OPERATIONS
STRATEGY
BY BENILDA C. JITO, MM
MOTIVATION
PRTNEOIOSA TERGSYAT
STRATEGIES
The mechanisms by which
businesses
coordinate their decisions regarding
their structural and infrastructural
elements.
GAINING COMPETITIVE ADVANTAGE
Competitive advantage denotes a firm’s ability to achieve market and
financial superiority over its competitors.
Creating competitive advantage requires:
Understanding customer needs and expectations and how the value
chain can best meet these through designing and delivering customer
benefit packages.
Building and leveraging operational capabilities to support desired
competitive priorities.
UNDERSTANDING CUSTOMER WANTS AND
NEEDS
• Order qualifiers are basic customer expectations,
generally considered the minimum performance
level required to stay in business.
• Order winners are goods and service features and
performance characteristics that differentiate one
customer benefit package from another and win
the customer’s business.
EVALUATING GOODS AND SERVICES
Search attributes are those that a customer can determine prior to
purchasing the goods and/or services.
These attributes include things like color, price, freshness, style, fit,
feel, hardness, and smell.
Experience attributes are those that can be discerned only after
purchase or during consumption or use.
Examples are friendliness, taste, wearability, safety, fun, and customer
satisfaction.
COMPETITIVE PRIORITIES
Competitive priorities represent the strategic emphasis that a firm places
on certain performance measures and operational capabilities within a
value chain. Key competitive priorities are:
Cost
Quality
Time
Flexibility
Innovation
COMPETITIVE PRIORITY – COST
Almost every industry has a low price market segment.
Examples include Honda Motor Co., Marriott's Fairfield Inns,
Merck-Medco On-line Pharmacy, Southwest Airlines, and
Walmart.Low cost results from high productivity, high
capacity utilization, and economies of scale.
Continuous improvement is essential to achieve a low-cost
competitive advantage.
COMPETITIVE PRIORITY – QUALITY
Businesses offering premium quality goods usually have large market
shares and were early entrants into their markets.
Quality is positively and significantly related to a higher return on
investment for almost all kinds of market situations.
A strategy of quality improvement usually leads to increased market
share, but at a cost in terms of reduced short-run profitability.
High goods quality producers can usually charge premium prices.
COMPETITIVE PRIORITY – TIME
Time is perhaps the most important source of competitive advantage.
Customers demand quick response, short waiting times, and
consistency in performance.
Speeding up work processes improves customer response.
• Deliveries can be made faster, and more often on-time.
• Time reductions also drive improvements in quality, cost, and
productivity.
COMPETITIVE PRIORITY – FLEXIBILITY
Success in global markets requires both design
and demand flexibility.
Flexibility is manifest in mass customization
strategies.
COMPETITIVE PRIORITY – FLEXIBILITY
• consulting Levi’s jeans that are cut to exact measurements
• Personal Web pages Estate planning
• Motorola pagers customized in different colors, sizes, and
shapes
• Personal weight training programs
• Modular furniture that customers can configure to their
unique needs and tastes
COMPETITIVE PRIORITY – INNOVATION
• Innovation is the discovery and practical
application or commercialization of a device,
method, or idea that differs from existing norms.
• Innovative companies focus on outstanding
product research, design, and development; high
product quality; and the ability to modify
production facilities to produce new products
frequently.
STRATEGIC PLANNING
• Strategy is a pattern or plan that integrates
an organization’s major goals, policies, and
action sequences into a cohesive whole.
• Strategic planning is the process of
determining long-term goals, policies, and
plans for an organization.
THREE LEVELS OF STRATEGY
• A corporate strategy is necessary to define the businesses in which the
corporation will participate and develop plans for the acquisition and allocation of
resources among those businesses.
• A business strategy defines the focus for SBUs.
• The major decisions involve which markets to pursue and how best to compete in
those markets; that is, what competitive priorities the firm should pursue.
• A functional strategy is the set of decisions that each functional area—marketing,
finance, operations, research and development, engineering, and so on—develops to
support its particular business strategy.
OPERATIONS STRATEGY
• The operations strategy defines how an
organization will execute its chosen business
strategies.
• Developing an operations strategy involves
translating competitive priorities into
operational capabilities by making a variety
of choices and trade-offs for design and
operating decisions.
SUSTAINABILITY AND OPERATIONS STRATEGY
• Sustainability is an organizational strategy in many firms and requires
major changes in the culture of an organization.
• Many companies pursue sustainability through their operations.
• Example: Dell, Inc. Design for Environment initiative to control raw
material acquisition, manufacturing processes, and distribution
programs while linking green policies with consumer use and disposal.
A FRAMEWORK FOR OPERATIONS STRATEGY
• Operations design choices are the decisions management
must make as to what type of process structure is best
suited to produce goods or create services.
• Types of processes and alternative designs Supply chain
integration and outsourcing Technology Capacity and
facilities (size, timing, location) Inventory Trade-off analysis
CONTS:
• Infrastructure focuses on the non process features
and capabilities of the organization and includes
the workforce, operating plans and control
systems, quality control, organizational structure,
compensation systems, learning and innovation
systems, and support services.
OPERATIONS STRATEGY AT MCDONALD’S
• McDonald's vision is to be the world's best quick service
restaurant experience.
• Being the best means providing outstanding quality,
service, cleanliness, and value, so that we make every
customer in every restaurant smile.
• To achieve our vision, we focus on three worldwide
strategies:
• (1) Be the Best Employer (2) Deliver Operational
Excellence (3) Achieve Enduring Profitable Growth
•Thank you
