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MGMT 314 Tutorial 2

Lincy Varghese

Victoria Management School

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Sustainable StrategyThe firms strategydescribes how it will create an

sustain value for its current shareholdersShareholders individuals or companies that legally

own one or more shares of stock in the companyStakeholders individuals or organizations who are

directly or indirectly influenced by the actions of the firAdding a sustainabilityrequirement means

meeting value goals without compromising theability of future generations to meet their own

needsTriple bottom line evaluating the firm against

social, economic, and environmental criteria

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Different competitive factors imply different performanceobjectives

Competitive factors

If the customers value these

Performance objectives

Then, the operations will need toexcel at these

Low price Cost

High quality Quality

Fast delivery Speed

Reliable delivery Dependability

Innovative products and

servicesFlexibility (products/services)

Wide range of products andservices

Flexibility (mix)

The ability to change the timing

or quantity of products andservices

Flexibility (volume and/or

delivery)

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Trade-Offs

Management must decide whichparameters of performance are criticaland concentrate resources on thosecharacteristics

For example, a firm that is focused onlow-cost production may not be capableof quickly introducing new products

Straddling seeking to match asuccessful competitor by addingfeatures, services, or technology toexisting activities

Often a risky strategy

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Order Winners and Order Qualifiers

Order qualifiers are those dimensions thatare necessary for a firms products to be

considered for purchase by customers

Features customers will not forego

Order winners are criteria used by

customers to differentiate the products and

services of one firm from those of other firms Features that customers use to determine

which product to ultimately purchase

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INDUSTRYCLOCKSPEEDISACOMPOSITE:OFPRODUCT,PROCESS,ANDORGANIZATIONAL

CLOCKSPEEDS

WhatDrivesClockspeeds?

Technology/innovationpush,customerpull,

systemcomplexity,andregulation

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SOFTWARE

APPLICATIONS

fastclockspeed

SERVICES

38

Mobile Phone System CLOCKSPEED is a mix ofTransmission Standards, Software and Handsets

MobilePhoneSystem

TRANSMISSION

STANDARD

slowclockspeed HANDSET

mediumclockspeed

OPERATING

SYSTEM fastclockspeed

slowclockspeed

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Responding to industrystructure dynamics

From

vertical /integral

to

Horizontal/modular

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Operations strategy must reflect four perspectives top-down,

bottom-up, market requirements, and operations resources

Top-down

Bottom-up

Corporate strategy

Business strategy

Emergent sense ofwhat the strategy

should be

Operationalexperience

Operations

resources

Capacity

Supply networksProcess technology

Development and

organisation

Marketrequirements

Quality

SpeedDependability

Flexibility

Cost

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What you

HAVE

in terms ofoperationscapabilities

What you

NEED

to competein the market

Operations

resources

Market

requirements

What you

WANT

from youroperations to

help youcompete

What you

DO

to maintainyour

capabilitiesand satisfy

markets

Strategicreconciliation

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Operations strategy is the strategic

reconciliation of market requirements with

operations resources

Tangible andintangibleresources

Operationscapabilities

Operationsprocesses

Operationsstrategy

decision areas

Customerneeds

Marketpositioning

Competitorsactions

Performanceobjectives

Understandingresources

and processes

Strategic decisionsCapacitySupply networksProcess

technologyDevelopment and

organisation

Required performanceQuality

SpeedDependabilityFlexibilityCost

Understandingmarkets

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Performanceobjectiv

es

Quality

Speed

Dependability

Flexibility

Cost

Developmentandorganisation

CapacitySupply

network

Process

technology

Decision areas

M

arketcompetitiveness

The operations strategy matrix

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Assessing Risk

All strategies have an inherent level of riskUncertainty in the environment causes supply

chain planners to evaluate the relative riskinessof their strategies

Supply chain risk is the likelihood of adisruption that would impact the ability of acompany to continuously supply products orservices

Supply chain coordination risks are associatedwith the day-to-day management of the supplychain

Disruption risks are caused by natural ormanmade disasters

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Risk Management Framework and

Risk Mitigation Strategies

1. Identify the sources of potential

disruptions.

2. Assess the potential impact of the risk.

3. Develop plans to mitigate the risk

Risk Risk Mitigation Strategy

Natural disaster Contingency planning (alternatesites, etc.), insurance

Country risks Hedge currency, produce/sourcelocally

Supplier failures Multiple suppliers

Logistics failure Safety stock, detailed tracking,and alternate suppliers

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Tutorial Exercise

Are RIMs Days Numbered ?