Module 01: Operations Strategy Operations Strategy Operations Management as a Competitive Weapon Module 1: Operations Strategy

Module 01: Operations Strategy OM Course Framework Manufacturing Design & Selection Process Analysis Operations Strategy Strategic Issues Aggregate Planning Inventory Location Capacity Tactical Issues TOC JIT MRP Operational Issues This course deals with the management of ‘processes.’ Applies to: For-profit and non-profit organizations Service and manufacturing organizations Module 01: Operations Strategy

Module 01: Operations Strategy Learning Objectives At the end of this module, each student will be able to: Evaluate the strategic process of any org. Explain competitive dimensions Understand marketing-operations link Identify some basic business strategies Module 01: Operations Strategy

Module 01: Operations Strategy 1. Strategic Process Mission Business Strategy: Action plan to achieve mission How are we going to get there Note: Functional areas have their own strategies which supports overall business strategy Module 01: Operations Strategy

Module 01: Operations Strategy Mission Examples 1. Levi Strauss 2. Motorola 3. Intel 4. Ritz Carlton 5. Binney & Smith (Crayola) a. Colorful visual expression b. Ladies & gentlemen serving Ladies & gentlemen c. Branded casual apparel d. Building blocks to computer industry e. Total customer satisfaction 1 – c Clarify what business a company is in 2 – f 3 – d Reflect character of the company 4 – e Clarify what business a company is in 5 – b Reflect character of the company 6 – a Clarify what business a company is in Module 01: Operations Strategy

Module 01: Operations Strategy Strategic Process Mission Business Strategy Business Strategy: Action plan to achieve mission How are we going to get there Note: Functional areas have their own strategies which supports overall business strategy Marketing Strategy Operations Strategy Fin/Acct Strategy Module 01: Operations Strategy

Module 01: Operations Strategy Core Competencies Collective knowledge and skills an organization has that distinguish it from the competition. Typically centers on an organization’s ability to integrate a variety of specific technologies and skills in the development of new products and services. Core competencies: Distinctive competencies Core capabilities Module 01: Operations Strategy

Core Competencies (cont.) Module 01: Operations Strategy Core Competencies (cont.) Are basis on which new products are developed. Better to think of organization in terms of its portfolio of core competencies than as a portfolio of products. Identifying and developing core competencies is one of top management’s most important roles. Module 01: Operations Strategy

Examples of Core Competencies Module 01: Operations Strategy Examples of Core Competencies Sony - miniaturization 3M - knowledge of substrates, coatings and adhesives Black and Decker - small electrical motors and industrial design Honda - engines and power trains Module 01: Operations Strategy

Typical Use of Core Competencies Module 01: Operations Strategy Typical Use of Core Competencies Cannon Core competencies in optics, imaging, and electronic controls Products include copiers, laser printers, cameras, and image scanners. Boeing Integrating large scale systems Commercial jetliners, space stations, missiles Module 01: Operations Strategy

Core Competencies Characteristics Module 01: Operations Strategy Core Competencies Characteristics Used to gain access to a variety of markets Should be strongly related to key benefits provides by products or services Should be difficult to imitate Module 01: Operations Strategy

Total Strategic Process Module 01: Operations Strategy Total Strategic Process Core competencies affect achieve competitive advantage Company Mission Business Strategy Marketing Operations Fin./Acct. Module 01: Operations Strategy

2. Competitive Dimensions Module 01: Operations Strategy 2. Competitive Dimensions Cost Quality High performance design (Lexus) Consistency (Coke) Dependability Rapid (Domino’s Pizza) On-time (Federal Express) Flexibility Variety (Emergency room) Volume (Supermarkets) Module 01: Operations Strategy

3. Marketing-Operations Link Module 01: Operations Strategy 3. Marketing-Operations Link OM Marketing Produce goods and services Investigate demand; establish dist. chain Costs Price Schedule Delivery promise Flexibility Number of models High quality Repeat sales Module 01: Operations Strategy

Marketing-Operations Link (cont.) Module 01: Operations Strategy Marketing-Operations Link (cont.) Order qualifier Order winner Order Qualifiers Screening criteria that permits a firm’s products/services to be considered as a possible candidates for purchase 1970s – Japanese (price) Order Winners Criterion that differentiates the products/services of one firm from another 1970s – Japanese (quality) Module 01: Operations Strategy

4. First-to-Market Strategy Products available before competition Strong applied research capability needed Can set high price to skim market or set lower price to gain market share Module 01: Operations Strategy

Second-to-Market Strategy Quick imitation of first-to-market companies Less emphasis on applied research and more emphasis on development Learn from first-to-market’s mistakes Module 01: Operations Strategy

Late-to-Market Strategy Wait until market becomes standardized and large volumes demanded Compete on basis of costs instead of product features Research efforts focus on process development versus product development Module 01: Operations Strategy