BITS PilaniPilani Campus

Operations ManagementLecture No. 6

Design of Goods & Services

PB VenkataramanMechanical Engineering

BITS Pilani, Pilani Campus

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

3

Introduction

PLC

Impact on

business

Product

Strategy

Video CasesProduct-By-

Value

Design

Approaches

Methods

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BITS PilaniPilani Campus

Product Life Cycle

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PLC Impact on Business MetricsAvailability-Cost-Profit

Introduction

-Stress, anxiety…

-Crucial first weeks

-Watchful of performance

-Common sickness

-Continue to invest

-Still with design

-Marketing supports

-Revenue starts

Apple Early Sales Case

Pre-launch

-Still to be born

-Marketing seeds

-Engineering conceives

-Others support

-Spends 1% of life

-Errors are costly

-Diagnosis must

-No revenue

Tata Bolt Case

Growth

-Marketing takes-over

-Least intervention of engg.

-Critical? Engg. In

-Invest in outfits

-Revenue grows

-Investment is high

-Stay healthy

-Bad habits impact rest of

life

Matured

-Stable revenue

-Stay hygienic

-Stay competitive

-Least investment

-Time to procreate

-Grow wealthy

Qualis Case

Decline

-Limited freedom

-Earn on savings

-Least exertion

-No adventures

-Stay calm

-Gracefully exit

Ambassodor Case

Time (NTS)Re

ve

nu

e

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BITS PilaniPilani Campus

Product-By-Value Analysis

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Strategy Development Exercise

7

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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Strategy Development Exercise

8

32000

28000

24000

20000

16000

12000

8000

4000

0.0 0.02 0.04 0.06 0.08 0.10 0.12 0.14 0.16 0.18 0.20

Alto

Omni

Wagon R

Swift

Dzire

Ertiga

Unit Contribution (mINR)

Tota

l C

on

trib

uti

on

(m

INR

)

Model

Contribut

ion

(mINR)

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

BITS Pilani, Pilani Campus

Steve Jobs StyleCourtesy: Steve Jobs by Walter Isaacson

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 couldn’t get simple answers, he slashed 70% of the products,

which resulted in massive layoffs.

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

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”

9

Pro

Desktop

Consumer

Portable

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Module Outline

10

Introduction

PLC

AnalogyImpact on

business

Product

Strategy

Video CasesProduct-By-

Value

Design

Strategy

Methods

BITS Pilani, Pilani Campus

BITS PilaniPilani Campus

End of Lecture