Coursera VCAP

Value proposition (financial, customer based): Provide a free (financial), flexible

(customer), online study platform containing content created by top professors from across
the globe.

Competencies (cost, time, quality, variety): They should be and are good at bringing
professors from top universities across the globe to one platform, and create content in
collaboration with them, which can then be accessed by subscribing students for free;

Assets (size, time, type, location): Internal labor resources who work with the
universities, market to students, and create the course materials. IT structure and
development, Infrastructure (buildings, IT), Engineers, administrative staff, finance,
knowledge from top world universities, their professors, discussions forums; IT platform
supported by Amazon Web services and its employees managing the platform.

Processes (supply, technology, demand innovation, risk): Outsourced - The professors

are not assets of Coursera and Amazon runs the services and provides storage (none of
which are assets); Course content creation/ planning/ translation; provide a platform
between universities and students (and even students/students, university/university).
Grading is also peer review by the community and outsourced.

Harley Flexibility to produce any product anywhere

Advantages:

Prevention in overstocking / inventory buildup

Some cost savings (labor, PPE, etc.) per plant?
Flexible resources pool demand risk and need less safety capacity. This also enables
them to exercise their real switching option to maximize profit. They reduce the
expected mismatch cost and thus add value. They also mitigate financial risk: profit
variability is reduced.

Disadvantages:

Slow responsiveness to orders across geographies lost sales opportunity

It generally costs more due to less standardized processes

Cost Differential between the costs of two competitors

It is the sum of CS and COE

C = COE + CS + CV,US - CV,RIVAL
CS - competitive strategy-driven cost differential; the cost difference inherent in the
way each company chooses to compete.
COE - operational efficiency-driven cost differential; the remainder of cost differential
after controlling for volume and strategy. The larger this component, the larger
competitive threat the rival poses to us
CV - extra cost incurred by operating at less than strategically-targeted utilization
level because of spreading a fixed cost over fewer units

Leading Vs Lagging Strategy

Lead Strategy: adding capacity in anticipation of an increase in demand. It is an

aggressive strategy with the goal of luring customers away from the company's
 competitors by improving the service level and reducing lead time. It is also a
strategy aimed at reducing stockout costs. A large capacity does not necessarily
imply high inventory levels, but it can imply higher cycle stock costs. Excess capacity
can also be rented to other companies. Although a lead capacity strategy can be very
risky, particularly if demand is unpredictable or technology is evolving rapidly, there
are many advantages to it:
o It ensures that the organization has adequate capacity to meet all demand,
even during periods of high growth. This is especially important when the
availability of a product or service is crucial, as in the case of emergency care
or hot new product. For many new products, being late to market can mean
the difference between success and failure.
o It can be used to preempt competitors who might be planning to expand their
own capacity. Being the first in an area to open a large grocery or home
improvement store gives a retailer a define edge.
o Many businesses find that overbuilding in anticipation of increased usage is
cheaper and less disruptive than constantly making small increases in
capacity.
Lag strategy: adding capacity only after the organization is running at full capacity or
beyond due to increase in demand. This is a more conservative strategy and opposite
of a lead capacity strategy. Organization that follow this strategy often provide
mature, cost-sensitive products or services. It may result in the loss of possible
customers either by stockout or low service levels. Advantages:
o It decreases the risk of waste
o Reduced risk of overbuilding
o Greater productivity due to higher utilization levels, and
o The ability to put off large investments as long as possible.

Outsourcing Vs Vertical Integration

Outsourcing benefits:
o Access to Competencies
o Size and Location economies of scale and scope
o Reduced capital commitment, liberating balanced sheet
o Access to technologies / IPs
Vertical Integration
o Control over size, location and quality
o Reduces losses on account of hold up (fear of yielding bargaining power) and
double marginalization (two monopolists upstream and downstream in a value
chain) problems
o Brings down transaction cost incurred while managing sourcing external
relationships
o Protection of intellectual property
Feasible, necessary, in line with strategic priorities, desirable given our value
proposition, can we contract and manage suppliers and ongoing risk?

Offshoring disadvantages inflexible labor

Transportation costs
Lead times
 Risks
Quality, including health, environmental and CSR
Currency, IP, political, competitive
Domestic trade barriers
Global operations complexity and social implications
Foreign trade barriers

Offshoring advantages

Cost reductions
Proximity to local or new markets
Domestic labor market constraints
Operational hedge

Modularity -> Product:

o Key: Modularity allows separation between product design and manufacturing; and
thus also between product and process learning.
o High Modularity = Low Scope for Product Learning = High scope for separating /
outsourcing
o Low Modularity = High Scope for Product Learning = Low scope for separating /
outsourcing

Pros of Modularity:

1. Lower Capital Cost

2. Reduced Schedule Risk
3. Improved Quality and Safety
4. Minimal Impact on Operations
5. Potential for Standardization
Flexibility
o Scalability
o Handles uncertain growth plans
o Quick to deploy
Cost effectiveness
o Right-sized
o Low energy costs
o Simplified planning and engineering
Predictable
o Performance clearly established in advance
o Tested and validated designs

Cons of Modularity:

High Capex
Lack of customer centricity modularity designed to provide flexibility across
customer class
Coordination complexity
Supplier risk giving away too much info while sharing technical expertise to ensure
suppliers deliver according to new specifications and cost.
Low flexibility for any exceptions
High skilled labor cost to manage modularity effectively
 Pros of standardized modularity:

Two learning benefits of standardization:

1. Learning can focus on the process design and planning [learning before doing] in a
central location
2. Learning and improvement can be shared among locations. Other locations can help
out.
3. The standard provides the baseline for lean operations: any experiment now must
improve against the standard before rolling it out.
Two learning disadvantages of standardization:
1. Learning by doing is more difficult and constrained. [One solution is to allow for
controlled experiments, which is exactly the key of LEAN continuous improvement
that centers on standardized work.]
2. Localization or customization is constrained.

Simplification of design process

Rightsizing, add capacity with less disruption
Speed of deployment and commissioning
Pre-characterized performance
Pre-fabrication higher quality
Mixing of different types of modules (density, redundancy)
Simplified maintenance
Lower initial and lifecycle cost