Business Studies HSC Textbook

Chapter 1

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Role of Operations

Management

Role of Operations Management

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Operations management is the core of a business and it is this aspect that makes it such an exciting subject to study. Operations management is concerned with those business activities that plan, schedule and control the business inputs that are transformed into finished goods and services. Operations management is all about managing customer satisfaction. It is the aspect of the business concerned with meeting customer needs.

KNOWING WHAT CUSTOMERS WANT Competing business 1

Price

Competing business 2

flexibility

What Competing business 4

customers

want

Quality

speed The Winner? – The business that is able to consistently provide the product in terms of: • price, • quality, • speed, • flexibility

Competing business 3

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Role of Operations Management

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Literacy Development ‘Operations’ comes from the Latin word ‘operari’ and means work. The word operations has a number of meanings apart from this very specific business meaning. Find another meaning and illustrate it in a sketch or a sentence. Typically the strategy follows the steps outlined below:

1 Correct the worst problems

Strategic role of operations management

2 Be as good as competitors The strategic role of operations management is to allocate resources in such a way that it helps 3 Be the best in the industry 4 Redefine the industry’s expectations

to achieve the business’s goals in a dynamic and often turbulent environment. The key aspect of strategy is that the managers of a business are trying to achieve business goals in an environment where competitors are trying to beat them and the managers of the business have no control over the actions of competitors and other factors in the external environment.

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Case Study Using an Australian business to explain the strategic role of operations management: Kmart When Guy Russo was appointed CEO of Kmart, his first challenge was to correct the worst problems the ailing retailer was experiencing. The most immediate challenge was to refurbish the stores so that they were clean and tidy, the décor was attractive and appropriate, the stock on the shelves was in good condition, and employees were always courteous, friendly and helpful. Big W had already achieved these things and this was the main reason customers were attracted to Big W. Russo quickly corrected the worst problems and set about being as good as Kmart’s competitors. Being as good as Kmart’s competitors involved a range of challenges. The first was the introduction of new goods for sale and ensuring that a wide range of goods were stocked on the shelves. Russo reduced the number of goods, such as hardware and electronics, and improved the range of apparel. He also improved employee training to ensure staff were competent in all aspects of the store’s operation and could quickly move from task to task. This enabled the store manager to match the number of customers at the checkouts at any particular time with checkout operators and minimise queuing time by customers. The next step in Russo’s strategy is for Kmart to be the best in the industry. The focus of this strategy is staff training to ensure all employees deliver the highest RedPeg Publishing HSC Business Studies

Role of Operations Management

© 2011 Don Sykes & Kim Crawford - www.redpeg.com.au possible levels of customer service. The training videos encourage staff to go beyond ‘courteous, friendly, and helpful’ and actively deliver customer service. This requires staff doing tasks such as shelf filling and organisation, for example, to stop what they are doing when they see a customer who appears to need help; they are to approach the customer and offer to help. The employee will then take the customer to the area they are looking for and help them choose the good that would best meet their need by pointing out some of the key benefits of a particular product. Another key strategy in being best in the industry is to improve the predictability of opening hours. If you go past a Big W store just before opening hours, you will often see a significant number of customers waiting while the employees prepare the store for opening. Many Big W customers wait for up to half an hour in the entrance. Kmart is now open 24 hours a day. This aspect of operations management enables customers to minimise the time for the total transaction of parking, entering the store, making their purchase and returning to the car. Kmart is rapidly emerging as an industry leader. The fourth step in the typical operations management strategy is to redefine the industry’s expectations. This means that customers receive customer service levels, value for money goods, availability and range of goods and an overall shopping experience that is well beyond what they expected. Kmart are striving for the sort of thing Walmart provides in the areas of costs and prices and range of products – no competitor can match them.

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THINK, INK, PAIR , SHARE What are some specific examples of resources you think Russo might have allocated to correct the worst problems when he took over the management of the business? What sort of things needs to be done to ensure Kmart will be the best in the industry? Jot down your ideas and discuss them with your learning partner.

Using each letter in the grid once per word, find as many words of at least four letters as you can, always using the central letter. (No proper nouns.) Score: 30 Good; 42 Very good; 54 or more Excellent E T R O A P O N I The nine letter word is:

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Michael Porter (born 1947) is a professor at Harvard Business School in Boston. Originally graduating with a degree in Aerospace and Mechanical Engineering in 1969, he is a leading authority on company strategy and competition between 6 businesses and geographic regions/ nations. More recently he has applied his research to understanding and addressing the problems of delivering health care in the USA and the renewal of depressed urban communities. Porter is the author of eighteen books and his ideas are taught in virtually every university business course in the world.

© 2011 Don Sykes & Kim Crawford - www.redpeg.com.au The strategic role of operations management is firstly to implement the business strategy. The operations function has the task of manufacturing the good or delivering the service. It is also important for the operations manager to fully understand the strategic business plan (what the business is trying to achieve in a dynamic, competitive environment), support the business strategy and contribute to the decision-making process. This may seem obvious but often the operations function is simply given the task of implementing the strategy with little consultation. How do you do this? There are two key strategies concerned with improving the competitive position of the business. The strategies are cost leadership and good/service differentiation. The concepts were developed in the 1980s by Michael Porter and were described in his landmark book, Competitive Strategy: Techniques for Analysing Industries and Competitors.

Cost leadership

Cost leadership is a strategy that aims to create a competitive advantage by having the lowest cost of manufacturing the good or delivering the service in the industry. A competitive advantage is the ability to do something the customer regards as important, better than your competitors. The goal of a cost-leadership strategy is to be the best business in the industry by having the lowest cost of operations in the industry.

Case Study Using a global business to illustrate cost leadership in a tertiary business: Walmart Walmart is the largest retailer in the world. In the year ended January 2010 Walmart sold goods and services to customers to a value of US$408 billion. The business made a net profit of US$14.3 billion. All this from a small discount store Sam Walton started on July 2, 1962. Sam Walton decided it would be better to make a $2 profit on each of a specific good where 100 were sold each day, rather than a higher $5 profit on sales of only 10 of the particular good in a day. In the first instance he made a total profit on that good of $200. In the second instance the higher profit would have yielded a total of only $50. Sam was the first to use a phrase widely copied today. The phrase was ‘every day low prices’. Sam offered Walmart customers a wide variety of high quality, branded and unbranded goods at the lowest possible prices. Walmart’s advertising described ‘every day low prices’ in these terms: ‘Because you work hard for every dollar, you deserve the lowest price we can offer every time you make a purchase. You deserve our Every Day Low Prices.’

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Sam Walton also realised that, if he could get goods from the manufacturers at the lowest possible prices and cut the operating expenses in his stores, he could make life very difficult for his competitors - Sears Roebuck and Company, Woolco and Kmart. Unlike his competitors, Sam Walton always shared the lower prices he received from his suppliers with his customers. Walmart’s products were usually 20% cheaper than his competitors. Sam Walton understood the importance of volume in generating profits and lowering costs. ‘By cutting your price, you can boost your sales to a point where you earn far more at the cheaper retail price than you would have by selling the item at the higher price. In retailer language, you can lower your mark-up but earn more because of the increased volume,’ Sam explained.

Image 1.1 Walmart in Wanda Shopping District Nanning, China

With vendor-managed inventory the inventory on Walmart shelves is managed by the supplier, who automatically replaces items sold

In the years that followed, Walmart relentlessly pursued a policy of reducing costs and offering prices to their customers lower than Walmart’s competitors. In the 1980s Walmart grew rapidly by using information technology innovations such

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© 2011 Don Sykes & Kim Crawford - www.redpeg.com.au as bar coding, radio frequency identification and vendor-managed inventory to automate the supply chain. Walmart and their main suppliers have interconnected accounting systems. Ordering, purchasing and payment all happen automatically. Increasingly this is also happening with smaller suppliers. Radio frequency identification involves a radio frequency transponder on all pallets of goods suppliers send to a Walmart store. It tracks the pallet, advises Walmart staff of the shelves where the inventory will be displayed and automatically pays the supplier. Walmart is very effectively using a cost-leadership strategy to sustain its strong growth. Walmart offers its customers relatively standardised products with the minimum level of differentiation at the lowest competitive price. When businesses like Walmart successfully implement cost-leadership strategies, the customers receive ‘value for money’. Walmart is redefining the retail industry’s expectations.

8 THINK, INK, PAIR , SHARE Which Australian retailers use the phrases ‘value for money’ and ‘every day low prices’ in their store advertising? Do you think there are dangers in a business such as Walmart being so efficient that no other business can compete with it? Try and put Sam Walton’s basic philosophy into your own words. Do you think the manager’s of Kmart Australia are trying to implement a cost-leadership strategy? Discuss all these ideas with your learning partner.

HOMETHINK Remember Kmart USA and Kmart Australia have no connection except the name

A handbag from the well known luxury French fashion house Louis Vuitton.

Research the dynamic history and operations of Walmart. Construct a 6-point timeline of the most significant changes in Walmart’s development. A business may choose a cost-leadership strategy when it offers its customers a relatively standardised product and the features or characteristics of the goods being sold are acceptable to their customers. You go to Kmart to buy goods such as a handbag, or perhaps a dress or shirt, because the good represents value for money. You are expecting the minimum level of differentiation. Indeed if you want differentiation, you will buy the Louis Vuitton handbag at $1500 rather than paying the $40 cost at Kmart.

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© 2011 Don Sykes & Kim Crawford - www.redpeg.com.au Again, it is important to understand that several businesses are competing to sell you the standardised product. In our previous example it is not just Kmart, but also Big W, Target and indeed businesses like Myer, all competing to sell you the handbag. If Kmart is going to be successful in implementing a cost-leadership strategy, the managers will have to build a highly efficient, large-scale supply chain. Remember it is this aspect that Walmart was able to do so well – sell a lot at small profits with very low costs. However, there are other key requirements in implementing a successful cost-leadership strategy. It is crucial that management has very tight control over manufacturing, supply and overheads costs. Overhead costs are the expenses that are necessary to the on-going functioning of the business. They include costs such as rent, advertising, wages, research and development, and so on. In other words, successfully implementing the cost-leadership strategy requires the costs of making the sales to be minimised.

Case Study 9

Using an Australian business to illustrate the concept of cost leadership: Kmart The remarkable turn around in Kmart’s performance since the appointment of Guy Russo as CEO is due to the successful implementation of a cost-leadership strategy. In the year ending June 2009 Kmart’s profitability increased by 105% and was followed by a further improvement of 93% in 2010. The strategy is based on pricing goods to generate sales. The reason for this is to lower costs by taking advantage of economies of scale. Economies of scale are cost savings that result from size. Kmart receives better prices from their suppliers because they are buying so much. Kmart is using national advertising to drive the increase in sales based on ‘value for money’, with the advertising slogans: ‘Look what you can get for $10’ and ‘Change you can see’!

There is an ambiguity or double meaning in the slogan: ‘Change you can see’. The word ‘change’ can refer to the physical appearance of the stores or it can refer to the money you receive back when you pay.

The next important aspect of the cost-leadership strategy is based on lowering the costs of inbound logistics. Inbound logistics refers to the receiving, warehousing and distribution of goods, mostly sourced from suppliers in China, to the individual Kmart stores. Containing the costs associated with inbound logistics involves: • carefully monitoring and evaluating the performance of suppliers • creating a balance between maximising the size of the order to take advantage of economies of scale and the increased cost of warehousing • constantly monitoring the costs of transport and working to lower the costs of both inbound and outbound transport costs • flattening the management levels and by having relatively few management layers reducing overhead costs. Getting Better Results

Role of Operations Management

© 2011 Don Sykes & Kim Crawford - www.redpeg.com.au Kmart management has also reduced overhead costs by implementing effective training programs to improve employee efficiency and effectiveness. The core of each Kmart store is a small, but highly trained, sales staff who have the goal of the highest levels of customer service. Casual employees provide the flexibility needed to adapt to the business cycle and the yearly fluctuations in retail spending. Kmart has developed consistent policies to reduce the turnover costs associated with highly trained employees leaving and, consequently, the need to train new people. Training sales staff is expensive. The KMart cost-leadership strategy is based on the following: • increasing the volume of sales by generating more sales to take advantage of economies of scale • reducing costs in inbound logistics which is a major source of costs • reducing overhead costs. So far Guy Russo has been remarkably successful, but there is little doubt his competitors are also striving to be the winner.

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THINK, INK, PAIR , SHARE Who are Kmart’s competitors? What have been your experiences of shopping at these competing stores? How are they similar or different? Jot down your ideas and discuss them with your learning partner.

Businesses that succeed with a cost-leadership strategy must have access to a great deal of capital. This is because highly efficient manufacturing facilities with high levels of the latest technology can provide an effective barrier to entry to competitors. Capital can also be used to create very efficient distribution channels that make it difficult for competitors to match prices. Woolworths, for example, used this strategy during the 1990s. Woolworths’ managers spent more than a billion dollars restructuring their warehouses and distribution systems with the very latest in logistics technology and were consequently able to put enormous pressure on Coles. From 1995 to 2007 Coles lost market share to Woolworths.

Good/service differentiation

A good/service differentiation strategy is a very different way of developing a competitive advantage. A good/service differentiation strategy is concerned with developing products that are different from their competitors because they have benefits or attributes a customer values. The customer is then prepared to pay more for the differentiated product.

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© 2011 Don Sykes & Kim Crawford - www.redpeg.com.au A typical example of the good/service differentiation strategy is the Apple iPod. At the time of the iPod’s introduction, most competitors were pursuing a cost-leadership strategy and the prices of mp4 players were falling rapidly as manufacturers incorporated a raft of cost-saving strategies. Apple incorporated attributes such as a cool design and intuitive technology. The strategy was responsible for Apple’s spectacular growth during the early 2000s. Apple’s success demonstrates the importance of highly skilled and creative product development teams in pursuing a good/service differentiation strategy. Jonathan Ive, the head designer for all Apple products, understands ‘cool’ and has been able to give the ‘cool’ attribute to the iPods, iPhones and iPads that are the reason for Apple’s rapid growth. Customers are prepared to pay for ‘cool’ and many are fiercely loyal to Apple.

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The customer loyalty that typically follows a successful good/service differentiation strategy is an important barrier to entry. It is difficult for competitors to copy because the customer loyalty is typically to the brand rather than the product. Most mp4 players now have the attributes that first attracted customers to the iPod, but customers still purchase the iPod. It is the brand loyalty that makes it difficult for rival firms to attract customers. Another important aspect of the good/service differentiation relates to cost increases from suppliers or component part manufacturers. Cost increases from suppliers can be of great concern where a business is pursuing a cost-leadership strategy, but when the product has been successfully differentiated the business is more likely to be able to pass the cost increase on to customers. The business is also able to resist the demands from large buyers to lower prices because that buyer has no real alternative. Have you noticed that, when electrical goods retailers have sales with greatly discounted products, the sale rarely includes Apple products?

THINK, INK, PAIR , SHARE Make a list of three products you consider have the attribute of ‘cool’. What is roughly the price difference between these products and the standard competing product? How important is brand when you buy clothes? List three products where price is the main consideration in your purchase. Jot down your responses and discuss them with your learning partner.

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Literacy Development Obviously ‘differentiation’ comes from the word different. Brainstorm examples with your family of how differentiation impacts on your daily life, such as fruit, vehicles, and television channels.

Goods and/or services in different industries

Because operations management is all about manufacturing goods and delivering services, it can be helpful at the outset to broaden our understanding of the nature of goods and services. Is this pineapple a good or a service?

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© 2011 Don Sykes & Kim Crawford - www.redpeg.com.au Of course most of you would immediately answer that it is a good. But did you know that when pineapples were first introduced into Europe in the seventeenth century, they were such a status symbol that poorer middle-class families would hire a pineapple to impress visitors when they entertained? The pineapple was returned to its owner when the visitors left. In this case is the pineapple a good or a service?

THINK, INK, PAIR , SHARE Work with your learning partner to decide if each of the following scenarios is about making a good or delivering a service: 1. The employee is attaching a wheel to a new Toyota Prius at the Toyota assembly plant in Japan. 2. The employee is attaching a wheel to a new Toyota Prius at the 20 000 kilometre assistance to customer at the distributers’ outlet.

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3. The parents of a new baby purchase Huggies disposable nappies from a supermarket. Are the disposable nappies a good or a service? 4. The parents of a new baby pay a weekly charge to have cotton nappies laundered. Are they buying a good or a service? 5. The manufacturers of a brand of motorcars purchase cans of paint to paint the finished vehicle. 6. The manufacturers of a brand of motorcars outsource the painting of the motorcars to the paint manufacturer Dulux, to paint each car for a fee.

Another way to look at the difference between a good and a service is by placing the product on a scale that sees the difference as a continuum. Would you agree with the placing of these products? Service

tooth extraction air-line ticket

fast food

newspaper

computer

television

farming

mining coal Good

Can you see why it is better to talk about products and services rather than goods and services? The reason, of course, is that most products consist of good and service components such as a warranty. The difference between goods and services is difficult to define and it is not particularly useful to make the distinction. Indeed, it is not particularly useful to make a distinction between a product and service. In the past it was easy to define products as tangible and services as intangible. But what about a computer program purchased as a disc and the same program downloaded from the internet. One product is tangible and the other intangible. It is the same product!

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THINK, INK, PAIR , SHARE Discuss with your learning partner the placement of each of the products on the continuum between a service and a good. Identify any products you consider wrongly placed and explain why. Try and think up another couple of products in the middle and test them out on your learning partner.

Different industries provide very different goods and services. Kmart, for example, is typical of the retail industry. Kmart provides a service that could be called a ‘shopping experience’. Customers have expectations about the service they are purchasing. They expect the products they are purchasing to be in good condition, the surroundings to be clean and pleasant and - most importantly - a high level of customer service. In addition, they expect goods to be available when they want them and to have access to the shops when they want to shop.

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Railcorp also provides a service and is typical of an industry that involves the movement of people. When customers purchase a ticket to go from one destination to another, they also have a set of expectations about the service they are purchasing. They expect the trains to be clean and a reasonable degree of customer service but, most of all, they expect the trains to be reliable and run to the timetable. They also expect the timetable to make trains available when they want to travel.

The Ford Motor Company provides a product. The Ford factory is typical of goods and services produced in the manufacturing industry. There is a good component, the car, and a service component, the after sales aspects of maintenance and warranty. When the business purchases products such as engines or brakes from its suppliers, Ford expects the parts to be manufactured to the specifications it gave to the suppliers. This determines the reliability its customers expect from Ford. Ford customers also expect the car will be well designed and be available when they want it. Customers will also expect a degree of customisation in terms of things like the colour of the vehicle and accessories.

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THINK, INK, PAIR , SHARE What goods or services are produced in the banking industry? What are customer expectations for these goods or services? What other businesses are typical of the goods or services provided by this industry? Jot down your ideas and discuss them with your learning partner.

Interdependence with other key business functions

Businesses create goods and services in a process called production. Operations management refers to the activities that transform inputs (raw materials, component parts, labour and so on) into outputs of goods and services. All businesses do this. Sometimes adding value to inputs to create a service is not so obvious. The reason a business exists is to produce goods and services. However, just creating the product or service is not enough. The product or service has to be sold. The specialist activities that design the product to meet the needs of customers and generate the demand by pricing, promoting and distributing the product are just as important. There is a clear interdependence between the operations function and the marketing function.

15 ‘Interdependent’ means dependent on each other.

Finance is also important. Employees have to be paid. Raw materials and component parts must be purchased. Bills for rent and electricity must be paid. The money from the sale of products or services must be collected and records must be kept. This is the finance function. There is a clear interdependence between the operations function, marketing function and finance function. These are the three basic functions in a business and as a general rule the success of the business is determined by how well they work together. Market research guides new product development. The marketing function will design a product that is competitive in the market place because it meets the needs of customers better than competing products. The operations function works with the marketing function during the development stage to determine the most efficient and effective design from the operations function. The finance function works with both to ensure the money needed to develop and manufacture the product is available and the appropriate financial systems for the sale and collection of the money are in place. Imagine you were Guy Russo, CEO of Kmart. Your company (Wesfarmers) has just purchased a business that is declining because it no longer effectively meets the needs of customers as well as Big W. You need to do three things. The first is to design a product (a shopping experience) that is better than Big W. You give this task to the marketing function. The marketing function develops a product based on wider aisles, refurbished stores and new merchandise with higher profit margins, lower costs and high levels of customer service. You give the task of creating this product to the operations function. The operations function Getting Better Results

Role of Operations Management

© 2011 Don Sykes & Kim Crawford - www.redpeg.com.au will transform the store with teams of carpenters, painters, shop-fitters and so on. The operations will examine every aspect of the supply chain from the factory in China, the container ships, warehousing to the final delivery to a Kmart store. The operations function will also be responsible for effectively training the thousands of employees to deliver the highest levels of customer service. People are very important. A business gets so much of its competitive advantage from the quality of its people. The business that effectively manages its human resources in terms of the way it selects, trains and rewards employees usually provides better products and services in the marketplace. It is the role of the human resource function to achieve these goals. None of these things can happen without money. You give the task of working out how much money will be needed and the most efficient way of providing the required money and the payment of wages and so on to the finance function. The business functions of operations, marketing and finance are interdependent.

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Processing the work for the unit on the Role of operations management

At the outset, focus on your HSC. Carefully review the unit of work. Practise potential multiple choice and short responses. Most importantly learn from business. Adopt the basic principles the most successful businesses have adopted. Russell and Taylor (2005) have set out the following principles for implementing a continuous improvement effort:

1. Create a mind-set for improvement. Do not accept that the present way of doing things is necessarily the best.

2. Try and try again. Don’t seek immediate perfection but move to your goal by small improvements, checking for mistakes as you progress.

3. Think. Get to the real cause of the problem. Ask why - five times. 4. Work in teams. Use the ideas from a number of people to brainstorm new ways. 5. Recognise that improvement knows no limits. Get in the habit of always looking for better ways of doing things.

Memory work

Carefully review the work you have done in this section. What is operations management? Operations management is concerned with planning, scheduling and controlling the business inputs that are transformed into finished goods and services. Operations management is all about managing customer satisfaction. It is the aspect of the business concerned with meeting customer needs. RedPeg Publishing HSC Business Studies

Role of Operations Management

© 2011 Don Sykes & Kim Crawford - www.redpeg.com.au Outline the strategic role of operations management * Allocate resources to help achieve the goals of the business and improve its competitive position.

* This can be achieved by: 1.

Cost leadership that aims to create a competitive advantage by producing the good or service at the lowest cost

2. Good/service differentiation, which is concerned with developing products that are different from those of competitors with benefits or attributes a customer values.

Explain the difference between goods and services in different industries Traditionally, goods were defined as tangible or physical things while services were intangible actions performed for the customer, such as legal advice from a lawyer. Today it is more difficult to make this distinction. For example, a newspaper is tangible, but it also provides the customer with a service. Kmart is a business typical of those in the retailing industry. This business provides a service. So, too, does a bus company and a dentist. Ford Motor Company, on the other hand, manufactures a product. Regardless of the industry, operations management is concerned with providing the good and/or service.

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Demonstrate the interdependence of operations with the other key business functions Operations management cannot exist in isolation from the other business functions of finance, human resources and marketing. Obviously finance is required to pay employees and to ensure inputs of raw materials and component parts are available when they are needed. Marketing is the function of a business that works out what customers want and develops the goods/services that will best meet customer needs in a competitive market place. For a business to operate successfully, the best employees need to be selected, motivated and retained. None of these functions can be sustained independently of the other functions.

Topic Test - chapter 1

The role of operations management

1. Which of the following best describes the strategic role of operations? (a) (b) (c) (d)

Operations is concerned with correcting the worst problems Achieving business goals in a dynamic external environment Being as good as competitors Gaining control over a turbulent external environment.

2. Which of the following best describes the concept of cost leadership? (a) (b) (c) (d)

Leading the industry in high costs Concerned with taking advantage of economies of scale Concerned with lowering the cost of inbound logistics Creating a competitive advantage by having the lowest cost of manufacturing in the industry.

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3. Which of the following best describes the concept of good/service differentiation? (a) (b) (c) (d)

Demonstrates the importance of a highly skilled and creative product development team Is difficult for competitors to copy because customer loyalty is to the brand Developing products that are different from their competitors Is an important barrier to entry to the industry.

4. Which of the following best describes the role of operations management? (a) (b) (c) (d)

Transforming inputs into finished goods Planning, scheduling and controlling business activities Managing customer satisfaction Transforming inputs into products that will effectively meet customer needs.

5. Which of the following best describes the strategic goal of operations management in a business like Kmart? (a)

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(b) (c) (d)

Redefine the expectations of customers in the industry Be the best in the industry Be as good as competitors Refurbish the stores so they are clean and tidy.

Short responses 1. Outline the strategic role of operations management.



5 marks

2. Explain the difference between cost leadership and good/service differentiation. 10 marks

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© 2011 Don Sykes & Kim Crawford - www.redpeg.com.au Marking your work Multiple choice answers: 1 (b), 2 (d), 3 (c), 4 (d), 5 (a). Checklist to mark short response 1

* An introductory sentence that includes the phrase operations management * Defines the term operations management in the second sentence * Explains the idea of trying to achieve business goals in a dynamic environment * Illustrates the concept of the strategic role of operations management with the Kmart case study

* Is carefully planned with cohesive links between sentences and paragraphs. Checklist to mark short response 2

* An introductory sentence with the idea that there are two approaches to gaining a competitive advantage and they are cost leadership and good/service differentiation

* Defines the terms cost leadership and good/service differentiation in the second sentence * Mentions a couple of features of cost leadership

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* Illustrates the idea of lowest cost with Walmart * Mentions some of the features of good/service differentiation * Illustrates these ideas with Apple products * Indicates careful consideration of cohesion in the sentences and paragraphs. Answers for Word Search ante anti apron atone atop earn earnt entrap inept iota irate nape near neat oaten opera operant operation opiate orate oration ornate pain paint painter pant part pate patron peat piano pirate prat rain rant rapt rate ratio ration repaint retain retina roan rota tape taper tapir tare tarn tarp tear tinea train trap

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