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Operations Management

Lecture No. 6
Design of Goods & Services

BITS Pilani
Pilani Campus

PB Venkataraman
Mechanical Engineering

Learning Outcomes
Compare and contrast the various phases in product life cycle and
interpret their impact on business and strategies
Select the appropriate strategy using product-by-value analysis
Explain various design approaches in achieving business
effectiveness

BITS Pilani, Pilani Campus

Module Outline

Introduction

PLC

Impact on
business

Product
Strategy

Video Cases

Product-ByValue

Design
Approaches

Methods
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Product Life Cycle

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PLC Impact on Business Metrics

Revenue

Availability-Cost-Profit

Pre-launch
-Still to be born
-Marketing seeds
-Engineering conceives
-Others support
-Spends 1% of life
-Errors are costly
-Diagnosis must
-No revenue

Time (NTS)

Introduction
-Stress, anxiety
-Crucial first weeks
-Watchful of performance
-Common sickness
-Continue to invest
-Still with design
-Marketing supports
-Revenue starts

Growth
-Marketing takes-over
-Least intervention of engg.
-Critical? Engg. In
-Invest in outfits
-Revenue grows
-Investment is high

Matured
-Stable revenue
-Stay hygienic
-Stay competitive
-Least investment
-Time to procreate
-Grow wealthy

Decline
-Limited freedom
-Earn on savings
-Least exertion
-No adventures
-Stay calm
-Gracefully exit

Qualis Case

Ambassodor Case

-Stay healthy
-Bad habits impact rest of

Tata Bolt Case

Apple Early Sales Case

life

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Product-By-Value Analysis

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Strategy Development Exercise


Model

Sales (units)

Sales (mINR)

Contribution
(mINR)

Unit Contribution
(mINR)

Alto

164,110

49,889

8,980

0.05

Omni

42,100

10,483

1,782

0.04

Wagon R

129,520

52,456

9,967

0.08

Swift

143,530

70,043

17,511

0.12

Dzire

172,650

1,08,770

27,192

0.16

Ertiga

43,060

27,558

6,063

0.14

Total

694,970

319,198

71,495

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Contribut
ion
(mINR)

Model

Strategy Development Exercise

32000

Unit
Contributi
on (mINR)

Alto

8,980

0.05

Omni

1,782

0.04

Wagon R

9,967

0.08

Swift

17,511

0.12

Dzire

27,192

0.16

Ertiga

6,063

0.14

Total Contribution (mINR)

Dzire
28000
24000
Swift

20000
16000
Wagon R
Alto

12000

Ertiga

8000
Omni

4000
0.0

0.02

0.04

0.06

0.08

0.10

0.12

Unit Contribution (mINR)

0.14

0.16

0.18

0.20
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Steve Jobs Style


Courtesy: Steve Jobs by Walter Isaacson

After a few weeks Jobs finally had enough. Stop he shouted at


one big product strategy session. This is crazy. He grabbed a
magic marker, padded to a white board, and drew a horizontal
and a vertical line to make a four quadrant chart. Here is what
we need, . Atop the two columns he wrote Consumer and
Pro; he labelled the two rows Desktop and Portable. Their
job was, he said, to make four great products, one for each
quadrant

Pro

Desktop

Consumer

Portable

The product review revealed how unfocused Apple had become.


The company was churning out multiple versions of each
product. Jobs asked, which ones do I tell my friends buy. When
he couldnt get simple answers, he slashed 70% of the products,
which resulted in massive layoffs.

For professional desktop quadrant they worked on Power


Macintosh G3. For professional portable Power Book G3. For
consumer desktop, iMac. And for consumer portable, iBook
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Module Outline

Introduction

Product
Strategy

PLC

Analogy

Impact on
business

Video Cases

Product-ByValue

Design
Strategy

Methods

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BITS Pilani
Pilani Campus

End of Lecture

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