considered as a potential for purchase
Order winners
Characteristics of an organization’s goods or services that cause it to be perceived as better than the competition
Strategy Formulation (cont.)
LO 2.4
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Environmental scanning is necessary to identify
Internal factors
Strengths and weaknesses
External factors
Opportunities and threats
Environmental Scanning
LO 2.4
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Economic conditions
Political conditions
Legal environment
Technology
Competition
Markets
Key External Factors
LO 2.4
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Human resources
Facilities and equipment
Financial resources
Customers
Products and services
Technology
Suppliers
Other
Key Internal Factors
LO 2.4
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Operations Strategy
Operations strategy
The approach, consistent with organization strategy, that is used to guide the operations function
LO 2.4
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Strategic OM Decision Areas

Decision Area What the Decisions Affect

Product and service design Costs, quality, liability, and environmental issues

Capacity Cost, structure, flexibility

Process selection and layout Costs, flexibility, skill level needed, capacity

Work design Quality of work life, employee safety, productivity

Location Costs, visibility

Quality Ability to meet or exceed customer expectations

Inventory Costs, shortages

Maintenance Costs, equipment reliability, productivity

Scheduling Flexibility, efficiency

Supply chains Costs, quality, agility, shortages, vendor relations

Projects Costs, new products, services, or operating systems

LO 2.4
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Quality-based strategy
Strategy that focuses on quality in all phases of an organization
Pursuit of such a strategy is rooted in a number of factors:
Trying to overcome a poor quality reputation
Desire to maintain a quality image
A desire to catch up with the competition
A part of a cost reduction strategy
Quality-Based Strategies
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Time-based strategies
Strategies that focus on the reduction of time needed to accomplish tasks
It is believed that by reducing time, costs are lower, quality is higher, productivity is higher, time-to-market is faster, and customer service is improved
Time-Based Strategies
LO 2.5
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Areas where organizations have achieved time reductions:
Planning time
Product/service design time
Processing time
Changeover time
Delivery time
Response time for complaints
Time-Based Strategies (cont.)
LO 2.5
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Agile Operations
Agile operations
A strategic approach for competitive advantage that emphasizes the use of flexibility to adapt and prosper in an environment of change
Involves the blending of several core competencies:
Cost
Quality
Reliability
Flexibility
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The Balanced Scorecard Approach
A top-down management system that organizations can use to clarify their vision and strategy and transform them into action
Develop objectives
Develop metrics and targets for each objective
Develop initiatives to achieve objectives
Identify links among the various perspectives
Finance
Customer
Internal business processes
Learning and growth
Monitor results
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The Balanced Scorecard

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Productivity
Productivity
A measure of the effective use of resources, usually expressed as the ratio of output to input
Productivity measures are useful for
Tracking an operating unit’s performance over time
Judging the performance of an entire industry or country
LO 2.6
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Why Productivity Matters
High productivity is linked to higher standards of living
As an economy replaces manufacturing jobs with lower productivity service jobs, it is more difficult to maintain high standards of living
Higher productivity relative to the competition leads to competitive advantage in the marketplace
Pricing and profit effects
For an industry, high relative productivity makes it less likely it will be supplanted by foreign industry
LO 2.6
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Productivity Measures

LO 2.6
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What is the
multifactor
productivity?
Productivity Calculation Example
Units produced: 5,000
Standard price: $30/unit
Labor input: 500 hours
Cost of labor: $25/hour
Cost of materials: $5,000
Cost of overhead: 2x labor cost
LO 2.6
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Solution

What is the implication of an unitless measure of productivity?

LO 2.6
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Productivity Growth

Example: Labor productivity on the ABC assembly line was 25 units per hour in 2014. In 2015, labor productivity was 23 units per hour. What was the productivity growth from 2014 to 2015?
LO 2.6
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Service sector productivity is difficult to measure and manage because
It involves intellectual activities
It has a high degree of variability
A useful measure related to productivity is process yield
Where products are involved
Ratio of output of good product to the quantity of raw material input
Where services are involved, process yield measurement is often dependent on the particular process:
Ratio of cars rented to cars available for a given day
Ratio of student acceptances to the total number of students approved for admission
Service Sector Productivity
LO 2.6
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Factors Affecting Productivity
Capital
Methods
Technology
Management
Quality
LO 2.7
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Improving Productivity
Develop productivity measures for all operations
Determine critical (bottleneck) operations
Develop methods for productivity improvements
Establish reasonable goals
Make it clear that management supports and encourages productivity improvement
Measure and publicize improvements
Don’t confuse productivity with efficiency
LO 2.7
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Input
Output
=
ty
Productivi
 
Partial Measures
Output
Single Input
;

Ouput
Labor
;

Output
Capital
 
Multifactor Measures
Output
Multiple Inputs
;

Ouput
Labor
+
Machine
;

Output
Labor
+
Capital
+
Energy
 
Total Measure
Goods or services produced
All inputs used to produce them
500
,
42
$
$150,000
=
 
Multifactor Productivity
=
Output
Labor
+
Material
+
Overhead
$25/hour))
hours

(2(500
+
$5,000
+
$25/hour)
hours

(500
$30/unit
units

5,000
=
´
´
´
3.5294
=
 
Productivity Growth
=

Current productivity

Previous productivity
Previous productivity
´
100
%
 
Productivity Growth
=

23

25
25
´
100
%
=

8
%

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