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ARVIND SONI

1601016
PGDM A
IPE, HYDERABAD
PRODUCTION AND OPERATION MANAGEMENT
ASSIGNMENT 4&5
SERVICE SECTOR

STARBUCKS:
Starbucks Corporation is an American coffee company and coffeehouse
chain. Starbucks was founded in Seattle, Washington in 1971.The
coffeehouse chain, with its abundance of locations across the world, is
often credited with making the morning coffee run a key part of our
modern culture.

PRODUCT DESIGN:

Starbucks emphasizes premium design for its goods and services.


The premium character is linked to the companys broad differentiation
generic strategy, along with its premium pricing strategy.
Other firms, such as manufacturers, are also involved in the design of
some goods like Starbucks mugs.
Starbucks also uses the premium character in quality management.
The company carefully sources its coffee beans from coffee farmers who
comply with Starbucks quality standards.
The firm also prefers to buy coffee from farmers certified under the
Starbucks Coffee and Farmer Equity (CAFE) program.
PROCESS DESIGN:
Process and capacity efficiency is one of the contributors to Starbucks
success.
Starbucks optimizes capacity and capacity utilization by designing
processes to meet fluctuations in demand.
For example, processes at the firms cafs are flexible to adjust
personnel to a sudden increase in demand during peak hours.
For example, processes at the firms cafs are flexible to adjust
personnel to a sudden increase in demand during peak hours.

LAYOUT DESIGN:
Starbucks location strategy focuses on urban centers, especially those
with large middle and upper class populations.
Most of its cafs are in densely populated areas.
Starbucks occasionally uses strategic clustering of cafs in the same
geographic area to gain market share and drive competitors away.
Starbucks emphasizes areas with affluent consumers who could afford
its premium priced products.
It also supports a warm and friendly ambiance to match the companys
organizational culture.
This layout strategy does not maximize space utilization for tables and
seats because Starbucks focus is on premium customer experience,
which involves higher prices for more leg space in the cafs.
LOCATION STRATEGY:
Starbucks has stores in some of the most prime and strategic location
across the globe. They target premium, high-traffic, high-visibility
locations near a variety of settings, including downtown and suburban
retail centers, office buildings, university campuses, and in select rural
and off-highway locations across the world.10 This has earned them a
significant competence and advantage to be able to penetrate prime
markets and tap into customers convince factor. Their stores are visually
appealing and have a cool factor attached to it with being designed to
reflect the unique character of the neighborhood they serve in and
environmentally friendly. They provide free wifi, great music, great
service, warm atmosphere and provide an environment of community
meeting spot, which forms a wider part of the Starbucks Experience.
The main aim for the firm is to make their stores a third place besides
home and work

McDONALDS:
McDonald's is an American hamburger and fast food restaurant chain.
It was founded in 1940 as a barbecue restaurant operated by
Richard and Maurice McDonald.
PRODUCT DESIGN:
McDonalds goal in this strategic decision area of operations
management is to provide affordable products.
The serving sizes and prices of its products are based on the most
popular consumer expectations.
Some McDonalds products are minimized in size to make them more
affordable.
McDonalds uses a production line method to maintain product quality
consistency.

PROCESS DESIGN:
McDonalds process and capacity design is centered on efficiency for
cost-minimization that supports the companys strategies.
This strategic decision area of operations management focuses on
maintaining process efficiency and adequate capacity to fulfill market
demand.
At McDonalds, the production line method maximizes efficiency and
capacity utilization.
LAYOUT DESIGN:
McDonalds uses practicality for this decision area of operations
management.
McDonalds goal in this strategic decision area of operations
management is to establish locations for maximum market reach.
McDonalds marketing mix includes restaurants, kiosks, and the
companys website and mobile app as venues.
The strategy involves maximizing space utilization in restaurants and
kiosks, rather than focusing on comfort and spaciousness.

LOCATION STRATEGY:
McDonalds goal in this strategic decision area of operations
management is to establish locations for maximum market reach.
McDonalds marketing mix includes restaurants, kiosks, and the
companys website and mobile app as venues. Through these
locations/venues, McDonalds reaches customers in traditional and
online ways.

MICROSOFT
PROCESS DESIGN:
In this strategic decision area, companies focus on resources and
standards applicable to production processes. In Microsofts case,
operations management relies on extensive automation to optimize
capacity and processes. For example, in computer hardware production,
the company automates production capacity allocation to minimize
productivity bottlenecks. On the other hand, for software production,
Microsofts operations managers streamline process design to reduce
errors and increase operational efficiency in correcting software
development issues.
LOCATION STRATEGY:
Proximity and access to resources, markets and supply chains are
considered in this strategic decision area of operations management. In
software development and distribution, Microsoft Corporation focuses
mainly on human resource productivity within its corporate facilities.
The companys computer software products are easily distributed to
target markets through the Internet. However, for hardware products
like the Xbox, Microsoft must ensure nearness and accessibility to target
markets around the world. For example, the company maintains
business partners, such as authorized sellers. In addition, the firm adds
more distribution channels by increasing the number of its Microsoft
Store locations worldwide. Thus, Microsofts operations management
approach in this strategic decision area involves a combination of virtual
and physical locations to reach markets and maximize resource
accessibility. These operational strategies are also reflected in the place
element of Microsofts marketing mix .

LAYOUT DESIGN:
Operations management optimizes resources in this strategic decision
area for the purpose of achieving efficient movement of human
resources, information, and materials. Microsofts layout design
integrates advanced computing technologies to facilitate such efficiency.
For example, efficient movement of information is achieved through
network technology, such as online computers in the workplace. On the
other hand, efficient movement of materials is supported through
Microsofts automation of production processes. Business partners are
also provided with technological solutions to achieve operational
efficiency and high productivity. Microsofts operations management
also uses innovative layouts for ease of employee movement throughout
its facilities.
PRODUCT BASED
IKEA:
IKEA is a worldwide furniture store popular for its build it yourself
furniture. IKEA was named after the founders initials, Ingvar
Kamprad, and the first letter of his farm and village, Elmtaryd and
Agunnaryd. Kamprad began selling furniture in 1947 with the intention
of selling it for a very low cost for more people to be able to buy
(Edmonds). Currently, IKEA is mostly focusing on its sustainable design
rather than the actually do-it-yourself furniture design.
Here we will take their furniture as the product and will discuss about
their product design, process design and layout.

PRODUCT DESIGN:
Products are generally inexpensive and easy to put together.
They focuses on consumer needs before designing a product.
The design of home furnishing products at IKEA starts with an
understanding of peoples everyday needs at home, especially the needs
of the majority of people, who have limited incomes and limited living
spaces.
This is how IKEA succeeds in offering well-designed, functional
products at prices so low that most people can afford them.
They always find the smartest way to do something so that it can be flat-
packed and minimize waste of space when transporting.
IKEA doesn't sell anyone else's products: almost everything is designed
in-house.
In order to make products sellable and right for the IKEA identity,
IKEA co-workers in product design and product development focus on
price and quality, design and function, environment and health.
They scrutinize every product idea with regard to the best use of raw
materials and manufacturing opportunities. This is why elements of the
design are often decided on the factory floor, where designers and
manufacturers work together.
IKEA uses a tool called the e-Wheel to analyze the four stages of a
products life cycle, which includes resource extractions, production,
use, and recycling/end-of-life. It helps evaluate the environmental
impact of the products they are supplying and keep track of the use of
raw material

PROCESS DESIGN:
All of the production and packaging is also done in-house, so any section
of the process can be altered at any time to make it more cost effective.
IKEA puts a price tag for their product first. The designer has to meet
the goal of staying within the budget and calculate that the selling the
product will gain enough to profit.
Ikea invented flat-packed furniture more than 50 years ago after a
product designer was having difficulty storing a table in his car and
came up with idea of taking the legs off.
IKEA applies Six-sigma at their plant. Six sigma refers to a metric used
for measuring defects as well as improving quality.
IKEA uses the DMAIC (define, measure, analyze, improve and control)
methodology as a practical implementation of the six sigma approach to
facilitate product improvement process.
They applies lean operation also. The primary goal of lean tactics is to
offer the perfect customer value using a value creation process
characterized by a zero waste.
Process Re-Engineering at IKEA: Process re-engineering ensures that
the business processes of an organization are fragmented further in sub-
tasks and sub-processes that are undertaken by numerous functional
units found within the organization.
The use of Enterprise Resource Planning (ERP) is also another practical
example of the use of process re-engineering at IKEA.

LAYOUT DESIGN:
IKEA places a lot of emphasis on its customers convenience, who are
mostly young adults living in cities.
Most of IKEA stores are often located at the heart of a city to facilitate
accessibility using public transport because the customer may not be
owning a car and that IKEA focuses on environmental conservation.
the store location is often found in the middle of several apartments and
condominium communities and surrounded by shopping centers.
IKEA stores combine both a warehouse and a showroom.
The store is designed in a manner that it facilitates smooth flow from the
parking, walking in the store, placing an order, picking the goods, and
lastly making payments.
A number of facilities have been integrated within IKEA stores in order
to persuade consumers to stay longer; for instance, there is a childrens
play area that is supervised, a parent and baby room, small cinemas,
and cafes and restaurants.

LOCATION STRATEGY:
In Europe and the US, where most customers use personal vehicles,
IKEA stores are usually located in the suburbs. InChina, however, most
customers use public transportation. So the company set up its outlets
on the outskirts of cities which are connected by rail and metro
networks.
TESLA MOTORS
PROCESS DESIGN:
This operations management decision area focuses on business
processes, along with related investments, standards, and resources.
Tesla Motors, Inc. integrates automation for this concern. For example,
the company has automated manufacturing processes combined with
human intervention. This condition helps Tesla achieve high
productivity through operational efficiency in the automotive business.

LOCATION STRATEGY:
Logistics and nearness to markets, resources and suppliers are
considered in this strategic decision area of operations management. In
terms of resources, Teslas operations managers utilize its global reach.
For example, suppliers like Panasonic provide materials necessary for
manufacturing electric automobiles. Teslas marketing mix also involves
company-owned stores and galleries in malls and other key locations to
maximize sales personnel productivity and access to the target market.
Layout Design and Strategy.
In this strategic decision area, operations management is concerned with
achieving optimal flow of resources and information. In Teslas case,
layouts are designed to maximize capacity utilization of facilities,
especially buildings used for manufacturing electric vehicles. Also, the
company employs advanced computing and networking technologies for
internal communications. These approaches increase productivity in
Teslas operations.

FORD MOTOR
PROCESS DESIGN:
This strategic decision area of operations management supports
production goals. Ford pioneered the assembly line method, which
maximizes production capacity. Also, Ford continues to improve its
capacity by developing new facilities for its production network and
supply chain.

LOCATION STRATEGY:
Ford Motor Companys aim in this strategic decision area of operations
management is to ensure strategic benefits of its facility locations. The
companys strategy involves regional production facilities, such as the
Ford factories in Germany. On the other hand, dealership locations are
based on market size.

LAYOUT DESIGN:
In this strategic decision area of operations management, the objective is
to maximize efficiency of workflows and resources. Ford addresses this
objective through automation of production processes, such as through
the use of robotics in production facilities.