© ana g. méndez university system, 2012. all rights reserved. w2 2.9 1 © ana g. méndez...

© Ana G. Méndez University System, 2012. All rights reserved.

1© Ana G. Méndez University System, 2012. All rights reserved.

W2 2.9

Operation Strategy/Design of goods and services

Operation Strategy/Design of goods and services



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A Global View of OperationsDeveloping Mission Statements and

StrategiesAchieving a Competitive Advantage

Through OperationsTen Strategic OM DecisionsStrategy Development and ImplementationGoods and Services SelectionProduct DevelopmentDefining a ProductService Design

PerfilOUTLINE


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At the end of Workshop Two, the student will be able to:

1. Develop a mission statement and strategy

2. Identify and explain three strategic approaches to competitive advantage

3. Identify and define the 10 decisions of operation management

4. Understand the significance of key success factors and core competencies

5. Identify and explain four global operation strategy options

Objetivos EspecificosSPECIFIC OBJECTIVE


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At the end of Workshop Two, the student will be able to:6. Describe product development system

7. Describe how time-base competition is implemented

8. Understand how products and services are defined

9. Apply decision trees to product issues

10. Describe customer participation in the design and production of services

Objetivos EspecificosSPECIFIC OBJECTIVE


Prepared by Gilberto Clavell 5

“Processes by which goods, services, capital, people, information, and ideas flow across national borders.” (Grewal/Levy)

“Trend toward greater economic, cultural , political, and technological interdependence among national institutions and economies.” (Wild/Wild/Han)

Grewal, D., & Levy, M. (2009). Marketing. New York: McGraw-Hill Companies, Inc.

Wild, J., Wild, K., & Han, J. (2008). International Business: The Challenges of Globalization. Upper Saddle River, NJ: Pearson Prentice Hall.

Objetivos EspecificosGLOBALIZATION DEFINITION


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Objetivos EspecificosGLOBALIZATION (CONTINUED)

Singap

ore

Irelan

d

Switzer

land

United

Sta

tes

Nethe

rland

s

Canad

a

Denm

ark

Sweden

Austri

a

Finlan

d

Top Ten Globalized Countries

Series1



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REASONS TO GLOBALIZE

Reasons to Globalize are:

1. Reduce costs (labor, taxes, tariffs, etc.)2. Improve the supply chain3. Provide better goods and services4. Understand markets5. Learn to improve operations6. Attract and retain global talent

Tangible Reasons

Intangible Reasons


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Michael Porter suggested four

"generic" business strategies

that could be adopted in order

to gain a competitive advantage.

The four strategies relate to the

extent to which the scope of a

businesses' activities are

narrow versus broad and the

extent to which a business

seeks to differentiate its

products.

COMPETITIVE ADVANTAGE

The four strategies are

summarized in the figure below:


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BUSINESS DEFINITION

• An economic system in which goods and services are exchanged for one another or money, on the basis of their perceived worth. Every business requires some form of investment and a sufficient number of customers to whom its output can be sold at profit on a consistent basis.


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DEVELOPING A MISSION STATEMENT AND STRATEGY

Mission statements tell an organization where it is going.

The Strategy tells the organization how to get there.


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HARD ROCK CAFE

Our Mission: To spread the spirit of Rock ‘n’ Roll by delivering an exceptional entertainment and dining experience. We are committed to being

an important, contributing member of our community and offering the Hard Rock family a fun, healthy, and nurturing work environment

while ensuring our long-term success.


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FACTORS AFFECTING MISSION

Benefit to Society

Mission

Philosophy and Values

Profitability and Growth

Environment

Customers Public Image


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STRATEGY

Action plan to achieve mission

Functional areas have strategies

Strategies exploit opportunities and strengths, neutralize threats, and avoid weaknesses


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STRATEGIES FOR COMPETITIVE ADVANTAGE

Differentiation – better, or at least different

Cost leadership – cheaper Response – rapid response

© Ana G. Méndez University System, 2012. All rights reserved. 15

OM’s CONTRIBUTION TO STRATEGY

Operations Specific CompetitiveDecisions Examples Strategy Used Advantage

Product

Quality

Process

Location

Layout

Human resource

Supply chain

Inventory

Scheduling

Maintenance

FLEXIBILITY:Sony’s constant innovation of new products………………………………....Design HP’s ability to lead the printer market………………………………Volume

Southwest Airlines No-frills service……..…..LOW COST

DELIVERY: Pizza Hut’s 5-minute guarantee at lunchtime…………………..…..………………….Speed Federal Express’s “absolutely, positively on time”………………………..….Dependability

QUALITY: Motorola’s HDTV converters….……........Conformance Motorola’s pagers………………………..….Performance

Caterpillar’s after-sale service on heavy equipment……………....AFTER-SALE SERVICE

Fidelity Security’s broad line of mutual funds………….BROAD PRODUCT LINE

Response(Faster)

Cost leadership(Cheaper)

Differentiation(Better)


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1. Goods and service design

2. Quality 3. Process and

capacity design4. Location selection5. Layout design

6. Human resources and job design

7. Supply chain management

8. Inventory

9. Scheduling

10. Maintenance

10 STRATEGIC OM DECISIONS


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FOUR INTERNATIONAL OPERATION STRATEGIES

Cos

t Red

uctio

n C

onsi

dera

tions

High

Low

HighLow

Local Responsiveness Considerations(Quick Response and/or Differentiation)

Standardized product Economies of scale Cross-cultural learning

ExamplesTexas InstrumentsCaterpillarOtis Elevator

Global Strategy Transnational Strategy

Move material, people, ideas across national boundaries

Economies of scale Cross-cultural learning

ExamplesCoca-ColaNestlé

International Strategy

Import/export or license existing product

ExamplesU.S. SteelHarley Davidson

Multi-domestic Strategy Use existing

domestic model globally Franchise, joint ventures,

subsidiaries

ExamplesHeinz The Body ShopMcDonald’s Hard Rock Cafe


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Goods and Services Selection


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PRODUCT DECISION

The goods or services the organization provides society

Top organizations typically focus on core products

Customers buy satisfaction, not just a physical good or particular service

Fundamental to an organization's strategy with implications throughout the operations function


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PRODUCT STRATEGY OPTIONS

DifferentiationShouldice Hospital

Low costTaco Bell

Rapid responseToyota


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PRODUCT LIFE CYCLES

Introduction Growth Maturity Decline

Sal

es,

cost

, an

d ca

sh f

low

Net revenue (profit)

Sales revenueCost of development and production

Cash flow

Negative cash flow Loss

Cash flow


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PRODUCT LIFE CYCLES

Product design and development critical

Frequent product and process design changes

Short production runs

High production costs

Limited models

Attention to quality

Introduction Growth Maturity Decline

OM

Str

ate

gy/

Issu

es

Forecasting critical

Product and process reliability

Competitive product improvements and options

Increase capacity

Shift toward product focus

Enhance distribution

Standardization

Less rapid product changes – more minor changes

Optimum capacity

Increasing stability of process

Long production runs

Product improvement and cost cutting

Little product differentiation

Cost minimization

Overcapacity in the industry

Prune line to eliminate items not returning good margin

Reduce capacity


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PRODUCT LIFE CYCLES

Introduction Fine tuning may warrant

unusual expenses for Research Product development Process modification

and enhancement Supplier development

Growth Product design begins to

stabilize Effective forecasting of

capacity becomes necessary

Adding or enhancing capacity may be necessary


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PRODUCT LIFE CYCLES

Maturity Competitors now

established High volume,

innovative production may be needed

Improved cost control, reduction in options, paring down of product line

Decline Unless product

makes a special contribution to the organization, must plan to terminate offering


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NEW PROUCT OPPORTUNITY

1. Understanding the customer’s needs

2. Economic change

3. Sociological and demographic change

4. Technological change

5. Political/legal change

6. Market practice, professional standards, suppliers, distributors

Brainstorming is

a useful tool


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PRODUCT DEVELOPMENT SYSTEM

Scope of product

development team

Scope for design and engineering

teams

Evaluation

Introduction

Test Market

Functional Specifications

Design Review

Product Specifications

Customer Requirements

Ability

Ideas


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ISSUES FOR PRODUCT DEVELOPMENT

Robust design Modular design Computer-aided design (CAD) Computer-aided manufacturing

(CAM) Virtual reality technology Value analysis Environmentally friendly design


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DEFINING THE PRODUCT

First definition is in terms of functions Rigorous specifications are developed

during the design phase Manufactured products will have an

engineering drawing Bill of material (BOM) lists the

components of a product


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SERVICES DESING

Service typically includes direct interaction with the customer Increased opportunity for customization Reduced productivity

Cost and quality are still determined at the design stage Delay customization Modularization Reduce customer interaction, often through

automation


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SERVICES DESIGN

(c) Customer participation in design and delivery such as counseling, college education, financial management of personal affairs, or interior decorating

(a) Customer participation in design such as pre-arranged funeral services or cosmetic surgery

(b) Customer participation in delivery such as stress test for cardiac exam or delivery of a baby


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Activities

After completing this presentation, please go to the Tasks to complete

the Workshop activities.

© ana g. méndez university system, 2012. all rights reserved. w2 2.9 1 © ana g. méndez...

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