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Process View & Strategy Part 2- Competitive Space and Strategy Based on the Book: Managing Business Process Flow. PowerPoint Presentation
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Process View & Strategy Part 2- Competitive Space and Strategy Based on the Book: Managing Business Process Flow. Competitive Product Space: PQVR/CQFF. Quality. Quality. Quality. Quality. Quality. Cost Efficiency =1/Cost . Variety . Cost . Responsiveness =1/Flow Time . Flow Time . D.

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Process View& StrategyPart 2- Competitive Space and StrategyBased on the Book: Managing Business Process Flow.

competitive product space pqvr cqff
Competitive Product Space: PQVR/CQFF

Quality

Quality

Quality

Quality

Quality

Cost Efficiency =1/Cost

Variety

Cost

Responsiveness =1/Flow Time

Flow Time

D

B

D

D

D

A

A

D

B

A

H

H

H

H

H

C

A

C

C

B

B

A

B

C

C

Competitive Product Space: A for dimensional space representation of the Product Attributes PQVR or Process Competencies CQFT.

Moving outward is better.

H

H

H

H

H

L

L

L

L

L

competitive product space
Competitive Product Space

Variety

B

A

Low

Cost Efficiency =1/Cost

High

Another firm: expensive and customized products.

One firm: low cost and standardized products

Low

High

strategic positioning
Strategic Positioning

Responsiveness

B

A

Low

High

Price Efficiency = 1/Price

Defines those positions that the firm wants to occupy in its competitive product space. The current position and direction.

A firm must ensure that its competitors are not able to imitate its chosen position. A sculpture, not a block.

High

It is harder for competitors to imitate an array of interlocked activities.

Low

what is the best strategy
What is the Best Strategy

Zara: timely yet limited variety at modest cost and quality.

Aravind and Shouldice: low cost, high quality, minimal variety, average to long response time.

Corolla: flow shop, decentralized assembly plants close to market, short flow time, low cost.

Ferrari: job shop, only a single plant in Italy, longer flow time, high cost.

McMaster-Carr: a materials, repair, and operations (MRO) product distributor, a process with high flexibility, high quality, short response time, but at a high price

WalMart: Short flow times, low inventory, low cost, average quality.

focused strategy efficient frontier
Focused Strategy, Efficient Frontier

World-class

Emergency Room

Efficient frontier

One general

Responsiveness

facility

World-class

(non-emergency)

Hospital

Cost

Efficient frontier: the minimal curve covering all the current positions in an industry.

High

Low

High

Low

focused strategy focused operations
Focused Strategy, Focused Operations

Focused Strategy: Committing to a limited, congruent set of objectives in terms of demand (product, market) and supply (input, technologies, and volumes).

A focused process is not limited to a few products.

Focused process: one whose products all fall within a small region of the 4 dimensional product space.

Plant Within Plant(PWP):The business strategy is diverse. But the entire business is divided into several mini-plants each with focused processes. One PWP may focus on low cost, the other on quick response.

strategic positioning and operational effectiveness
Strategic Positioning and Operational Effectiveness

A

B

Responsiveness

C

High

Price Efficiency

Low

Firms located on the same ray share strategic priorities. World class firms are on the efficient frontier. Efficient frontier is the minimal curve covering all the current positions in an industry.

Strategic positioning: the direction of the improvement from current position; the position on the EF the company wants to occupy.

Efficient operations

frontier

Firms not on the EF, are not on strict trade-off, they can make simultaneous improvement on more than one dimension. They do not need to trade-off. Firms on EF need to trade-off.

High

Low

efficient frontier
Efficient Frontier

Trade-off:decreasing on one dimension to increase on the other dimension. World class firms also try to push the EF outward. As technology and management practices advance, the EF moves upward. But the impact is not the same in all industries.

If I have one more line to define Operations Management  Understand Trade-off.

Different companies intentionally choose different processes to accomplish the same goal. McDonald vs. In & Out.

Different processes lead to different advantages and disadvantages. We always facing trade-offs.

It is not difficult to deliver books very fast. It is not difficult to deliver books at a very low cost. But, it is difficult to deliver book fast and at a low cost.

operational effectiveness
Operational Effectiveness

Operational effectiveness: developing operations strategy (resources, processes, values, competencies) that support the strategic positioning (customer value proposition) better than the competitors.

How does effective differ from efficient?

Conventional Management Definition: Effectiveness; doing right things.Efficiency; doing thingsright.

Operations Management Definition:

Cost Efficiency: achieving an output with minimal level of input and resources. Low cost Operations.

Effective Process: supports execution of company’s strategy in the four dimensions of C/Q/F/T. Synchronized process does good in all 4 dimensions.