Chapter 2 Operation Strategy

					Chapter 2: Operation Strategy
1

B Y: OT C H A N DY, B E & M S C . MANAGEMENT INSTITUTE OF CAMBODIA

After finish this chapter…
2

 Define an operation strategy  Able to identify the 9 different competitive priorities

used in operation strategies
 Able to describe the role of operation strategy as

source of competitive strength

Contents
3

 Coporate strategy  Market analysis  Modern day operation capabilities  Competitive priorities and capabilities

Operation as strategic importance
4

 Modern day organizations have to excel in
 Mass

customization  Lean production  Agile manufacturing  Customer-centric provision  Etc.
 Depend on ability to actually do these things

and it is reside within operations.

Operation as strategic importance
5

 Late 1990s, Toyota announceed their strategic

intention to expand capacity and produce even more automobiles.
 By 2004, Toyota had fulfilled their promise and

become 2nd car producer in USA.

Operation as strategic importance
6

 Dell Computers have in-house capabilities that

others have found difficult to imitate.
 The problem with some organizations is that

they don't have senior-level personnel in place who fully understand the potential that operation can have.

Contents map
7

 Coporate strategy  Market analysis  Modern day operation capabilities  Competitive priorities and capabilities

Corporate strategy…
8

 Corporate strategy specifies the businesses that

the company will pursue, isolates new opportunities and threats in the environment, and identifies the growth objective.
 Also address, how a firm can differentiate itself

from the competition.

Corporate strategy…
9

 Choices could include producing standardized

versus customized services or products or competing on the basis of cost advantage versus responsive service delivery.
 Corporate strategy provides an overall direction

that serves as the framework for carrying out all the organization's functions.

Corporate strategy…
10

 Strategic consideration:

Developing corporate strategy involves three considerations: 1. Monitoring and adjusting to CHANGES 2. Identify and develop core competences 3. Develop core processes

Corporate strategy…
11

1. Environmental scanning:
 

Environment CHANGES rapidly Firm need to adapt to these changes Scan by monitor trends in the socioeconomic environment incl. industry, marketplace, and society. Scan for threats and opportunities





Corporate strategy…
12

1. Environmental scanning:




Threats: new entrants, new products and services, low cost players, high quality product line etc. Opportunities: economic trends, technological changes, new policies, living style, availability of new resources, collective power of customers and suppliers

Corporate strategy…
13

2. Development of core competences:






Good managerial alone can not overcome changes Success firms take the advantage of what they do well – unique strengths Core competencies are the unique resources and strengths that an organization's management considers when formulating strategy.

Corporate strategy…
14

2. Development of core competences:


Core competencies include:  Management of value  Capacity management  Workforce  Facilities  Market and financial know-how  System and technology  Integratationa and affiliation

Corporate strategy…
15

3. Development of core processes:




Firm's core competencies should determine core processes The four core processes  Customer relationship  New service/product innovation  Order fulfillment  Suppliers relationship

Corporate strategy…
16

3. Development of core processes:
Products/Servic e development

Supplier Relationship

Order fulfillment

Customer relationship

Corporate strategy…
17

3. Development of core processes:


Many companies have all four of these core processes esp. news paper industry. Important point is every firm MUST evaluate their core competencies and chose to focus on thoses processes that provide greatest competative strengths.



Corporate strategy…
18

 Global strategies:
 Identifying

opportunities and threats today require a global prespective. strategy may include buying foreign services or parts, combating threat from foreign competitors, or planning way to enter market beyond national boundaries.

 Global

Corporate strategy…
19

 Global strategies:
 Two

1.

i

2.

effective global strategies are: Strategic alliances in the form of collaborating effort, joint venture, technology (know-how) licensing Locating abroad

McDonald vs. Jollibee in the Philippines
20

Contents map
21

 Coporate strategy  Market analysis  Modern day operation capabilities  Competitive priorities and capabilities

Market Analysis
22

 Market segmentation:
 Market

segmentation is a process of identifying groups of customers with enough in common to warrant the design and provision of services or products that larger group wants and needs. It is allow firm to incorporate the needs of customer into the design of the service or product and the processes for its production.



Market Analysis
23

 Market segmentation:
 Characteristic

use to determine market segments:

 Demographic factors:

age, income, education level, occupation, and location pleasure, fear, innovativeness, and boredom

 Psychological factors:

Industry factors:

specific technology, use certain materials, or participate in particular industry

Market Analysis
24

 Market segmentation:
 Another

important note: two customers may use the same product for very different reasons.
the key factors in each segment is the starting point in devising a customerdriven operation strategy.

 Identifying

Market Analysis
25

 Need Assessment:
 What

are the needs for each market segment? well competitors are addressing those needs? assessment should include: tangible and intangible service or product attributes and features that a customer desires.

 How

 Need

Market Analysis
26

 Need Assessment:
 Market

needs may be group as follow: Service or Product Needs: price, quality, degree of customization
Delivery

System Needs: availability, convennience, courtesy, safety, accuracy, reliability, delivery speed, and delivery dependability

Market Analysis
27

 Need Assessment:
 Market

needs may be group as follow: Volume Needs: high or low vol, degree of variability in vol, and degree of predictability in vol.
Other

Needs: reputation and num of year in business, after sale technical support, ability to invest in international financial market, competent legal services, and service or product design capability.

28

Contents map
29

 Coporate strategy  Market analysis  Modern day operation capabilities  Competitive priorities and capabilities

Modern day operation capabilities
30

 Transition of operation from craft –

mass – agile

Modern day operation capabilities
31

 Craft era:
 Low

volume
variety capable of flexibility level of skill and quality

 High  Firm  High

Modern day operation capabilities
32

 Mass production:

volume  Standard product  Produce at low cost without or less varieties  Work is largely de-skill  Repetitive and narrow in scope with little flexibility from workers  Automation is dedicated to small product range  Production/operation is views as low grade function in firm

 High

Modern day operation capabilities
33

 Mass customization:
A

firm's service or product strategy addresses certain competitive priorities that will win orders from customers.
such competitive priority is variety.

 One

Modern day operation capabilities
34

 Mass customization:
 Considering

the paint retailer! They are praticing a strategy known as mass customization.
customization is a strategy whereby a firm's flexible processes generate a variety of service or product at reasonable low costs.

 Mass

Modern day operation capabilities
35

 Mass customization:
 Postponement:

key to being mass customizer is postponing the task of differentiating a service or product for a specific customer until the last possible moment. It is an organzational concept whereby some of final activities in the provision of a service or product are delayed until the orders are received.

A

Modern day operation capabilities
36

 Mass customization:
 Postponement
 The

apply to service:

Ritz-Carlton Hotel, will record customers preferences and will add into its service to tailor made the preferences of the same customers when they check in again.

Modern day operation capabilities
37

 Mass customization:


Postponement apply to manufacturing:
HP

postpones assemble of its printers with the country-specific power supply and packaging of appropriate manual until the last step in the process, which is perform by distributor in the region where printer is being delivered.

Modern day operation capabilities
38

 Mass customization:


Postponement apply to manufacturing:
Being

a successful mass customizer such as HP may require the redesign of products or processes.

Modern day operation capabilities
39

 Mass customization:


Postponement apply to manufacturing:
Benneton,

a major producer of sweater, rather than dyeing the yarn before manufacturing the sweater; it reverse this process to after and wait until there are orders (usually large retail buyers).

40

41

42

43

Modern day operation capabilities
44

 Mass customization:
 Internet

implication: Internet has been a valuable technology for mass customization strategies.
Dell

sells computer through web page that allow consumers to configure their computers from large variety of options. and GM also do the same

Ford

Mass Customization

45

Mass Customization

46

Watch interview with Andrew Lippman, Founder of MIT Media Lab .

47

Modern day operation capabilities
48

 Mass customization:
 Internet
Each

implication:

of these ventures provide customers an enormous amount of choice in the service and product they buy. But also put a lot of pressure on processes that must produce them. So, flexibility and short response times are prized qualities for mass-customization processes.

Contents map
49

 Coporate strategy  Market analysis  Modern day operation capabilities  Competitive priorities and capabilities

Competitive priorities and capabilities
50

Competitive capabilities
Cost Quality Time 1. Low-cost operations 2. Top quality 3. Consistent quality 4. Delivery speed 5. On-time delivery 6. Development speed Flexibility 7. Customization 8. Variety 9. Volume flexibility

Competitive priorities and capabilities
51

 Cost:  Lowering prices can increase demand for services or products BUT it is also reduces profit.


Low-cost operation is delivering a service or producing a product at lowest possible cost to the satisfaction of process’s external and internal customers.

Competitive priorities and capabilities
52

 Quality:  Quality is a dimension of a service or product that is defined by external and internal customers.


Two important competitive priorities:
quality  Consistent quality
 Top

Competitive priorities and capabilities
53

 Time:  Delivery speed: lead time is use to measure this delivery speed.


On-time delivery: meeting delivery time as promise Development speed: how quick the new service or product is introduce to the market.



Competitive priorities and capabilities
54

 Flexibility:  Customization: is satisfying the unique needs of each customer by changing service or product design.


Variety: is handling wide assortment of services or products efficiently. It is different from customization because service or product is not necessary unique.



Volume flexibility: is accelerating or decelerating the rate of production of services or products quickly to handle large fluctuations in demand.

The End
55

 Q&A


				
DOCUMENT INFO
Shared By:
Stats:
views:12022
posted:7/3/2009
language:English
pages:55
Description: Just to overview what is operation strategy?
About Always look for opportunity to learn! Looking for a specific "Lean Resource" download go to my personal blog here: www.leanorganization.blogspot.com