A. Discuss the relative importance of the five performance objectives to the success of Swatch – quality, cost, speed, dependability, flexibility; and

Case Study 1 – Swatch (Slack et al., Operations Management)
In the early 1980s the Swiss watch industry was nearly dead. Competition from cheap but often high-quality products from Far Eastern manufacturers such as Seiko and Casio had almost obliterated the traditional Swiss industry. Trying to protect their investments, the Swiss banks organized a merger of the two largest companies on the advice of Nicolas Hayek, now boss of Swatch’s parent company SMH, formed from the merger. He saw the potential of a new plastic-cased watch, which was already being developed inside one of the companies. One of its major advantages was that it could be made in high volume at very low cost. The quartz mechanism was built directly into the all-plastic case using very few components, less than half the number in most other watches. Fewer components also meant that the manufacture of the watch could be fully automated. This made Swatches cheap to produce even in Switzerland, which has one of the highest labour costs in the world.
The innovative design, some creative marketing, but above all else the operation’s success at producing the watch cheaper than anyone else brought the company significant rewards. In the early 1980s the total market share for all Swiss watches was around 25 per cent; ten years later it had more than doubled. The ability to offer a good watch at a low price had released the potential of the watch to become a fashion accessory. Swatch’s operations reaped the benefits of high volume but had to cope with an ever-increasing variety of product designs. Through automation and rigid standardization of the internal mechanism of the watch, the company managed this increase in variety without it crippling its costs. It is the success of the company’s operations managers in keeping their costs low (direct labour cost is less than 7 per cent of the total cost of production) that has allowed Swatch to succeed. Not that everything the company has done has been successful. Some designs never caught the public imagination and some distribution and marketing mistakes were made, especially in the United States. However, continuing innovation, high quality and low cost make it much easier to overcome such problems.

With reference to the above case study (Swatch):
A. Discuss the relative importance of the five performance objectives to the success of Swatch – quality, cost, speed, dependability, flexibility; and

B. Discuss the contribution of the marketing function, the product design function, and the operations function to the success of Swatch.
Case Study 2 – A Focus on Jeans (Slack et al., Operations Management)
Jeans are one of the most commonly worn types of clothing around the world. Not surprisingly, the thread which holds them together has to be strong and of high quality. The company Coats Thread is a major manufacturer of jeans thread, supplying product to companies such as Levi-Strauss and Vanity Fair (who manufacture Lee and Wrangler brands). The manufacturer of jeans thread involves spinning the polycotton corespun thread, formulating and mixing the dyes, dyeing the thread in batches, lubricating and winding the thread onto smaller reels, and shipping these to many jeans factories around Europe. Up until recently, Coats sold product on a country-by-country basis with up to five of its plants each producing jeans thread for customers all over Europe. Now, all of Coats’ jeans thread for its European markets is distributed through a single plant in Scotland. All orders and deliveries are also dealt with by a single, integrated, supply chain planning and control system. This has led to significant advantages for both Coats and their customers. The Scottish plant could focus on the manufacturing and marketing skills necessary to sell into this market and their customers had a single point of contact when they wanted to discuss supply issues.
With reference to the above case study (A Focus on Jeans),

• Discuss the relative importance of the five performance objectives for achieving business competitive advantage through operations quality, speed, dependability, flexibility, and cost.


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