CLASS 1 THEME

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CLASS 1 THEME What Can Operations Management
Do to Make Firms Winners and You a Success?
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STERN SCHOOL GOAL DEVELOP AND DISSEMINATE
KNOWLEDGE ON WHY ORGANIZATIONS SUCCEED AND WHY
CERTAIN INDIVIDUALS WITHIN THESE ORGANIZATIONS
PROSPER
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• Organization Success Basics
• A.Thorough understanding of the structure of the
  international economic and political environment
  and the long term competitiveness of nations.
• B.Creative strategy choice and implementation
  based on the understanding of multi-national
  structure of the organizations industry/sector
  and the root drivers of its competitive
  advantage.

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Organization Success Tactics A. Most firms
gain and maintain competitive advantage by
developing a focused product/service/market
strategy which is based on key core competencies
developed by integrating the Marketing,
Operations, Information Technology and Finance
functions of the organization. B. Whether it be
sourcing raw material or managerial talent,
deciding on a production location or in which
marketplace to compete, or which organization to
benchmark against, successful firms are cognizant
of the international business environment and
view it as an opportunity rather than a threat.
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Competitive Advantage Drivers
Operations Cost Quality Flexibility Capacity Servi
ce Guarantee Out Sourcing Degree of Verticle
Integration
Marketing Product Design Time to Market Product
Line Scope Image Sales/Distribution/ Service
Finance Availability of Funds Cost of Funds Risk
Management Hedging
Information Order Processing Distributed
Decisions Enterprise Resource Planning Knowledge
of Customer
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Individuals prosper within organizations if
they A. Acquire leadership skills which are
applied with an understanding of the ethical,
legal and environmental context within which the
organization operates. B. Have superior
decision making ability requiring unstructured
problem solving and risk management skills. C.
Have sound functional specialty skills.
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INDIVIDUAL SUCCES TACTICS A. Managers succeed
by tailoring a leadership style appropriate to
the dynamics of the organization, its goals and
its environment whenever possible. B. The key to
problem solving in an uncertain environment is to
use an analysis, choice, implementation framework
with careful attention being paid to the effects
of changes in basic assumptions and alternative
scenarios of the future. C. Complex and diverse
organizations require distributed decision
capability and the ability to build risk profiles
from these distributed cells into the parent
organization for final risk management. D.
Development of appropriate human resource
selection and compensation systems as well as
negotiation strategies are also essential.
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KEY EDUCATIONAL CONCEPTS TO SUPPORT GOAL

• Firm
• Markets and Institution
• Structure and Performance
• Competitiveness and Performance
• Risk Management
• Equity and Commodity Pricing
• Monetary Policy
• Core Drivers of Advantage
• Quality
• Timeliness
• Flexibility
• Innovation
• Product/Geographic Breadth
• Brand Image
• Selling
• Reputation

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• Individual
• Leadership
• Strategic Visioning
• Change Agent
• Negotiator
• Storyteller
• Protector
• Motivator
• Exemplar
• Problem Solver
• Data Gathering
• Analysis
• Choice
• Control
• Dissemination

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OPERATIONS MANAGEMENT IS AN AREA OF STUDY WHICH
DEALS WITH HOW FIRMS GAIN AND MAINTAIN GLOBAL
COMPETITIVE ADVANTAGE FROM THEIR SUPPLY FUNCTION.
THE SUPPLY FUNCTION DEALS WITH CREATION,
PRODUCTION, DISTRIBUTION, MAINTENANCE AND
REGENERATION OF PRODUCTS, SERVICES OR
INTELLECTUAL PROPERTY.
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• The Operations View of the Competitive Advantage
  Portfolio
• Institutions Gain Competitive Advantage from
  Operations by
• Cost Leadership or Parity
• Quality Distinction
• Process Technology Innovation
• Responsiveness to Customer Needs
• Capacity to Serve
• Adaptability to Customer Desires
• Timeliness to Market
• Tailored Distribution System
• Degree of Vertical Integration

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Some Operations Competitive Advantage Examples
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• OM and Individual Success
• Develop an OM Perspective
• Enhance Problem Solving Skills
• Practice Problem and Data Finding
• Undertake Scenario Generation and Analysis
• Develop Multifunctional Perspective and
  Integrative Way of Thinking
• Learn State of the Art Software - HOM

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THREE EDUCATIONAL FOUNDATION DISCIPLINES FORM
THE CORE TO OUR WAY OF THINKING I. Economic
Reasoning A. Structure of Markets and
Industries B. Negotiations/Contracting Among
Stakeholders C. Decision Making of Individuals
and Institutions II. Strategic Reasoning A.
Understanding Firms Product/Market Focus and
Strategy B. Determination of Customers/Markets
Key Factors of Success C. Identification of
Core Competencies to Support
(AB) III. Analytical Reasoning A. Systems
Analysis B. Optimization/Simulation Modeling
C. Risk Assessment - Sensitivity Analysis D.
Tradeoffs vs. Pushing the Frontier
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• KEY ORGANIZATIONAL ASSUMPTIONS
• Information required for decision making can be
  made available and distributed
• Individual unit decisions can be easily
  aggregated
• Resources needed by the organization can be made
  available at a competitive price

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Some Observations on the Economic Environment 1.
Individuals desire greater wealth and at any
wealth level they want the most customization and
best quality they can afford (MORE) 2. All
markets eventually become saturated (NOTHING
LASTS FOREVER) 3. Good quality drives out
bad 4. Cant sell what you dont have or cant
deliver
Winner Firms Operations Responses 1.
Flexibility and responsiveness in product/service
development, imaging, production , and delivery
system 2. Low cost producer 3. Must be
cost/quality efficient frontier competitor 4.
Develop tailored capacity and supply chain
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Some Observations on the Economic Environment 5.
They who do not sow will not reap 6.
Technological followers and low wage rate
producers will increase 7. Concentrators vs.
Diminishing Scale Economies (the jury is still
out)
Winner Firms Operations Responses 5.
Continuous investment in product and process R
D 6. Shorten all product cycles and invest in
front of demand 7. Choose which and tailor
organization structure and core competencies
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Winner Firms Operations Responses 8. Insure
Core Competencies match customer desires 9.
Determine mix of partner based or auction based
suppliers
Some Observations on the Economic
Environment 8. Efficient e, b-b commerce
Survivors substantial threat to older Business
Models 9. Web Sourcing Continues to Expand