Syllabus

Course Meeting Times

Lectures: 2 sessions / week, 1.5 hours / session

Prerequisites

15.760/15.761 Introduction to Operations Management

Course Description and Objectives

This course provides a framework to describe and formulate an operations strategy and understand and evaluate the key decisions in operations that have a substantial impact on a firm's competitive position. Thus, the word strategy has two connotations: formulating an operational strategy (long-term plan) and making strategic (important) operational decisions. We will study books, articles, and cases in a variety of settings using a variety of tools to achieve these two goals. The course will also examine today's critical strategic issues such as outsourcing and globalization.

Operations strategy consists of the strategic use of functions such as manufacturing, supply chain, and service provision. Traditionally, these areas have been viewed as narrow functional areas, and management of them was based on some simple criterion such as cost minimization. More recently, managers and business observers have understood that manufacturing and operations have to be managed in the broader context of business strategy. In this sense, decisions on manufacturing and operations capabilities must fit and be consistent with the business strategy. Such decisions need to take into account the competitive environment, including the maturity of the industry on the S-curve and the structure of the value chain. Furthermore, decisions about different areas of manufacturing and operations must be consistent with each other. Strategic choices about facilities, capacity, vertical integration, process technology, control and information systems, sourcing, human resources, organization, and other areas all significantly affect what the business brings to the marketplace. The course will examine how decisions in these areas can be made in a coherent manner.

Beyond integration of manufacturing decisions with business strategy, manufacturing and operations strategy emphasizes the concept of operations as a source of competitive advantage. Using the broad notion of manufacturing, a company's strength in manufacturing and operations can be the basis of competitive position. A competitive advantage can accrue through superior product development, cost, quality, features, etc.

The course will be divided into four parts. In the first part, we will examine general concepts such as competitive leverage using manufacturing and operations, the fit of the various elements of manufacturing and operations, the impact of the competitive environment, and the structure of the value chain. We will explore how industry dynamics affect strategy and discuss concepts of industry clockspeed. In the second part, we will examine the key elements and decision categories in an operations strategy. These include facilities and capacities, technology, and the other decision categories noted above. In each of these areas, we will examine how different choices affect the business competitively and how to make decisions in each of these.

In the third part of the course, we will examine different integrated strategic approaches, each of which places requirements on operations but allow different means for companies to compete. These approaches include competing on cost and productivity; quality; availability; features, innovativeness and new products; and environmental performance. We will compare these different approaches and the tradeoffs among them.

Finally, in the fourth part we will examine some issues in operations policy and strategy that are particularly relevant today. These issues revolve around outsourcing and globalization. For example, how much should a company outsource? Can a company give up all of its manufacturing? We will also explore globalization. Should an economy such as the U.S. be concerned about the flight of jobs overseas to China and India? Such themes, while a focus in part 4, will also appear in other parts of the course. Part 4 will also explore the future of operations and manufacturing.

Intended Audience

This class is for anyone interested in operations and strategy, with a focus on second-year Leaders for Global Operations and management students, particularly those aspiring to careers in (1) operations, (2) general management, (3) entrepreneurship, or (4) management consulting. A working knowledge of operations, which, for many firms, employs the greatest number of employees and requires the largest investment in assets, is often indispensable for general managers and entrepreneurs.

Readings

The course will be based largely on case studies, with lectures supplementing these. The readings section contains a complete list of case studies and readings for the course. Study questions are also available to guide class discussion and case write-ups.

The following two textbooks are required for this course:

Beckman, Sara, and Donald Rosenfield. Operations Strategy: Competing in the 21st Century. McGraw-Hill/Irwin, 2007. ISBN: 9780072500783.

Fine, Charles H. Clockspeed: Winning Industry Control in the Age of Temporary Advantage. Basic Books, 1999. ISBN: 9780738201535.

A list of optional readings is available in the readings of this course.

Work Forecast

Our expectation is that you will spend approximately nine hours per week in total for this course. Your weekly schedule should plan for roughly

• three hours in class,
• three hours doing individual reading and case preparation before group meetings,
• three hours for group discussions to prepare the weekly case assignments and/or the ongoing final project.

Grading and Expectations

Individual Contribution

Your contributions should create and enhance a positive learning environment for this course. This includes enhancing the atmosphere and quality of classroom discussions, as well as interactions outside the classroom. Grading will be based on the quality and impact of your contributions, not primarily on quantity (although a minimum amount of the latter is necessary to deliver on the former).

Class Discussion

In a typical class session, one or more students will be asked to begin the discussion by addressing specific questions. If you have thoroughly prepared the case or reading, you should have no difficulty in handling such a leadoff request. After the leadoff initial analysis and recommendations, the discussion will be opened to the rest of the class, sometimes with cold calling mixed in. Some of the criteria for judging effective class participation include

1. Relevance,
2. Insightfulness (in analysis, observation, or questions),
3. Constructiveness in the context of the class discussion flow,
4. Depth of analysis,
5. Clarity and brevity.

Case Studies and Project

The class final project and the case write ups account for a significant portion of the final grade. Details on these deliverables can be found in the projects and assignments sections of this course.