ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA

Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217

(043) 757-4445 / (043) 757-5944

COLLEGE DEPARTMENT
Learning Module
In
OPERATION MANAGEMENT
(SY. 2021-2022)

Prepared by:
Valentino Estole
Subject Instructor

WEEK 1
Chapter 1.
 ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA
2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217
(043) 757-4445 / (043) 757-5944

I. Lesson Objectives

 Getting to know the subject – Operation Management

 Introduce basic terminologies and goal of the subject towards future career path.

II. Read and Learn

OPERATION MANAGEMENT

Operations Management is:

The business function responsible for planning, coordinating, and controlling the
resources needed to produce products and services for a company

Typical Organization Chart

PRESIDENT OR CEO

MARKETING OPERATIONS FINANCE

Manages: Customers Manages: people, Manages: cash flow,

Demands equipment, technology, current asset and capital
materials and information investments

Generates: sales for Generates: goods and/or

goods and services services

What is Role of Operation Management?

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 ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA
2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217
(043) 757-4445 / (043) 757-5944

 Operation Management transforms inputs to outputs

– Inputs are resources such as People, Material, and Money

– Outputs are goods and services

Operation Management’s Transformation Role

 Add value

– Increase product value at each stage

– Value added is the net increase between output product value and input
material value

 Provide an efficient transformation

Efficiency – means performing activities well for least possibleCost

Operations Strategy

Is a collective pattern of coordinated decisions for the formulation,

reformulation, and deployment of the organization’s resources. These decisions
provide a competitive advantage in support of the overall strategic initiative of the firm or
strategic business units. Operations strategy is a pattern of decisions made over
time. These decisions focus on resource configuration and deployment.

For example, how many work shifts, which type of machinery, what kind of
reporting structure, and which type of information to use are all decisions about how to
use resources. The resulting configurations of the firm’s resources must provide or

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 ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA
2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217
(043) 757-4445 / (043) 757-5944

support the firm’s strategic advantage in the market place. So, for the survival of the
firms, considerations of competitive advantage in operation strategy are very important.

THE COMPETITIVENESS CHALLENGES

Business competition

The process of companies and individuals competing in the same industry or

field.

Competitiveness or Competitive Advantage

- denotes a firm’s ability to achieve market superiority over its competitors.

Distinctive Competencies

A strong competitive advantage is derived from an organization’s competitive

priorities

Special attributes or abilities possessed by an organization that give it a

competitive edge. In effect, distinctive competencies relate to the way that organizations
compete. The most effective organizations seem to use an approach that develops
distinctive competencies based on customer needs as well as on what the competition
is doing. Merely matching a competitor is not sufficient, it is necessary to exceed the
quality level of the competitor.

Depending on these distinctive competencies any company can achieve

competitive advantage through acts of innovation and new ways of doing things, such
as new product designs, production technologies, training programs, quality control

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 ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA
2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217
(043) 757-4445 / (043) 757-5944

techniques, or new way to manage supplier relationships. It is also to be noted that

mere competence does not constitute a competitive advantage.

Characteristics of Distinctive Competencies

i. It is driven by customer wants and needs.

ii. It makes a significant contribution to the success of the business.
iii. It matches the organization’s unique resources with the opportunities in the
environment.
iv. It is durable and lasting and difficult for competitors to copy.
v. It provides a basis for further development.
vi. It provides direction and motivation to the entire organization

Four (4) Distinctive Competencies /Competitive Priorities

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 ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA
2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217
(043) 757-4445 / (043) 757-5944

Traditional View of Competitiveness

1. Cost Leadership

Many firms gain competitiveness by establishing themselves as low-cost

leaders in the market. These firms produce high volumes of mature products and
achieve their competitive advantage through low prices. Such firms often enter
markets that were established by other firms. They emphasize achieving economies
of scale and finding cost advantages from all sources. Low cost can result from high
productivity and high-capacity utilization. More importantly, improvements in quality
lead to improvements in productivity, which in turn lead to lower costs. Thus, a
strategy of continuous improvement is essential to achieve a low-cost competitive
advantage.

2. Product Differentiation

Product differentiation refers to any special features (e.g. design, cost, quality,
ease of use, convenient location, warranty, etc.) that cause a product to be
perceived by the buyer as more suitable than a competitor’s product or service. To
achieve differentiation, a firm therefore must be unique in its industry along some
dimensions that are widely valued by customers. It selects one or more attributes
that customers perceive as important and positions itself uniquely to meet those
needs. As a result, it can command premium prices and achieve higher profits.
However, a firm that uses differentiation cannot ignore costs. It must achieve a cost
position at par with its competitors and reduce costs in all areas that do not affect
differentiation.

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 ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA
2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217
(043) 757-4445 / (043) 757-5944

Modern View of Competitiveness

1. Quality

This focuses on satisfying the customer by integrating quality into all phases of
the organization. This includes not only the final product or service that is provided to
the customer, but also the related processes such as production, design, and after-
sales service.

2. Time

It focuses on reducing the time required to accomplish various activities. By

doing so, organizations seek to improve services to the customer, and to gain a
competitive advantage over rivals who take more time to accomplish the same tasks.

TRANSLATING STRATEGY INTO ACTION

Strategy
a plan of action or policy designed to achieve a major or overall aim.
Balance Scorecard

Innovative companies used the scorecard as the central, organizing framework for their
management process. Objective: to gain clarification, consensus, and focus on their
strategy, and then to communicate the strategy throughout the organization.

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 ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA
2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217
(043) 757-4445 / (043) 757-5944

The real power of the Balance Scorecard, however, occurs when it is

transformed from a measurement system to a management system.

Used of Balance Scorecard

 Clarify and Gain consensus about strategy

 communicate strategy throughout the organization
 align departmental and personal goals to strategy
 link strategic objectives to long-term targets and annual budgets
 identify and align strategic initiatives
 perform periodic and systematic strategic reviews
 obtain feedback to learn about improve strategy

Strategy maps help clarify the strategy and the related strategic objectives, whereas
balanced scorecards are used to establish metrics and targets to measure and
manage the performance of the organization against those strategic objectives.

III. Activity

Will be send afterwards!! August 24, 2021

The traditional view of competitiveness employs cost leadership, in which a company

manufactures and produces the cheapest product on the market in order to stay

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 ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA
2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217
(043) 757-4445 / (043) 757-5944

competitive, and product differentiation, in which a company creates a product that

stands out from its competitors, allowing consumers to easily distinguish what you sell
from what your competitors do.  On the other hand, the modern view of competitiveness
relies on quality, which focuses on customer satisfaction by the quality of the products
they provide, and time, which focuses on minimizing the amount of time it takes to
complete tasks. In all, the difference between the two views of competitiveness, In the
traditional, the main focus of the company is the cheap price and the uniqueness of the
product, while in the modern one the company focuses on the quality of a product and
on the production in a short span of time of products.