Chap 4
Chap 4
Chap 4
OM
4
Operations
Strategy
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website, in whole or in part.
LEARNING OUTCOMES
1 Explain how organizations seek to gain
competitive advantage
2 Explain approaches for understanding
customer wants and needs
3 Describe how customers evaluate goods
and services
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Competitive Advantage
Firms ability to achieve market
and financial superiority over its
competitors
Requires:
- Understanding customer needs and
expectations
- Building and leveraging operational
capabilities to support desired
competitive priorities
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Exhib
it
4.1
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Competitive Priorities
Strategic emphasis that a firm
places on certain performance
measures and operational
capabilities within a value chain
Types
- Cost
- Quality
- Time
- Flexibility
- Innovation
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Cost
Each industry has a low price market
segment
Low cost results from:
High productivity
High capacity utilization
Economies of scale
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Quality
Businesses offering premium
quality goods have large market
shares and were early entrants into
the markets
Positively and significantly related
to a higher return on investment
for all kinds of market situations
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Quality
Strategy of quality improvement
leads to increased market share
High goods quality producers can
charge premium prices
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Exhib
it
4.2
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Time
Important source of competitive
advantage
Customers demand quick response,
short waiting times, and consistency
in performance
Speeding up work processes
improves customer response
Deliveries can be made faster and
on-time
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Time
Reductions:
Accomplished only by streamlining
and simplifying processes and value
chains
- To eliminate non-value-added steps
such as rework and waiting time
Drive improvements in quality, cost,
and productivity
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Flexibility
Success in global markets requires
design and demand flexibility
Visible in mass customization
strategies
Mass customization: Ability to make
goods and services that the customer
requires at any:
- Volume
- Time for anybody, and for a global
organization
- Place in the world
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Innovation
Discovery and practical application
or commercialization of a device,
method, or idea that differs from
existing norms
Innovative companies focus on:
- Outstanding product research,
design, and development
- High product quality
- Ability to modify production facilities
to produce new products frequently
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Strategic Planning
Process of determining long-term
goals, policies, and plans for an
organization
Objective - Build a strong position for
the organization to achieve its goals
despite unforeseen external forces
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Levels of Strategy
Corporate strategy - Businesses in
which the corporation will
participate and develop plans for
the acquisition and allocation of
resources among those businesses
These businesses in which the firm
participates are called strategic
business units (SBUs)
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Levels of Strategy
Business strategy - Defines the
focus for SBUs
Major decisions involves:
- Pursuing the target markets
- Best way to compete in target
markets
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Levels of Strategy
Organization will decide on the
execution of its chosen business
strategies
Development - Translating competitive
priorities into operational capabilities
- By making variety of choices and
trade-offs for design and operating
decisions
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Sustainability
Organizational strategy in many
firms
Dimensions
Environmental
Social
Economic
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Workforce
Operating plans and control systems
Quality control
Organizational structure
Compensation systems
Learning and innovation systems
Support services
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Exhib
4.3
it
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Exhib
4.4
it
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Operations Strategy at
McDonalds
Vision - World's best quick service
restaurant experience
Worldwide strategies
- Be the best employer
- Deliver operational excellence
- Achieve enduring profitable growth
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Operations Strategy at
McDonalds
Sustainability initiatives
Build a sustainable McDonalds that
involves all facets of business
Commit to a three-pronged approach
- Reduce
- Reuse
- Recycle
Strive to provide eco-friendly
workplaces and restaurants
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Operations Strategy at
McDonalds
Sustainability initiatives
Work with suppliers and outside
experts to continuously improve:
- Purchasing decisions
- Evaluation of supplier performance
regarding animal welfare
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Exhib
4.5
it
McDonalds Customer
Benefit Package
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SUMMARY
Competitive advantage is required
to show the firms ability to
achieve superiority over
competitors
Customers perceive greater risks
when buying services than when
buying goods
Understanding competitive
priorities provides basis for
designing the process that create
and deliver goods and services
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SUMMARY
When an organization takes a
direction and the decisions on
competitive priorities are driven by
its strategy
Framework for operations strategy
is designed for goods-producing
organization and to be applied to
service-providing firms
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KEY TERMS
Competitive advantage
Competitive priorities
Credence attributes
Experience attributes
Infrastructure
Innovation
Mass customization
Operations design choices
Operations strategy
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KEY TERMS
Order qualifiers
Order winners
Search attributes
Strategy
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Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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