Introduction to Introduction to Business Business

ManagementManagementA multi-Lecture Presentation for Air University A multi-Lecture Presentation for Air University

(BE-TE)(BE-TE)

This presentation can be used freely for non This presentation can be used freely for non commercial purposes.commercial purposes.Students MUST note that lecture slides are for reference only and the exam will rely

mostly on class discussions rather than slides.

What Do What Do Operations Operations

Managers Do?Managers Do? What is Operations?What is Operations?

a function or system that transforms inputs into a function or system that transforms inputs into outputs of greater valueoutputs of greater value

What is a Transformation Process?What is a Transformation Process? a series of activities along a a series of activities along a value chain value chain

extending from supplier to customerextending from supplier to customer activities that do not add value are superfluous activities that do not add value are superfluous

and should be eliminatedand should be eliminated What is Operations Management?What is Operations Management?

design, operation, and improvement of design, operation, and improvement of productive systemsproductive systems

Physical: Physical: as in manufacturing as in manufacturing operationsoperations

Locational: Locational: as in transportation as in transportation operationsoperations

Exchange: Exchange: as in retail operationsas in retail operations Physiological: Physiological: as in health careas in health care Psychological: Psychological: as in entertainmentas in entertainment Informational: Informational: as in communicationas in communication

Transformation Transformation ProcessProcess

INPUT •Material•Machines•Labor•Management•Capital

TRANSFORMATIONPROCESS

OUTPUT •Goods•Services

FeedbackFeedback

Operations as a Operations as a Transformation Transformation

ProcessProcess

Operations Operations FunctionFunction

OperationsOperations MarketingMarketing Finance and Finance and

AccountingAccounting Human Human

ResourcesResources Outside Outside

SuppliersSuppliers

What is a Business Process?

The Process View

Any organization entity or business can be characterized as a process or a network of processes

Based on the simple transformation model of a process Has its origin in the areas of manufacturing and quality

The transformation model of a process

Inputs OutputsProcess

What is a Business Process?

3. A more comprehensive process definition

A business process is a network of connected activities and buffers with well defined boundaries and precedence relationships, which utilize resources to transform inputs into outputs with the purpose of satisfying customer requirements

Process

CustomersSuppliers

Resources

Inputs Outputs

Process Types and Hierarchies

1. Individual processes– Carried out by a single individual

2. Vertical or Functional processes– Contained within one functional unit or department

3. Horizontal or Cross Functional processes– Spans several functional units, departments or

companies

Make up

Make up

Marketing Operations Accounting

CEO

Order Request Order FulfilledProduction planning

Vertical process Horizontal processIndividual process

Buying a TV commercial

Illustration: Process Types and Hierarchies

Process Process Improvement Improvement TechniquesTechniques

BenchmarkingBenchmarking

A technique in which a company A technique in which a company measures its performance against measures its performance against that of best in class companies, that of best in class companies, determines how those companies determines how those companies achieved their performance levels achieved their performance levels and uses the information to improve and uses the information to improve its own performance.its own performance.

Balanced ScorecardBalanced Scorecard

A management system that provides A management system that provides feedback on both internal business feedback on both internal business processes and external outcomes to processes and external outcomes to continuously improve strategic continuously improve strategic performance and results.performance and results.

Business Process Business Process Reengineering (BPR)Reengineering (BPR)

Involves significant changes in Involves significant changes in design and production of an design and production of an organization’s product/services; organization’s product/services; focusing on processes rather than focusing on processes rather than traditional functions.traditional functions.

The key to BPR is for organizations to look at their business processes from a "clean slate" perspective and determine how they can best construct these processes to improve how they conduct business.Business process reengineering is also known as BPR, Business Process Redesign, Business Transformation, or Business Process Change Management.

Corporate Social Corporate Social Responsibility (CSR)Responsibility (CSR)

Through CSR, a company considers Through CSR, a company considers the interests of society by taking the interests of society by taking responsibility for the impact of their responsibility for the impact of their activities on customers, suppliers, activities on customers, suppliers, employees, shareholders, employees, shareholders, communities and other stakeholders, communities and other stakeholders, as well as the environment.as well as the environment.This obligation is seen to extend beyond the statutory obligation to comply

with legislation and sees organizations voluntarily taking further steps to improve the quality of life for employees and their families as well as for the local community and society at large.

Customer SurveysCustomer Surveys

Collecting data from Collecting data from customers about the customers about the performance and performance and possible possible improvements in improvements in ones business.ones business.

Employee Suggestion Employee Suggestion SchemeScheme

A formal mechanism A formal mechanism through which through which employees can give employees can give their suggestions and their suggestions and ideas.ideas.

In its simplest form, a suggestion scheme will elicit suggestions from employees, classify them, and dispatch them to “experts” for evaluation. After this, the suggestion might be adopted, in which case the suggester may well be rewarded. But even if a suggestion is rejected, the suggester may still be rewarded with a token gift.

Improvement TeamsImprovement Teams

Teams constituted to address specific Teams constituted to address specific performance issues in a business.performance issues in a business.

Types of Process Improvement TeamsThere are three types of teams. Kaizen teams, Lean (or Process Improvement) teams, and Six Sigma teams. All three focus on performance andprocess improvement. They each bring a different perspective to the world of improvement.

Kaizen teams tend to address the physical processes that lend themselves to the use of visual analytical tools. If the team can observe what is being done to find improvement opportunities, this is a good team approach.

Lean/Process Improvement teams tend to focus on cross-functional projects, with requirements that are not clearly understood or agreed upon between the different functional players (departments), or by the people working the process. They take a horizontal focus across the process to understand requirements and eliminate waste. Waste is anything done that does not contribute to meeting requirements.

Six Sigma teams take a vertical approach to process analysis and go deep inside the process where the root cause of the problem is not easily understood. They are more analytical than a Lean team. Six Sigma teams use sophisticated tools to discover the “root cause” of problems, eliminate variation, stabilize processes, and sometimes even design a new process.

Knowledge ManagementKnowledge Management The process of systematically and actively The process of systematically and actively

managing and leveraging the knowledge in an managing and leveraging the knowledge in an organization.organization.

Integral components of KM•Generating new knowledge •Accessing valuable knowledge from outside sources •Using accessible knowledge in decision making •Embedding knowledge in processes, products, and/or services •Representing knowledge in documents, databases, and software •Facilitating knowledge growth through culture and incentives •Transferring existing knowledge into other parts of the organization •Measuring the value of knowledge assets and/or impact of knowledge management 

LeanLean

Process of improvement focusing on Process of improvement focusing on reducing all types of wastes in a reducing all types of wastes in a business.business.

The seven types of wastes are:The seven types of wastes are:•Overproduction (production ahead of demand) Overproduction (production ahead of demand) •Transportation (moving products that is not actually required to Transportation (moving products that is not actually required to perform the processing) perform the processing) •Waiting (waiting for the next production step) Waiting (waiting for the next production step) •Inventory (all components, work-in-progress and finished product Inventory (all components, work-in-progress and finished product not being processed) not being processed) •Motion (people or equipment moving or walking more than is Motion (people or equipment moving or walking more than is required to perform the processing) required to perform the processing) •Over Processing (due to poor tool or product design creating Over Processing (due to poor tool or product design creating activity) activity) •Defects (the effort involved in inspecting for and fixing defects)Defects (the effort involved in inspecting for and fixing defects)

Class ExerciseClass Exercise

Identify Wastes in your Identify Wastes in your university/class.university/class.

Mission and Vision Mission and Vision StatementsStatements

Brief statements describing the Brief statements describing the purpose and vision of a business, purpose and vision of a business, intended to keep the employees intended to keep the employees aware of the organization’s intended aware of the organization’s intended direction.direction.The following elements can be included in a mission statement.

Their sequence can be different. It is important, however, that some elements supporting the accomplishment of the mission be present and not just the mission as a "wish".•Purpose and values of the organization •Which business the organization wants to be in (products or services, market) or who are the organization's primary "clients" (stakeholders) •What are the responsibilities of the organization towards these "clients" •What are the main objectives supporting the company in accomplishing its mission

Examples of Mission Examples of Mission StatementsStatements

"Provide society with superior products and "Provide society with superior products and services by developing innovations and services by developing innovations and solutions that improve the quality of life and solutions that improve the quality of life and satisfy customer needs, and to provide satisfy customer needs, and to provide employees with meaningful work and employees with meaningful work and advancement opportunities, and investors advancement opportunities, and investors with a superior rate of return."—with a superior rate of return."—MerckMerck

"To enable people and businesses throughout "To enable people and businesses throughout the world to realize their full potential."—the world to realize their full potential."—MicrosoftMicrosoft

"Organize the world's information and make "Organize the world's information and make it universally accessible and useful."—it universally accessible and useful."—GoogleGoogle

Class ExerciseClass Exercise

Make a mission statement of your Make a mission statement of your University.University.

Make a mission statement of a new Make a mission statement of a new business (choose your business).business (choose your business).

Plan-Do-Check-Act Plan-Do-Check-Act (PDCA)(PDCA)

A four-step process for continuous quality A four-step process for continuous quality improvement. improvement.

The PDCA (or PDSA) CycleThe PDCA (or PDSA) Cycle was originally conceived was originally conceived by Walter Shewhart in 1930's, and later adopted by by Walter Shewhart in 1930's, and later adopted by W. Edwards Deming. The model provides a framework W. Edwards Deming. The model provides a framework for the improvement of a process or system. It can be for the improvement of a process or system. It can be used to guide the entire improvement project, or to used to guide the entire improvement project, or to develop specific projects once target improvement develop specific projects once target improvement areas have been identified.areas have been identified.

The PDCA cycle is designed to be used as a dynamic The PDCA cycle is designed to be used as a dynamic model. The completion of one turn of the cycle flows model. The completion of one turn of the cycle flows into the beginning of the next. Following in the spirit into the beginning of the next. Following in the spirit of of continuouscontinuous quality improvement, the process can quality improvement, the process can always be reanalyzed and a new test of change can always be reanalyzed and a new test of change can begin. This continual cycle of change is represented in begin. This continual cycle of change is represented in the the ramp of improvementramp of improvement. Using what we learn in one . Using what we learn in one PDCA trial, we can begin another, more complex trial.PDCA trial, we can begin another, more complex trial.

Example: The Student with Example: The Student with Poor GradesPoor Grades

Isabel is a first-year medical student who has just taken Isabel is a first-year medical student who has just taken her first set of examinations and is very unhappy with her first set of examinations and is very unhappy with the results.the results.

What is she trying to accomplish?What is she trying to accomplish? Isabel knows that she Isabel knows that she needs to improve her studying skills in order to gain a needs to improve her studying skills in order to gain a better understanding of the material. better understanding of the material.

How will she know that a change is an improvement?How will she know that a change is an improvement? Isabel considers the most important measure of her Isabel considers the most important measure of her study skills to be her exam grades. However, she does study skills to be her exam grades. However, she does not want to risk another exam period just to find out not want to risk another exam period just to find out that her skills are still not good. She decides that a that her skills are still not good. She decides that a better way to measure improvement is by taking old better way to measure improvement is by taking old exams. exams.

What changes can she make that will result in What changes can she make that will result in improvement?improvement? Isabel thinks that she has spent too little Isabel thinks that she has spent too little time studying. She feels that the best way to improve time studying. She feels that the best way to improve her study skills is by putting in more hours. her study skills is by putting in more hours.

Contd..

Cycle 1Cycle 1

Plan:Plan: Isabel decides to add an additional thirty hours per Isabel decides to add an additional thirty hours per week to her already busy schedule. She resolves that she week to her already busy schedule. She resolves that she must socialize less, get up earlier, and stay up later. At must socialize less, get up earlier, and stay up later. At the end of the week she will take an old exam to see how the end of the week she will take an old exam to see how she is progressing.she is progressing.Do:Do: By the end of the week, Isabel finds that she was By the end of the week, Isabel finds that she was able to add only fifteen hours of studying. When she able to add only fifteen hours of studying. When she takes the exam she is dismayed to find that she does no takes the exam she is dismayed to find that she does no better.better.Check:Check: The fifteen extra hours of studying has made The fifteen extra hours of studying has made Isabel feel fatigued. In addition, she finds that her ability Isabel feel fatigued. In addition, she finds that her ability to concentrate during those hours is rather limited. She to concentrate during those hours is rather limited. She has not exercised all week and has not seen any of her has not exercised all week and has not seen any of her friends. This forced isolation is discouraging her.friends. This forced isolation is discouraging her.Act:Act: Isabel knows that there must be another way. She Isabel knows that there must be another way. She needs to design a better, more efficient way to study that needs to design a better, more efficient way to study that will allow her time to exercise and socialize.will allow her time to exercise and socialize.

Contd..

Cycle 2Cycle 2 Plan:Plan: Isabel contacts all her medical school friends who she knows are doing well yet Isabel contacts all her medical school friends who she knows are doing well yet

still have time for outside lives. Many of these friends have similar advice that Isabel still have time for outside lives. Many of these friends have similar advice that Isabel thinks she can use. Based on her findings, she decides to always attend lectures, to thinks she can use. Based on her findings, she decides to always attend lectures, to rewrite her class notes in a format she can understand and based on what the rewrite her class notes in a format she can understand and based on what the professor has emphasized, and to use the assigned text only as a reference.professor has emphasized, and to use the assigned text only as a reference.Do:Do: Isabel returns to her original schedule of studying. However, instead of spending Isabel returns to her original schedule of studying. However, instead of spending a majority of her time poring over the text, she rewrites and studies her notes. She a majority of her time poring over the text, she rewrites and studies her notes. She goes to the text only when she does not understand her notes. When Isabel takes goes to the text only when she does not understand her notes. When Isabel takes one of the old exams, she finds that she has done better, but she still sees room for one of the old exams, she finds that she has done better, but she still sees room for improvement.improvement.Check:Check: Isabel now realizes that she had been spending too much time reading Isabel now realizes that she had been spending too much time reading unimportant information in the required text. She knows that her new approach unimportant information in the required text. She knows that her new approach works much better, yet she still feels that she needs more studying time. She is works much better, yet she still feels that she needs more studying time. She is unsure what to do, because she doesn't want to take away from her social and unsure what to do, because she doesn't want to take away from her social and physically active life.physically active life.Act:Act: Isabel decides to continue with her new studying approach while attempting to Isabel decides to continue with her new studying approach while attempting to find time in her busy day to study more.find time in her busy day to study more.

Contd..

Cycle 3Cycle 3

Plan:Plan: In her search for more time to study, Isabel realizes that there are many places In her search for more time to study, Isabel realizes that there are many places that she can combine exercising and socializing with studying. First, she decides to that she can combine exercising and socializing with studying. First, she decides to study her rewritten notes while she is exercising on the Stairmaster. Next, she intends to study her rewritten notes while she is exercising on the Stairmaster. Next, she intends to spend part of her socializing time studying with her friends.spend part of her socializing time studying with her friends.Do:Do: Isabel's friends are excited about studying together, and their sessions turn into a Isabel's friends are excited about studying together, and their sessions turn into a fun and helpful use of everyone's time. Isabel has found that she enjoys studying while fun and helpful use of everyone's time. Isabel has found that she enjoys studying while she exercises. In fact, she discovers that she remains on the Stairmaster longer when she exercises. In fact, she discovers that she remains on the Stairmaster longer when she's reading over her notes. When Isabel takes her exams this week, she is happy to she's reading over her notes. When Isabel takes her exams this week, she is happy to find that her grades are significantly higher.find that her grades are significantly higher.Check:Check: Isabel now knows that studying does not mean being locked up in her room Isabel now knows that studying does not mean being locked up in her room reading hundreds of pages of text. She realizes that she can gain a lot by studying in reading hundreds of pages of text. She realizes that she can gain a lot by studying in different environments while focusing on the most important points.different environments while focusing on the most important points.Act:Act: Isabel chooses to continue with the changes she has made in her studying habits. Isabel chooses to continue with the changes she has made in her studying habits. What Isabel initially thought would be an improvement turned out to only discourage her What Isabel initially thought would be an improvement turned out to only discourage her further. Many people who are in Isabel's place do not take the time to study their further. Many people who are in Isabel's place do not take the time to study their changes and continue them even though they lead down a disheartening path. By using changes and continue them even though they lead down a disheartening path. By using the PDCA cycle, Isabel was able to see that her initial change did not work and that she the PDCA cycle, Isabel was able to see that her initial change did not work and that she had to find one that would better suit her. With perseverance and the willingness to had to find one that would better suit her. With perseverance and the willingness to learn, Isabel was able to turn a negative outcome into a positive improvement learn, Isabel was able to turn a negative outcome into a positive improvement experience.experience.

Class ExerciseClass Exercise

Architect a PDCA cycle of a Architect a PDCA cycle of a man/woman trying to loose 30 man/woman trying to loose 30 pounds of weight.pounds of weight.

Quality Function Quality Function Deployment (QFD)Deployment (QFD)

A Japanese method for A Japanese method for systematically translating true systematically translating true customer needs into product/service customer needs into product/service technical requirements for design, technical requirements for design, development, implementation, and development, implementation, and delivery of a product.delivery of a product.

"Time was when a man could order a pair of shoes "Time was when a man could order a pair of shoes directly from the cobbler. By measuring the foot directly from the cobbler. By measuring the foot himself and personally handling all aspects of himself and personally handling all aspects of manufacturing, the cobbler could assure the customer manufacturing, the cobbler could assure the customer would be satisfied," lamented would be satisfied," lamented Dr. Dr. YojiYoji AkaoAkao, one of the , one of the founders of QFD, in his private lectures. founders of QFD, in his private lectures.

Quality Function Deployment (QFD) Quality Function Deployment (QFD) was was developed to bring this personal interface to modern developed to bring this personal interface to modern manufacturing and business. In today's industrial manufacturing and business. In today's industrial society, where the growing distance between society, where the growing distance between producers and users is a concern, QFD links the needs producers and users is a concern, QFD links the needs of the customer (end user) with design, development, of the customer (end user) with design, development, engineering, manufacturing, and service functions.engineering, manufacturing, and service functions.

QFD is:QFD is:

Understanding Customer Requirements Understanding Customer Requirements Quality Systems Thinking + Psychology Quality Systems Thinking + Psychology

+ Knowledge/Epistemology + Knowledge/Epistemology Maximizing Positive Quality That Adds Maximizing Positive Quality That Adds

Value Value Comprehensive Quality System for Comprehensive Quality System for

Customer Satisfaction Customer Satisfaction Strategy to Stay Ahead of The Game Strategy to Stay Ahead of The Game

As a quality system that As a quality system that implements elements of Systems implements elements of Systems

Thinking with elements of Thinking with elements of Psychology and Epistemology Psychology and Epistemology (knowledge), QFD provides a (knowledge), QFD provides a

system of comprehensive system of comprehensive development process for:development process for: Understanding customer needs Understanding customer needs

What 'value' means to the customer What 'value' means to the customer Understanding how customers or end users become Understanding how customers or end users become

interested, choose, and are satisfied interested, choose, and are satisfied Analyzing how do we know the needs of the customer Analyzing how do we know the needs of the customer Deciding what features to include Deciding what features to include Determining what level of performance to deliver Determining what level of performance to deliver Intelligently linking the needs of the customer with Intelligently linking the needs of the customer with

design, development, engineering, manufacturing, design, development, engineering, manufacturing, and service functions and service functions

Intelligently linking Design for Six Sigma (DFSS) with Intelligently linking Design for Six Sigma (DFSS) with the front end Voice of Customer analysis and the the front end Voice of Customer analysis and the entire design system entire design system

QFD helps organizations seek out both spoken and QFD helps organizations seek out both spoken and unspoken needs, translate these into actions and unspoken needs, translate these into actions and designs, and focus various business functions toward designs, and focus various business functions toward achieving this common goal, empowering achieving this common goal, empowering organizations to exceed normal expectations and organizations to exceed normal expectations and provide a level of unanticipated excitement that provide a level of unanticipated excitement that generates value. generates value.

   The QFD methodology can be used for both tangible The QFD methodology can be used for both tangible

products and non-tangible services, including products and non-tangible services, including manufactured goods, service industry, software manufactured goods, service industry, software products, IT projects, business process development, products, IT projects, business process development, government, healthcare, environmental initiatives, government, healthcare, environmental initiatives, and many other applications. and many other applications.

House of QualityHouse of Quality

Example – QFD of a Car Example – QFD of a Car DoorDoor

Class ExerciseClass Exercise

Draw a House of Quality for a ball Draw a House of Quality for a ball point pen.point pen.

Quality Management Quality Management System (QMS)System (QMS)

A formalized system that documents A formalized system that documents the structure, responsibilities and the structure, responsibilities and procedures required to achieve procedures required to achieve effective quality management.effective quality management.

Complete Lecture for QMS will Complete Lecture for QMS will followfollow

Six SigmaSix Sigma

A rigorous and disciplined A rigorous and disciplined methodology that utilizes data and methodology that utilizes data and statistical analysis to measure and statistical analysis to measure and improve a company’s operational improve a company’s operational performance, practices and systems.performance, practices and systems.

Supplier DevelopmentSupplier Development

Formal system intended at Formal system intended at developing the capacity and developing the capacity and performance of ones suppliers with a performance of ones suppliers with a target to have improved input from target to have improved input from them.them.

To achieve a high level of supplier development, the partnership To achieve a high level of supplier development, the partnership idea has to be fully accepted both by the subcontractors and by idea has to be fully accepted both by the subcontractors and by the procuring (or contracting) enterprises, and it is thus the procuring (or contracting) enterprises, and it is thus necessary for enterprises to operate in a climate of equity and necessary for enterprises to operate in a climate of equity and mutual trust, with a knowledge of and respect for each other’s mutual trust, with a knowledge of and respect for each other’s rights and obligations.rights and obligations.

Supplier development is a broad concept aimed at strengthening Supplier development is a broad concept aimed at strengthening the performance of subcontracting firms not only by enabling the performance of subcontracting firms not only by enabling them to acquire the skills and capacities required of them by the them to acquire the skills and capacities required of them by the main contracting (or client) enterprise but also by raising their main contracting (or client) enterprise but also by raising their awareness and assisting them in reducing their costs.awareness and assisting them in reducing their costs.

Contracting enterprises offer work to subcontractors, thus Contracting enterprises offer work to subcontractors, thus enabling them to conclude contracts with them and, in the case enabling them to conclude contracts with them and, in the case of long-term contracts, to guarantee them a certain economic of long-term contracts, to guarantee them a certain economic continuity. If such enterprises want their suppliers to meet their continuity. If such enterprises want their suppliers to meet their requirements to the greatest possible extent, they will need to requirements to the greatest possible extent, they will need to support them in their development and they will in this way support them in their development and they will in this way achieve benefits since, by assisting them, they will be better achieve benefits since, by assisting them, they will be better able to serve the end customer.able to serve the end customer.

Supplier EvaluationSupplier Evaluation

Formal system to evaluate the Formal system to evaluate the performance of the suppliers of a performance of the suppliers of a business.business.

SWOT AnalysisSWOT Analysis

An assessment tool for identifying An assessment tool for identifying the overall strategic situation in an the overall strategic situation in an organization by listing its Strengths, organization by listing its Strengths, Weaknesses, Opportunities and Weaknesses, Opportunities and Threats (SWOT).Threats (SWOT).

Wal-Mart SWOT Wal-Mart SWOT Analysis.Analysis.

Strengths - Wal-Mart is a powerful retail brand. It Strengths - Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience has a reputation for value for money, convenience and a wide range of products all in one store.and a wide range of products all in one store.

Weaknesses - Wal-Mart is the World's largest Weaknesses - Wal-Mart is the World's largest grocery retailer and control of its empire, despite grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some its IT advantages, could leave it weak in some areas due to the huge span of control.areas due to the huge span of control.

Opportunities - To take over, merge with, or form Opportunities - To take over, merge with, or form strategic alliances with other global retailers, strategic alliances with other global retailers, focusing on specific markets such as Europe or focusing on specific markets such as Europe or the Greater China Region. the Greater China Region.

Threats - Being number one means that you are Threats - Being number one means that you are the target of competition, locally and globally. the target of competition, locally and globally.

Strengths

•patents •strong brand names •good reputation among customers •cost advantages from proprietary know-how •exclusive access to high grade natural resources •favorable access to distribution networks More Possible StrengthsAdvantages of proposition?, Capabilities? Competitive advantages? USP's (unique selling points)? Resources, Assets, People? Experience, knowledge, data? Financial reserves, likely returns? Marketing - reach, distribution, awareness? Innovative aspects? Location and geographical? Price, value, quality? Accreditations, qualifications, certifications? Processes, systems, IT, communications? Cultural, attitudinal, behavioural? Management cover, succession?

Weaknesses The absence of certain strengths may be viewed as a weakness.

For example, each of the following may be considered weaknesses:

lack of patent protection a weak brand name poor reputation among customers high cost structure lack of access to the best natural resources lack of access to key distribution channels Weakness may be the flip side of strength. Take the case in which

a firm has a large amount of manufacturing capacity. While this capacity may be considered a strength that competitors do not share, it also may be a considered a weakness if the large investment in manufacturing capacity prevents the firm from reacting quickly to changes in the strategic environment.

Disadvantages of proposition? Gaps in capabilities? Lack of competitive strength? Reputation, presence and reach? Financials? Own known vulnerabilities? Timescales, deadlines and pressures? Cashflow, start-up cash-drain? Continuity, supply chain robustness? Effects on core activities, distraction? Reliability of data, plan predictability? Morale, commitment, leadership? Accreditations, etc? Processes and systems, etc? Management cover, succession?

Opportunities The external environmental analysis may reveal

certain new opportunities for profit and growth. Some examples of such opportunities include:

an unfulfilled customer need arrival of new technologies loosening of regulations removal of international trade barriers

Market developments? Competitors' vulnerabilities? Industry or lifestyle trends? Technology development and innovation? Global influences? New markets, vertical, horizontal? Niche target markets? Geographical, export, import? New USP's? Tactics - surprise, major contracts, etc? Business and product development? Information and research? Partnerships, agencies, distribution? Volumes, production, economies? Seasonal, weather, fashion influences?

Threats Changes in the external environmental also may

present threats to the firm. Some examples of such threats include:

shifts in consumer tastes away from the firm's products emergence of substitute products new regulations increased trade barriers

Political effects? Legislative effects? Environmental effects? IT developments? Competitor intentions - various? Market demand? New technologies, services, ideas? Vital contracts and partners? Sustaining internal capabilities? Obstacles faced? Insurmountable weaknesses? Loss of key staff? Sustainable financial backing? Economy - home, abroad? Seasonality, weather effects?

The SWOT/TOWS MatrixThe SWOT/TOWS Matrix

OPPORTUNITIES

THREATS

STRENGTHS WEAKNESSES

SO Strategies

ST Strategies

WO Strategies

WT Strategies

Example – Wal-Mart TOWS Example – Wal-Mart TOWS MatrixMatrix

To take over, merge with, orTo take over, merge with, orform strategic alliances withform strategic alliances withother global retailersother global retailersfocusing on specific marketsfocusing on specific marketssuch as Europe or Chinasuch as Europe or China

Being number one means thatBeing number one means thatyou are the target of you are the target of competition, locally and competition, locally and globally.globally.

powerful retail brandpowerful retail brandreputation for value for moneyreputation for value for moneyreputation forreputation for ConvenienceConveniencewide ranging products in one store.wide ranging products in one store.

World's largest grocery retailerWorld's largest grocery retailerControl of its empire weakControl of its empire weak

SO Strategies

ST Strategies

WO Strategies

WT Strategies

The SWOT/TOWS MatrixThe SWOT/TOWS Matrix

To take over, merge with, orTo take over, merge with, orform strategic alliances withform strategic alliances withother global retailersother global retailersfocusing on specific marketsfocusing on specific marketssuch as Europe or Chinasuch as Europe or China

Being number one means thatBeing number one means thatyou are the target of you are the target of competition, locally and competition, locally and globally.globally.

powerful retail brandpowerful retail brandreputation for value for moneyreputation for value for moneyreputation forreputation for ConvenienceConveniencewide ranging products in one store.wide ranging products in one store.

World's largest grocery retailerWorld's largest grocery retailerControl of its empire weakControl of its empire weak

Take over one of the Chinese retailers

New Branding for greater China

Periodical reviews of branding strategies

Merge with an IT giant forInstituting stronger control

More research to investigatecompetitors

Strengthen IT for reductionIn reporting time.

World’s Top 20 RetailersWorld’s Top 20 Retailers

Class Exercise/Home Class Exercise/Home WorkWork

Q-1. Choose (think of) any business. Perform its SWOT Q-1. Choose (think of) any business. Perform its SWOT analysis.analysis. When doing it, you must have, or collect, relevant data about When doing it, you must have, or collect, relevant data about

market positioning of the business, its strengths and market positioning of the business, its strengths and weaknesses.weaknesses.

Q-2. Draw a House of Quality for a ball point pen.Q-2. Draw a House of Quality for a ball point pen. Complete sections 1,3,4 and 5. Make VALID assumptions Complete sections 1,3,4 and 5. Make VALID assumptions

where required.where required.

Q-3. What are different types of processes in Q-3. What are different types of processes in businesses? Give 3 examples each of all the types.businesses? Give 3 examples each of all the types.

Q-4. Identify wastes in your daily routine. Keep the 7 Q-4. Identify wastes in your daily routine. Keep the 7 types of wastes in mind while doing it.types of wastes in mind while doing it.

Q-5. Make a mission statement of following:Q-5. Make a mission statement of following: Your lifeYour life The business you choose in Q1.The business you choose in Q1.

TQMTQM

An approach to quality that uses An approach to quality that uses management practices and quality management practices and quality tools to improve quality continuously tools to improve quality continuously to customers.to customers.

Complete Lecture for QMS will followComplete Lecture for QMS will follow

5S5S

A housekeeping methodology for A housekeeping methodology for increasing the efficiency of a increasing the efficiency of a workplace.workplace.

The 5S's are:The 5S's are: SeiriSeiri: Sorting. Refers to the practice of going through all the : Sorting. Refers to the practice of going through all the

tools, materials, etc., in the work area and keeping only essential tools, materials, etc., in the work area and keeping only essential items. Everything else is stored or discarded. This leads to fewer items. Everything else is stored or discarded. This leads to fewer hazards and less clutter to interfere with productive work. hazards and less clutter to interfere with productive work.

SeitonSeiton: Set in Order. Focuses on the need for an orderly : Set in Order. Focuses on the need for an orderly workplace. "Orderly" in this sense means arranging the tools and workplace. "Orderly" in this sense means arranging the tools and equipment in an order that promotes work flow. Tools and equipment in an order that promotes work flow. Tools and equipment should be kept where they will be used, and the equipment should be kept where they will be used, and the process should be ordered in a manner that eliminates extra process should be ordered in a manner that eliminates extra motion. motion.

SeisōSeisō: Sweeping, Systematic Cleaning, or Shining. Indicates the : Sweeping, Systematic Cleaning, or Shining. Indicates the need to keep the workplace clean as well as neat. Cleaning in need to keep the workplace clean as well as neat. Cleaning in Japanese companies is a daily activity. At the end of each shift, Japanese companies is a daily activity. At the end of each shift, the work area is cleaned up and everything is restored to its the work area is cleaned up and everything is restored to its place, making it easy to know what goes where and to know when place, making it easy to know what goes where and to know when everything is where it should be are essential here. The key point everything is where it should be are essential here. The key point is that maintaining cleanliness should be part of the daily work - is that maintaining cleanliness should be part of the daily work - not an occasional activity initiated when things get too messy.not an occasional activity initiated when things get too messy.

SeiketsuSeiketsu: Standardizing. This refers to standardized work : Standardizing. This refers to standardized work practices. It refers to more than standardized cleanliness practices. It refers to more than standardized cleanliness (otherwise this would mean essentially the same as (otherwise this would mean essentially the same as "systemized cleanliness"). This means operating in a "systemized cleanliness"). This means operating in a consistent and standardized fashion. Everyone knows consistent and standardized fashion. Everyone knows exactly what his or her responsibilities are. In part this exactly what his or her responsibilities are. In part this follows from Seiton where the order of a workplace should follows from Seiton where the order of a workplace should reflect the process of work, these imply standardised work reflect the process of work, these imply standardised work practice and workstation layout. practice and workstation layout.

ShitsukeShitsuke: Sustaining. Refers to maintaining and reviewing : Sustaining. Refers to maintaining and reviewing standards. Once the previous 4S's have been established standards. Once the previous 4S's have been established they become the new way to operate. Maintain the focus on they become the new way to operate. Maintain the focus on this new way of operating, and do not allow a gradual this new way of operating, and do not allow a gradual decline back to the old ways of operating. However, when an decline back to the old ways of operating. However, when an issue arises such as a suggested improvement or a new way issue arises such as a suggested improvement or a new way of working, or a new tool, or a new output requirement then of working, or a new tool, or a new output requirement then a review of the first 4S's is appropriate. a review of the first 4S's is appropriate.