Question

The operations management literature classifies the strategic decisions of operations management according TEN (10) critical areas. For a global firm seeking competitive advantage via differentiation, which one of the following statements is incorrect?

A. The firm should undertake heavy R&D investments with the aim of developing a broad range of products.
B. The firm should purchase competitively by identifying suppliers willing to provide bargains.
C. The firm should hire the very best in the industry globally.
D. The firm should maintain high volumes of finished goods inventory primarily to ensure all demands are met.

Answer 1

Statement D is incorrect for a global firm seeking competitive advantage through differentiation, as maintaining high inventory levels is more aligned with a cost leadership strategy rather than a differentiation strategy.

Step-by-step explanation:

In regard to the strategic decisions of operations management for a global firm focusing on differentiation, statement D is incorrect. Maintaining high volumes of finished goods inventory is not generally advised for firms aiming for differentiation, as this approach is more aligned with a cost leadership strategy. Instead, these firms should focus on product innovation and quality enhancements. High inventory levels can result in high carrying costs and can potentially be detrimental if the differentiated products become obsolete or out of date due to rapidly changing consumer preferences or technological advancements.

Operations management must align with a firm's overall strategy. When aiming for differentiation, it is critical to invest in R&D (statement A), smart procurement strategies for quality (not necessarily the cheapest bargains as suggested in statement B), and hiring exceptional global talent (statement C) who can contribute to creating unique products and services that set the company apart in the marketplace.