UNIVERSITI TEKNOLOGI MARA

FACULTY OF BUSINESS MANAGEMENT

Operations Strategy & Competitiveness

Arliza Abdullah OPM530/533

Topics
DEVELOPING MISSIONS AND STRATEGIES
Mission Strategy

ACHIEVING COMPETITIVE ADVANTAGE THROUGH OPERATIONS

Competing on Differentiation Competing on Cost Competing on Response

TEN STRATEGIC OM DECISIONS

Arliza Abdullah OPM530/533

Developing Missions & Strategies

Mission - where are you going?
Organizations purpose for being Provides boundaries & focus Answers What do we provide society?

Strategy - how you are going to get there

Action plan to achieve mission Shows how mission will be achieved Company has a business strategy Functional areas have strategies

Arliza Abdullah OPM530/533

Factors Affecting Mission

Philosophy & Values Environment Mission Customers Benefit to Society Public Image Profitability & Growth

Arliza Abdullah OPM530/533

Strategy Process
Company Mission Business Strategy Functional Area Functional Area Strategies

Marketing Decisions
Arliza Abdullah OPM530/533

Operations Decisions

Fin./Acct. Decisions
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Four Steps for Strategy Formulation

Defining a primary task

Assessing core competencies

What is the firm in the business of doing?

What does the firm do better than anyone else?

Determining order winners and order qualifiers Positioning the firm

What wins the order? What qualifies an item to be considered for purchase?
How will the firm compete?

Arliza Abdullah OPM530/533

Strategies for Competitive Advantage

Differentiation

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

Cost leadership

Provide the maximum value as perceived by customer Does not imply low value or low quality

Quick response
Flexibility Reliability Timeliness Requires institutionalization within the firm of the ability to respond

Arliza Abdullah OPM530/533

Competitive Priorities
Cost - Southwest Airlines
one type of airplane facilitates crew changes, record-

keeping, maintenance, and inventory costs direct flights mean no baggage transfers

Quality - Ritz-Carlton - one customer at a time

Every employee is empowered to satisfy a guests wish Each hotel has a quality leader Quality reports tracks guest room preventive maintenance cycles percentage of check-ins with no waiting time spent to achieve industry-best clean room appearance Guest Preference Reports are recorded in a database
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Arliza Abdullah OPM530/533

Competitive Priorities

Flexibility

Custom Foot Shoe Store: customers feet are scanned electronically to capture measurements custom shoes are mailed to the customers home in weeks prices are comparable to off-the-shelf shoes

Speed

Dell ships custom-built computers in two days

Arliza Abdullah OPM530/533

OMs Contribution to Strategy

Operations Decisions
Quality
Product Process Location Layout Human Resource Supply Chain
Motorolas automotive products ignition systems Motorolas pagers Pizza Huts five-minute guarantee at lunchtime Federal Expresss absolutely, positively on time Sonys constant innovation of new products HPs ability to follow the printer market Southwest Airlines No-frills service

Examples

Specific Strategy Used

FLEXIBILITY

Competitive Advantage

Design Volume
LOW COST DELIVERY

Speed Dependability
QUALITY

Differentiation (Better)

Conformance Performance

Inventory
Scheduling Maintenance
Arliza Abdullah OPM530/533

Cost leadership (Cheaper)

Response (Faster)

IBMs after-sale service on mainframe computers Fidelity Securitys broad line of mutual funds

AFTER-SALE SERVICE

BROAD PRODUCT LINE

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Goods and Services and the 10 OM Decisions

Operations Decisions Goods & services decisions Quality Process and capacity design
Arliza Abdullah OPM530/533

Goods
Product is usually tangible Objective quality standards Customer not involved in most of process

Services
Product is usually intangible Subjective quality standards Customer may be directly involved in process. Capacity must match demand to avoid lost sales
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Goods and Services and the 10 OM Decisions (cont)

Operations Decisions Location Selection Layout Design Human Resources and Job Design

Goods
May need to be near raw materials or labor force Layout can enhance production efficiency Workforce focused on technical skills. Labor standards consistent. Output-based wage system.

Services
Product is usually intangible Subjective quality standards Customer may be directly involved in process. Capacity matches demand to avoid lost sales
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Arliza Abdullah OPM530/533

Goods and Services and the 10 OM Decisions (cont)

Operations Decisions Goods Services

Supply-chain relationships Supply chain Supply-chain management relationships critical to important, not necessarily

Inventory

Scheduling

final product Raw materials, workin-process, and finished goods Ability to convert inventory may allow leveling of production rates

critical Most services cannot be stored Primarily concerned with meeting the customer's immediate schedule

Arliza Abdullah OPM530/533

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Goods and Services and the 10 OM Decisions (cont)

Operations Decisions

Goods

Services

Maintenance Maintenance is often

Maintenance is often preventive and takes "repair" and takes place at place at the production the customer's site site

Arliza Abdullah OPM530/533

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Defining Global Operations

International business - engages in cross-border transactions

Multinational Corporation - has extensive involvement in international business, owning or controlling facilities in more than one country
Global company - integrates operations from different countries, and views world as a single marketplace Transnational company - seeks to combine the benefits of globalscale efficiencies with the benefits of local responsiveness

Arliza Abdullah OPM530/533

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Reasons to Globalize
Reduce costs (labor, taxes, tariffs, etc.) Improve the supply chain Provide better goods and services Attract new markets Learn to improve operations Attract and retain global talent

Arliza Abdullah OPM530/533

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Risks of Globalization

Cultural differences Supply chain logistics Safety, security, and stability Quality problems Corporate image Loss of capabilities

Arliza Abdullah OPM530/533

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Achieving Global Operations -Four Considerations Global product design Global process design and technology Global factory location analysis Impact of Culture and Ethics

Arliza Abdullah OPM530/533

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