Operations

Management
Operations Strategy &
Competitiveness

CHAPTER 2_PART 1
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  DEVELOPING MISSIONS AND
STRATEGIES
 Mission
 Strategy
 ACHIEVING COMPETITIVE ADVANTAGE
THROUGH OPERATIONS
 Competing on Differentiation
 Competing on Cost
 Competing on Response
 TEN STRATEGIC OM DECISIONS

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  ISSUES IN OPERATIONS STRATEGY
 Research
 Preconditions
 Dynamics
 STRATEGY DEVELOPMENT AND
IMPLEMENTATION
 Identify Critical Success Factors
 A Global view of Operations Cultural and Ethical Issues
 Build and Staff the Organization
 Integrate OM with Other Activities
 GLOBAL OPERATIONS STRATEGY OPTIONS
 International Strategy
 Multidomestic Strategy
 Global Strategy
 Transnational Strategy
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 When you complete this chapter, you should be able
to :
Identify or Define:
 Mission
 Strategy
 Ten Decisions of OM
 Multinational Corporations

Describe or Explain:
 Specific approaches used by OM to achieve strategies
▪ Differentiation
▪ Low Cost
▪ Response
 Four Global Operations Strategies
 Why Global Issues are Important

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 Mission - where are you
going?
 Organization’s purpose for
being
 Provides boundaries & focus
 Answers ‘What do we provide
society?’

© 1995 Corel Corp.

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 FedEx is committed to our People-Service-Profit philosophy. We
will produce outstanding financial returns by providing total
reliable, competitively superior, global air-ground
transportation of high priority goods and documents that
require rapid, time-certain delivery. Equally important,
positive control of each package will be maintained using real
time electronic tracking and tracing systems. A complete
record of each shipment and delivery will be presented with
our request for payment. We will be helpful, courteous, and
professional to each other and the public. We will strive to
have a completely satisfied customer at the end of each
transaction.

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 Philosophy &
Values
Profitability
Environment
& Growth
Mission

Customers Public Image

Benefit to
Society

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 Mission - where you are going

 Strategy - how you are going to get there; an

action plan

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 Action plan to achieve
mission
 Shows how mission will
be achieved
 Company has a business
strategy
 Functional areas have
strategies © 1995 Corel Corp.

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 Company
Mission

Business
Strategy

Functional
Functional Area
Area
Strategies

Marketing Operations Fin./Acct.

Decisions Decisions Decisions

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  Differentiation

 Cost leadership

 Quick response

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 Uniqueness can go beyond both the physical
characteristics and service attributes to
encompass everything that impacts
customer’s perception of value

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 Provide the maximum value as perceived by
customer

Does not imply low value or low quality

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 Flexibility
 Reliability
 Timeliness

Requires institutionalization within the firm of

the ability to respond

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Requires the institutionalization within the firm
of the ability to change, and to adapt

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 Operations Examples Specific Competitive
Decisions Strategy Used Advantage
Quality FLEXIBILITY
Sony’s constant innovation of new products Design
Product HP’s ability to follow the printer market Volume

Process Southwest Airlines No-frills service LOW COST

Location DELIVERY
Pizza Hut’s five-minute guarantee at lunchtime Speed
Layout Federal Express’s “absolutely, positively on time” Dependability Differentiation
(Better)
Response
Human Resource QUALITY (Faster)
Motorola’s automotive products ignition systems Conformance Cost
Supply Chain Motorola’s pagers Performance leadership
(Cheaper)
Inventory
IBM’s after-sale service on mainframe computersAFTER-SALE SERVICE
Scheduling
Fidelity Security’s broad line of mutual funds BROAD PRODUCT LINE
Maintenance
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  Goods & service design
 Quality
 Process & capacity design
 Location selection
 Layout design
 Human resource and job design
 Supply-chain management
 Inventory
 Scheduling
 Maintenance

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 Operations Goods Services
Decisions
Goods & Product is usually Product is usually
services tangible intangible
decisions
Quality Objective quality Subjective quality
standards standards
Process Customer not involved Customer may be directly
and in most of process involved in process.
capacity Capacity must match
design demand to avoid lost sales
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 Operations Goods Services
Decisions
Location May need to be near raw Product is usually
Selection materials or labor force intangible
Layout Layout can enhance Subjective quality
Design production efficiency standards
Human Workforce focused on Customer may be directly
Resources technical skills. involved in process.
and Job Labor standards consistent. Capacity matches
Design Output-based wage system. demand to avoid lost
sales

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 Operations Goods Services
Decisions
Supply chain Supply-chain Supply-chain relationships
management relationships critical to important, not necessarily
final product critical
Inventory Raw materials, work- Most services cannot be
in-process, and stored
finished goods
Scheduling Ability to convert Primarily concerned with
inventory may allow meeting the customer's
leveling of production immediate schedule
rates
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 Operations Goods Services
Decisions
Maintenance Maintenance is often Maintenance is often
preventive and takes "repair" and takes place at
place at the production the customer's site
site

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 Customization at high
High Process-focused Volume
Job Shops Mass Customization
(Print shop, emergency
(Dell Computer’s PC)
room , machine shop,
Repetitive (modular)
fine dining
Variety of Products

focus
Assembly line
Moderate (Cars, appliances, TVs,
fast-food restaurants) Product-focused
Continuous
(steel, beer, paper,
bread, institutional
kitchen)
Low
Low Moderate High
Volume
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  High quality product
 High capacity utilization
 High operating effectiveness
 Low investment intensity
 Low direct cost per unit

From the PIMS study of the Strategic Planning

Institute

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