Business and Operations Strategy: Key Concepts Explained
Business and Operations Strategy: Key Concepts
1. A business strategy is a plan that helps a company reach its goals, stay focused, and outpace competitors. It provides direction and ensures efficient use of resources. Without it, a business may lack focus and struggle to succeed.
2. Operations strategy focuses on how a company manages its day-to-day activities to support its overall goals. It ensures efficient production, delivery, and quality. A good operations strategy helps reduce costs, improve customer satisfaction, and increase productivity. Without it, a business may face delays, poor quality, or higher costs.
7. Order qualifiers are the basic features or standards a product must meet to be considered by customers, like price or quality. Order winners are the features that make a product stand out and convince customers to choose it, like fast delivery or unique features.
They are important because order qualifiers help a business stay competitive, while order winners help attract customers and drive sales. Without both, a company may struggle to meet customer expectations or stand out in the market.
8. The three types of technologies are:
- Product technology – Innovations used to create new or improved products.
- Process technology – Tools and systems that improve how products are made or services are delivered.
- Information technology – Systems that handle data and communication, such as software, networks, and databases.
The strategic role of technology is to improve efficiency, reduce costs, and enable innovation. It helps businesses stay competitive, meet customer needs, and improve decision-making. Using the right technology can create new opportunities, enhance customer experiences, and drive growth.
Mohammed Almosawi
9. Productivity is the measure of how efficiently a business or individual uses resources (like time, labor, or materials) to produce goods or services. It is often calculated as the output per unit of input.
Productivity is important because it directly impacts a company’s profitability and competitiveness. Higher productivity means producing more with fewer resources, leading to lower costs and better profits. It also allows businesses to offer better value to customers and invest in growth.
10. The three types of productivity measures are:
- Partial Productivity: This measures the efficiency of a single input, like labor or materials, in relation to output. For example, labor productivity is calculated as the amount of output produced per labor hour.
- Total Factor Productivity: This measures the efficiency of all inputs combined (labor, materials, capital), in relation to output. It provides a broader view of productivity by considering all resources together.
- Multi-Factor Productivity: This measures the efficiency of multiple inputs (labor, capital, and materials) in relation to output, but not all inputs. It’s more detailed than partial productivity but not as comprehensive as total factor productivity.
Each type helps a business understand different aspects of efficiency and identify areas for improvement.
1) Product Design and Its Relationship to Business Strategy:
Product design is the process of creating and planning a product’s appearance, features, and functionality. It directly supports a business strategy by ensuring that the product aligns with the company’s goals, such as targeting a specific market, offering high quality, or being cost-effective. A well-designed product can help a business stand out and meet customer needs in line with its overall objectives.
2) Differences Between Product and Service Design:
Product design focuses on creating physical items like phones or cars, while service design is about planning and organizing services like cleaning or customer support. Product design deals with tangible features and functionality, whereas service design focuses on creating a positive customer experience and efficient service delivery.
5) Stages of the Product Life Cycle and Demand Characteristics
Introduction, Growth, Maturity, and Decline.
- Introduction: The product is new, and demand is low because not many people know about it. Companies try to raise awareness.
- Growth: More people buy the product, and demand grows quickly as it becomes more popular.
- Maturity: Demand slows down because most people who want the product have bought it. Companies try to stand out or lower prices.
- Decline: Demand drops as the product gets old or is replaced by newer options. Sales fall, and companies may stop selling it.
7) Goods Operations: These involve the production of physical, tangible products (like cars or electronics). Key characteristics include inventory, standardized production, and the ability to store finished products. Goods can be sold or shipped at any time after production.
Services Operations: These focus on providing intangible services (like healthcare or education). Key characteristics include customer interaction, services are produced and consumed at the same time, and there is little to no inventory. Services are often customized to each customer’s needs.
14) Services with a good match between customer expectations and service delivery:
- Luxury Hotels: Customers expect high-quality service, comfort, and personalized attention. Luxury hotels match these expectations with exceptional service, clean rooms, and attentive staff.
- Airlines (First-Class or Business Class): Customers expect timely flights, comfort, and good service. Airlines that deliver spacious seating, quality meals, and excellent customer service meet these expectations.
Services with a poor match:
- Fast Food Restaurants: Customers expect quick service, but sometimes food quality or accuracy of orders may not meet expectations, leading to dissatisfaction.
- Customer Support Hotlines: Customers often expect quick, effective solutions, but long wait times or unhelpful representatives can lead to frustration.
3. Tasty Ice Cream is a year-round take-out ice cream restaurant that is considering offering an additional product, hot chocolate. Considering the additional machine it would need plus cups and ingredients, it estimates fixed costs to be $250 per year and variable costs to be $0.30. If it charges $1.50 for each hot chocolate, how many hot chocolates does it need to sell in order to break even?
4. Slick Pads is a company that manufactures laptop notebook computers. The company is considering adding its own line of computer printers as well. It has considered the implications from the marketing and financial perspectives and estimates fixed costs to be $500,000. Variable costs are estimated at $200 per unit produced and sold. a. If the company plans to offer the new printers at a price of $350, how many printers does it have to sell to break even?
4) a) break even point = fixed costs/ price per unit – Variable cost