The document provides a comprehensive case study on operations management at WH Smith, detailing the strategies implemented by CEO Kate Swann to turn the company from a £135m loss to a £106m profit over ten years. It covers key topics such as the definition and importance of operations management, the implementation of efficiency, economy, and effectiveness, and the significance of operational planning and performance objectives. Overall, it illustrates how strategic managerial decisions in operational activities can significantly impact financial performance and competitiveness.

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Operations Manage-
ment in Business: WH
Smith Case Study
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Table of Contents
Introduction:...........................................................................................................................................3
Task 1: ....................................................................................................................................................3
1.1 Definition and importance of Operation Management:...................................................................3
1.2 Key elements of OM: ........................................................................................................................3
1.3 Processing of goods within legal and ethical boundaries: ..............................................................4
1.4 Role of OM in achieving strategic objectives:...................................................................................4
1.5. System and Sub-system diagrams for WH Smith’s operational process: ........................................4
Task 2: .....................................................................................................................................................5
2.1. Implementation of 3Es’ in WH Smith:..............................................................................................5
2.1.1. Efficiency: .....................................................................................................................................6
2.1.2. Economy: ......................................................................................................................................7
2.1.3. Effectiveness: ............................................................................................................................7
2.2. Critical analysis of profit maximisation and cost minimisation: ......................................................7
2.3. Importance of 5 performance objectives of operation management:............................................8
2.3.1. Cost: .............................................................................................................................................8
2.3.2. Quality:..........................................................................................................................................8
2.3.3. Speed: ...........................................................................................................................................8
2.3.4. Dependability: ..............................................................................................................................9
2.3.5. Flexibility:......................................................................................................................................9
Task 3 .....................................................................................................................................................9
3.1. Importance of operational planning:...............................................................................................9
3.2 Linear programming of WH Smith:……………………………………………………………………………………………… 9
3.3. Network plan and critical path of WH Smith:................................................................................10
3.4. Quality and its maintenance:.........................................................................................................11
Conclusion:............................................................................................................................................12

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Introduction:
For any type of organisation there are many operational activities. These activities are used
in purchasing, development and proper utilisation of resources. These types of activities are
main attributes of the business that helps in gaining high profit. To obtain the profit the com-
pany need to set up a proper and integrated operational plan so that the company can reach
the optimism of profit.
W H Smith is one of the major book retailer and news agents in UK. It was running in £135m
loss 10years before. Then Kate Swann took the charge of the company as the CEO. She imple-
mented some strategies regarding the operational activities and turned the huge loss into a
profit of £106m in this current year (WhSmithplc.co.uk.).
Task 1:
1.1 Definition and importance of Operation Management:
The administrative process of any business that are practised to generate highest level of
efficiency possible by the help of the resource available in the business house is stated as
operation management. This activity helps or concerned with the conversion of material and
labour into the goods and service efficiently as to achieve the maximised profit.
The major importance operations management have is to utilise the resources so that the
optimal profit can be earned (Brauchle and Evans, 2008). The organisation needs to maintain
the operation in such a manner so that they can use the resources like raw materials like
paper print inks are properly labours used in such a manner to create goods that is the books,
stationery and newspapers.
1.2 Key elements of OM:
Operations Management deals with the operational activities of a business. OM deals with
the task of managing process that transforms the resources into finished goods. The key ele-
ments are inputs that are the raw materials, process and the outputs (Dow et al. 2007).

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In case of WH Smith the raw materials are like paper, news prints, and print ink. These raw
materials are used in the process of printing, packaging and customizing. Finally the finished
goods are like books, journals, newspapers and stationeries.
1.3 Processing of goods within legal and ethical boundaries:
The goods should be processed or manufactured within the legal and ethical boundaries that
are the legal issues, quality issue and ethical issues of the market environment. There are
many legal issues that consider fair trading, safe production, employee extortion, and envi-
ronmental effects of the production. And the ethical issue deals with the publication regard-
ing many facts like political social issues that can arise some critical condition. Also there are
some religious issues that can make huge social and political hamper. The legal and ethical
issues need to be take into consideration while production (Choi and Eboch, 2007).
1.4 Role of OM in achieving strategic objectives:
Establishing the departmental budget is the basic connection between operational manage-
ment and strategy planning. The strategy plan gives well established budget based on the
projected revenue and then the operational planner gives more precise idea that can be used
to test the success of strategy planning. According to Theoharakis et al. (2007), strategy plan
is used to outline the objective of the company and to identify the methods that can be used
to achieve the objectives.
In case of WH Smith Kate Swann prepared many budgets that are based on the operational
plans. She managed the activities in such a manner that the organisation recovered from a
financial deficit and went to a profitable position in 10 years.
1.5. System and Sub-system diagrams for WH Smith’s opera-
tional process:
System and sub-system designing is a blue print of process that an organisation need to work
according to achieve the profit more over it is framework of production process. For any busi-
ness organisation there are 3 major steps in the system design. Input, process and output are
the three attribute a business have in the system (Song et al. 2011).

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Figure 1: system design of WH Smith
(Source: a created by the author)
In case of WH Smith there are three attribute. The first one input deals with the raw materials,
employee skills, managerial activities and the factory or the resource location. Process part
deals with the production terms, the ideas implemented and processing strategies of the
managers. Finally output deals with the quality of product. The product range merged with
many newspapers, books and stationery.
Task 2:
2.1. Implementation of 3Es’ in WH Smith:
Input:
Raw material, em-
ployee, managers,
factory or opera-
tional store
Process:
Machinery, in-
novative ideas,
processing strat-
egies of manag-
ers
Output:
Quality of prod-
ucts like news
paper, books,
stationery, ser-
vice of the em-
ployees

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Figure 2: 3 E’
(Source: Marcellus and Dada, 2006, p.18)
2.1.1. Efficiency:
Efficiency is the indicator of quality of the product or the service providing. As WH Smith is
enhanced their business through online activity, they opened more stores in different places.
They introduced many stationery products so that the attraction of the teenager and young
women can be done. This integrated marketing needs proper care of quality control. The cus-
tomer perception and expectation need be matched (Ho, 2009).
3 E’s
Effectiveness
Efficiency
Economy

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2.1.2. Economy:
The economic point of WH Smith totally concentrated on the financial instability that is the
deficit condition that arises in 10 years back.
2.1.3. Effectiveness:
The Effectiveness can be defined as the impact of certain activities and motivational decisions
taken in order to meet the objectives of the company. WH Smith operational activities and
management decisions are made by the managers and employees’ involvement to recover
from the financial distress. Some motivational activities lead the retail shop to provide good
services to the customers as it is not possible for company reach every customer as a news-
paper vendor.
2.2. Critical analysis of profit maximisation and cost minimisa-
tion:
Every business organization wants to maximize its profit, in order to doing so it must choose
the input that minimizes the cost of production. Cost minimization is required to bind the cost
of product or services that offered in a particular limit that a lees price can be tagged. On
other side the quality maximizing stands for improving the quality of products or services in
order to meet the consumer needs (Kelemen, 2009).
Both the attributes have opposite relation. It is almost same like demand and supply relation-
ship. If profit need to be maximised then more quality and characteristics need to be provided
in a product and in order to doing so the company need to incur more cost. The more quality
the organisation needs to provide the more they will need to incur cost.
WH Smith is dealing with the books stationery and news papers. In order to maximising the
profit the company need to increase the sales as well as the raw material cost need to be
minimised (Murthy, 2007). The tension between profit maximisation and cost minimisation
cannot be ignored. But to reduce the gap the company need to implement to the cost mini-
mization process in a proper way i.e. minimize cost related to salary of the employee, trans-
portation cost, overhead cost but not by decreasing the quality of input. The carrying cost
needs to be decreased as well as different sources of resources are taken into consideration.

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2.3. Importance of 5 performance objectives of operation man-
agement:
Figure 3: Five performance objectives
(Source: Goetsch and Davis, 2010, p.29)
2.3.1. Cost:
Cost is the expenses a company need to incur in order providing the customers with their
required products. WH Smith cant expend more as they cannot change the price tag cause
there are many competitors in the industry.
2.3.2. Quality:
WH Smith needs to check the paper quality and the context of the books they are providing.
In order to maintain or providing high quality the organisation need to raise up the cost but
in the competitive market it is quite impossible to increase the cost.
2.3.3. Speed:
WH Smith is leading books and newspaper seller they need to built up e speedy network of
delivering the products to the customers as to meet their expectations. The more fast net-
work will provide more customer satisfaction.
COST
QUALITY
SPEED
DEPEND
ABILITY
FLEXIBI
LITY

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2.3.4. Dependability:
WH Smith store’s service department should focus on the needs, requirements and the feed-
backs. As the customers wants to be dependent of them the organisation need to integrate.
2.3.5. Flexibility:
There should be flexibility in service channels or the production procedure that can help to
make immediate changes according to the customer needs.
Task 3
3.1. Importance of operational planning:
In any type organisation operational plans are required to make the process of production
smooth and proper. This type of planning helps to link the strategy goals and its objectives
with the planned goals and objectives (Murthy, 2007). In some times planning and control
implies as the management of activities that meet the customer’s demand. It is based on
prediction future demand for the output system.
Operational planning activity of WH Smith segmented into each retail stores. The managers
and the employees are to take the responsibility of taking the decision.
3.2. Linear programming of WH Smith:
Linear programming is basically a mathematical tool or process that takes various linear ine-
qualities relating to some situation and finding best outcome as maximum profit or lowest
cost under some conditions. It deals with a class of optimization problem, where objective
functions have to be optimized and all the constraints are linear in terms of the decision var-
iable. The maximisation of qualities needed to achieve the best customer satisfaction whereas
the cost is also need to be minimised as to achieve the highest profit (Mishra, 2009).
In case of WH Smith the company the operational activity that increased the cost cutting ef-
fort and quality maximisation as the profit scenario changed a lot during the last 10 years
under Kate Swann. The operational activity that was adopted to take the best possible
method of taking the option of process and delivery system of the organisation is very much
suitable.

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3.3. Network plan and critical path of WH Smith:
Critical Path analysis is a much used tool for the project manager. This method is often used
for all types of project. It also includes construction, defence, research projects, product de-
velopment, engineering, and plant maintenance and software development (Mishra, 2009).
0/0
3/6
10/10
15/15
15/18
5/8
25/25

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Figure 4: critical path
(Source: as created by the author)
In the above mentioned diagram the timing of new project of WH Smith has been described
the total activity will be of 25 days and here are many procedures but the company will take
the most appropriate one. The company need to renovate the store to show case the prod-
ucts to grab more customer attention. According to the plans the organisation need to make
planning the things like store rooms, customer galleries to sit and read books, have been in-
cluded in the store that will make the customer comfortable to visit and shop for their books.
CPA is basically known as network analysis. The original CPM program and its approach are
no longer used. The critical path analysis can be applied to any approach used to analyze a
project network logic diagram. CPA is known as the net work analysis. A net work consists of
two things- nodes and arrow. WH Smith used this technique to judge the cost effectiveness,
profitability, raw material wastage etc.
3.4. Quality and its maintenance:
In case any type product quality is the main parameter by which a customer judges the effi-
ciency of it. The more the expectation and perception of the customer is matched the quality
the product will generate. The more qualitative product will meet the expectation of the cus-
tomers. In case of WH Smith the quality of the products depends upon many a thing that is
the page quality, writing quality and the stationery quality and uniqueness of the products.
Quality of a product can be maintained by total quality management which focuses on cus-
tomer requirements, specification of product, quality output, and control in production cost
(Kelemen, 2009). Company have to keep in mind the consumers needs, have to deal with new
technology, maintain the prices of their product. In case of WH Smith the product and after
sales service need to be reviewed all the time. They also need to have a well set of writers
who will provide the best quality of books. The newspaper should contain of the most trend-
ing news.

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Conclusion:
WH Smith Company launched in 1999. It is one of the biggest retail company deals with books,
newspapers and stationeries. In 2001-2004, they are running from huge loss that is £135m.
Kate Swann took the charge as the CEO of the company at that time. WH Smith company was
a loss running company Kate Swann took some managerial decision to bring some operational
and strategically change to change the financial situation and earned a profit state of £106m.
The steps include quality management, control and maximization, production, critical path
method, 3E cost minimization, supply flow to change the profit scenario. This procedure helps
them done a great job to change the whole scenario. His suggestion worked and company
reported a huge profit. They earned almost double profit. The company get back to their old
reputation as largest retail group in the market. The example of WH Smith.co.uk Company
can easily show that how operational management can put an impact or can change the sce-
nario of a company.
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