Oper Ati Ons St Rat Eg Y An D Comp

OPER ATI ONS ST RAT EG Y AN D COMP ETIT IV EN E SS Presented by: Abhishek Gupta Sagun Bajaj Priyanka Bakhshi

The Role of Business Strategy • Provides a plan (business strategy) making the best use of resources that: – Defines the long-range plan to compete in the marketplace – Helps to differentiate the firm from competitors – Provides a game plan upon which functional strategies are developed – Focuses on doing the “right tasks”

Business/Functional Strategy

Three Inputs to a Business Strategy

Corporate Strategy Focus: Survival Business Strategy Focus: Distinctive Competence Cost Leadership Product Differentiation Focus (cost or differentiation)

Operations Strategy Focus: Competitive Priorities Cost Flexibility Quality Delivery Capability Building

Implementation

Resources Process

Product

Structure

Infrastructure

Other Functional Strategies Marketing Finance Human Resources Engineering Information Systems

Policy Service-enhanced Product or Delivered Service

Satisfied Customer

Competitive Priorities- The Edge • Four Important Operations Questions: Will you compete on – Cost? Quality? Time? Flexibility? All of the above? Some? Tradeoffs?

Competing on Cost? • Offering products/services at a low price relative to competitors. – Typically high volume products – Often limit product range & offer little customization – May invest in automation to reduce unit costs – Can use lower skill labor – Probably use product focused layouts – Low cost should not mean low quality

Competing on Quality? • Quality is sometimes subjective • Quality may be defined differently by customers versus employees • Quality dimensions: – High performance design: • Superior features, high durability, & excellent customer service

– Product & service consistency: • Meets design specifications • Close tolerances • Error free delivery

• Quality issues to address: – Product design quality – products/services must meet requirements – Process quality will produce error-free products/services

Competing on Time? • Time is one of the most important competitive priorities • Being first-to-deliver often wins the race • Time –related issues: – Fast delivery: • Focused on shorter time between order placement and delivery

– On-time delivery: • Deliver product exactly when needed every time

– Rapid development speed • Using concurrent processes to shorten product development time

Competing on Flexibility? • The company’s environment often changes rapidly • Flexibility is needed to accommodate these changes – Product flexibility: • Easily switch production from one item to another • Easily customize product/service to meet specific requirements of a customer

– Volume flexibility: • Ability to ramp production up and down to match market demands

Are There Priority Tradeoffs? • •

Emphasize priorities that support the business strategy, which may require “trade-offs” Focus on “order qualifiers” and “order winners” – – – – – – – – – – –

•

Which priorities are “Order Qualifiers”? e.g. Must have excellent quality since everyone expects it Which priorities are “Order Winners”? e.g. Southwest Airlines competes on cost McDonald’s competes on consistency FedEx competes on speed Custom tailors compete on flexibility Can you have both high quality and low cost? e.g. Yes, Coke and Pepsi are good examples Can you offer design flexibility and short delivery? e.g. Yes, modular housing manufacturers do it

Productivity: Definition Productivity is the relationship between the Outputs generated from a system and the Inputs that are used to create those outputs. Mathematically

O P = I

Measuring Productivity •

Productivity is a measure of how efficiently inputs are converted to outputs Productivity = output/input

•

Total Productivity Measure Total Productivity = $sales/inputs $

•

Partial Productivity Measure Partial Productivity = cars/employee

•

Multifactor Productivity Measure Multi-factor Productivity = sales/total $costs

Competing on Productivity • At the national level, growing productivity – leads to a higher standard of living – holds inflation in check – enhances international competitiveness.

• The annual growth in GDP is due to – growth in productivity – growth in inflation

•

(Macroeconomic Theory)

Productivity Portfolios • Investments in facilities and equipment • Investments in programs and systems • Investments in people. • (Note: these alternatives are not mutually exclusive; however, most organizations tend to choose one as their dominant orientation.)

ARAVIND EYE CARE SYSTEM

OVERVIEW • AECS - Founded in 1976 by Dr. Govinda Venkataswamy in Madurai • Goal – Offer quality care at reasonable cost • In 2004, it performed 2,30,000 eye surgeries and handled 16,40,000 patient visits • Mission–To eradicate needless blindness by providing appro– priate, compassionate and quality eye care for all

STRATEGY USED • Art of MASS MARKETING • Speedy and fast Division of Work • Quality Care & Productivity at prices that everyone can afford • Core Principle – Providing services to rich and poor alike • Large Volume Care and Well organized system • Organizing Camps