UNIT III

DESIGNING OPERATIONS

PRODUCT DESIGN

➢ Product Design describes the process of imagining, creating, and

iterating products that solve users' problems or address specific needs in
a given market.
➢ The key to successful product design is understanding the end-user
customer, the person for whom the product is being created.
➢ C.S. Deverell – “Product design in its broadest sense includes the whole
development of the product through all the preliminary stages until actual
manufacturing begins”.

ESSENTIAL REQUIREMENT OF A GOOD PRODUCT

DESIGN/CRITERIA FOR PRODUCT DESIGN:
1. Function
✓ The product must be designed in such a way that it optimally performs
the main task or function for which it is purchased by a buyer.
✓ In other words, the product must satisfy the needs and wants of the
consumer.
✓ For e.g. The main function of an Air Conditioner (AC) is to provide quick
cooling of a room. So, AC must be designed in such a way that it can cool
a room as fast as technologically possible. If it doesn't meet basic
expectations, the consumers won't buy it.
2. Repairability
✓ The product must be designed in such a way that it can be easily repaired
whenever necessary during a malfunction.
✓ The product repairs must be done quickly that too at a low repair cost.
✓ Consumers usually don't buy those costly products, which are either very
expensive to repair / maintain or those who take a longer time and more
money for repairing.
3. Reliability
✓ Reliability means dependability on a product.
✓ Consumers prefer to purchase and use often those products which
perform their main function or task optimally for a longer period without
any annoying malfunctions, breakdowns or failures.
✓ In short, a product must perform quite well and give trouble-free service
for a decent amount of time.
✓ It must not need constant repairs and/or frequent maintenances.
✓ It is so, since repairs often turn costly and are very time consuming.
✓ Reliability is crucial for consumer durables and office equipment.
 ✓ A reliable product gains consumers' trust, loyalty and this creates its
goodwill in the competitive market.
✓ Therefore, reliability is an important factor to be kept in mind while
designing a product.
4. Aesthetics
✓ Aesthetics must be kept in mind while designing a product. It refers to,
how the product looks, feels, sounds, tastes or smells.
✓ That is, the product must look, feel, sound, taste or smell very good.
✓ It must be attractive, compact and convenient to use.
✓ Its packaging must also be made graphically appealing and colorful.
✓ If this aspect is not considered, product will fail in the market.
✓ This factor is very important, especially in case a product is designed for
and targeted to the young generation that is emerging with a modern
mindset and current trends.
5. Durability
✓ Durability refers to the life of a product.
✓ A durable product performs flawlessly for a longer period.
✓ It is a sign of a good-quality product.
✓ Consumers want their products to have a longer life.
✓ They do not want to replace their products repeatedly.
✓ This factor is very crucial for durable and costly products like televisions,
refrigerators, cars, so on.
✓ Therefore, durability is another important requirement that must be
kept in mind while designing a product.
6. Producibility
✓ The product must be designed in such a way that it can be produced in
large quantities with ease at a minimum production cost.
✓ The production department must be able to produce the product easily,
quickly, in ample quantities and at a low production cost.
✓ The production process must not be very complex, and it must not require
costly machines to produce the product.
7. Simplicity
✓ The design of the product must be very simple.
✓ The simpler a design, the easier, it is to produce and use (handle).
✓ Simple products are also economical and reliable.
✓ The product must have the least number of operations without affecting
its functionality.
8. Compact
✓ The product must be small; it must occupy less space, and must have
lower weight.
✓ In other words, it must be very compact.
✓ The company must try to make its products as small as possible.
✓ Today, everything is turning smaller.
✓ Big sized cell phones are now out of fashion.
✓ In the 1950s, computers were as huge as spacious rooms.
✓ However, today we have laptops and palmtop computers.
✓ Most products can be made compact. Still, this cannot be done for all
products.
✓ In case of televisions, it is just the opposite. Today people want bigger
televisions.
 ✓ Similarly, there is a limit on small size. We cannot have a phone which
is so tiny that it requires a microscope to see its keypad.

PRODUCT DESIGN PROCESS:

1. Identifying Needs and Ideation:

➢ Research and identify user needs, market trends, and opportunities.
➢ Generate ideas through brainstorming, user surveys, interviews, and
competitor analysis.
➢ Define product requirements and objectives based on gathered
insights.
2. Concept Development:
➢ Select promising ideas and develop them into conceptual designs.
➢ Create sketches, wireframes, and prototypes to visualize the concepts.
 ➢ Evaluate concepts against user needs, technical feasibility, and
business goals.
3. Detailed Design:
➢ Refine the chosen concept based on feedback and testing.
➢ Develop detailed designs, including dimensions, materials, and
specifications.
➢ Create digital or physical prototypes for further evaluation and
iteration.
4. Prototyping and Testing:
➢ Build prototypes to test functionality, usability, and performance.
➢ Conduct user testing and gather feedback for iterative improvement.
➢ Iterate on the design based on testing results to address issues and
enhance usability.
5. Design Validation:
➢ Validate the design against regulatory requirements, industry
standards, and legal constraints.
➢ Perform thorough testing, including stress tests, durability tests, and
safety assessments.
➢ Ensure the design meets quality standards and is ready for production.
6. Manufacturing Preparation:
➢ Finalize design specifications and prepare documentation for
manufacturing.
➢ Work closely with manufacturing partners to optimize production
processes.
➢ Address any manufacturing constraints or challenges.
7. Production and Launch:
➢ Begin production of the final product.
➢ Implement quality control measures to maintain consistency and meet
standards.
➢ Plan and execute marketing strategies for product launch.
8. Post-launch Evaluation and Iteration:
➢ Monitor product performance and gather user feedback post-launch.
➢ Identify areas for improvement and iterate on the design as necessary.
➢ Continue to support the product with updates, maintenance, and
customer service.

APPROACHES TO PRODUCT DESIGN

Approaches that are adopted for the product design are not necessarily rigid.
The approach might simply serve as a broad guideline for the designer
regarding the overall product design. Various approaches to product design are
as follows:
❖ Product Break-Down: This method consists of studying the product by
dividing it into components and examining how each component works
with other parts. It is used in automobile engineering for analyzing the
way in which the products like vehicles are created.
❖ Systems Engineering: This approach is based on defining the needs of
customers. The goal is to satisfy customer with cost effective and higher
quality product. Various disciplines are integrated together to form a well-
defined process that begins from stating the problem, investigating
alternative designs, modelling the system, assessing performance and
evaluating the system involved in design.
❖ Value Engineering: This approach lays emphasis on increasing profit
by reducing cost and improving quality. The basic idea is to enhance the
value of the product with better quality. Value engineering tries to
enhance function of the product so that the customers can perceive greater
value of those functions.
❖ Value Analysis: The value analysis like value engineering analyses the
cost and quality ratio of the product. For example, a customer's expected
level of quality of a ₹50,000 automobile versus a ₹3,350 used car likely
depends on the cost of each. It basically works on the expected quality
beside to the acceptable cost.
❖ Function Analysis: This is related to value engineering and focuses on
the problem solving by teamwork as it takes into account team's input
during the product design. As the name suggests that the team
determines what functions are important to customer.
 ❖ Quality Function Deployment: The quality function deployment helps
in finding out the demand of customer. Its analysis both the verbal and
non-verbal type of demand. This approach suggests transforming
customer needs into tangible functions.

PRODUCT DEVELOPMENT

What is Product Development?

 Product development refers to the complete process of taking a product

from idea to market. It also describes the process of renewing an existing
product or introducing an old product to a new market. This includes
identifying market needs, conceptualizing the product, building a
product roadmap, launching a product, and collecting feedback.

NEW PRODUCT DEVELOPMENT (NPD)

✓ New Product Development (NPD) is a set of design, engineering, and

research processes which combine to create and launch a new product to
market.
✓ Product development is the creation and launch of products to meet
customer needs.
NEW PRODUCT DEVELOPMENT PROCESS

When a company develops a new product, it cannot just hope that the product
will be a success in the market. It is essential for the company to understand
its customers, markets, and competitors before developing a product to deliver
superior value to customers. For this, the company must carry out a strong
new product development process.

The eight major steps of the new product development process are as follows:

1) Idea Generation
 Idea generation refers to brainstorming new product ideas or strategies
to innovate an existing product.
 The different internal and external sources through which a company
generates ideas for a new product are customers, distributors, suppliers,
competitors, etc.
 Before creating any product, companies evaluate market conditions,
perform studies, understand the users’ wants and needs, and then
suggest possible solutions.
  SWOT analysis is a very effective technique to discover the weak aspects
of the product as well as to explore where significant opportunities exist.
 A SWOT Analysis is a framework to evaluate the organization’s
Strengths, Weaknesses, Opportunities, and Threats.
 At last, this stage aims to generate as many ideas as possible which are
feasible and deliver value to consumers.
 The need for high-quality photography among consumers, for instance,
can inspire a mobile phone maker to develop the idea of a smartphone
with a novel camera system.
2) Idea Screening
 The second stage is called Idea Screening. This stage involves screening
and reviewing all of the ideas generated in the first step and selecting
only those with the best probability of success.
 Many factors are kept in mind while deciding which ideas to accept and
which to reject.
 These factors include projected advantages to consumers, necessary
product innovations, technical viability, and feasibility for marketing.
 The stage of idea screening is best performed within the company.
 Experts from several teams also assist the company in assessing the
requirement of resources, the need for technology, and the marketability
of the proposal.
 For instance, an automobile manufacturer may evaluate potential
concepts for electric vehicles before manufacturing electric cars while
considering factors, like the availability of batteries, their affordability,
and how well they would appeal to consumers.
3) Concept Development and Testing
 After all the ideas pass through the stage of idea screening, these ideas
are evolved into concepts.
 A product concept is a detailed version of the product idea and contains
a precise explanation of the idea. It should highlight the target audience,
the pricing for the product, and the characteristics and advantages of the
product that could be valuable for the customers.
 Generating various product concepts assist the companies in determining
how attractive each concept is to buyers and selecting the one that will
bring them the most value.
 Once the concepts are generated, they are tested within a select group of
consumers. Concept testing is a great technique for validating product
ideas with users before committing time and resources to develop them.
 For instance, any business producing sportswear products might create
a concept for a light running shoe and seek opinions from athletes
concerning the product’s comfort, toughness, and design.
4) Marketing Strategy Development
 Once a concept is selected and well-validated, it is essential to develop a
preliminary marketing strategy to launch the product to the market
based on the product concept and assess the worth of the product from a
business point of view.
 The marketing strategy helps in deciding pricing, positioning, and
promoting the product.
 A marketing strategy statement includes three parts:
 ➢ The first part of the statement describes the target market, the
firm’s planned value proposition, and its sales, market share and
profit goals for the first few years.
➢ The second part of the statement includes the product’s planned
price, its distribution, and marketing budget for the first year.
➢ The last part of the statement consists of the planned long-run
sales, marketing mix strategy, and profit goals.
 Once the marketing strategy has been developed, product management
can assess the economic desirability of the product.
5) Business Analysis
 Once the marketing strategy has been developed it is important to assess
the worth of the product from a business point of view.
 An assessment of the sales projections, estimated expenses, and
anticipated profits are included in the business analysis. And, if they
meet the goals of the company, the product can proceed to the product
development stage.
 For instance, a food company would assess the profitability of a new
snack by looking at the expenses associated with ingredient sourcing,
production, packaging, and distribution.
6) Product Development
 The next stage is Product Development.
 In this stage, the R&D or engineering department converts a product
concept into a physical product.
 This step involves a huge jump in investment as it shows whether or not
the product idea can be turned into a workable product.
  The R&D Department tries to design a prototype to satisfy customer
needs and excite them in buying the product, and can also be produced
quickly and within budget.
 For this, the department runs tests on one or more physical versions of
the product concept. Development of a successful prototype may take
time (days, weeks, months, or even years). The companies can do product
testing on their own or can outsource testing from a third party/firm
which specializes in testing. For instance, a tech business might create
test versions of a new smartwatch, evaluate how well it works, and then
make design changes that can satisfy the customer’s needs.
7) Test Marketing
 The next step is Test Marketing.
 Test Marketing refers to the process of testing the product and marketing
program in realistic market settings.
 With this step, the marketer can have the experience of marketing the
product in the market at a small scale before spending huge money on its
full introduction. Simply put, test marketing lets the organization test its
product and its marketing program including targeting, positioning
strategy, distribution, advertising, branding, pricing, packaging, and
budget levels.
 The cost of performing test marketing can be high, and as it takes time,
it can give the need for test marketing and the level of test marketing
varies with the product. When the cost of developing and introducing the
product is low, or when the management is confident about the product’s
success, the company may do no or little test marketing. However, when
 the introduction of a new product requires a big investment, risks are
high, or when the management is not confident about the product and its
marketing program, it may do a lot of test marketing. For instance. a
cosmetics company might launch a new skincare product in a particular
area and collect information on consumer reaction, usage trends, and
sales.
8) Product Launch
 At the final stage, companies are now prepared to launch the new product
onto the market.
 For a successful launch, a company must ensure that the product,
marketing, sales, and support teams are well-placed and should keep
good track of its performance.
 Companies must frequently monitor and evaluate the success of the
product launch and make modifications if it fails to accomplish the
expected goals.
 For instance, a software provider might monitor sales, client feedback,
and user satisfaction polls to assess the effectiveness of a recently
introduced productivity tool.

PRODUCT LIFE CYCLE

What Is the Product Life Cycle?

• The Product Life Cycle is a management tool that makes it possible to

analyze how a product behaves from its development to its withdrawal
from the market. It covers every stage of growth, from launch through to
adoption, and sales maturity.
STAGES OF THE PRODUCT LIFE CYCLE

1. Introduction Stage:
• In the Introduction stage, the product is first introduced into the market.
This is usually done on a small scale, in order to gauge customer reaction
and assess market potential. The main objectives at this stage are to
generate awareness and interest in the product, and to build up initial
demand.
• There are typically high levels of uncertainty during this stage, as both
the company and consumers are unsure of how well the product will be
received. As such, companies will often invest heavily in promotion and
marketing activities in order to create buzz around the product. This
stage can be very costly, and there is no guarantee that the product will
be successful. However, if properly executed, it can lay the foundations
for long-term success.
2. Growth Stage:
• This is the stage where the product starts to gain traction in the market.
Sales start to increase, and more and more people are aware of the
product. The company will start to invest more in marketing and
advertising to continue growing the product's reach. At this stage, it is
important to continue innovating and improving the product so that it
can maintain its growth.
3. Maturity Stage:
• When a product reaches the maturity stage of its life cycle, it has likely
been on the market for some time and has established a solid customer
base. At this point, sales growth slows and competition increases. In
order to stay competitive, businesses may need to reduce prices, offer
more promotions or discounts, or invest in product improvements or new
features. Additionally, companies may need to focus on marketing efforts
to maintain customer interest.
• The maturity stage is typically the longest stage of the product life cycle
and can last for several years. In order to stay profitable during this time,
businesses need to carefully manage their costs and expenditures.
4. Decline Stage:
• The decline stage of the product life cycle is typically characterized by a
decrease in sales and profitability. This stage is caused by various factors,
such as technological obsolescence, changes in consumer preferences, or
intense competition from other products.
• During this stage, companies often focus on cost-cutting measures in
order to maintain profitability. They may also introduce new versions of
 the product in an attempt to revive sales. Ultimately, however, the
decline stage is typically a sign that the product has reached the end of
its life cycle and will soon be discontinued.

STAGE-GATE APPROACH

What is the Stage Gate process?

The State Gate process is a patented trademark of Robert Cooper. The model
focuses on the innovation process and is also referred to as the waterfall
process.

It is a project management technique, in which an initiative or project takes

place, divided over several stages. These stages are separated by so-called
‘gates’; the decision points for whether or not to proceed to the next stage.

Definition of the stage-gate model

The stage-gate model is a technique used in product development to manage

the movement from one phase to the next. Each phase, or "stage", of the project,
is separated by a figurative "gate" that prevents you from progressing onto the
next milestone without sufficient pause for thought.

 Stage Gate Decision

At each gate, a decision is made whether to continue the process or not. This
decision is based on the prognosis and information available at that moment
and in most cases is made by a manager or steering committee. The quality of
an idea is assessed at each of the gates.
This concerns the quality of the execution by a cross functional team or project
teams, business motivation to continue financially and the action plan showing
what needs to be done in order for the project to have a chance at succeeding.

After each gate, one of the following decisions can be made:

❖ Go: The project is good enough to move on to the next stage.

❖ Kill: The project is not good enough to develop further and is shut down
right away.
❖ Hold: The project is not good enough to continue to develop it at this
moment, but not so bad that it needs to be shut down immediately. It is
put on hold to possibly be resumed at a later date.
❖ Recycle: The project is good enough to develop further, provided some
changes are made.
❖ Phases Of Stage Gate Approach

❖ Idea: The idea stage is used to brainstorm potential new projects. This
involves performing market research to identify gaps in the market and
holding discussions to flesh out ideas. This stage can involve team
members, customers, and stakeholders.
❖ Scoping: The scoping stage allows teams to deep-dive the most
promising ideas from stage one to figure out the project’s viability. This
can involve more market research and is a great opportunity to run a
SWOT analysis.
❖ Business case: Before starting to develop the product, teams should
build a strong business case for the project. This stage will involve
creating a detailed product definition and a feasibility study if required.
❖ Development: The development stage should result in a functional,
ready-to-launch product. This will be the most intensive stage in the
stage gate model.
❖ Launch: The launch stage involves creating a strong marketing strategy
that will increase product awareness and consumer demand.
TOOLS USED FOR PRODUCT DEVELOPMENT

1. Sketches
❖ Sketches are generally done by hand on paper or whiteboards. They make
initial concepts visible and presentable. This is before moving towards
executing more expensive elaborative steps.
❖ All existing ideas are presented here at any stage during development.
Sketches allow exploring creative process, and hence, new ideas for
improvements can arise.
❖ Once you make a sketch, present it to the client and ask for feedback.
From their point of view, presentable sketches are helpful. Clients don’t
understand code. Designers and developers might require additional
details to work with.
❖ Therefore, presenting your sketched concept lets them absorb the
information better than just explaining its functionality.
❖ Sketches are also great to test if an idea will work in real life. With tools
like Sketch Mirror, you can share those sketches as an interactive
prototype on any device or as a demo video.
 ❖ This helps to continuously validate ideas before fleshing them out into
high-fidelity mockups. Mockups require more effort from both designer
and developer.
2. Technical drawings
❖ These are used after sketches are developed and optimized. This tool is
used to communicate ideas and requirements with other members of the
product development team and external suppliers.
❖ Technical drawings must contain all necessary information about a
concept before moving towards production.
❖ This is an important step because production without the necessary
information means higher development costs, sub-optimal quality of the
final product, and higher material costs. The main purpose of technical
drawings is to represent all essential elements in the development
process. Technical drawings contain plan views, sectional views,
exploded views, orthographic projections, or any combination of these
views to convey depth and dimensional relationships required by a design
solution.
3. Prototypes
❖ The purpose of prototypes is to ensure that the product works as intended
by simulating its most important features.
❖ In essence, they allow for changes before the final design is produced.
Prototypes are often created based on technical drawings since they
already contain most of the required information. This step is also very
useful for marketing purposes since a physical product enhances the
customer experience.
 ❖ In addition, the earlier prototypes are created in the design process, the
more likely it is that additional features or changes are implemented.
When creating a prototype create many different versions of the product
and test them extensively to see which one works best. Take an existing
product and adapt it to fit your needs.
4. Mockups
❖ Mockups are used as an extension of prototypes for marketing purposes.
Their purpose is to provide our customers with a feel for the final product
or visualize aspects that cannot easily be reproduced using a prototype.
❖ Mockups are usually done on computer-aided design (CAD) software
programs. Due to safety concerns or practical reasons, they are very
useful when presented in large events where people can’t touch or hold
them.
❖ Once again, these tools make it possible for new ideas and concepts to
arise before production starts.
5. Models
❖ These are similar to prototypes, but they allow more freedom regarding
changes since they have to meet the market’s reality and are more
expensive. They are used for marketing purposes or presentations at
conventions, congresses, or any other type of gathering where this type
of tool is necessary. Each one has its purpose within the sequence that
leads to success.
TECHNIQUES FOR EFFICIENT PRODUCT DEVELOPMENT:

A. Standardization:

To ensure the series of produce goods are same and can be produce as per
requirement with the machinery and method available in a cost-effective way,
such process is called as Standardization. Standardization is outlining and
relating the process of production. All factors of production (i.e. men, machine,
material, methods) come under concept of standardization. The performance of
factors of production is determined by these set standards.

➢ According to Kimball and Kimball, "By Standardization in the

manufacturing sense is meant the reduction of one line to fixed types,
sizes and characteristics". any
➢ According to R.C. Davis, "A Standard may be defined at that which is
established by authority, custom or general consent as a model, criterion
 of rule of measurement standardization is merely the work of developing
and applying such criteria".

Advantages of Standardization

The advantages of standardization are as follows:

i. Aids Large-Volume Production: Standardization concept led to

manufacture of products having same features in large volume this
definitely focuses the resources and effort on production of particular
product. Standardization minimize wastage which automatically reduces
cost. save time, energy and resource. It minimizes wastage in different
stage of
ii. Reduces Wastage: Standardization production (i.e. designing, raw
material, semi-finished and finished goods). It ultimately reduces
manufacturing cost.
iii. Helps in Automating Process: Standardization need precision in
production and to attend that precision the production processes are
automatized. The division and automation of production process help to
produce standardized product. New machinery and advance technologies
are used to produce fine quality of product.
iv. Helps in Regulating the Production Phases: Standardization
process sets the standard for different production phases. The set
standards are compared with actual performance in production phases
and if any difference exists it is removed. In this way, standardization
helps in regulating production process.
v. Encourage to the Management: Standardization encourage
management to improve the product quality, outlook and usefulness. The
 new and better product helps management to attract more and more
consumer for the product.

Disadvantages of Standardization

Disadvantages of standardization are as follows:

i. Inflexible: Standardization means manufacturing products with same

features; it avoids any alteration in production process. In product
development stage, standardization is avoided because the early stage of
product development needs lot of alteration/change. Thus,
standardization is inflexible.
ii. Small Producers avoid Standardization: Standardization requires
introduction of new machinery and advance technology in the production
process which is quite expensive for small producers. Small producer
finds it difficult to maintain same standard countrywide so they avoid
standardization.
iii. Unnecessary Standardization has Harmful Effect: Unnecessary
standardizations make production process tedious. Repetitive production
process ruins the worker interest and ability in the production.
Eventually the objective of large-scale production fails.
iv. Dissimilarity in Standard: Company which have decentralized
working environment cannot maintain the same standard in the
production process. Central authority is required to maintain same
standard in the production.
B. Simplification

The company sometimes lessen its number of product and product line
available in the market is called Simplification. Simplification of product range
is done to reduce wastage of time, money and resource. The loss-making
product or the product less in demand are dropped from market and the
resources are diverted to some potentially profitable goods/product production.

➢ According to W.R. Spreigal and R.H. Lansburg, "Simplification

refers to the elimination of superfluous varieties, sizes and dimensions
etc.".
➢ According to John I. Burbidge, "Simplification is mainly concerned
with the reduction of diversity among products (the product range),
assemblies; parts; materials and design features".

Advantages of Simplification

Advantages of simplification can be studied (producers and consumers) under

two heads, i.e.:

1. Advantages to Producer: Benefits of simplification to producers are as

follows:
i. Manufacturing Costs Decrease: Simplification stop production of
loss-making product and the resources such as manpower, material,
money and machinery are diverted to produce some other desirable
product. As the resource are used to produce some other product in
large quantity the objective of large-scale production is achieved and
manufacturing cost decreases automatically.
 ii. Use of Specialized Plants: Production of standard product needs
special plants and machinery and standardized procedure.
iii. Reduction in Inventories: Simplification reduces unnecessary
product manufacturing so the material consumption such as raw
material, work-in-progress and finished goods is reduced. The
noticeable amount of capital saves which otherwise is block in
inventory.
iv. Increase in Efficiency: The set rules for production are
specialization and division of work which eventually increases
efficiency in production.
v. Increase in Profits: Simplification increases the production of
demanded goods increase it sales turnover. Factors like reduction in
wastage, increase in efficiency and increase in sales results in huge
profit in the business.
2. Advantages to Consumer: Benefits of simplification to the Consumers are
as follows:
i. Reasonable Product Price: Simplification reduces the product
line of the firm only desired product are produced. To produce those
limited products firm, hire skill workers and special machine this
improve the quality and reduce the price of production. The
production of large volume reduces the product cost per unit. Thus,
it helps the consumers to get good quality product at reasonable
price.
ii. Better Facilities: Simplification helps the consumer to avail
better facilities. Due to limited production of product the firm also
 take care of after sale services like installation, repair and
maintenance.
iii. Steady Supply of Products: Simplification helps the consumer
to get constant supply of their product.

Disadvantages of Simplification

Shortcomings of simplification techniques are as follows:

i. Consequences of Seasonal Variations: Simplification reduces the

product line of the firm which make the firm more prone to consequences
of seasonal variations. It would be difficult for producer to deal with
constant change in consumer taste and preferences with limited product.
The withdrawals of some products from firm's product line affect its sale
and it is difficult to compensate it with increase in sale of other product.
ii. Loss of Competitive Position: The reduction in product line of the firm
leads to losing its competitive position in market. Sometimes the product
removed from product line is complementary to the other product
produce. The consumers like to buy the complementary products from
same firm because it is easily available and economical too in situation
the firm losses its customer.
C. Specialization

Specialization means focusing in particular production activity. It's an

extension of simplification process. Specialization requires human resource
with specific skill, expert knowledge and years of experience in particular field
of activity. According to Taylor's concept of functionalization, to gain
specialization a person should be given only one task in the firm so that he
gains expertism about the task eventually. Taylor's concept of
functionalization, which says to allot one task to one person, cannot be said
definitely correct. No doubt in today's complex market expert knowledge is
required. But the extend of specialization/expert knowledge is decided on basis
of nature of product, functions, market etc. Specialization is result of reduction
in product line of the firm. The firm concentrate on limited product production
which leads to standardized methods of production, reduction in
manufacturing cost, improved production quality, reduce raw material
wastage etc. It helps in large scale production. The specialization leads to
rigidity in production activity. Excessive specialization sometimes leads to
boring and tediousness in production activity.

➢ According to Prof. Kimball and Kimball, "The concentration of

efforts upon limited field of endeavor. The concentration in its widest
sense, where the production of an article is divided up among a number
of workers, each worker performing a very limited range of work".

Advantages of Specialization:

Advantages of Specialization are as follows:

i. Higher Productivity: The factors in specialization like standardized

method for production, concentration in particular activity and expert
knowledge leads to higher productivity.
ii. Reduction in Manufacturing Cost: Specialization leads to division of
labour and helps in large volume of production which eventually reduces
manufacturing cost.
iii. Encourage Research and Development: The person is allotted one
task it gains skill, knowledge, experience and take initiative to resolve
day to day issues encountered by him throughout the operation process.
Such efforts from workers give rise to research and development.
iv. Encourage Cooperation: All production activities are inter-dependent
so it encourages cooperation between individuals, departments and
production units.
v. Improve Product Quality: Specialization result in reduce raw material
wastage, smooth flow in production process and improve product quality.

Disadvantages of Specialization

Shortcomings of specialization are as follows:

i. Uninteresting and Tediousness: Excessive specialization leads to

repetitiveness in production activity which results in no interest and
tediousness of production process.
ii. Encourage Rigidity: Specialization means focusing in production of
particular product. It moves inventio rage experiment means in
Specialization eradicates/remove invention and research in production
because it requires special skill and knowledge.
iii. Interdependence of Industries: In specialization the production
process of one industry is dependent on other industry. This
interdependence quality sometimes affects the production process when
one industry stops it production due to strike, lockout or shortage of raw
material.
iv. Huge Financial Expenditure: Specialization leads to huge financial
expenditure. It requires specialized skill, advance technology etc. in
production process which increase firm's expenses.
v. Seasonal Variations in Demand: The demand of seasonal product
drop down in off season and the specialized machinery remain idle for
quite long time. A lot of money gets wasted in maintenance of specialized
plant and machinery of seasonal product.
D. Diversification

Diversification means adding new product in firm's product line.

Diversification is contrary to simplification process. Diversification aim is to
provide variety to the firm's product line by adding product of different types
and sizes or improving the existing product with new features. Diversification
is use to get hold of market opportunities by increasing its product line.
Diversification not only adds the number product offered within a particular
product line which is referred as depth but also add different product line in
the product mix which is referred as width.

Diversification can be well-defined as adding things in business. Mainly

diversification is use for adding new product in firm's product line but it can
be new product line, new market, new technology or a new company. For
instant, when television set start making LCD/LED television set it is not
diversification. Diversification is not just change in quality or size. If television
set making add fridge/Air conditioner/Cooler to its product line so it can be
called as Diversification. The product added to the company's product line can
be complementary (i.e. Pen making company start producing refill/ink pot) or
totally different (i.e. Shoe making company start producing apparel) to present
product. The process of diversification is use in manufacturing activity (i.e.
company manufacturing telephone/Mobile set/Fridge start manufacturing
shoe/apparel/handbags) as well as marketing activity (i.e. the dealer who deals
in electronic items start dealing in eatables).

Advantages of Diversification

Advantages of diversification are as follows:

➢ Increase Sales: The addition in present product line of company with

complementary or entirely distinct product will definitely increase the
sale of the company.
➢ Balance Product Line: Diversification helps in balancing the present
product line by producing complementary goods.
➢ Optimum Utilization of Resources: Diversification can efficiently
utilize the plant and machinery which are not in use and earn profit from
it.
➢ Utilize Waste: Waste material can be used in other product
manufacturing.
➢ Avoid Seasonal Fluctuation: As the company has wide variety of
product in his bag so the distributor has some or other product
distribution work throughout the year.
➢ Stabilize Earnings: Due to huge variety of products the company
earnings are not affected by one product rejection or low sale in the
market. Thus, diversified products help to stabilize the earnings.

Disadvantage of Diversification

Shortcomings of diversification are as follows:

✓ Expensive Operation: The manufacturing of too many products
simultaneously increases the difficulties and costs of manufacturing
units. All firms cannot bear high operation cost.
✓ Time Consuming: Increase in product variety requires proper
scheduling and supervision. This definitely consumes lot of time and
energy of production department.
✓ Inventory Control: Number of products added in the product line
increases company's inventory, which eventually give rise to inventory
storage, maintenance, handling and control problem.
✓ Require Skill Manpower: Production of different products require skill
and experienced manpower. This increases the cost of hiring Manpower
automatically.