1. COMPETITIVENESS AND OPERATIONS STRATEGY

2. the bar is getting higher
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. CHAPTER FOCUS
Competitiveness
Strategy
Productivity

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. MARKETING INFLUENCES COMPETITIVENESS BY:
Identifiying consumer needs and desires
Pricing
Advertising and promotion

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

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

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. 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. HIERARCHICAL PLANNING
Mission
Goals
Organizational Strategies
Tactics
Functional Strategies

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

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

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. 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. 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. 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. TACTICS AND OPERATIONS
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. 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 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. 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. SAMPLE STRATEGIES Organizational Strategy Operations Strategy
Examples of Companies or Services
Low Price
Low Cost
U.S. first-class postage
Wal-Mart
High Quality
High performance design and/or high quality processing
Consistent Quality
Sony TV
Lexus, Cadillac,
Coca-Cola; Kodak, Motorola
Short Time
Quick Response(rapid delivery)
On-time delivery
McDonald’s Restaurants
Express mail
FedEx; One-hour photo
Newness
Innovation 3M
Flexibility
Variety
Volume
Burger King (Have it your way”)
McDonald’s (“Buses Welcome”)
Service
Superior customer service
Disneyland
IBM
Location
Convenience
Supermarkets, Banks, ATMs
Mall Stores

25. © 1995 Corel Corp.
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

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. ENVIRONMENTAL SCANNING
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

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

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. SWOT ANALYSIS TO STRATEGY FORMULATION
Mission
Internal
External S
trengths O
pportunities
Strategy
Internal
External W
eaknesses T
hreats
Competitive
Advantage

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 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. Organization Strategy
Relates to growth rate, market share
Operations Strategy
Relates to product design; choice of location, technology, new facilities

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

37. OPERATIONS ROLE IN CORPORATE STRATEGY
Provide support for overall strategy of a firm
Serve as firm’s distinctive competence
Must be consistent
Must be consistent with overall strategy

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

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

41. STRATEGIC OM DECISION AREAS
What the Decisions Affect
Product and service design
Costs, quality, liability, and environmental issues
Capacity
Cost, structure, flexibility
Process selection and layout
Costs, flexibility, skill level needed, capacity
Work design
Quality of work life, employee safety, productivity
Location
Costs, visibility
Quality
Ability to meet or exceed customer expectations
Inventory
Costs, shortages
Maintenance
Costs, equipment reliability, productivity
Scheduling
Flexibility, efficiency
Supply chains
Costs, quality, agility, shortages, vendor relations
Projects
Costs, new products, services, or operating systems

42. TRADITIONAL STRATEGIES
Cost minimization
Product differentiation

43. COMPETING ON COST Eliminate all waste Invest in
Updated facilities & equipment
Streamlining operations
Training & 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 strategy
Strategy that focuses on quality in all phases of an organization
Focuses on maintaining or improving the quality of an organization’s 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. 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. 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. COMPETING ON FLEXIBILITY
Produce wide variety of products
Introduce new products
Modify existing products quickly
Respond 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 change
Involves the blending of several core competencies:
Cost
Quality
Reliability
Flexibility

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. THE BALANCED SCORECARD