Operation Strategy & Competitiveness

1. Operation Strategy & Competitiveness Chapter #2

2. Relationship between Corporate Strategy & Operation Strategy Corporate Strategy Strategic Direction, Resources Organizational Process & Coordination to Produce Good & Services Operations Strategy

3. Corporate Strategy • Corporate Strategy consists of the decision made by the Top management regarding issues that effect the long-term survival and growth of the firm. • It describes the future course of action the firm needs to adopt for long term success. • Corporate strategy provides an overall direction that serves as the framework for carrying out all the organization's functions.

4. Operations Strategy • Specifies the means by which operations implements corporate strategy and helps build a customer-driven firm. • Operations strategy links long term and short term operations decisions to corporate strategy. • Operations strategy helps the firm to be competitive and to improve its performance and profitability.

5. Corporate Strategy • Environmental scanning • Core competencies • Core processes • Global strategies • Market Analysis • Market segmentation • Needs assessment • Competitive Priorities • Cost • Quality • Time • Flexibility • New Service/ • Product Development • Design • Analysis • Development • Full launch Performance Gap? No Yes Operations Strategy • Competitive Capabilities • Current • Needed • Planned • Decisions • Managing processes • Managing supply chains Operations strategy & Corporate strategy Figure 1.5

6. Please see page 50 (book-1)for details Formulating Corporate Strategy • Environmental scanning (SWOT) • Developing core competencies • Core competencies refer to unique resources and strengths that an organization’s management consider when formulating strategies. These competencies include: • Workforce • Facilities • Market and financial know-how • Systems and technologies • Developing core processes • Global strategies • Strategic Alliances

7. Market Analysis • Market Definition – STP decisions • Needs assessment • Service or product needs • Delivery system needs • Volume needs • Other needs

8. Competitive Priorities Please see page 53-56 (book-1)for details

9. Competitive Priorities

10. New Service/ProductDevelopment stages • Design • Analysis • Development • Full Launch Please see page 62 (book-1)for details

11. Operation Strategy (Example)

12. Operation Strategy at South West Airlines • Organizational processes: • Point-to-point route system rather than hub-and-spoke design used by others. • Service to 57 cities in 29 states with average trip of 500 miles • Operating costs kept low through the use of 737 aircrafts, and limited services (no meals). • Minimizing time span from landing to departure. • Operating business at very low costs. • Coordination of Activities • Simplification of functions • Coordination among various dept. to deliver on-time service. • Customer facilitation and easy access.

13. Operations Strategy at Zara Boutique • Organizational processes: • $2 billion company with 924 stores in 31 countries • Production of 12,000 apparel styles each year. • Each is available in store in four weeks. • Renews nearly half their stock every two weeks. • Have more than 200 designer and produce two third of it’s clothes in company-owned facility in Spain. • Hi-tech computer guided manufacturing and facilities. • Skills of unique design team. • Coordination of Activities • Cross functional coordination in new product development. • Short time span between idea and their transformation into stores.

14. Operations Strategy at Starbucks • Organizational processes: • More than10,000 store in 28 countries with average growth in profits is 30% per year. • Secrets is their operations & service strategy. • Supply of world famous coffee powder comes directly from Java, Indonesia through an effective supply chain. • Quality is maintained in all stores worldwide with standardized procedures and strong customer feed back system. • Wide range of products including a variety of exotic coffee, cappuccino, espresso as well as sandwiches, pastries, desserts even a music CDs of pop stars and internet facilities. • Services include order and payment via phone and Starbucks web site and automated espresso machines. • Company uses cluster store strategy in populated areas, e.g. there are 124 stores in just Manhattan area, New York.