midterms

• Location decisions


  Decisions made by existing organizations for a variety of reasons, such as being part of marketing strategy
• Strategic importance of location decisions

  • Closely tied to an organization's strategies
  • Can result in locating where labor/material costs are low, or near markets/raw materials to reduce transportation costs
• Location options for managers of existing companies


  • Expand an existing facility
  • Add new locations while retaining existing ones
  • Shutdown at one location and move to another
  • Maintain the status quo
• Globalization


  • Has opened new markets and meant increasing dispersion of manufacturing and service operations around the world
  • Many companies are outsourcing operations to other companies in foreign locations
• Home base


  • In the past, companies tended to operate from a single country
  • Now, companies are finding strategic and tactical reasons to globalize their operations
• Benefits of globalizing operations


  • Expanding markets
  • Cost savings (transportation, labor, raw materials, taxes)
  • More favorable legal and regulatory environment
  • Financial benefits (avoid currency changes, incentives from governments)
  • New sources of ideas and perspectives
• Disadvantages of global operations


  • High transportation costs
  • Increased security costs
  • Unskilled labor
  • Import restrictions
• Critics may argue that cost savings are being generated through unfair practices such as sweatshops, child labor, and less stringent environmental requirements
• Quality


  The degree to which performance of a product or service meets or exceeds customer expectations
• Dimensions of product quality


  • Aesthetics
  • Special features
  • Conformance
  • Reliability
  • Durability
  • Perceived quality
  • Serviceability
• Dimensions of service quality


  • Convenience
  • Reliability
  • Responsiveness
  • Time
  • Assurance
  • Courtesy
  • Tangibles
• Product and service design

  The essence of any organization is the products or services it offers. There is an obvious link between the design of those products or services and the success of the organizations.
• Product and service design

  • It is closely tied to an organization's strategy
  • It is a major in cost, quality, time-to-market, customer satisfaction, and competitive advantage
• Factors that give rise to market opportunities and threats

  • Economic - Low demand, excessive warranty claims, the need to reduce costs
  • Social and demographic - Aging baby boomers, population shifts
  • Political, liability, or legal - Government changes, safety issues, new regulations
  • Competitive - New or changed products or services, new advertising/promotions
  • Cost or availability - Raw materials, components, and labor
  • Technological - in product components processes
• Value analysis


  An examination of the function of parts and materials in an effort to reduce the cost and/or improve the performance of a product
• Objectives of product and service design

  • Customer satisfaction - It is essential for designers to understand what customer wants and design with that in mind
  • Quality - Typically high on the list of priorities in product and service design
  • Designing for operations - Taking into account the capabilities of the organization in designing goods and services
• Designers must be careful to take into account a wide array of legal and ethical considerations. Moreover, if there is a potential to harm the environment, then those issues also become important.
• Product liability


  The responsibility of a manufacturer for any injuries or damages caused by a faulty product
• Product life cycle

  1. Incubation/Introduction

  2. Growth

  3. Maturity

  4. Decline
• Standardized products


  Made in large quantities of identical items
• Standardized products


  • calculators, computers, and non-fat milk
• Standardized service


  Every customer or item processed receives essentially the same service
• Standardized service


  • Automatic car wash
• Standardized processes


  Deliver standardized service or produce standardized goods
• Mass customization


  A strategy of producing basically standardized goods, but incorporating some degree of customization
• Delayed differentiation


  The process of producing, but not quite completing, a product or service until customer preferences are known
• Modular design


  A form of standardization in which component parts are grouped into modules that are easily replaced or interchanged
• Reliability


  The ability of a product, part, or system to perform its intended function under a prescribed set of conditions
• Failure


  Situation in which a product, part, or system does not perform as intended
• Normal operating


  The set of conditions under which an item's reliability is specified
• Robust design


  Design that results in products or services that can function over a broad range of conditions
• Product designers in companies that operate globally also must take into account any cultural differences of different countries or regions related to the product.
• Existing organizations may need to make location decision for a variety of reasons. Firms such as banks, fast-food chains, supermarkets, and retail stores view locations as part of marketing strategy.
• Strategic importance of location decisions

  • Location decisions are closely tied to an organization's strategies
  • A strategy of being a low-cost producer might result in locating where labor or material costs are low, or locating near markets or raw materials to reduce transportation costs
• Location options for existing companies

  • Expand an existing facility
  • Add new locations while retaining existing ones
  • Shutdown at one location and move to another
  • Maintain the status quo
• Globalization has opened new markets, and it has meant increasing dispersion of manufacturing and service operations around the world. In addition, many companies are outsourcing operations to other companies in foreign locations.
• In the past, companies tended to operate from a "home base" that was located in a single country. Now, companies are finding strategic and tactical reasons to globalize their operations.
• Benefits of globalizing operations

  • Markets - Companies often seek opportunities for expanding markets for their goods and services, as well as better serving existing customers by being more attuned to local needs and having a quicker response time when problems occur
  • Cost savings - Among the areas for potential cost saving are transportation costs, labor costs, raw materials costs, and taxes
  • Legal and regulatory - There may be more favorable liability and labor laws, and less-restrictive environmental and other regulations
  • Financial - Companies can avoid the impact of currency changes that can occur when goods are produced in one country and other countries. Also, a variety of incentives may be offered by national, regional, or local governments to attract businesses that will create jobs and boost the local economy
  • Other - New sources of ideas for products and services, and new perspectives on operations, and on solutions to problems
• Disadvantages of global operations

  • Transportation costs - High transportation costs can occur due to poor infrastructure or having to ship over great distances, and the resulting costs can offset savings in labor and materials cost
  • Security costs - Increased security risks and theft can increase costs. Also, security at international borders can slow shipments to other countries
  • Unskilled labor - Low labor skills may negatively impact quality and productivity, and the work ethic may differ from that in the home country. Additional employee training may be required
  • Import restrictions - Some countries place restrictions on the importation of manufactured goods, so having local suppliers avoid those issues
  • Criticisms - Critics may argue that cost savings are being generated through unfair practices such as sweatshops, in which employees are paid low wages and made to work in poor condition; using child labor; and operating in countries that have less stringent environment requirements
• Quality


  The ability of a product or service to consistently meet or exceed customer expectations