Fundamentals of Management, 8th ed

service organization

An organization that

transforms

resources into an

intangible output and

creates time or place

utility for its

customers

460

Part 5: Controlling

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The Role of Operations in Organizational Strategy

It should be clear by this point that operations management is very important to organiza-

tions. Beyond its direct impact on factors such as competitiveness, quality, and productiv-

ity, it also directly influences the organization’s overall level of effectiveness. For example,

the deceptively simple strategic decision of whether to stress high quality regardless of cost,

lowest possible cost regardless of quality, or some combination of the two has numerous

important implications. A highest-possible-quality strategy will dictate state-of-the-art

technology and rigorous control of product design and materials specifications. A combi-

nation strategy might call for lower-grade technology and less concern about product

design and materials specifications. Just as strategy affects operations management, opera-

tions management affects strategy. Suppose that a firm decides to upgrade the quality of its

products or services. The organization’s ability to implement the decision is dependent in

part on current production capabilities and other resources. If existing technology will not

permit higher-quality work, and if the organization lacks the resources to replace its tech-

nology, increasing quality to the desired new standards will be difficult.

DESIGNING OPERATIONS SYSTEMS

The problems, challenges, and opportunities faced by operations managers revolve around

the acquisition and utilization of resources for conversion. Their goals include both efficiency

and effectiveness. A number of issues and decisions must be addressed as operations systems

are designed. The most basic ones are the product–service mix, capacity, and facilities.

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There is a tendency to associate operations management with production and manufacturing. But

in reality operations management is also very relevant to service organizations such as this hair

salon. Operations management techniques help the salon manager schedule stylists, book

appointments, order and maintain the optimal inventory of products, and move clients through

dedicated work stations for washing, coloring, cutting, and styling.

Chapter 15: Managing Operations, Quality, and Productivity

4 6 1

Copyright 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).

Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

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