MSc Supply Chain & Logistics Management

Business, Operations and Supply Chain Strategy

Date: PRACTICE EXAM

Time: 2:00 – 4:15 (105 minutes for the exam itself, plus 30 minutes reading time for the case study)

Answer TWO questions: ONE from Section A and ONE from Section B

give the company advice about its future business and operations strategy.1 First. please read carefully the attached Case Exercise on ‘Hagen Style’. Then answer the following questions: (a) Discuss the business strategy that the company has followed so far.Business. Page 2 of 5 . (24 marks) (b) (c) Please turn over for Section B /…. Based on a careful evaluation of these options. Explain what strategic decision criteria you consider to be appropriate for evaluating these options. What are the current competitive priorities in operations? What is currently the main problem area in operations? (18 marks) Develop a number of strategic options for the company (relating to business to strategy in general. What kind of issues or questions does the company face with respect to the future direction of its business strategy? (18 marks) Discuss the operations strategy that the company has followed so far. Operations and Supply Chain Strategy PRACTICE EXAM SECTION A: ANSWER ALL PARTS OF THE FOLLOWING QUESTION (worth 60 marks in total) Q. and operations strategy in particular).

Strathclyde Business School) Please turn over for the case exercise /. Illustrate your comparison with appropriate examples from real-life business organisations.3 Explain what is meant by the following two network structures in operations: horizontal networks and vertical networks. Operations and Supply Chain Strategy PRACTICE EXAM SECTION B: ANSWER ONE OF THE FOLLOWING QUESTIONS (worth 40 marks each) Q. (40 marks) END OF THE EXAM PAPER (Examiner: Dr Robert van der Meer. (40 marks) Q. then explain under what conditions outsourcing would be inappropriate. Compare the main challenges involved in managing these different network structures.. Illustrate your explanation with appropriate examples from real-life business organisations..Business.2 Some articles in the business press advise managers to focus on their company’s core competences and to outsource ‘non-core’ activities as much as possible. Page 3 of 5 . Do you think that such general advice is always appropriate? If not.

the box would be automatically check weighed (to ensure that no items had missed the box). In total the company had almost 10. selling kitchen equipment. soon it had evolved into a pioneering direct marketing operation which sold its products (only about half of which were now manufactured by itself) through a network of local representatives. they were recruited to service a geographic area. Please turn over for the rest of case exercise /. Whereas many representatives now used the Internet to place orders. Hagen would receive their orders. and consolidate their orders on a weekly basis.. This information was fed down to the warehouse where each representative’s order (usually containing 20 to 50 individual items) was packed. just outside Munich (Germany). deposited items in the box. Both centres. each loaded with one of the higher selling products. sealed. usually within a one-hour drive. A standard-sized box was automatically loaded on a moving belt conveyor and. containers.Business. Orders were received at one of Hagen Style’s two distribution centres (staggered through the week so as to smooth demand on the centres). some faxed their orders and a growing number posted their consolidated orders by Internet. Most representatives still mailed their order to Hagen using pre-printed forms and prepaid envelopes. the other.. etc. if an order was complete. Representatives would sell from door-to-door or at places of work. Much of the packing process was standardised and automatic. this way of placing orders. used the same processes. pack and dispatch them so that the representatives could deliver to their customers in less than one week. as around 45 per cent were. Those boxes which needed additional items packing (usually these were less popular or large items which would not fit the automatic dispensers) were automatically routed on to a manual line where operators would complete the packing process. as it proceeded down the belt. and addressed. most of their customers were not yet amongst those who would have access to. Most of Hagen Style’s products were ‘value’ items of reasonable quality with standard rather than innovative design. or be comfortable using. salad bowls and so on. one in Dortmund (Germany) near the company’s head office. community centres. Page 4 of 5 . the delivery note inserted.000 representatives although only around 70 per cent of them were ‘active’. clubs. tableware. the representatives’ orders were keyed in to the company’s information system (or checked if they came through the Internet. Founded around forty years ago as a manufacturer of plastic kitchenware. filler put in the box to prevent damage in transit. it originally sold its products through department stores. At the end of the packing lines were the loading bays where boxes would be loaded onto the trucks for their journey to the representatives. as mistakes by representatives were still common using this medium). automatic dispensers. perfected over many years. First. small gadgets. Operations and Supply Chain Strategy PRACTICE EXAM Hagen Style case exercise ‘Hagen Style’ was one of the most successful direct marketing companies in Europe. Working from home. However. At the end of the belt. The packing sequence fed down to the warehouse was calculated so as to ensure that all boxes for a certain area arrived at the correct loading bay just in time for dispatch on the correct truck.

in general. far fewer packing errors. Recently even Hagen Style. had started selling a limited range of its products through selected discount stores and was planning to sell through a catalogue operation. or even improve. Certainly industry benchmarking studies show that we are significantly superior to similar operations. Operations and Supply Chain Strategy PRACTICE EXAM Kurt Meyer. its product margins selling through these channels. and faster throughput times from order receipt to dispatch. bowing to the inevitable. For example. Our main problem is that the operation was designed for high volumes but the direct marketing business using representatives is. most of which now stocked the type of products in which Hagen Style specialised. transportation and warehouse people have together created a great system. Traditional customers were moving towards using catalogues. They have always been envious of our fulfilment operation and have indicated that they would be willing to subcontract most of their order fulfilment to us. We have lower costs per order. it would be better to concentrate on what we know. packing lines. I have been talking with Lafage Cosmetics who sell their products in a very similar way to our traditional business. and dispatch arrangements are not designed to cope with that kind of order. Moving into the catalogue business will mean dealing with a far greater number of individual customers. TV shopping channels. Should they modify their existing fulfilment operation or subcontract the business to specialist carriers? And what would happen to their distribution centres? This posed a problem for Kurt: “Although our system is great at what it does. the downside is that it would find it difficult to cope with very different types of order. Our information system.Business. each of whom will place relatively small orders for one or two items. We would have the opposite problem delivering to discount stores. on a slow but steady decline. Hagen Style’s vice president of distribution. I am sure we could still get profitable business by utilising our distribution skills for the substantial number of companies who still need our kind of service. It reckoned that it could maintain. was proud of his distribution centres: “It is no exaggeration to say that we run one of the slickest order fulfilment operations in the world. Years of investment and improvement have gone into perfecting it.” Page 5 of 5 . The problem was how to distribute their products to these new channels. Direct selling using door-to-door representatives was regarded as an old-fashioned market channel. As far as I am concerned. There. Our IT systems.” Kurt’s anxiety over future business was shared by all the company’s management. relatively few customers would place large orders for a relatively narrow range of products. or just buying from supermarkets and discount stores.

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