A Case study on Operations Management

A Case Study Presented to the Faculty of the Graduate School

Claro M. Recto Academy of Advanced Studies
Lyceum of the Philippines University
Intramuros, Manila

In Partial Fulfillment of the Requirements for the Degree

MASTER IN BUSINESS ADMINISTRATION

By
Silvestre, Allison G.
December 2014

Executive Summary:
Hazel had worked for Fortune 500 for 15 years. Hazel, along with 400 other workers was
terminated due to the new CEO's decision to downsize the company. Hazel decided to put up a
lawn mowing service business.
View Point:
Hazel
Time Context:
Present
Problem Statement:
Hazel is to choose from the most income generating method to have continuous financial
stability supporting her basic needs and current lifestyle.
Statement of Objective:
To prevent the depletion of her financial resources by having a continuous source of income,
which would preferably continue to increase proportionately with the number of years, for
support of her basic needs.

Areas of Consideration:
Financial
Strengths

Marketing

Operation

Hazel has a smallscale lawn mowing

business that earns
income.

Hazel earned loyal

customers.

Weakness

Her savings were

depleted having no
source of income
for eight months
since termination
from Fortune 500
company.

Little knowledge on good

marketing that is
applicable to the nature of
her business.

Unfamiliarity with the

operations in terms of other
variation of the service she
offers that may result to
poor and unwanted quality

Opportunities

The existence of her

Clients and friends are

There are 400 people that

Word of mouth - free

indirect marketing from
her current clients.

Quality service is tested. it

is good enough to satisfy
her neighbors and
recommend her to others.

lawn mowing
business can be a
good credential that
may enable her to
loan from a bank
for financing.
Threats

In case of loaning,
she must have
collateral that is a
great risk. She may
lose her collateral
when she loses the
ability to pay.

spreading the news about

the business.

are laid off that she could

possibly hire.

Good credentials that

makes her a good prospect
in job application.
Possibility of new
entrants.
Existing competitors and
professional lawn
mowers.

Existing competitors who

have been in the business
for a longer period of time
may have already perfected
their quality and services.

Competitions on job
seeking since many are
laid off.

Alternative Courses of Action

ACA1. Continue the business as is.
Advantages:
No additional capital, no need to hire additional employees, and no need for additional
equipments
Disadvantages:
No growth, stagnant business, and closes the room for improvement.
Strength

Weakness

Opportunities

Threats

Awareness to handling the

current customers and
knowledge in how it
works.

Slow development
of knowledge in
new technology and
other variations.

The market would

adapt and accept the
concept of availing
professional lawn
care service

Competitors may run

off the business by
using more effective
and efficient services.

Mastery of the process

because of continuous
repetitions

ACA2. Apply for another job.

Advantages:
No capital, no risk, lesser work and fixed work hours.
Disadvantages:
Less flexible work hours and fixed income.
Strength

Weakness

Opportunities

Threats

15 years work experience

from Fortune500

Lack of knowledge
in other jobs and
new technology.

Possible higher
income/salary from
a big company.

Presence of more
competent and
younger people whom
companies might
prefer.

ACA3. Expand the Business

Advantages:
Accumulate more profit, will have bigger market share, and more opportunities to expand
to a bigger business.
Disadvantages:
Need more capitalization, more employees are needed, needs more equipments, lack of
knowledge in expanding the business.
Strength

Weakness

Opportunities

Threats

The current customers

already have confidence
with Hazels work.

Lack of knowledge
in operating bigger
business.

Possible higher
income.

Existing competitors

Unknown reaction
of the new target
market.

Analysis:

Bigger potential
market to penetrate.

Other areas or
customers may
present unfavorable
factors.

Of all the three alternatives, the most advisable course of action is to expand the business.
Income may become higher and may improve her current lifestyle and the increase of potential
loyal customers.
While continuing with the current operations and getting a job will basically meet her
basic need, but she could do more than simply working for a minimum income. It is not enough
to earn just right to shoulder her expenses. There will be no savings in that case. In both cases
there will be lesser risk but the progress will be slow.

Recommendation:
Expanding the business is the most advantageous action to be taken. Hazel has only
started with the lawn mowing services and she is doing well. It is also a good sign. Financial
limitations can be addressed by availing loans.
When the financial trouble is met through financing, everything is expected to be alright.

Plan of Action:
Training for staffs to be more efficient and the newly hired staffs should trained on how
to use the equipments, trouble shooting, how to deal with clients etc. Briefing and debriefing
should also be a priority every project. Competent employees are the key to success in every
service oriented business. Tools and equipment should also be maintained properly. The
equipments must be logged and cleaned before and after use.
Other alternatives such as subcontracting and outsourcing are good options in case the
employee cannot handle all the job order. Outsourcing minor jobs would ease up the job of the
companys staff.
The company may also consider tie ups with other companies to outsource some of their
clients. They can even form alliance that would benefit both parties.

Questions to be answer in connection with the case.

1. In what ways are Hazels customers most likely to judge the quality of her lawn care services?
Hazels customers will most likely judge the quality of her lawn care services by the quality
and quantity of Hazels other previous customer. The quality will most likely be measured in
terms of the health of the lawn, the green grass, shrubs, etc., and the absence of dead patches,
neatness and cleanliness of the lawn, and healthy foliage. Another factor would also deal with
how well did Hazel satisfy or conforms the customer's expectations.
2. Hazel is the operations manager of her business. Among her responsibilities are forecasting
inventory management, scheduling, quality assurance, and maintenance.
A. What kinds of things would likely require forecasts?
Weather and climate condition as well as the demand for lawn mowing services would likely
require forecasts. If the weather condition is not good and if there is a possibility of a heavy
rain or drizzle then it is not possible for Hazel to mow the lawn.
Possible increase and decrease in market share. The demand for mowing and the demand for
man power.
Cost and or prices of equipments and material should also be considered on forecasting.
B. What inventory items does Hazel probably have? Name one inventory decision she has to
make periodically.
Inventory items might include rake, grass-cutters, fertilizers, mowers, seeds, cultivators, and
other lawn mower equipments. One inventory decision she has to make periodically is the
proper maintenance of the lawn mowers and the blades to prevent delays and to assure the
quality of her works.
C. What scheduling must she do? What things might occur to disrupt schedules and cause
Hazel to reschedule?
Hazel must do the scheduling of allocating the work to specific worker and determining the
sequence in which lawn care are to be performed. She must also consider the availability of
equipments, man power, availability of the customers, their preference, needs and wants and
the location and proximity of the customers. One great factor that can cause rescheduling is the
weather. Another factors that may cause disruption is the condition of her equipments,
emergency needs of the customers and personal matters or problems of Hazel.
D. How important is quality assurance to Hazels business? Explain.

Quality assurance is more challenging in services rather than the production. The quality
assurance to Hazels business is indeed very important. It will determine the number of Hazels
customers. It will also reflect on her business credibility. Quality assurance is very important
for her business expansion as well. If she cannot convey trust and confidence then she will
definitely lose some of her customers.
E. What kinds of maintenance must be performed?
Hazel's maintenance is basically centered in her inventory and tools. The maintenance work
that are needed are checking the expiration dates of fertilizers, checking and maintaining the
equipments (the blades, the lubrication etc.), and proper coordination and communication with
the customers and the workers.
3. What are some of the trade-offs that Hazel probably considered relative to:

A. Working for a company instead of for herself?

Working for the company will save Hazel from having risks of investing in her own business.
The job will probably be easier and the pay will be sufficient for her daily needs since she had
been in for 15 years in fortune 500 company. Although, by doing her own business she can
have more flexibility in terms of time since she is her own boss.
B. Expanding the business?
By expanding the business she can get more clients, more clients means more returns and
profits. But also, this expansion of customers may affect the quality of service she renders to
the customers.
By, not expanding the business she will restrict her business' growth and of course profit. But
then, she will have the capability of improving her service to existing clients.
C. Launching a Web site?
Launching a website is costly, but the returns will also be high because the website will have a
global reach.
By not launching a website, Hazel will save money and can result to cheap and traditional form
of advertisements like flyers, door-to-door campaigns and of course, word of mouth publicity.

4. The town is considering an ordinance that would prohibit putting grass clippings at the curb
for pickup because local landfills cannot handle the volume. What options might Hazel
consider if the ordinance is passed? Name two advantages and two drawbacks of each option.

Hazel could consider grass cycling. Leaving the grass clippings on the lawn. Advantage will be
the grass would shade out weeds and have a more efficient root system. Disadvantage will be
leaving too much clippings could damage the lawn and may incur more expense.
Hazel could also consider using a compost pile. Advantage will be she could reduce the cost of
buying fertilizers and she can even make her own formula for making fertilizers. Disadvantage
will be it takes time and effort before the clipping would turn into compost. It may also incur
additional cost to buy additional chemicals and maintenance of the compost.
5. Hazel decided to offer the students who worked for her a bonus of $25 for ideas on how to
improve the business, and they provided several good ideas. One idea that she initially rejected
now appears to hold great promise. The student who proposed the idea has left, and is currently
working for a competitor. Should Hazel send that student a check for the idea? What are the
possible trade-offs?

There is no need for Hazel to send a check to the student because the student is no longer her
employee and the idea is rejected initially. She only reconsidered it and now the student is no
longer her employee. The trade-offs are between the gain of Hazel's competitor and the loss of
a possible good idea maker. The employee works for her competitor now so it is a gain for her
competitor.
6. All managers have to cope with variation.
A. What are the major sources of variation that Hazel has to contend with?
The credibility of her service.
The quality of her service.
The affordability of her service.

B. How might these source of variation impact Hazel's ability to match supply and demand?
Hazel could easily determine how much supply she needs to the demand of the customers.

7. Hazel is thinking of making some of her operations sustainable. What are some ideas she
might consider?
Hazel should consider the efficiency of her work as well as the maximum quality of her
services. She should also consider providing promos and discounts to her regular customers.

Revisited
1. What competitive advantage does hazel have over a professional lawn care service?
Accessibility
Logistics
Credibility
2. Hazel would like to increase her profits but she doesn't believe that it would
be wise to raise her prices considering the current state of local economy. Instead,
she has given some thought to increasing productivity.
A. Explain how increased productivity could be an alternative to increased prices.
Being productive and able to make the same output with the lesser time will lead to more
output. Thus, having more time to do another job without taking the risk of loss of customer
because of increasing the price of the services offered
B. What are some ways that Hazel could increase productivity?
Maintenance
Innovate
Redesign/Improve the system for efficiency
'Route planning'
Research more about lawn mowing services
Improve workforce through training
Incorporate technology to their system
3. Hazel is thinking the purchase of new equipment. One would be power sidewalk edgers. She
believes edgers will lead to an increase in productivity. Another would be a chainsaw, which
would be used for tree pruning. What trade-offs should she consider in her analysis?
Additional services to be offered to customers.
Increase in customers which could mean increase in profit.
Increase the company's flexibility in terms of the services.
Additional expense for buying the equipment ,maintenance and depreciation cost.
Trade-offs:
If Hazel purchase the edgers and chainsaw would mean: Increase productivity because of the

equipments' capability. Edgers and chainsaws help speed up the

services which could have additional customers per day.
Additional workforce, additional labor expense.
If Hazel did not purchase the edgers and chainsaws would mean: No expenses for additional
equipment, maintenance and depreciation costs, labor expense.
No additional profit. (Company is conservative)
Efficiency of services remains.
Question 4: Hazel has been fairly successful in her neighborhood, and now wants to expand to
other neighborhoods, including some that are five miles away. What would be the advantages
and disadvantages of doing this?
Advantages
Company exposure
Additional customers
Additional profit
Disadvantages
Difficulty in finding people, equipment, supplier
Prices of service comes less flexible.
More difficult to manage/handle the business.
Additional cost.
High net loss(if expansion was not
handled carefully)
Threat of new entrants
5. Hazel doesn't have a mission statement or a set of objectives. Take one of
the following positions and defend it:
A. Hazel doesn't need a formal mission statement objectives. Many businesses have them.
B. She definitely needed a mission statement and a set of objectives. They would be extremely
beneficial.
C. There may be some benefit to Hazel's business, and should consider developing one.
Option B. The mission statement serves as guidance for the entrepreneur and employees to
identify and clarify the business purpose and direction. High-performing organizations have
more thorough mission statements than the low-performing organizations.

References:
Antony, J. and Preece, D. (2002) Understanding, Managing and Implementing Quality:
Frameworks, Techniques and Cases. London: Routledge.
Keijzers, G. (2004) Business, Government and Sustainable Development. Routledge: New York.
Stevenson, W. (2012) Operations Management, 11th Edition. McGraw-Hill Higher Education
Jao, Arnold Mikko
Kaw, Seleena Marie
http://www.lawncare-business.com
http://www.ehow.com/how_4860031_hire-lawn-care-services.html
http://www.entrepreneur.com/startingabusiness/businessideas/startupkits/article190462.html
http://www.lawncare.about.com/od/toolsofthetrade/a/Lawncaretools.htm