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2-1 COMPETITIVENESS AND OPERATIONS STRATEGY. 2-2 A COLD HARD FACT Better quality, higher productivity, lower costs, and the ability to respond quickly.

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Presentation on theme: "2-1 COMPETITIVENESS AND OPERATIONS STRATEGY. 2-2 A COLD HARD FACT Better quality, higher productivity, lower costs, and the ability to respond quickly."— Presentation transcript:

1 2-1 COMPETITIVENESS AND OPERATIONS STRATEGY

2 2-2 A COLD HARD FACT Better 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

3 2-3 CHAPTER FOCUS Competitiveness Strategy Productivity

4 2-4 COMPETITIVENESS Competitiveness: How effectively (the extent that) an organization meets the wants and needs of customers relative to others that offer similar goods or services Organizations compete through some combination of their marketing and operations functions What do customers want? How can these customer needs best be satisfied?

5 2-5 MARKETING INFLUENCES COMPETITIVENESS BY: Identifiying consumer needs and desires Pricing Advertising and promotion

6 2-6 OPERATIONS INFLUENCES COMPETITIVENESS THROUGH (1 of 4 ): 1. Product and Service Design 2. Cost 3. Location 4. Quality and Reliability

7 2-7 OPERATIONS INFLUENCES COMPETITIVENESS THROUGH (1 of 4 ): 5. Quick or Reliable Response a. New Product Introduction Speed b. Delivery Speed c. Delivery Reliability 6. Service

8 2-8 OPERATIONS INFLUENCES COMPETITIVENESS THROUGH (1 of 4 ): 7. Flexibility a. in making alterations in design b. in coping with changes in volume c. in new product introduction 8. Inventory Management

9 2-9 OPERATIONS INFLUENCES COMPETITIVENESS THROUGH (1 of 4 ): 9. Supply Chain Management 10. Service and Service Quality 11. Managers and Workers

10 2-10 WHY SOME ORGANIZATIONS FAIL? (1 of 2) Too much emphasis on short-term financial performance Failing to take advantage of strengths and opportunities Failing to recognize competitive threats Neglecting operations strategy

11 2-11 WHY SOME ORGANIZATIONS FAIL (2 of 2) Too much emphasis in product and service design and not enough on improvement Neglecting investments in capital and human resources Failing to establish good internal communications and cooperation Failing to consider customer wants and needs

12 2-12 HIERARCHICAL PLANNING Mission Goals Organizational Strategies Tactics Functional Strategies

13 2-13 Mission Goals Organizational Strategies Functional Goals Finance Strategies Marketing Strategies Operations Strategies Tactics Operating procedures HIERARCHICAL PLANNING

14 2-14 MISSION Mission - where you are going? The reason for the existence for an organization Provides boundaries & focus © 1995 Corel Corp.

15 2-15 States the purpose of the organization The mission statement should answer the question of What business are we in? MISSION STATEMENT

16 2-16 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 2-17 MCDONALDS 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 2-18 GOALS The mission statement serves as the basis for organizational goals Goals They provide detail and the scope of the mission Goals can be viewed as organizational destinations They serve as the basis for organizational strategies

19 2-19 STRATEGIES Strategy A plan for achieving organizational goals Serves as a roadmap for reaching the organizational destinations Mission: Where you are going? Strategy: How you are going to get there; an action plan (shows how mission will be achieved)

20 2-20 STRATEGIES Organizations have Organizational (business) strategies Overall strategies that relate to the entire organization Support the achievement of organizational goals and mission Functional level strategies Strategies that relate to each of the functional areas and that support achievement of the organizational strategy

21 2-21 TACTICS AND OPERATIONS Tactics The methods and actions taken to accomplish strategies The how to part of the process Answers the question: How to reach the destination, following the strategy road map Operations The actual doing part of the process

22 2-22 STRATEGY EXAMPLE 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 comfortably Mission: Live a good life Goal: Successful career, good income Strategy: Obtain a college education Tactics: Select a college and a major Operations: Register, buy books, take courses, study, graduate, get job

23 2-23 CORE COMPETENCIES Core Competencies The special attributes or abilities that give an organization a competitive edge To be effective core competencies and strategies need to be aligned

24 2-24 SAMPLE STRATEGIES Organizational StrategyOperations StrategyExamples of Companies or Services Low PriceLow CostU.S. first-class postage Wal-Mart High QualityHigh performance design and/or high quality processing Consistent Quality Sony TV Lexus, Cadillac, Coca-Cola; Kodak, Motorola Short TimeQuick Response(rapid delivery) On-time delivery McDonalds Restaurants Express mail FedEx; One-hour photo NewnessInnovation3M Express mail FlexibilityVariety Volume Burger King (Have it your way) McDonalds (Buses Welcome) ServiceSuperior customer serviceDisneyland IBM LocationConvenienceSupermarkets, Banks, ATMs Mall Stores

25 2-25 STRATEGY FORMULATION Effective strategy formulation requires taking into account: Core competencies Environmental scanning ( SWOT) Successful strategy formulation also requires taking into account: Order qualifiers Order winners © 1995 Corel Corp.

26 2-26 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) Price Quality Time Flexibility Service Location Develop Distinctive Competencies based on customer needs and on what the competitors doing

27 2-27 The consideration of events and trends that present threats or opportunities for a company Environmental Scanning is necessary to identify Internal Factors Strengths and Weaknesses External Factors Opportunities and Threats ENVIRONMENTAL SCANNING

28 2-28 ENVIRONMENTAL SCANNING: KEY EXTERNAL FACTORS Economic conditions Political conditions Legal environment Technology Competition Customers and Markets Suppliers Distributors

29 2-29 ENVIRONMENTAL SCANNING: KEY INTERNAL FACTORS Resources available (human resources, facilities and equipment, financial resources) Existing and potential products and services Technology Stages of life cycles of current products

30 2-30 SWOT ANALYSIS TO STRATEGY FORMULATION Strategy Mission External Opportunities Internal Strengths Internal Weaknesses External Threats Competitive Advantage

31 2-31 ORDER QUALIFIERS: DEFINED Order qualifiers are the basic criteria that permit the firms 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 2-32 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 organizations goods or services that cause it to be perceived as better than competitors products

33 2-33 A brand name car can be an order qualifier Repair services can be order winners Examples: Warranty, Roadside Assistance, Leases, etc

34 2-34 ORGANIZATION STRATEGY/ OPERATIONS STRATEGY The organization strategy provides the overall direction for the organization. It is broad in scope covering the entire organization Operations 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 2-35 Organization Strategy Relates to growth rate, market share Operations Strategy Relates to product design; choice of location, technology, new facilities

36 2-36 STRATEGIC PLANNING Mission and Vision Corporate Strategy Voice of the Business Voice of the Customer Marketing Strategy Operations Strategy Financial Strategy

37 2-37 OPERATIONS ROLE IN CORPORATE STRATEGY Provide support for overall strategy of a firm Serve as firms distinctive competence Must be consistent Must be consistent with overall strategy

38 2-38 IMPETUS FOR STRATEGY CHANGE Changes in the organization Stages inthe product life cycle Changes in the environment

39 2-39 GLOBAL STRATEGY Strategic decisions must be made with respect to globalization What works in one country may not work in another Strategies must be changed to account for these differences Other issues Political, social, cultural, and economic differences

40 2-40 STRATEGIC DECISIONS IN OPERATIONS Products Processes, Technology Capacity Job design Quality Facilities Sourcing Services Inventory

41 2-41 STRATEGIC OM DECISION AREAS Decision AreaWhat the Decisions Affect Product and service design Costs, quality, liability, and environmental issues CapacityCost, structure, flexibility Process selection and layout Costs, flexibility, skill level needed, capacity Work designQuality of work life, employee safety, productivity LocationCosts, visibility QualityAbility to meet or exceed customer expectations InventoryCosts, shortages MaintenanceCosts, equipment reliability, productivity SchedulingFlexibility, efficiency Supply chainsCosts, quality, agility, shortages, vendor relations ProjectsCosts, new products, services, or operating systems

42 2-42 TRADITIONAL STRATEGIES Cost minimization Product differentiation

43 2-43 COMPETING ON COST Eliminate all waste Invest in Updated facilities & equipment Streamlining operations Training & development

44 2-44 COMPETING BY DIFFERENTIATION Please the customers by offering unique goods or services that make them feel special

45 2-45 QUALITY-BASED STRATEGIES Quality-based strategy Strategy that focuses on quality in all phases of an organization Focuses on maintaining or improving the quality of an organizations products or services Understand customer attitudes toward and expectations of quality Quality at the source Pursuit of such a strategy is rooted in a number of factors: Trying to overcome a poor quality reputation Desire to maintain a quality image A part of a cost reduction strategy

46 2-46 TIME-BASED STRATEGIES Time-based strategies Strategies that focus on the reduction of time needed to accomplish tasks Competing on speed: fast moves, fast adaptations, tight linkages It 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 2-47 TIME-BASED STRATEGIES Areas where organizations have achieved time reductions: Planning time Product/service design time Processing time Changeover time Delivery time Response time for complaints

48 2-48 COMPETING ON FLEXIBILITY Produce wide variety of products Introduce new products Modify existing products quickly Respond to customer needs

49 2-49 AGILE OPERATIONS Agile operations A strategic approach for competitive advantage that emphasizes the use of flexibility to adapt and prosper in an environment of change Involves the blending of several core competencies: Cost Quality Reliability Flexibility

50 2-50 THE BALANCED SCORECARD APPROACH A top-down management system that organizations can use to clarify their vision and strategy and transform them into action Develop objectives Develop metrics and targets for each objective Develop initiatives to achieve objectives Identify links among the various perspectives Finance Customer Internal business processes Learning and growth Monitor results

51 2-51 THE BALANCED SCORECARD


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