Operations management Essay Example | Topics and Well Written Essays - 2000 words

Operations management - Essay Example However, in some situations, intangible factors may lead to the specialization of the company in a certain area. Some of the companies may not be aware of the intangible specialization and are therefore faced with serious problems in their attempt to shift from a certain market segment. Intangible specialization can be simply defined as specialization of a company in a certain area due to some intangible factors mainly brought about by the routinized activities of the company in performing its different operations relating to the production of the main product the company produces. The intangible factors include routinized and path-dependent decision-making routines that help in the regulation of the process and product design and renewal of the product (Maielli, 2005, p. 250). In addition, intangible specialization is mainly concerned with the internal routines and the accumulation of intangible capital in the designing and manufacturing of certain products, making the company effic ient in the production of such products, as well as other products. Intangible specialization may restrict the company in a certain field and hinder its attempt to change the area of its operation. It reduces the output mix flexibility of the company even if the company has technical flexibility in its production technology (Maielli, 2005, p. ... The company should therefore device means of reaping maximum income from the area of specialization, as attempts to shift into other areas will be difficult in most cases. Knowledge of the intangible specialization also helps the company in formulation and application of strategies that will aid the shift to other areas in the supply chain. Intangible specialization is categorized into the evolution theory of economic change. The theory emphasizes the importance and effects of routinized and path-dependent decision-making and output-mix decision-making (Maielli, 2005, p. 250). In addition, intangible specialization usually affects the way a company reproduces the technical skills that aid in the manufacture of certain types of products (Maielli, 2007, p. 285). It usually comes up involuntarily as a response to the domestic market in the area of operation of the company. Intangible specialization may be advantageous or a limitation to the company. This is mainly dependent on the strat egies that the company formulates while factoring in the strengths and weaknesses due to its intangible specialization in a certain area of operation. One of the main benefits of intangible specialization is that it may help a company overcome different financial difficulties if efficient strategies are put in place to enable it to have output-mix optimization in the area where it has intangible specialization. 2. How did Intangible Specialization affect Fiat’s strategy and output-mix optimization in the 1970s? Fiat is an Italian company mainly involved in the manufacture of cars. The company has a strong reputation in the manufacture of city cars, though it also manufactures other types of vehicles. Intangible specialization has made the