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Operations Management Operations Strategy for Competitive Advantage in a Global Environment

Operations Management Operations Strategy for Competitive Advantage in a Global Environment. Reasons to Globalize. Reduce costs (labor, taxes, tariffs) Improve supply chain Provide better goods and services HLL’s Wheel in response to Nirma Understand markets Learn to improve operations

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Operations Management Operations Strategy for Competitive Advantage in a Global Environment

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  1. Operations ManagementOperations Strategy for Competitive Advantage in a Global Environment

  2. Reasons to Globalize • Reduce costs (labor, taxes, tariffs) • Improve supply chain • Provide better goods and services • HLL’s Wheel in response to Nirma • Understand markets • Learn to improve operations • Attract and retain global talent

  3. Vision and Mission • Mission – What an org. does, its action. • Provides boundaries & focus • More functional in nature dealing with pricing, quality, market place and other items of the value chain • Vision – The ultimate result of action • What an org. would like to happen as a result of the action that it does.

  4. Vision and Mission of a hospital • To make the denizens of kathmandu healthier • To provide a healing environment with family-cantered care with compassion, comfort and respect with best possible medical facilities available.

  5. Mission/Strategy • Strategy - how you are going to get there; the action plan to achieve the mission • The answer to the third intrinsic question: • Where are we? • Where do we want to be? • How to achieve?

  6. Mission of OM Departments Product Design: To Design products with superb quality and inherent customer value. Quality: To be consistent with quality in every single aspect of production, right from design, procurement, production etc. Process Design: To determine and design production process compatible with low cost, high quality product.

  7. Continued Location selection: To locate, design, efficient and economical facilities that will yield high values to the company. Layout: To achieve production effectiveness and efficiency while supporting a high quality of work. Human Resources: To provide a good quality of work atmosphere, well designed, safe rewarding jobs, stable employment, equitable pay in exchange for outstanding individual contribution from employees at all levels.

  8. Continued Supply Chain: To collaborate with suppliers to develop innovative products from stable, efficient and effective sources of supply. Inventory: To achieve low investments in inventory consistent with high facility utilizations. Maintenance: To achieve high utilization of facilities and equipment by effective preventive maintenance and prompt repair of facilities and equipment

  9. Strategies & Competitive Advantage • Ability of the firm to outperform its industry i.e. to earn a high rate of profit than the industry norm • Competitive advantage: The creation of a unique advantage over others • To achieve a competitive advantage, a firm must create more value than its competitors • Differentiation • Cost leadership • Quick response

  10. Competing on Differentiation • Create unique bundles of products/services that will be highly valued by customers • Differentiation should be thought of going beyond the physical characteristics and service attributes to encompass everything about the product or service that will influence the potential customer. • Experience Differentiation: selling experience Eg.; Disney does this where people get immersed surrounded by a dynamic visual and sound experience

  11. Can encompass everything related to product or service that influences value • Broad Product Line • Product features • Product Services • Status Symbol • Technical Innovation

  12. Competing on Cost • Maximize value as defined by customers • Does not mean low quality • Establishing a low cost position relative to competitors through • Optimum utilization of resources • Economies of scale • Coverage of variable costs and a lesser proportion of fixed costs (Dumping by the Chinese)

  13. Competing on Response • Including the values related to timely product development and delivery, as well as reliable scheduling and flexible performance. • Flexibility – ability to match changes in marketplace. Volumes and Designs changes • Reliability – scheduling. Communicated to the customer so that he/she can rely on. • Timeliness – design, production, delivery

  14. Operations Decisions Specific Strategy Used Competitive Advantage Examples Quality Product Process Location Layout Human Resource Supply Chain Inventory Scheduling Maintenance FLEXIBILITY Sony’s constant innovation of new products Design HP’s ability to follow the laptop market Volume Southwest Airlines No-frills service LOW COST DELIVERY Pizza Hut’s five-minute guarantee at lunchtime Speed Differentiation (Better) Dependability Federal Express’s “absolutely, positively on time” QUALITY Conformance Motorola’s automotive products ignition systems Cost leadership (Cheaper) Spice Nepal’s network Performance IBM’s after-sale service on mainframe computers AFTER-SALE SERVICE Fidelity Security’s broad line of mutual funds BROAD PRODUCT LINE OM’s Contribution to Strategy Response (Faster)

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