operations value chain firm infrastructure inbound logistics outbound logistics marketing &...
TRANSCRIPT
Operations
Value Chain
Firm infrastructure
Inbound logistics
Outbound logistics
Marketing & sales Service
Procurement
Technology development
Human resource managementSupportActivities
Marg
in
Primary Activities
Strategy What should they do?
Operational Managers and Staff
“DOING”
Gather and report information
Incorporate plans into operations
Understand/support the strategy
Participate in implementation planning
Contribute to development/review
Chief Executive and Senior Managers
“TARGETING”
Own, articulate and “sell” strategy
Plan and manage implementation
Develop and recommend alternatives
Maintain, amend, review strategic plans
Identify and evaluate new directions
The Board of Directors
“POSITIONING”
Consider, review and authorise
Monitor implementation
Set vision, values and key policies
Assess alternatives and evaluate risk
Suggest or initiate new directions
Strategy How might they do that?
Operational Managers and Staff
“DOING”
Routine reporting and analysis
Routine operational management
Maintain awareness, identify issues
Help check relevance and feasibility
Develop new ideas and proposals
Chief Executive and Senior Managers
“TARGETING”
Apply their skills/experience
Link strategy with business plans
Analyse environment, set objectives
Monitor and respond to progress
Generate ideas internally/externally
The Board of Directors
“POSITIONING”
Receive reports, debate, decide
Agree on objectives and measures
Workshop, test and challenge
Apply broader context and experience
Seek external views and reviews
Strategy Responsible for?
Operational Managers and Staff
“DOING”
Info accuracy and completeness
Achieving controllable goals
Aligning activities with strategy
Anticipating problems/opportunities
Adding value in the agreed ways
Chief Executive and Senior Managers
“TARGETING”
Clarity, coherence, relevance
Defined goals/accountabilities
Translation into effective tactics
Tuning and tacking appropriately
Leading creativity and innovation
The Board of Directors
“POSITIONING”
Maximising “shareholder value”
Strategic success or failure
Making accountability effective
Taking the wider and longer view
Appropriate organisational culture
Board Functions Matrix
Key Result Areas (KRAs) Suggested % of board time dedicated
to Key Result Areas
Strategy and Direction 40%
Key Projects & Communication 20%
Risk Management & Compliance 15%
Key Performance / Predictive Indicator (KPI) 15%
Knowledge, Skills & Experience Mix 10%
Political• Government stability• Taxation and trading policy• Foreign trade regulations• Social welfare policies regulatory bodies and processes
Economic factors• Business cycles• GMP trends• Interest rates• Money supply• Inflation• Unemployment• Disposable income
Sociocultural factors• Population demographics• Income distribution• Social mobility• Lifestyle changes• Attitudes to work and leisure• Consumerism• Levels of education
The Organisation
Technological• Government spending on research and development• Government and industry focus on technological effort• New discoveries/developments• Speed of technology transfer• Intellectual property issues
Environmental• Environmental protection laws• Waste disposal• Energy consumption• Carbon trading
Legal• Competition law• Employment law• Health and Safety• Product safety
BCG Product Portfolio Matrix Reallocates Resources
High
Growth
Low
Low HighMarket Share
Question Mark
Dogs
Stars
CashCow
Keep investing in thisHas high performance and high potentialStar
Use the money generated for stars and question marks
Cash cow has high current market share and usually cash flow associated with it but is not likely to grow in the future
Cash Cow
Exit this businessHas low current performance and low potentialPet
Use resource to build into a starHas low current performance but high potentialQuestion Mark
How Resources Should be MovedDescriptionType of Business
Don’t forget strategic alignment
The aim of any good strategy is to first set the strategic direction and then ensure that all the other nine dimensions are aligned so that they are pushing in the same direction. If any of the dimensions
are not aligned they will become barriers.
ProcessStructure
MotivationStructure
OrganisationalCulture
TechnologyStructure
MeasurementSystems
PoliticalPower
OrganisationalStructure
ManagementMethods
IndividualBeliefs
StrategicDirection
More concrete,Easier to change
More difficult to change,
Less concrete
Balanced Scorecard
• Makes strategy operational• Focuses organisation on breakthrough performance• Integrates corporate programmes• Can be broken down into lower levels• Links KPIs to strategy• Facilitates strategic feedback and learning
Balanced Scorecard - BSC
Financial
Processes
Customer LearningStrategy
BSC example of common measures
Financial• EVA• ROI• Net income
Internal Processes• R & D expenditure• Sales from new products• Productivity
Learning and Growth• Employee satisfaction• Dollars spent on training• Voluntary turnover
Customer• Customer satisfaction
survey• Customer loyalty• Customer retention
How to construct a balanced scorecard1. Establish objectives
2. Decide who will be involved in the development process
3. Decide on the organisation unit to which the scorecard will apply
4. Decide on the structure• Review existing measures to see if can be turned into KPIs• Develop additional KPIs• Relate all KPIs back to original objective
5. Finalise the scorecard
Three types of performance measures• Key result indicators
Tells you what you have done
• Performance Indicators
Tell you what to do
• Key Performance Indicators
Tell you what to do to increase performance dramatically
FINANCIAL
CUSTOMER / MARKETING
INTERNAL PROCESSES
LEARNING & GROWTH
THISMTHLASTMTHTARGET
0.0
2.5
5.0
7.5
10.0
FINANCIAL CUSTOMER /MARKETING
INTERNALPROCESSES
LEARNING & GROWTH