osml2 - om strategy

8/13/2019 OSML2 - OM Strategy

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OPERATIONSMANAGEMENT

OPERATIONSSTRATEGYFORCOMPETITIVE ADVANTAGE


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SHOULDICEHOSPITAL

Located In Toronto Canada

World famous Hernia repair Hospital

Rate of infection, complications and recurrence is

less than 0.5% (12 times lower than competitors)

Average recovery time 4 days, half compared to

its competitors

Patients from 115 countries

Patients participation in all aspects Facilities designed to encourage exercise and

rapid recovery

Capacity properly planned7000 surgeries in 5

operating rooms and 89 beds Lifetime support through annual follow up


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MISSIONSTATEMENTOFFEDEX

FedEx will produce superior financial returns for

shareowners by providing high value-added supply

chain, transportation, business and related

information services through focused operatingcompanies. Customer requirements will be met in the

highest quality manner appropriate to each market

segment served. FedEx will strive to develop mutually

rewarding relationships with its employees, partnersand suppliers. Safety will be the first consideration in

all operations. Corporate activities will be conducted

to the highest ethical and professional standards.


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MISSIONSTATEMENT- THEWALT

DISNEYCOMPANY

The mission of The Walt Disney Company is to

be one of the world's leading producers andproviders of entertainment and information.

Using our portfolio of brands to differentiate our

content, services and consumer products, we

seek to develop the most creative, innovative andprofitable entertainment experiences and related

products in the world.


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MISSION

Mission - where are

you going?

Organizations purposefor being

Provides boundaries &

focus

Answers What do we

provide to society?


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FACTORSAFFECTINGMISSION

Mission

Philosophy &

Values

Profitability& GrowthEnvironment

Customers Public Image

Benefit to

Society


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MISSION/STRATEGY

Mission - where you are going

Strategy - how you are going to get there;

an action plan


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STRATEGY

Action plan to achieve

mission

Company has abusiness strategy

Functional areas have

strategies to exploit

opportunities andstrengths, neutralize

threats and avoid

weaknesses


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STRATEGYPROCESS

MarketingDecisions

OperationsDecisions

Fin./Acct.Decisions

CompanyMission

Business

Strategy

Functional AreaFunctional Area

Strategies


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STRATEGIES& COMPETITIVE

ADVANTAGE

Ability of the firm to outperform its industry

i.e. to earn a high rate of profit than the

industry norm

To achieve a competitive advantage, a firm

must create more value than its competitors

Differentiation

Cost leadership

Response


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COMPETINGONDIFFERENTIATION

Create uniquebundles ofproducts/services that will be high ly

valued by customers

Can encompass everything related to

product or service that influences value

Broad Product Line

Product features

Product Service

Experience differentiation


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COMPETITIVESERVICESTRATEGIES

(DIFFERENTIATION)

Making the Intangible Tangible

(memorable)

Customizing the Standard Product

Reducing Perceived Risk

Giving Attention to Personnel Training

Controlling Quality

Note: Differentiation in service means being

unique in brand image, technology use, features,

or reputation for customer service.

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COMPETINGONCOST

Maximize value as defined by customers

Does not mean low value or low quality

Establishing a low cost position relative to

competitors through

Optimum utilization of resources

Economies of scale


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COMPETITIVESERVICESTRATEGIES

(OVERALLCOSTLEADERSHIP)

Seeking Out Low-cost Customers

Standardizing a Custom Service

Reducing the Personal Element in Service

Delivery (promote self-service)

Reducing Network Costs (hub and spoke)

Taking Service Operations Off-line

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COMPETINGONRESPONSE

Flexibility - ability to match changes

Reliability - scheduling

Timeliness - design, production, delivery

Requires institutionalization within the firmof

the ability to respond


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COMPETITIVEENVIRONMENTOF

SERVICES

Relatively Low Overall Entry Barriers

Economies of Scale Limited

High Transportation Costs

Erratic Sales Fluctuations

No Power Dealing with Buyers or

Suppliers

Product Substitutions for Service

High Customer Loyalty

Exit Barriers


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WINNINGCUSTOMERSINTHE

MARKETPLACE

Service Qualifier: To be taken seriously a certain level

must be attained on the competitive dimension, as

defined by other market players. Examples are

cleanliness for a fast food restaurant or safe aircraft foran airline.

Service Winner: The competitive dimension used to

make the final choice among competitors. Example is

price.

Service Loser: Failure to deliver at or above the

expected level for a competitive dimension. Examples

are failure to repair auto (dependability), rude treatment

(personalization) or late delivery of package (speed).3-17


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ISSUESINOPERATIONSSTRATEGY

Research

Preconditions

Dynamics


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RESEARCHCHARACTERISTICSOF

HIGHROI ORGANIZATION

High product quality

High capacity utilization

High operating efficiency

Low investment intensity

Low direct cost per unit

From the PIMS program of the Strategic Planning Institute


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PRECONDITIONS

Strength and Weakness of competitors

Possibility of new entrants, substitute products and

commitment of suppliers and distributors Current and prospective environmental, technological

legal and economic issues

Product life cycle

Resources available within firm and OM functions Integration of OM strategy and company strategy


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DYNAMICS

Changes within the organizations

Changes in the environment


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STRATEGYDEVELOPMENTAND

IMPLEMENTATION

Understand issuesresearch, preconditions,

dynamics

Do a SWOT AnalysisForm a strategy for competitive advantage

Identify critical success factors and supporting

activities

Group activities into organizational structure

Build and staff the organization

S P L


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STAGESINTHEPRODUCTLIFE

CYCLE

Introduction

Growth

Maturity

Decline

Gro

wthrate

LCD TVLED TV Plasma TV Flat

screen

CRT TVs


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Best period to increase market share

R&D engineering are critical

Introduction Company

Strategy& Issues

Product design and development are critical

Frequent product and process design changes

Excess capacity

Short production runs

High production costs Utmost attention to quality

Quick elimination of market-revealed design

defects

OM

Strategy

& Issues

LIFE


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CompanyStrategy &

Issues

Practical to change prices or quality image

Marketing is critical

Strengthen niche

Growth

OM

Strategy& Issues

Forecasting is critical

Product and process reliability

Competitive product improvements andoptions

Shift toward product oriented process

Enhance distribution

LIFE


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CompanyStrategy &

Issues

Poor time to increase market share

Competitive costs become critical

Poor time to change price or quality

Defend position via fresh promotional and

distribution approaches

Maturity

OM

Strategy

& Issues

Standardization - Increasing stability of

manufacturing process

Less rapid product changes and more minor annualmodel changes

Optimum capacity

Long production runs

Re-examination of necessity of design changes

LIFE


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LIFE

CompanyStrategy &

Issues

Cost control critical to market share

Decline

OM

Strategy

& Issues

Little product differentiation

Cost minimization

Overcapacity in the industry Prune line to eliminate items not

returning a good margin

Reduce capacity


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CSFSOFMICROSOFT

It focuses on one businesssoftware

It thinks globallyoperates and sells

Senior management involved in productdevelopment process

It recruits and retains top people in its field

Emphasizes on speed to market

Activity Mapping: Southwest Airlines Low Cost


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y pp g

Competitive Advantage

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osml2 - om strategy

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