BUSN 115 Class

1
BUSN 115 - Class 6

• Chapters 12, 13, 14 4

2
Operations Management - Chapter 12

• 1. Production Planning
• 2. Production Control
• 3. Improving Production

3
Elements of Production

• Production The creation of products services
  by turning inputs into outputs
• Operations Management Management of the
  operations process
• Production planning The aspect of operations
  management in which the firm considers the
  competitive environment and its own strategic
  goals in an effort to find the best production
  methods
• 1. Production types process
• 2. Site selection
• 3. Facility layout
• 4. Resource planning
• 5. Supply chain management

4
Titans Production Planning

• Titan motorcycle company production estimates for
  1999 were based on
• the introduction of a new product line
• estimated industry sales for 1999, based on past
  sales trends

Titans Production
Motorcycle Industry Sales
Thousands ofMotorcycles
Source Motorcycle Industry Council/The Arizona
Republic, Dec. 5, 1999, p. D5.
5
Types of Production Process

• Production Process
• Inputs Convert into outputs
• Process manufacturing- basic inputs are broken
  down into one or more outputs (clean water)
• Assembly process basic inputs are combined to
  create the output
• Types of Production Process
• 1. Mass production
• 2. Mass customization
• 3. Customization
• Timing of the process
• Continuous process long production runs high
  volume, low variety products
• Intermittent process short production runs
  (Batches) of different products

6
Coffee Bean Production Process

• 2 ways to grow coffee beans
• In the sun beans grow faster, but this process
  requires clearing forests
• In the shade beans grow slower, but process
  preserves existing ecosystems
• The trade-off must be considered when deciding
  what process to use

Source Consumer Reports, Jan. 2000, p. 30.
7
Site Selection Considerations

• 1. Availability of production inputs
• 2. Marketing factors
• 3. Local incentives
• 4. Manufacturing environment
• 5. International location considerations
• Good US Labor Locations
• States with above average labor quality and below
  average labor cost
• Alabama Alaska
• Georgia Hawaii
• Virginia Wyoming

8
Types of Facility Layout

• Process layout arranges work flow around the
  production process.
• All workers performing similar task are grouped
  together
• 2. Product layout used for a continuous or
  repetitive production process.
• Workstations are arranged in a line with products
  moving along the line
• 3. Fixed-position layout the product stay in
  one place while workers and machinery move to it
  as needed.

9
Elements of Resource Planning

• Purchasing
• In sourcing vs. Outsourcing
• Inventory management
• Computerized resource planning
• Materials requirement planning (MRP)
• Enterprise resource planning (ERP)
• The guy with the most resources doesnt win.
  The guy who utilizes his resources best wins.
  Chuck Knight, CEO of Emerson Electric
• (Source Neff Citrin, Lessons from the Top,
  1999, p. 200.)

10
Supply Chain Management

• Supply Chain The entire sequence of securing
  inputs, producing goods, and delivering them to
  customers
• Supply Chain Management
• The process of smoothing transitions along the
  supply chain
• Supply Chain Management Strategies
• Forge stronger bonds with suppliers
• Improve supplier communication
• electronic data interchange (IDE)

11
Production control

• Define The coordination of materials,
  equipment, and human resources to achieve
  production operation efficiency
• Aspects of Production Control
• 1. Routing-determining work flow
• 2. Scheduling-controlling timing
• Gantt charts
• Critical path method PERT charts

12
Typical Gantt Chart
September October
8
Symbols scheduled start completed work time not
avail. scheduled end review date
13
Improving Production

• Total Quality Management
• Lean Manufacturing
• Just-in-Time
• Automation
• Computer-aided design (CAD)
• Computer-aided manufacturing (CAM)
• Robotics
• Flexible manufacturing systems (FMS)
• Computer-integrated manufacturing (CIM)

14
Marketing - Chapter 13

• 1. The Marketing Concept
• 2. Creating a Marketing Strategy
• 3. Developing a Marketing Mix
• 4. Buyer Behavior
• 5. Market Segmentation
• 6. Marketing Research
• 7. Trends in Marketing

15
Marketing Concept

• Define- Identifying consumer needs and then
  producing the goods or services that will satisfy
  them while making a profit for the organization
• Elements of the Marketing Concept
• Customer value
• ratio of benefits to sacrifices
• Customer satisfaction
• feeling that benefits have exceeded sacrifices
• Building relationships
• long term partnership with customers

16
Deeres Customer Orientation

• Understand needs of the agricultural farmer
  customer
• Provide good products that rarely fail
• Quickly repair any problem equipment
• Develop products based on what farmers want
• Extend credit to farmers if needed build trust
  and loyalty
• Provide information that increases customer value
  

Source Neff Citrin, Lessons from the Top,
1999, p. 47-53.
17
Creating a Marketing Strategy

• Understanding the external environment
• Social forces
• Demographics
• Economics
• Technological
• Political and legal
• Competitors
• Defining the target market
• Creating a competitive advantage
• cost competitive advantage
• differential competitive advantage
• niche competitive advantage

18
Marketing Mix

• Define- The blend of 4 Ps product offering,
  pricing, promotional methods, and place
  (distribution system) that brings a specific
  group of consumers superior value
• Developing a Marketing Mix
• Product strategy choosing a brand name,
  packaging, colors warranty, accessories and
  service.
• Pricing strategy- based on demand and cost of
  production.
• Distribution strategy- distribution channel
• Promotion strategy marketing mix

19
Buyer BehaviorConsumer Decision-Making
1. Sense stimulus
2. Recognize problem
3. Search for information
Individual Social factors
Memory
4. Evaluate alternatives
5. Purchase product
6. Evaluate outcome
7. Post-purchase behavior
20
When the Buyer is a Business (Not a Customer)

• Higher purchase volume
• Fewer buyers
• More concentrated location of buyers
• Direct distribution
• Rational purchase decisions

21
Top 10Business-to-Business Advertisers

• 1. ATT Corp.
• 2. IBM Corp.
• 3. Microsoft Corp.
• 4. Compaq Computer Corp.
• 5. MCI Communications Corp.
• 6. Hewlett-Packard Co.
• 7. Sprint Corp.
• 8. American Express Co.
• 9. Canon
• 10. 3Com Corp.

Source Business Marketing,www.businessmarketing.
com
22
Market Segmentation

• Define - The process of separating, identifying,
  and evaluating the layers of a market in order to
  design a marketing mix
• Types of Market Segmentation
• Type General characteristics
• Demographic age, education, gender, income,
  race, family size
• Geographic regional location (I.e., midwest),
  population density, city/county size,
  climate
• Psychographic lifestyle, personality,
  interests, values, attitudes
• Benefit benefits provided by the good or
  service
• Volume amount of use (light to heavy)

23
Marketing Research Process

• 1. Define the marketing problem
• 2. Choose a method of research
• survey, observation, experiment
• 3. Collect the data
• primary data, secondary data
• 4. Analyze the data
• 5. Make recommendations to management

24
Importance of Marketing Research

• Bob Tillman, CEO of Lowes, emphasizes the value
  of market research
• retailers often fail because they second guess
  the market research
• market research is the only direct source of
  information about what the customer wants
• it must be protected from internal politics or
  adverse influence

Source Neff Citrin, Lessons from the Top,
1999, p. 377.
25
Trends in Marketing

• Advanced observation research methods
• Decision support systems (DSS)
• Use of databases for micromarketing
• allows customized marketing to individuals
• Amazon.com records what every customer buys this
  gives them a sense of every customers taste
  preferences, which can be used to target specific
  customers with customized purchase suggestions
  special offers (Source Fortune, Sept. 28, 1998,
  p. 124)

26
Products Quality - Chapter 14

• 1. Types of Products
• 2. Building Brand Equity Master Brands
• 3. Importance of Packaging
• 4. Creating Products that Deliver Value
• 5. Product Life Cycle
• 6. Pricing
• 7. Trends Affecting Products

27
Product

• Define - In marketing, any good or service, along
  with its perceived attributes and benefits, that
  creates value for the customer.

28
Business Products

• Defined Products bought by businesses for use in
  making other products or in providing services.
• Capital Products large expensive items with a
  long life span.(Assets)
• Expense Items less expensive items that have no
  life span. (Profit Loss)

29
Tangible Intangible Attributes Create Product
Value
Imageof store
Warranty
Serviceafter sale
Color
Attach-ments
Product type of material, size, shape, smell
Imageof brand
Pack-aging
Instruc-tions
30
Product Successes vs. Failures

• Successes
• aspirin tablet (1900)
• laminated safety glass (1909)
• mass-produced tampons pads (1920s)
• adhesive tape (1925)
• latex paint (1941)

• Failures
• New Coke (1985)
• Apple Newton (1993)
• disposable dress (1966)
• Ford Pinto (1970)
• quadraphonic sound (mid-1970s)

Source Consumer Reports, Jan. 2000, pp. 14-17.
31
Branding

• Brand equity The value of company and brand
  names
• Master brand A brand so dominant that consumers
  think of it immediately when a product is
  mentioned
• Purposes of Branding
• Product identification
• brands allow marketers to distinguish their
  products from all others
• Repeat sales brand loyalty
• New product sales
• brand equity fuels sales of new products

32
Top 10 Brands on the Internet

• 1. Yahoo!
• 2. AOL.com
• 3. Microsoft
• 4. Netscape
• 5. Excite
• 6. msn.com
• 7. Lycos
• 8. GeoCities
• 9. Infoseek
• 10. Disney

26.6 million Unique visitors/month
22.0 million
18.6 million
17.6 million
17.3 million
16.3 million
14.6 million
14.2 million
12.2 million
9.7 million
Source Fortune, Sept. 28, 1998, p. 274.
33
Importance of Packaging

• Protects the product
• prevent damage, prevent spoilage
• Distinguish product from competition
• Ben Jerrys has an ecologically friendly
  unbleached paperboard package for its ice cream
  pints, consistent with its socially conscious
  mission (Source Ben Jerrys,
  www.benandjerrys.com)
• Promote product
• brand identification, information

34
Creating New Products
1. Set new product goals
2. Develop new product ideas
3. Screen ideas/concepts
4. Develop the concept
5. Test-market the new product
6. Introduce the product to the marketplace
35
Sales Profits During Product Life Cycle
SalesProfits
Introduction
Growth
Decline
Maturity
Sales Profits
0-
36
Pricing Issues

• Perceived satisfaction vs. actual satisfaction
• Pricing objectives
• maximizing profits
• achieve target return on investments
• offer good value at fair price

37
Determining Price

• Markup pricing - a percentage is added to product
  cost to determine price
• Markup/Retail price
• Breakeven analysis - determine the number of
  units needed to be sold at a given price to cover
  costs, so additional sales result in profit
• Product Pricing Strategies
• 1. Price skimming-intro _at_ high price then lower
  price over time
• 2. Penetration pricing - -intro _at_ low price then
  raise price over time
• 3. Leader pricing- store lowers price to attract
  customers
• 4. Bundling grouping 2 or more products
• 5. Odd-even pricing
• 6. Prestige pricing
• Example An Arizona store sold more turquoise
  jewelry after it was marked double the original
  price

38
Trends Affecting Products

• Building immediate brand recognition
• Increase in mass customization
• Levi Strauss electronically scans customers
  bodies to make custom-fit jeans (Source Consumer
  Reports, Jan. 2000, p. 15)
• Growth of internet auctions
• sets pricing standards for some products
• 2,450,327 items for sale on eBay on Jan. 1, 2000
  (Source eBay, www.ebay.com)
• eBay has 1.5 billion page views per month
  (Source eBay, www.ebay.com)

39
BUSN 115 - Class 7

• Chapters 4

40
Ethics

• Define - a set of moral standards for judging
  whether something is right or wrong.
• Individual Business Ethics
• 1. Utilitarianism -the consequences of an act
  determine whether it is right or wrong
• 2. Individual Rights -human rights, legal rights
• 3. Justice - what is fair according to societal
  standards
• 4. Stages of Ethical Development preconventional
  behavior based on the threat of punishment
• conventional obedience to the organization.
• postconventional- standards of a mature adult

41
Types of Justice

• 2 ways that people judge fairness
• Procedural justice
• Is the process fair?
• Distributive justice
• Is the result fair?

42
How Organizations Influence Ethical Conduct

• 1. Recognizing Unethical Business Actions
• 2. Resolving Ethical Problems in Business
• 3. Ethics Training
• 4. Establishing a Formal Code of Ethics

43
Types of Unethical Business Actions

• 1. Taking things that dont belong to you
• 2. Saying things you know arent true
• 3. Giving or allowing false impressions
• 4. Buying influence or engaging in a conflict of
  interest
• 5. Hiding or divulging information
• 6. Taking unfair advantage
• 7. Committing improper personal behavior
• 8. Abusing another person
• 9. Permitting organizational abuse
• 10. Violating the rules
• 11. Condoning unethical actions

44
Cyberslacking on the Job

• Personal use of the Internet at work is a concern
  for many employers
• Of the time employees spend online at work, 1/3
  of it is spent recreationally

How employees slack onthe Internet
Generalnews
Other
Shopping Sports Entertainment
Travel Pornography
Investment
45
Ways of Resolving Ethical Problems

• 1. Three-Questions Test
• Is it legal?
• Is is balanced?
• How does it make me feel?
• 2. Font Page of the Newspaper Test
• 3. Leading by Example
• 4. Ethics Training

46
Social Responsibility

• Define - the concern of businesses for the
  welfare of society as a whole includes concerns
  beyond legal and contractual obligations

47
Pyramid of Business Responsibility
Be a good corporate citizen
Philanthropic Responsibility
Ethical Responsibility
Do what is fair
Obey law
Legal Responsibility
Pursueprofit
Economic Responsibility
48
Two Dimensionsof Social Responsibility

• Legality
• Does the action break a law?
• 2. Responsibility
• Is the action responsible?
• Does the action benefit society?

Responsible
Irresponsible
Follows laws and benefits society
Follows laws,but harms society
Legal
Benefits society,but breaks laws
Harms societyand breaks laws
Illegal
49
Responsibilities to Stakeholders

• 1. Responsibility to Employees
• 2. Responsibility to Customers
• 3. Responsibility to the General Public
• environmental protection
• corporate philanthropy
• 4. Responsibilities to Investors

50
Examples

• I expect
• job security, benefits, flexibility, compensation
• safe products, response to complaints, honest
• advertising
• profits, disclosure, ethical practices

• When I am
• a(n)
• Employee
• Customer
• Member of Society
• Investor

51
Trends in Business Ethics

• 1. Strategic Giving
• ties philanthropy to corporate mission
• 2. Social Contracts with Employees
• 3. Carrying Ethical Conduct Overseas

52
New Social Contract between Employer and Employee

• The Company is sayings
• No Job Security
• You will be employed by us as long as you add
  value to the organization.
• And the employee is continuously responsible for
  finding ways to add value.
• In return the employee has the right do demand
  interesting and important work
• Pay that reflects your contribution
• Freedom and resources to perform well.