THE ROLE OF OPERATIONS

Berceanu Bianca-Gabriela

Contents

1) Explain how an operations function within the following organizations could contribute to
their long-term competitive success:........................................................................................................2
1.1 Four Stage Model Of Strategic Role Of Operations................................................................2
1.2 There Are Five Operations Performance Objectives:...................................................................3
1.3 Types of Airport Operations...........................................................................................................5
1.4 The Success Of The Airport And Its Measures.............................................................................7
2) For the following organizations, explain how their operations functions can support business
strategy, implement business strategy and drive business strategy:......................................................9
2.1 What Is A Business Operational Strategy?..................................................................................10
2.2 Types Of Business Operational Strategies For A Bank..............................................................10
2.3 How their operations functions can support business strategy, implement business strategy
and drive business strategy.................................................................................................................11
Bibliography............................................................................................................................................16
 Competitive strategy

Integration of Operations Business performance

& Marketing

Functional proactiveness

“Strategic and tactical operations decisions determine how well the organization can
accomplish its goals. They also provide opportunities for the organization to achieve unique
competitive advantages that attract and keep customers.” [ CITATION Wha21 \l 1033 ]

1) Explain how an operations function within the following organizations could

contribute to their long-term competitive success:
- a salted snack manufacturer

- an airline (I choose an airline as organization) – WIZZ AIR

- a parcel delivery service

- an hotel.

“An organization’s operations function is concerned with getting things done; producing
goods and/or services for customers.”[ CITATION Nig02 \l 1033 ] All business organizations are
concerned with how they will survive and prosper in the future. “A business strategy is often
thought of as a plan or set of intentions that will set the long-term direction of the actions that are
needed to ensure future organizational success.”[ CITATION Nig02 \l 1033 ]

An organization’s operations are strategically important precisely because most

organizational activity comprises the day-to-day activities within the operations function.
Organizational success is only likely to result if short-term operations activities are consistent
with long-term strategic intentions and make a contribution to competitive advantage.

1.1 Four Stage Model Of Strategic Role Of Operations.

STAGE SUMMARY
 Stage1: Organizations find it impossible to manage its operations strategically as its
Internally operations performance objectives are continually changing between low cost,
neutral
increased flexibility, improved quality etc. Operations managers never have
time to focus consistently on a set of objectives. Make limited contribution to
the organization and struggle not to hinder progress by making too many
mistakes. They are reactive towards operations and so operations do not
provide a source of competitive advantage.
Stage2: Organizations manage operations by seeking to emulate those of its
Externally competitors, copying best practices of its industry such as JIT, TQM etc. They
neutral
adopt these techniques which they will have not developed same level of
expertise in their application. These organizations develop operations strategies
that may not match the main business strategy. It may not lead to competitive
advantage.
Stage3: An organization has an operations strategy that is linked to and derived from
Internally its business strategy. This means that its operations performance objectives are
supportiv
aligned with and supportive of its business objectives, offering the possibility
e
that operations can provide the means of achieving competitive advantage. The
organizations operations are likely to be the best in its industry.
Stage4: Organization uses its operations excellence as the basis for its business
Externally strategy; an operations-based strategy. These organizations are at the fore-front
supportiv
of development in the best practice in that they set industry standards in ways
e
that delight customers. To remain at stage 4, organizations need to learn how to
make the most of its existing resources and competences to learn how to
develop new capabilities.

1.2 There Are Five Operations Performance Objectives:

1 Cost: The ability to produce at low cost.

Cost often implies offering a product at a lower price, relative to the price of the
competing products in the same market as a result of low cost of production. Low cost-strategy
can result into high profit margins even at competitive price. This does not mean low quality but
rather efficiency, reduced waste and increased productivity.
 To improve cost performance, performance has to improve in the other operations
objectives of quality, dependability, speed and flexibility.

2 Quality: The ability to produce in accordance with specification and without error.

This enhances customer satisfaction and easier operations. Bottom line is products have
to be designed to meet customer needs and the process needs to be designed to produce the
intended products consistently without error. This reduces cost and increases dependability since
less time will be required to correct mistakes and less confusion and irritation to the customer.
Airlines have now embraced continuous improvement initiatives aimed at eliminating non-value
adding processes through benchmarking, the six sigma approach and the ISO 9000 standards
implementation.

3 Speed: The ability to do things quickly in response to customer demands and thereby
offer short lead times between when a customer orders a product or service and when they
receive it.

Speed involves minimizing the time between a customer asking for products or service
and the customer receiving them. This assures availability and results to speed advantage. This
often calls for operational efficiency, eliminating processes that do not save time. Technology
has been instrumental in this together with flexible workforce to meet peak demand periods

4 Dependability: The ability to deliver products and services in accordance with

promises made to customers (e.g. in a quotation or other published information).

Dependability is the ability to deliver to the customer on time or as promised to save time
and money. This ensures stability and no surprises.

5 Flexibility: The ability to change operations. Flexibility can comprise up to four

aspects:i. The ability to change the volume of production.

ii. The ability to change the time taken to produce.

iii. The ability to change the mix of different products or services produced. iv. The
ability to innovate and introduce new products and services.
 Flexibility is essential to accommodate rapid environmental changes including customer
needs and expectations. Flexible system are able to add new products that may be important to a
customer or drop the products that are not doing well (product flexibility) and can also increase
or decrease the amount produced to accommodate changes in demand (volume flexibility).
Organizations competing on flexibility find it hard to compete on speed as well because they
need time to custom-make products to customer specifications. They cannot also compete on
cost because it may take more resources to customize.

“Excelling at one or more of these operations performance objectives can enable an

organization to pursue a business strategy based on a corresponding competitive
factor.”[ CITATION Nig02 \l 1033 ]

In formulating an operations strategy, management has to focus its resources and internal
capabilities in such a way that they can gain competitive advantage. There is a perception that
organization cannot excel in all competitive dimensions due to the varied customer demands and
the organization’s overall strategy. Traditionally, there has to be a trade off; for example if an
organization focuses on quality, then it has to trade off low cost.

Organization need to know the market needs and establish ways of meeting those needs,
focusing on cost, quality, speed, flexibility and adaptability. When customer buy a product, they
decide what features they want in the product (order qualifiers), then they look at the alternatives
and choose the best one (order winners). An organization only remains competitive if its
products have the main qualifying factors (so that it is shortlisted) and many of the order winning
factors.

1.3 Types of Airport Operations

An airport is an infrastructure facility, but also a complex organization that has the
characteristics of an enterprise. Both the infrastructural and economic character of the airport is
reflected in the legal definition according to which the airport is an airport, i.e. a separate area on
land, water or other surface entirely or partly intended for take-offs, landings and ground or
surface water traffic air, along with its permanent construction objects and equipment, entered in
the register of airports; public use, used for the payment of transport of passages, baggage, goods
or mail.
Within an airport, there are generally four divisions:

 Landside operations.

“Landside operations is crucial to what the passenger experiences while going through the
airport. Working in this field, you’ll understand the needs of the customers and implement tools
to make their experience better. If you believe this industry is for you, it’s good to consider the
many common positions out there, keeping in mind that these depend on the size and demand of
each airport.” [ CITATION SHa21 \l 1033 ]

 Airside operations.

“This department works to make sure the entire airside environment runs as efficiently as
possible. This includes:

 Coordinating responses to airside incidents, accidents, emergencies.

 Allocation of aircraft parking and aircraft escorts.
 Conducting runaway and taxiway inspections.
 Policing airside driving.
 Vehicle escorts for companies and contractors requiring airside access.
 Day-to-day management of wildlife to reduce the risk of bird interference on aircraft.”
[ CITATION SHa21 \l 1033 ]

 Billing and invoicing

“Individuals who work in billing and invoicing handle both aeronautical and non-
aeronautical revenue. Ledger or accounting systems contain information regarding airport
finances: flight bills, handling invoices, cash, sales within the airport (points-of-sales), staff
payrolls, etc. People in this division typically have a background in business, accounting, or
finance.”[ CITATION SHa21 \l 1033 ]

 Information management

“Information management refers to the collection and distribution of daily flight information.
People who work in information management store seasonal and arrival/departure information,
and keep track of the connection with airlines. This department is integral to the timeliness of
flight arrivals and departures and the organization of the flight schedule.”[ CITATION SHa21 \l 1033
]

“The business environment is affected by a range of factors including; economic system,

political system, legal restraints, industry, labour relations, customer expectations , markets,
competition, technology, culture, history, infrastructure, state of the economy, shareholders’
demand, natural environment, labour conditions and so on.”[ CITATION BOS16 \l 1033 ]
“Organizations strategically respond to any significant changes in the business environment in
order to remain competitive.”[ CITATION BOS16 \l 1033 ]

1.4 The Success Of The Airport And Its Measures

An airport can achieve success in one area of its activity while in others it may not
achieve its intended goals. The full success of the airport is determined by the fulfillment of all
the company's goals set by the manager. In addition to the size of the airport's success, the time
dimension is also important. The complex and dynamically changing environment of the airport
means that the success achieved can be difficult to maintain in subsequent periods. For this
reason, sometimes the success of an enterprise is identified with the organization's ability to
develop in a long-term perspective.

From the point of view of the infrastructure facility, the success of the airport is to ensure
efficient and safe movement of aircraft and the flow of passengers and goods. In this context, the
measure of airport success is the change in the number of flight operations, the number of
passengers checked in, or the number of checked-in goods and mail in a given period of time,
compared to the previous period. The growth of these indicators is the success of the airport.
From an enterprise perspective aimed at maximizing profit, financial analysis of an airport is the
most important system for measuring achievements at an airport.

For airport owners, which are primarily self-governments, in addition to self-financing

the company, it is important to co-create the development of the city and the region thanks to the
airport's operation. The activity of the airport increases not only the availability of the region, it
allows the flow of passengers and goods but also affects the activity of entities, including the
location of enterprises.
 2) For the following organizations, explain how their operations functions can support
business strategy, implement business strategy and drive business strategy:
- a fast-food restaurant
- a bank ( I chose a bank)
- an oil refinery.
The Banking sector has been the scene of huge change in recent years and operations
departments have been at the forefront of these changes.

The thrust of current strategies in Banking Operations departments is focused on

substantially reducing the unit costs of the key drivers (e.g. cost per current account). These
reductions are being achieved through a combination of automation, outsourcing and moving the
work overseas.

The key operational activities in a bank are listed below:

 Acceptance of Deposits.

 Lending of Funds.

 Clearing of Cheques.

 Remittance of Funds.

 Lockers & Safe Deposits.

 Bill Payment Services.

 Online Banking.

 Credit & Debit Cards.

Functions and Roles in Operations Management

 Planning and implementing manufacturing plants.

 Managing projects.

 Planning information systems.

 Helping to design and develop products and services.

  Managing inventory through the supply chain.

 Managing delivery to customers in a timely manner.

 Optimizing quality control.

2.1 What Is A Business Operational Strategy?

A business operational strategy is a decision-making process that shapes an organization's

long-term plans to achieve the objectives in its mission statement. It comprises specific actions
management wants to take to achieve a specific aspect of a company's operations. Operational
strategies connect the firm's programs, policies, guidelines and workforce in a way that allows
each branch to support others in achieving a common goal.

An effective business strategy considers a company's long-term objectives and creates

steps that cohesively bond business plans with resources, capacity, time, location and
competition. When implemented successfully, operational strategies strengthen a company's
overall strategy and may help achieve marketplace advantage over competitors. It can also
improve an organization's competencies and infrastructure, allowing it to better serve customers
and keep or even extend its competitive advantage over others in the market.

2.2 Types Of Business Operational Strategies For A Bank

Customer-driven operational strategy

“A company uses customer-driven operational strategies to meet the needs of its

customers. Customer-driven strategies can identify trends in customer behavior, such as a change
in buying preferences based on demographics.”[ CITATION Rob21 \l 1033 ] This data can help your
company adapt quickly to changes in the market, identify threats and take steps to mitigate them
and leverage strengths that will improve its competencies and market advantage.

Competitive priorities strategies

Companies use competitive priorities strategies to distinguish their brand, products,

services and people from competitors. “It requires incorporating your marketing strategy,
production processes and organizational culture into the overall corporate strategy.” [ CITATION
Rob21 \l 1033 ] The aim of competitive priorities strategies is to create products and services that
can always meet the needs and preferences of customers at an acceptable price point.

To develop effective competitive priorities, companies need to assess their operational

expenses and product development times. They also need to evaluate the features, quality and
benefits of their offers and introduce variety and distinct features that can help their products and
services stand out from others in the market.

Product or service development strategy

“A product or service development strategy can help a company improve innovation and
add value to the design of its products or services. One strategy businesses can adopt in this area
is to create products or services designed to meet the needs of a niche market.”[ CITATION Rob21 \l
1033 ] It can also mean leveraging staff and technology to offer customers a wide range of
products or services with features not found in alternatives. For example, a company can
prioritize the speedy delivery of products, free installation or multi-platform usability of a
service.

Flexibility strategy

“Some companies use an operational strategy that allows them to compete based on the
flexibility of their product or service or volume. For example, a company can emphasize its
ability to change its products quickly based on customers' preferences. Flexibility can also mean
allowing customers to personalize their orders or the ability to hold a small or large amount of
inventory based on expected demand.”[ CITATION Rob21 \l 1033 ]

2.3 How their operations functions can support business strategy, implement
business strategy and drive business strategy

The integration between service operations and marketing strategic activities

significantly impacts organizational performance of retail banks.

The relationship of the integration and business performance is assumed to be constantly

positive when it is viewed from the universal law perspective. However, this assumed
relationship might ignore various costs that are required to attain proper integration. In reality,
substantial costs and efforts are required to attain high quality integration – quality being critical
to the achievement of business performance.

Most Financial Services Groups are moving this way at a speed convenient to them
although there is still a lot of room for further process centralization and specialization. For
example, many banks have already taken multiple processes out of branches into district, area or
regional centres. Now they are taking this a step further by re-dividing the work so that each
process is carried out nationally in only one centre, increasing specialization and realizing even
greater economies of skill and scale.

The effect that the interaction of operations and marketing strategic activities has
on business performance is moderated by a banks’ competitive strategy.

“In retail banking services, satisfying customer needs is of utmost importance. This
requires operations and marketing areas of a bank to keep close integrated relationship for
effective response to customer requirements. In order to keep a close reciprocal and inter-
dependent relationship between these two functions, each function should be able to cooperate
with.” [ CITATION Mah99 \l 1033 ]

The structural strategic factors are concerned with the brick and mortar decisions while
the infrastructural strategic elements are related to the decisions affecting people and systems. In
order to establish the operations strategy choice patterns of retail banks, in this study we
developed 16 strategic activity items that are composed of nine structural and seven
infrastructure choices. These activity items are shown in Table I.
the validity of measurement. Next, we
describe our instrument for measuring
the
proactivness on part of operations and
marketing functions.
First, in order to capture how
operations and marketing are
proactively involved in
strategic management process,
respondents were asked to indicate
“the extent with
which your operations and marketing
managers participate in strategic
planning at the
RBU level on a seven-point Likert
scale (with 1 as ‘no involvement’ and
7 as ‘total
involvement’)”. Additionally, three
items (such as product and market
decisions,
long-term capital investment
decisions, and growth strategy-related
decisions of RBU)
Scale
Lowest Highest
Selected items 1 2 3 4 5 6 7
OP1. Increase in ATM investment 1 2 3 4 5 6
7
OP2. Expansion of full service branches 1 2
34567
OP3. Expansion of limited service branches 1
234567
OP4. Relocating branches close to market 1 2
34567
OP5. Managing demand by pricing or
advertising 1 2 3 4 5 6 7
OP6. Migrating customers to automated
service
system 1 2 3 4 5 6 7
OP7. Increasing internal MIS staff size 1 2 3
4567
OP8.Establishing cooperation with soft-ware
suppliers 1 2 3 4 5 6 7
OP9.Integrated MIS across multiple delivery
channels 1 2 3 4 5 6 7
OP10.Enhancing new employee and
supervisor
training 1 2 3 4 5 6 7
OP11.Educating and retaining high quality
employees 1 2 3 4 5 6 7
OP12.Job enlargement for front line workers
1234567
OP13. Increasing financial incentives 1 2 3 4
567
OP14. Developing quality control procedures
1234567
OP15.Customer education and complaint
management 1 2 3 4 5 6 7
OP16. Establishing teamwork structure 1 2 3
4567
MK1. New product development 1 2 3 4 5 6
7
MK2. Customizing products for the market 1
234567
MK3. Investment in the point of sales
technology 1 2 3 4 5 6 7
MK4. Pricing analysis for products/services 1
234567
MK5. Reinforcing mass media advertising 1
234567
MK6. Reinforcing direct mail advertising 1 2
34567
MK7. Reinforcing sales promotion 1 2 3 4 5
67
MK8. Market research 1 2 3 4 5 6 7
MK9. Investment in the customer
information
system 1 2 3 4 5 6 7
MK10. Converting the full branches to the
sales
center 1 2 3 4 5 6 7
MK11. Providing customers with location
convenience 1 2 3 4 5 6 7
MK12. Product improvement and
development R&D 1 2 3 4 5 6 7
Note:
a
OP
TABEL 1.1 [ CITATION Dep \l 1033 ]

As we define operations management more fully, we consider these foundations of OM: 

 Planning: Operations managers must constantly forecast, plan, and adjust to optimize

processes based on conditions.
 Process: Production of goods or services requires having strong, repeatable processes.
 Efficiency: Managers must troubleshoot bottlenecks, inadequate resources, and
downtimes to create optimal efficiency.
 Cost Control: Production is typically a major part of a company’s cost structure, and you
must manage it wisely.
 Quality: Good quality control is necessary to maintain customer satisfaction and the
company’s reputation. Companies can greatly suffer without it.
 Continuous Improvement: To remain competitive, companies need to have processes in
place to consistently seek better ways of doing things.
 Technology: Underlying all of these foundations is technology. Well-used technology
keeps a company ahead of the curve.
 Profitability: Executed properly, all of the above foundations lead to a strong bottom
line.

The field of operations management includes a diverse set of functions and roles, which can
differ among industries and different-sized companies: 
 Planning and implementing manufacturing plants
 Managing projects
 Planning information systems
 Helping to design and develop products and services
 Managing inventory through the supply chain
 Managing delivery to customers in a timely manner
 Optimizing quality control
 Conducting procurement/purchasing
 Managing logistics
 Managing transportation and distribution
 Managing and maintaining facilities
 Conducting enterprise resource planning (ERP)
 Forecasting for planning
 Planning for capacity
 Navigating industrial labor relations
 Analyzing the value chain
 Optimizing resource usage
 Eliminating waste and bottlenecks
 Continuously improving processes
 Executing a company’s strategic plan 
 Bibliography

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FAINORA, B. (2016). OPERATIONS STRATEGIES IN KENYAN AIRLINES.
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advantage. India: Pergamon.
Nigel Slack, M. L. (2002). OPERATIONS, STRATEGY AND OPERATIONS STRATEGY.
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https://www.evergladesuniversity.edu/blog/common-airport-operations/
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