2 the bar is getting higher A COLD HARD FACTBetter quality, higher productivity, lower costs, and the ability to respond quickly to customer needs are more important than ever and…the bar is getting higher
4 COMPETITIVENESS Competitiveness: How effectively (the extent that) an organization meets the wants and needs of customers relative to others that offer similar goods or servicesOrganizations compete through some combination of their marketing and operations functionsWhat do customers want?How can these customer needs best be satisfied?
5 MARKETING INFLUENCES COMPETITIVENESS BY: Identifiying consumer needs and desiresPricingAdvertising and promotion
6 OPERATIONS INFLUENCES COMPETITIVENESS THROUGH (1 of 4): 1. Product and Service Design2. Cost3. Location4. Quality and Reliability
7 OPERATIONS INFLUENCES COMPETITIVENESS THROUGH (1 of 4): 5. Quick or Reliable Responsea. New Product Introduction Speedb. Delivery Speedc. Delivery Reliability6. Service
8 OPERATIONS INFLUENCES COMPETITIVENESS THROUGH (1 of 4): 7. Flexibilitya. in making alterations in designb. in coping with changes in volumec. in new product introduction8. Inventory Management
9 OPERATIONS INFLUENCES COMPETITIVENESS THROUGH (1 of 4): 9. Supply Chain Management10. Service and Service Quality11. Managers and Workers
10 WHY SOME ORGANIZATIONS FAIL? (1 of 2) Too much emphasis on short-term financial performanceFailing to take advantage of strengths and opportunitiesFailing to recognize competitive threatsNeglecting operations strategy
11 WHY SOME ORGANIZATIONS FAIL (2 of 2) Too much emphasis in product and service design and not enough on improvementNeglecting investments in capital and human resourcesFailing to establish good internal communications and cooperationFailing to consider customer wants and needs
15 MISSION STATEMENT States the purpose of the organization The mission statement should answer the question of “What business are we in?”
16 MISSION STATEMENT OF THE HARD ROCK CAFE To spread the spirit of Rock ‘n’ Roll by delivering an exceptional entertainment and dining experience. We are committed to being an important, contributing member of our community and offering the Hard Rock family a fun, healthy, and nurturing work environment while ensuring our long-term success.
17 MC’DONALD’S MISSION STATEMENT McDonald's brand mission is to "be our customers' favorite place and way to eat." Our worldwide operations have been aligned around a global strategy called the Plan to Win centering on the five basics of an exceptional customer experience -- People, Products, Place, Price and Promotion. We are committed to improving our operations and enhancing our customers' experience.
18 GOALSThe mission statement serves as the basis for organizational goalsGoalsThey provide detail and the scope of the missionGoals can be viewed as organizational destinationsThey serve as the basis for organizational strategies
19 STRATEGIES Strategy A plan for achieving organizational goals Serves as a roadmap for reaching the organizational destinationsMission: Where you are going?Strategy: How you are going to get there; an action plan (shows how mission will be achieved)
20 STRATEGIES Organizations have Organizational (business) strategies Overall strategies that relate to the entire organizationSupport the achievement of organizational goals and missionFunctional level strategiesStrategies that relate to each of the functional areas and that support achievement of the organizational strategy
21 TACTICS AND OPERATIONS The methods and actions taken to accomplish strategiesThe “how to” part of the processAnswers the question: “How to reach the destination, following the strategy road map”OperationsThe actual “doing” part of the process
22 STRATEGY EXAMPLE Mission: Live a good life Rita is a high school student. She would like to have a career in business, have a good job, and earn enough income to live comfortablyMission: Live a good lifeGoal: Successful career, good incomeStrategy: Obtain a college educationTactics: Select a college and a majorOperations: Register, buy books, take courses, study, graduate, get job
23 CORE COMPETENCIES Core Competencies The special attributes or abilities that give an organization a competitive edgeTo be effective core competencies and strategies need to be aligned
24 SAMPLE STRATEGIES Organizational Strategy Operations Strategy Examples of Companies or ServicesLow PriceLow CostU.S. first-class postageWal-MartHigh QualityHigh performance design and/or high quality processingConsistent QualitySony TVLexus, Cadillac,Coca-Cola; Kodak, MotorolaShort TimeQuick Response(rapid delivery)On-time deliveryMcDonald’s RestaurantsExpress mailFedEx; One-hour photoNewnessInnovation3MFlexibilityVarietyVolumeBurger King (Have it your way”)McDonald’s (“Buses Welcome”)ServiceSuperior customer serviceDisneylandIBMLocationConvenienceSupermarkets, Banks, ATMsMall Stores
26 IDENTIFICATION OF CORE COMPETENCIES The special attributes or abilities that give an organization a competitive edge. What the firm does better than anyone else (critical success factors, distinctive competencies)PriceQualityTimeFlexibilityServiceLocationDevelop Distinctive Competencies based on customer needs and on what the competitors doing
27 ENVIRONMENTAL SCANNING The consideration of events and trends that present threats or opportunities for a companyEnvironmental Scanning is necessary to identifyInternal FactorsStrengths and WeaknessesExternal FactorsOpportunities and Threats
29 ENVIRONMENTAL SCANNING: KEY INTERNAL FACTORS Resources available (human resources, facilities and equipment, financial resources)Existing and potential products and servicesTechnologyStages of life cycles of current products
30 SWOT ANALYSIS TO STRATEGY FORMULATION MissionInternalExternalStrengthsOpportunitiesStrategyInternalExternalWeaknessesThreatsCompetitiveAdvantage
31 ORDER QUALIFIERS: DEFINED Order qualifiers are the basic criteria that permit the firm’s products to be considered as candidates for purchase by customers.These are the characteristics that customers perceive as minimum standards of acceptability to be considered as a potential purchase.
32 ORDER WINNERS: DEFINED Order winners are the criteria that differentiate the products and services of the firm from others’.These are the characteristics of an organization’s goods or services that cause it to be perceived as better than competitors’ products
33 A brand name car can be an “order qualifier” Repair services can be “order winners”Examples: Warranty, Roadside Assistance, Leases, etc
34 ORGANIZATION STRATEGY/ OPERATIONS STRATEGY The organization strategy provides the overall direction for the organization. It is broad in scope covering the entire organizationOperations strategy is the approach consistent with organization strategy that is used to guide the operations function. It is narrower in scope, dealing with the operations aspect of the organization.
35 Organization Strategy Relates to growth rate, market shareOperations StrategyRelates to product design; choice of location, technology, new facilities
36 STRATEGIC PLANNING Mission and Vision Corporate Strategy Voice of the BusinessCustomerMarketing StrategyOperations StrategyFinancial Strategy
37 OPERATIONS ROLE IN CORPORATE STRATEGY Provide support for overall strategy of a firmServe as firm’s distinctive competenceMust be consistentMust be consistent with overall strategy
38 IMPETUS FOR STRATEGY CHANGE Changes in the organizationStages inthe product life cycleChanges in the environment
39 GLOBAL STRATEGYStrategic decisions must be made with respect to globalizationWhat works in one country may not work in anotherStrategies must be changed to account for these differencesOther issuesPolitical, social, cultural, and economic differences
40 STRATEGIC DECISIONS IN OPERATIONS ProductsProcesses, TechnologyCapacityJob designQualityFacilitiesSourcingServicesInventory
41 STRATEGIC OM DECISION AREAS What the Decisions AffectProduct and service designCosts, quality, liability, and environmental issuesCapacityCost, structure, flexibilityProcess selection and layoutCosts, flexibility, skill level needed, capacityWork designQuality of work life, employee safety, productivityLocationCosts, visibilityQualityAbility to meet or exceed customer expectationsInventoryCosts, shortagesMaintenanceCosts, equipment reliability, productivitySchedulingFlexibility, efficiencySupply chainsCosts, quality, agility, shortages, vendor relationsProjectsCosts, new products, services, or operating systems
42 TRADITIONAL STRATEGIES Cost minimizationProduct differentiation
43 COMPETING ON COST Eliminate all waste Invest in Updated facilities & equipmentStreamlining operationsTraining & development
44 COMPETING BY DIFFERENTIATION Please the customers by offering unique goods or services that make them feel special
45 QUALITY-BASED STRATEGIES Quality-based strategyStrategy that focuses on quality in all phases of an organizationFocuses on maintaining or improving the quality of an organization’s products or servicesUnderstand customer attitudes toward and expectations of qualityQuality at the sourcePursuit of such a strategy is rooted in a number of factors:Trying to overcome a poor quality reputationDesire to maintain a quality imageA part of a cost reduction strategy
46 TIME-BASED STRATEGIES Strategies that focus on the reduction of time needed to accomplish tasksCompeting on speed: fast moves, fast adaptations, tight linkagesIt is believed that by reducing time, costs are lower, quality is higher, productivity is higher, time-to-market is faster, and customer service is improved
47 TIME-BASED STRATEGIES Areas where organizations have achieved time reductions:Planning timeProduct/service design timeProcessing timeChangeover timeDelivery timeResponse time for complaints
48 COMPETING ON FLEXIBILITY Produce wide variety of productsIntroduce new productsModify existing products quicklyRespond to customer needs
49 AGILE OPERATIONS Agile operations A strategic approach for competitive advantage that emphasizes the use of flexibility to adapt and prosper in an environment of changeInvolves the blending of several core competencies:CostQualityReliabilityFlexibility
50 THE BALANCED SCORECARD APPROACH A top-down management system that organizations can use to clarify their vision and strategy and transform them into actionDevelop objectivesDevelop metrics and targets for each objectiveDevelop initiatives to achieve objectivesIdentify links among the various perspectivesFinanceCustomerInternal business processesLearning and growthMonitor results
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