VIETNAM NATIONAL UNIVERSITY HO CHI MINH CITY

HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY

SCHOOL OF INDUSTRIAL MANAGEMENT

Group Essay Assignment

Chapter 1: Operations and Productivity

Subject: Production and Operations Management – IM2031
Class: CC01
Instructor: Mr. Echelmeyer Wolfgang
Group: 4

Group members:
Student full name Student Email
ID
1 Đặng Khánh Linh 2252430 linh.dangkhanh@hcmut.edu.vn
2 Hồ Đỗ Uyên Phương 2252653 phuong.ho0111@hcmut.edu.vn
3 Lê Đình Quốc Khánh 2252326 khanh.le02092004@hcmut.edu.vn
4 Lê Mỹ Trang 2252824 trang.levyjane@hcmut.edu.vn
5 Nguyễn Khánh Hạ 2152545 ha.nguyensanas@hcmut.edu.vn
6 Nguyễn Thị Phương Thảo (*) 2053443 thao.nguyen0802@hcmut.edu.vn

(*) : Group Leader

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Table of Contents
1. Explain differences between goods and services (give an example).......................2
2. The modern societies has been described as a "knowledge society." How does
this affect productivity measurement and the comparison of productivity between
societies of today and societies of the 19th century?.......................................................3
3. What are the measurement problems that occur when one attempts to measure
productivity?.....................................................................................................................4
4. Mass customization and rapid product development were identified as challenges
to modern manufacturing operations. What is the relationship, if any, between these
challenges? Can you cite any examples?........................................................................5
5. What are the five reasons productivity is difficult to improve in the service
sector?...............................................................................................................................7
6. Discuss the overlap among operations, marketing, and finance-the three
functions basic to all organizations-for small and medium enterprises........................8

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1. Explain differences between goods and services (give an example)

- Tangibility and Intangibility: The most basic differences between goods and
services lie in their physical form. Goods are tangible objects, like a bed or a
computer, which we can interact with and see with our senses while services are
intangible experiences, like staying for a night at a hotel, that cannot be touched
physically or felt before purchasing the service.
- Production and consumption: Goods are usually produced first and then stored for
future consumption such as syringes or medicines. In contrast, services are usually
created and consumed instantly. An example of this is when the patient is done
paying for the hospital, the doctor will provide health care procedures for the
patient.
- The uniqueness: Compared to goods, which are often uniform and mass-produced,
services shine through their inherent uniqueness. While every iPad is essentially the
same, a haircut from your regular stylist caters to your specific preferences. This
inherent flexibility allows services to be highly personalized, creating unique
experiences for each customer.
- The involvement in customer’s idea: Distinct from the standardized offerings of
pre-packaged meals, services excel in personalization. Unlike a mass-produced
frozen pizza with a predetermined set of toppings, restaurant dining allows for
customization based on individual preferences. Diners can choose their desired
crust, sauce, and toppings, creating a unique culinary experience.
- Evaluation: Goods are standardized products, which means that they will not
change their definition despite the type or age of the product, for example, a car or a
motorbike. But for services, it could vary depending on time and many other factors.
A good example of this is the insurance policies for cars and motorbikes because
they would change based on what type of the vehicle is and when it’s being
released.
- Location: Compared to tangible goods like cars and furniture, which are typically
produced in fixed factories requiring dedicated infrastructure and standardized
processes, services offer a refreshing contrast. Haircuts can happen in familiar
salons, consultations can be conducted online from the comfort of your home, and
meals can be prepared in diverse restaurants.
- Automation feasibility: While services like healthcare and education rely heavily
on human expertise, both goods and services are increasingly impacted by
automation. Manufacturing robots and self-driving cars exemplify automation in the
realm of goods, while chatbots and algorithmic trading platforms showcase their
potential in certain service sectors.
- Quality evaluation: It’s usually easier when it comes to evaluating a product’s
quality rather than a service’s quality. For example, to decide if this figure is good,
we could consider factors such as the design, quality of the details, what the figure is
made of, and so many more. However, when it comes to evaluating the customer
service of a figure store, it will not be easy due to the differences in each customer’s
requirements.
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- Residual value: Unlike tangible goods like used cars or smartphones that retain
value and can be resold, services like haircuts or consultations are typically
consumed and cannot be transferred. This is because services are intangible
experiences, unlike physical objects with lasting existence. However, exceptions
exist, such as transferable software licenses or streaming service subscriptions can
sometimes be gifted or shared with others.

2. The modern societies has been described as a "knowledge society." How does
this affect productivity measurement and the comparison of productivity
between societies of today and societies of the 19th century?
The modern society, characterized as a knowledge society, affects
productivity measurement and comparisons between contemporary and 19th-
century societies in various ways:
- Intangible Assets: The transition to a knowledge economy has resulted in a
focus on intangible assets, intellectual property, and human capital, making
traditional measurements of productivity based solely on material production
obsolete or insufficient. Knowledge-intensive activities, such as research and
development, software engineering, and creative industries, now contribute
significantly to global productivity.
- Industrial Revolution: The 19th century saw a gradual increase in
productivity primarily due to the Industrial Revolution and the subsequent
spread of technologies. However, the pace of change was slower than in the
late 19th and early 20th centuries, when rapid improvements in transportation
and communication facilitated widespread diffusion of innovations.
- Working Hours: The 19th century witnessed longer working hours, whereas
today's wealthy countries enjoy shorter working weeks. This trend reflects the
impact of rising productivity, which allows societies to achieve higher
standards of living without requiring excessive labor input.
- Qualitative Measures: The emergence of the knowledge society has shifted
the emphasis away from purely quantitative measures of productivity towards
qualitative ones that take into account aspects such as quality of life,
environmental sustainability, and societal well-being.
- Measurement Challenges: The advent of the knowledge society has
introduced challenges regarding the accurate measurement of productivity, as
new types of outputs require innovative methods to capture their true
contribution to economic growth.

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3. What are the measurement problems that occur when one attempts to measure
productivity?
Measuring productivity is an important task including defining the number of
output, measuring the quality of output, inputs, and technological
advancements

- Difficulty in Measuring Output: The output can be measured in terms of

volume (units) or value (dollars). It is very difficult to combine both these
factors to measure:
+ If the output is similar, productivity can be measured in “volume”.
+ If the output is not homogeneous, productivity can be measured in
“value”.
However, if some units are both similar and others non-homogeneous, the
industry will face difficulties in measuring productivity. Similarly, it is very
difficult to find out whether the by-products and work-in-progress should be
included in the output or not. If it is included, then it is very hard to find its
value.
- Difficulty in Measuring Inputs: Often many industries do not have proper
records of inputs such as capital, land, labours, and machines. Although all
resources are available, it is difficult to calculate the exact number of man-
hours worked (input of labour).
- Intangible Output in Service Sectors: Estimating productivity in service
sectors like insurance, teaching, nursing, and banking can be complex because
the output is intangible (numbers are often private), making it challenging to
develop a measurement standard.
- Lack of Record Keeping: When there is a lack of storage records of inputs
that are used to generate output, it becomes challenging to measure
effectively.
- Changes in Prices and Technology: Variations in input costs and
technological developments can affect productivity measurements by
changing the cost of output produced and the process's efficiency
- Difficulty in Measuring Man-Hours: It can be difficult to define the precise
number of productive man-hours. If we take into consideration the salary of
workers to calculate the man-hours, that salary also includes the cost of the
idle time so it can be challenging.
- Team Productivity Measurement: In some situations where multiple
workers contribute to a task, distinguishing individual contributions and
measuring team productivity accurately can be a significant challenge.

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4. Mass customization and rapid product development were identified as

challenges to modern manufacturing operations. What is the relationship, if
any, between these challenges? Can you cite any examples?
Mass customization
Relationship Mass customization refers to the
with ability to produce customized
manufacturing products at a large scale to meet
operations individual customer preferences. So
when the demand for mass
customization increases, the
manufacturers will be pressured to
shorten lead times and keep the price
low while maintaining quality,
efficiency, and economies of scale.
Challenges 1. An efficient supply chain
 As there might be neither time
nor budget for full product
inspection, manufacturers
must work with suppliers who
can deliver high-quality
materials on time.
 The supply chain needs to be
adaptable. Every node in the
supply chain should be able to
communicate effectively with
each other so that they are all
aware of any changes in
customers’ demand or
accidents that could affect lead
time.
 Mass customization requires
manufacturers to source a
wide range of components and 2. Time Constraints:
materials to accommodate
diverse product configurations
Rapid production
It involves shortening the product
development cycle and reducing
the time from concept to
production. The goal is to quickly
respond to changing customer
needs, technological
advancements, and market
dynamics.
1. An efficient supply chain
 Rapid product development
demands quick access to
suppliers and the ability to
rapidly prototype and
iterate designs.
 Rapid production is
vulnerable to disruptions in
the supply chain, such as
supplier shortages,
transportation delays, or
geopolitical instability.
 Time pressure can lead to
increased risk of errors,
lower quality outputs, and
strained resources.

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2. Management system
 Each customer may have
extremely different demands
for products, thus the order
management system plays a
crucial role in building
relationships between the
manufacturers and consumers. 3. Quality Control:
Companies need to develop a
management system able to
manage a huge amount of
information, including a client
database, customer orders, and
more.
3. A flexible production
process
 Since manufacturers need to
produce goods based on
customers’ different
requirements, a highly flexible
manufacturing process is very
important. Companies that are
able to organize their modular
product design properly tend
to have a more agile
manufacturing system.
Examples  Ford Motor Company: Ford
faced challenges with mass
production during the
development of the Ford Edsel
in the late 1950s. The Edsel
was intended to be a mass-
produced car marketed to a
specific demographic, but it
encountered significant
problems due to
Group 4
 Higher rates of defects,
rework, and product
recalls. Maintaining
consistent quality standards
while ramping up
production speed requires
careful monitoring, testing,
and continuous
improvement processes.
4. Resource Optimization:
Rapid production can strain
resources such as raw
materials, energy, and
skilled labor.
Manufacturers must
optimize resource
utilization to minimize
waste, maximize
productivity, and ensure
sustainable operations
while meeting tight
production schedules.
 Tesla's Production
Challenges: Tesla, known
for its electric vehicles, has
faced numerous challenges
in ramping up production
to meet high demand for its
cars. During the production
of the Model 3, Tesla
experienced significant
delays and quality issues as
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overestimation of demand, it attempted to accelerate

design flaws, and excessive
production costs. Despite
extensive market research and
investment in mass production
facilities, the Edsel failed to
meet sales expectations and
became one of the most
notorious failures in
automotive history.
production to meet
ambitious targets. These
challenges stemmed from
issues such as production
bottlenecks, supply chain
constraints, and difficulties
in scaling up
manufacturing processes
rapidly.

5. What are the five reasons productivity is difficult to improve in the service
sector?
Productivity improvement in services is difficult because:
- Typically labor intensive: Services often require a lot of face-to-face human
interaction, leading to more labor usage than other manufacturing industries.
Increased automation can help alleviate some of the work, but staff are still
needed to perform tasks such as communicating with customers, solving
problems, and providing personalized service.
- Frequently focused on unique individual attributes or desires: Services
are often designed to meet each customer's unique needs and desires, which
makes process standardization and automation more difficult. Each customer
may have different requirements, requiring employees to be flexible and
adaptable to meet their needs.
- Often an intellectual task performed by professionals: Many services
require highly specialized knowledge and critical thinking skills, which makes
machine automation difficult. Professionals in the service sector often have a
wealth of experience and expertise and can provide solutions tailored to each
customer's specific needs.
- Often difficult to mechanize and automate: Many tasks in services involve
direct human interaction, nonverbal communication, and emotions, which
makes automation difficult. Applying technology to services needs to be done
carefully to ensure service quality is not affected.

- Often difficult to evaluate for quality: Service quality can depend on many
different factors, including customer perception, service effectiveness, and the
value the service brings. Evaluating service quality is often based on
qualitative methods, which makes comparing and measuring productivity
more difficult.

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6. Discuss the overlap among operations, marketing, and finance-the three

functions basic to all organizations-for small and medium enterprises.
Definition:
Operations Management (OM):
Core Purpose: Operation management ensures efficiency in the
manufacturing process and production of goods and services for enterprises.
Key Functions:
- Resource Allocation: Operating management controls and oversees resource
allocation using the allocation mechanism. It identifies the techniques for
allocating various resource types to memory, CPU, peripherals, and backup
storage…
- Process Optimization: Process optimization is crucial for ensuring that a firm
can function effectively, maintain high-quality standards in manufacturing or
services, and fulfill consumer expectations.
- Quality Control: Operations Management guarantees that product quality is
maintained or enhanced throughout production.
Integration with Marketing and Finance: Operations Management
collaborates with marketing to align production with customer demand. It
works closely with finance to manage costs and investments throughout
operations.
Marketing:
Crucial Role: Marketing allocates demands, builds brand awareness, and
enhances connections with customers.
Functions:
- Market research: Marketing helps enterprises to understand their customer's
needs and preferences.
- Promotion: creating compelling messages or campaigns to attract old and new
buyers.
- Pricing Strategies: determining optimal prices to enhance revenue and profit
for the firm.
Alignment with Operations and Finance: Marketing influences product
design and production decisions. It collaborates with finance to allocate
budgets for promotional activities and with operations to ensure the marketing
process is efficient.
Finance:
Key concept: Finance controls the firm’s funds, investments, and financial
risks.
Critical Functions:
- Budgeting: allocating resources effectively.
- Capital decisions: evaluating investments (e.g., new equipment, expansion).
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- Risk management: forecasting and dealing with financial risks.

Integration with Operations and Marketing: Finance supports operations
by ensuring adequate funding and evaluating marketing initiatives’ financial
impact. Moreover, finance also supports operations by ensuring the financial
resources to maintain them.
Discuss the overlap among operations, marketing, and finance for small
and medium enterprises.
The overlap between operations, marketing, and finance is often called the
“iron triangle.” This term emphasizes that all three functions are collaborative
and essential to the success of any organization, especially for small and
medium enterprises
- Budgeting: Marketing may be responsible for setting the overall budget, while
finance tracks actual spending in the process. While operations provide input
on resource needs.
- Resource Allocation: Operations require financial resources for equipment,
labor, and inventory. Marketing needs funds for campaigns. Finance allocates
resources efficiently and evaluates the financial impact of promotional
activities.
- Human Resources: Both operations and marketing rely on skilled personnel,
while finance manages the payroll and benefits between enterprises and
individuals.
- Customer Service: Operations ensure smooth service delivery, while
marketing shapes consumer experiences. And finance ensures the financial
resources to maintain all the services, capacities, and goods for the customers.

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References:
1. Marvin Frankel, & John W. Kendrick. (2024, January 15). Historical trends
Early industrialization. Encyclopædia Britannica.
https://www.britannica.com/money/topic/productivity/Historical-trends
2. Roser, M., Spooner, F., & team, O. W. in D. (2020, December 16). Our world
in data. Our World in Data. https://ourworldindata.org/
3. Cook, E. (2017, October 20). How money became the measure of everything.
The Atlantic. https://www.theatlantic.com/business/archive/2017/10/money-
measure-everything-pricing-progress/543345/
4. Akrani, G. (n.d.). Difficulties or problems in measuring productivity.
KALYAN CITY LIFE BLOG.
https://kalyan-city.blogspot.com/2013/03/problems-in-measuring-
productivity.html
5. Member, U. S. (n.d.). What is operations management?. UAGC.
https://www.uagc.edu/blog/what-operations-management
6. Staff, S. (2022, December 15). What is marketing management: Definition
and guide. https://www.shopify.com/blog/marketing-management
7. Sampson, L. (2023, January). What is financial management?. What Is
Financial Management? | Oracle India.
https://www.oracle.com/in/erp/financials/financial-management/#:~:text=Fina
ncial%20management%20is%20all%20about,and%20other%20sources%20of
%20funding.

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