Operations Strategy

Study Questions

These study questions are provided to guide course readings and case write-ups, and to introduce fundamental ideas that will be discussed in class.

SES #	TOPICS	STUDY QUESTIONS
Part I: Basic Concepts of Operations Strategy
1	Course introduction; Innovation and operations discipline	1. What were key operations milestones of McDonald’s over the past 50 years? 2. What are the new challenges McDonald’s faces in the 2000s and beyond? 3. What are the lessons for operations strategy from McDonald’s?
2	Frameworks for strategy and the decision category approach	1. How does a company make decisions in each of the areas of operations? 2. What are Zara’s decisions in facilities, capacity, vertical integration, HR, product generation process and production planning?
3	Developing an operations strategy; Application of decision category approach and the capabilities approaches	1. How would you characterize BYD’s strategy? How is it different from its competitors? How could it justify entering this industry with such a strong set of competitors from Japan? 2. How consistent are its decisions among the various decision categories? 3. What are the advantages and disadvantages of its manual processes? How might process design be different in a manual system? 4. The production process for BYD’s Japanese competitors relied on several robotic arms per line, with each arm costing RMB 800,000 (approximately US $100,000). How many workers would a robotic arm need to replace for BYD to justify its purchase? 5. Should BYD buy Qinchuan? Can the company’s capabilities be applied to automobiles? To other areas?
4	Value chain dynamics and operations decisions	1. In light of value chain dynamics, how do we reconsider the concept of an “operations strategy”? 2. Similarly, how should we define and identify “excellent” operations? 3. What companies particularly impress you with their operations? Why? 4. What’s the “recipe” for a winning operations strategy?
5	Value chain dynamics: Lessons from the auto industry	1. How would you describe the key accomplishments of Henry Ford and Alfred Sloan and Taiichi Ohno? Think partly in terms of the product, process, and supply chain (3–D concurrent engineering in Clockspeed) that each firm engineered. 2. Do you think the Tata Nano (or others like it) could have a disruptive effect on the industry and furthermore, on the current industry leader, Toyota? 3. How might Tata drive such a disruption? 4. What is the role of operations strategy in your suggested approach?
6	Enterprise architecture and operations strategy	1. Describe the traditional business model, operations strategy, and enterprise architecture of Southwest. What was the role of the airplane turnaround process in the operations strategy? 2. In what sense was the Southwest business model disruptive? 3. What is your assessment of the evolution of the Southwest model and the decisions Southwest has made over the past decade? 4. What would you recommend to Southwest regarding the opportunity to add slots at LaGuardia airport? Why?
Part II: Key Elements and Decision Categories in an Operations Strategy
7	Vertical integration and outsourcing
8	Business processes	1. What are the key features of the existing fulfillment process at CVS? What parts are in the greatest need of redesign? 2. Does pharmacy fulfillment process improvement represent a significant (financial) opportunity for CVS? How might you assess this? 3. What changes would you recommend to CVS’s pharmacy fulfillment process? 4. What IT changes, if any, would be required to implement your changes? 5. What general principles would you propose for process redesign based on your analysis of the CVS system?
9	Process technology decisions and multiple plants	1. What are the implications for both cost and flexibility of automation? Do you agree with the assertion made by one of the managers in the case: “If you automate, you stagnate?” 2. What are your recommendations regarding the issue of standardizing process technology across all plants? Are there motives behind this proposal, other than those stated in the case? 3. As Juergen Geissinger, how would you go about implementing your recommendation? How would you overcome resistance from the plants? As Steve Dickerson, the plant manager at Asheville, North Carolina, what line of reasoning would you use to convince senior management that full automation is the less desirable alternative? 4. As Klaus Lederer, what option would you like to see pursued? How do various options fit into the broader corporate strategy of ITT Automotive? 5. When can the concept of “copy exactly” be applied to a network of plants?
10	Capacity strategy: How to make decisions on capacity and capacity expansion	1. How much capacity will Genentech need in 2010 and 2015 for Avastin and the other products listed in exhibits 3 and 4. 2. How do you deal with uncertainty? Assuming a normal distribution and that one standard deviation of demand is 25 percent of demand how much capacity will they need to reach the 85th percentile? How reasonable do you think the normal assumption is? Is the 85th percentile a reasonable approach? 3. Assuming no additional contractor capacity, do you need ccp3? If so what size tanks do you recommend? What if the estimates on page 10 (first pg in the section on “capacity expansion options”) are doubled? 4. What do you recommend on location and what in general do you recommend for how they should proceed in meeting Avastin demands?
11	Facilities strategies and globalization; Comparisons of plant productivity	1. Compare the performance of Applichem’s 6 Release-ease plants. 2. Why were some plants “better” performers than others? 3. How would you advise Joe Spadaro to configure his worldwide manufacturing system?
12	Summary lecture on facilities strategy and globalization
13	Sourcing and supplier management
14	Information systems and the impacts of the electronic economy	1. What is Amazon’s strategy and its approach to IT? 2. Do you agree that creating AWS makes strategic sense for Amazon? 3. Why or why not is it consistent with its strategy? 4. What does Amazon need to do to be successful with Web Services? 5. What recommendations would you make to Amazon regarding AWS?
15	Logistics systems and the fulfillment supply chain
Part III: Capabilities and Different Approaches to Operations Strategy
16	Competing on quality: Sources of quality and different measures of quality	1. What are Delamere’s strengths and weaknesses? What does it deliver to customers that other vineyards do not? What does it take to be outstanding in the wine business? 2. What types of uncertainty does Richardson face? 3. What does quality mean in winemaking? 4. What principles and concepts should one apply to improving a production system such as winemaking? 5. What should Richardson do? How will his personality and experience shape his decision?
17	Competing on cost versus competing on availability	1. What are the key elements of the New Balance business strategy? What are the key elements of its operations strategy? How well does the operations strategy fit the business strategy? 2. How well do the Lean operations and the Toyota Production System translate to the New Balance environment? How realistic are the NB2E goals? 3. How should the company respond to the Adidas-Reebok merger? Should it change (e.g. less domestic production) or continue the current strategy? 4. Assuming some reasonable value for domestic labor cost (to establish the value of pair of shoes) what is the premium for domestic manufacturing? Given the significantly shorter lead-time, however, this will also yield inventory savings. What would these inventory savings be as compared to New Balance stocking these warehouses based on 9-week lead-time from Asia? What are the implications of this in terms of realistic?
18	Competing on cost versus competing on features and innovativeness	1. What are the causes and consequences of BMW’s quality problems with newly launched products? What should be done to improve “launch quality”? 2. What are your recommendations to Carl Peter Forester concerning the R-series prototypes? What should he do regarding future development projects? 3. What changes would you recommend in the way BMW develops new models? What attributes of newly launched products would you expect to improve as a result of these recommendations? Which attributes might deteriorate? 4. What recommendations would you make to Chairman von Kuenheim regarding BMW’s strategy to compete against new Japanese entrants into the luxury car market? 5. Compare and contrast Apple’s approach to the iPhone development to the development process of BMW. What hypotheses are generated by the comparison?
19	Competition in the housing industry: Improving cost, quality and availability	1. Why is the industry structured the way it is? Could it be structured differently? What are the roles of the other value chain members (e.g., mortgagelenders)? 2. Where are the opportunities for disruptive change? 3. Finally, assuming that United Building Supply brings a solid commitment and a lot of financial muscle to the task, what must they do to disrupt and transform this industry? What should the end game look like? What are the critical success factors they should focus on? Is this task insurmountable? 4. What might Henry Ford or Alfred Sloan or Taiichi Ohno do? Or does industry require a very different vision and model?
Part IV: Globalization, Outsourcing and Other Critical Issues in Operations Strategy and Policy in the 21st Century
20	Models for gaining advantage in a global environment; How to position within a value chain	1. What has been the historic strength and strategy of Li & Fung? 2. How sustainable is this model? 3. What are the weaknesses or vulnerabilities of the model? 4. How did they react to the arrival of the Internet? Did it strengthen them or weaken them? Why?
21	Globalization, joint ventures, sourcing overseas, and macroeconomic effects of off-shoring	1. What strategies can a manufacturing or services company follow in the era of outsourcing? When and how can any company stay in a high-cost location 2. What is the likely endgame in manufacturing for high cost countries, such as the U.S.? 3. What are the global macroeconomic effects of off shoring (e.g. Major parts of certain industries going offshore)?
22	Supplier power and overseas sourcing: Moving up the value chain in outsourcing	1. What were the strategic motives of Global and Chengdu, respectively, for entering the joint venture? Were either of these strategies obviously faulty, ex ante? 2. How would you judge the launch of CSL? What did the partners do right? What did they do wrong? 3. What is your assessment of the negotiating positions of each company, once they got into unexpected territory? Should either party have anticipated these problems? 4. What are the lessons for global joint ventures and working in China?
23	Student presentations	1. Should you accept the offer from the OEM for an exclusive contract for iPhone 4? 2. If you are an OEM would you accept an offer from Flextronics for an ODM phone? 3. What are the opportunities and risks for Flextronics as it progresses from state to state as a CM, CDM, and ODM? What are the opportunities and risks for an OEM as it does business with Flextronics at each stage? 4. Would you aggressively pursu_e_ the strategy of being an ODM ?
24	Student presentations and course wrap- up