Operations

Management

Operations Strategy for

Competitive Advantage
in a Global
Environment
 Reasons to Globalize

♦ Reduce costs (labor, taxes, tariffs)

♦ Improve supply chain
♦ Provide better goods and services
♦ HLL’s Wheel in response to Nirma
♦ Understand markets
♦ Learn to improve operations
♦ Attract and retain global talent
 Vision and Mission

♦ Vision – The ♦ Mission – What

ultimate result of an org. does, its
action action.
♦ What an org. ♦ Provides

would like to boundaries &

happen as a focus
result of the ♦ More functional in

action that it nature dealing

does. with pricing,
quality, market
place and other
items of the value
 Vision and Mission of a
hospital

♦ To make the denizens of kathmandu

healthier

♦ To provide a healing environment with

family-cantered care with compassion,
comfort and respect with best possible
medical facilities available.
 Mission/Strategy

♦ Strategy - how you are going to get

there; the action plan to achieve the
mission
♦ The answer to the third intrinsic
question:
♦ Where are we?
♦ Where do we want to be?
♦ How to achieve?
 Mission of OM
Departments
♦ Product Design: To Design products with superb quality
and inherent customer value.

♦ Quality: To be consistent with quality in every single

aspect of production, right from design, procurement,
production etc.

♦ Process Design: To determine and design production

process compatible with low cost, high quality product.
 Continued

♦ Location selection: To locate, design, efficient and economical

facilities that will yield high values to the company.

♦ Layout: To achieve production effectiveness and efficiency while

supporting a high quality of work.

♦ Human Resources: To provide a good quality of work

atmosphere, well designed, safe rewarding jobs, stable
employment, equitable pay in exchange for outstanding
individual contribution from employees at all levels.
 Continued

♦ Supply Chain: To collaborate with suppliers to develop

innovative products from stable, efficient and effective
sources of supply.

♦ Inventory: To achieve low investments in inventory

consistent with high facility utilizations.

♦ Maintenance: To achieve high utilization of facilities and

equipment by effective preventive maintenance and
prompt repair of facilities and equipment
 Strategy

♦ Action plan to
achieve mission
♦ Company has a
business strategy
♦ Functional areas
have strategies to
exploit
opportunities and
strengths,
neutralize threats
and avoid
 Strategy Process
Vision &
Mission

Business
Strategy

Functional
Functional Area
Area
Strategies

Marketing Operations Fin./Acct.

Decisions Decisions Decisions

L3 –
 Strategies & Competitive
Advantage
♦ Ability of the firm to outperform its industry
i.e. to earn a high rate of profit than the
industry norm
♦ Competitive advantage: The creation of a
unique advantage over others
♦ To achieve a competitive advantage, a firm
must create more value than its competitors
♦ Differentiation
♦ Cost leadership
♦ Quick response
 Competing on
Differentiation
♦ Create unique bundles of products/services that will be
highly valued by customers
♦ Differentiation should be thought of going beyond the
physical characteristics and service attributes to
encompass everything about the product or service that
will influence the potential customer.
♦ Experience Differentiation: selling experience
Eg.; Disney does this where people get immersed
surrounded by a dynamic visual and sound experience
♦Can encompass everything related to
product or service that influences
value
♦Broad Product Line
♦Product features
♦Product Services
♦Status Symbol

♦Technical Innovation
 Competing on Cost
♦ Maximize value as defined by customers

♦ Does not mean low quality

♦ Establishing a low cost position relative to

competitors through
♦ Optimum utilization of resources
♦ Economies of scale
♦ Coverage of variable costs and a lesser proportion
of fixed costs (Dumping by the Chinese)
 Competing on
Response
♦ Including the values related to timely product
development and delivery, as well as reliable
scheduling and flexible performance.
♦ Flexibility – ability to match changes in marketplace.
Volumes and Designs changes
♦ Reliability – scheduling. Communicated to the
customer so that he/she can rely on.
♦ Timeliness – design, production, delivery
 OM’s Contribution to
Strategy
Operatio Specific Competi
ns Exampl Strategy tive
Decision es Used Advanta
Quality
s FLEXIBILITY ge
Sony’s constant innovation of new productsDesign
Product
HP’s ability to follow the laptop market Volume

Process Southwest Airlines No-frills service LOW COST

Location DELIVERY
Pizza Hut’s five-minute guarantee at lunchtimeSpeed
Layout Federal Express’s “absolutely, positively on Dependability
time” Differentiation
(Better)
Human QUALITY
Conformance
Motorola’s automotive products ignition systems Respons
Resource Cost e
Spice Nepal’s network Performance leadership (Faster)
Supply Chain (Cheaper)

IBM’s after-sale service on mainframe computers

Inventory AFTER-SALE SERVICE

Fidelity Security’s broad line of mutual BROAD

funds PRODUCT LINE
Scheduling

Maintenance