Operations and the Economy:

The US economy is clearly a lot better than the collapse in 2008. The big three automakers are actually all profitable. The Maryland state budgets are dismal but you can see the growth in terms of new construction all over the state, both residential and commercial. However, there are serious problems still with the economy. Naturally, like any other American (or Chinese, or Latvian, or any other people) you are most concerned with what affects you directly. For example, I am thrilled with the discounts I am getting at Burger King, or with the special deals at Checkers. It is known that McDonalds is doing well and Burger King is not. An operation must adjust to the economy around it in order to survive. Some of the operational measures taken in hard times are offering discounts, offering a new range of low cost products, cutting hours to reduce costs, layoffs to reduce production and cost, reducing staff, etc. Can you give some examples of these that you have observed? You should also discuss how effective these measures are. For example, if staff is laid off and there is neither a person nor a system to help a customer, you end up with an irate customer and lost sales.

Talking about cheap products, have you seen any new cheap offering from Apple? And yet, Apple is doing very well with billions of dollars in profits. My explanation is that Apple is a differentiated product, just like Mercedes Benz. People who buy high-end differentiated products are not troubled by economic situations. Has Nordstrom dropped its prices? Discuss these economic situations in the light of operational decisions.

All eyes are now on Europe as one country after another goes on the skids. I am sure the USD (US Dollar) is doing very well with respect to the EUR (Euro). This could be a great time to travel to Europe. I wonder if the travel industry is promoting Europe travel. US manufacturing is hurt by the Europe economy and canceled or postponed projects and orders. Discuss Europe vis-a-vis the US economy, and operational decisions that it leads to.