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COMPETITIVENESS AND OPERATIONS STRATEGY

COMPETITIVENESS AND OPERATIONS STRATEGY. 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. CHAPTER FOCUS. Competitiveness Strategy Productivity.

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COMPETITIVENESS AND OPERATIONS STRATEGY

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  1. COMPETITIVENESS AND OPERATIONS STRATEGY

  2. 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. Mission Goals Organizational Strategies Functional Strategies Tactics HIERARCHICAL PLANNING

  13. HIERARCHICAL PLANNING Mission Goals OrganizationalStrategies Functional Goals Finance Strategies MarketingStrategies OperationsStrategies Tactics Tactics Tactics Operatingprocedures Operatingprocedures Operatingprocedures

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

  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 Wincentering 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 • Tactics • 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 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 anorganization a competitive edge • To be effective core competencies and strategies need to be aligned

  24. SAMPLE STRATEGIES

  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 anorganization a competitive edge. What the firm does better than anyone else (critical success factors, distinctive competencies) • Price • Quality • Time • Flexibility • Service • Location DevelopDistinctive Competenciesbased 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 qualifiersare 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 winnersare 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. Abrand name carcan be an“order qualifier” Repair servicescan 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. Mission and Vision Voice of the Business Corporate Strategy Voice of the Customer Marketing Strategy Operations Strategy Financial Strategy STRATEGIC PLANNING

  36. 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

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

  38. 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

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

  40. STRATEGIC OM DECISION AREAS

  41. TRADITIONAL STRATEGIES • Cost minimization • Product differentiation

  42. COMPETING ON COST • Eliminate all waste • Invest in • Updated facilities & equipment • Streamlining operations • Training & development

  43. COMPETING BY DIFFERENTIATION Please the customers by offering unique goods or services that make them feel special

  44. 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

  45. TIME-BASED STRATEGIES • 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

  46. 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

  47. COMPETING ON FLEXIBILITY • Produce wide variety of products • Introduce new products • Modify existing products quickly • Respond to customer needs

  48. 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

  49. 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

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