Operations Management as a Competitive Weapon

Module 1:

Operations Strategy
OM Course Framework

Strategic Issues Tactical Issues Operational Issues

Operations
Strategy Capacity

MRP
Process
Analysis Location

JIT
Manufacturing
Design & Inventory
Selection

Aggregate TOC
Planning

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 Learning Objectives
At the end of this module, each student will be able to:

1. Evaluate the strategic process of any org.

2. Explain competitive dimensions

3. Understand marketing-operations link

4. Identify some basic business strategies

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1. Strategic Process

Mission

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 Mission Examples

1. Levi Strauss a. Colorful visual expression

b. Ladies & gentlemen serving
2. Motorola
Ladies & gentlemen
3. Intel
c. Branded casual apparel
4. Ritz Carlton d. Building blocks to computer
5. Binney & Smith industry
(Crayola) e. Total customer
satisfaction
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Strategic Process

Mission

Business
Strategy

Marketing Operations Fin/Acct

Strategy Strategy Strategy

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 Core Competencies

 Collective knowledge and skills an

organization has that distinguish it from
the competition.

 Typically centers on an organization’s

ability to integrate a variety of specific
technologies and skills in the development
of new products and services.

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 Core Competencies (cont.)

 Are basis on which new products are

developed.
 Better to think of organization in terms of
its portfolio of core competencies than as a
portfolio of products.
 Identifying and developing core
competencies is one of top management’s
most important roles.
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Examples of Core Competencies

 Sony - miniaturization
 3M - knowledge of substrates,
coatings and adhesives
 Black and Decker - small electrical
motors and industrial design
 Honda - engines and power trains
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Typical Use of Core Competencies

 Cannon
 Core competencies in optics, imaging,
and electronic controls
 Products include copiers, laser printers,
cameras, and image scanners.
 Boeing
 Integrating large scale systems
 Commercial jetliners, space stations,
missiles
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 Core Competencies Characteristics

 Used to gain access to a variety of

markets
 Should be strongly related to key
benefits provides by products or
services
 Should be difficult to imitate
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Total Strategic Process

Core achieve
competencies competitive
affect
Company advantage
Mission

Business
Strategy

Marketing Operations Fin./Acct.

Strategy Strategy Strategy

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2. Competitive Dimensions

 Cost
 Quality
 High performance design (Lexus)
 Consistency (Coke)
 Dependability
 Rapid (Domino’s Pizza)
 On-time (Federal Express)
 Flexibility
 Variety (Emergency room)
 Volume (Supermarkets)
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3. Marketing-Operations Link

OM Marketing
Produce goods Investigate demand;
and services establish dist. chain
Costs Price
Schedule Delivery promise
Flexibility Number of models

High quality Repeat sales

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Marketing-Operations Link (cont.)

 Order qualifier

 Order winner

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4. First-to-Market Strategy

 Products available before competition

 Strong applied research capability

needed

 Can set high price to skim market or

set lower price to gain market share

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Second-to-Market Strategy

 Quick imitation of first-to-market

companies

 Less emphasis on applied research

and more emphasis on development

 Learn from first-to-market’s

mistakes
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 Late-to-Market Strategy

 Wait until market becomes standardized

and large volumes demanded

 Compete on basis of costs instead of

product features

 Research efforts focus on process

development versus product development

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