REVIEWER ON CH 3_Operations Strategy

Competitive Advantage Competitive Priorities

A firm’s ability to achieve market and The strategic emphasis that a firm places on
financial superiority over its competitors. certain performance measures and
operational capabilities within a value chain
Requires:
• Types:
– Understanding of customer NEEDS
and EXPECTATIONS - Cost - Flexibility
– Building and leveraging operational - Quality - Innovation
capabilities to support desired
competitive priorities - Time

Understanding Customer Wants and Cost

Needs Low prices can be achieved by:
Understood by segmenting customers based  High Productivity
on their unique wants and needs
 High Capacity Utilization
– Order Qualifiers: basic customer
expectations  Achieving economies of scale

 minimum performance level required  Efficient design and operation of the

to stay in business supply chain

– Order Winners: goods and service  Improvement in Quality

features and performance
characteristics that differentiate one
CBP from another Quality

 Help win the customers

Evaluating Goods and Services

Search Attributes

- Aspects of a good or service that a

customer can determine prior to purchase

Experience Attributes

- Aspects of a good or service that can be

discerned only after making a purchase or
during consumption or use

Credence Attributes
Time
- Aspects of a good or service that the
customer believes in and cannot be Important source of competitive advantage
discerned even after making a purchase • Customers demand:
and consumption
 Quick response
How Customers Evaluate Goods and
Services  Short waiting times

 Consistency in Performance

• Reductions

 Accomplished by streamlining and

simplifying processes and value
chains

 Drive improvements in quality, cost,

and productivity
 Levels of Strategy, P2

Flexibility • Functional Strategy

• Manifests in mass: customization – Set of decision that each functional

strategies area develops to support its
particular business strategy
• Mass Customization: ability to make
goods and services that global • Operations Strategy
customers require at any volume and
– Set of decisions made across value
time.
chains that support implementation
Innovation of higher-level business strategies

• Discovery and practical application or – Developed by translating

commercialization of a device, competitive priorities into
method, or idea that differs from operational capabilities
existing norms

• Innovative companies focus on:

– Outstanding product research,

design, and development

– High product quality

– Ability to modify production

facilities to produce new
products frequently

OM and Strategic Planning

Strategy is a pattern or plan that integrates

an organization’s major goals, policies, and
action sequences into a cohesive whole

• Effective Strategies: Sustainability & Operations Strategy

– Developed around competitive • Type of an organizational strategy and is
priorities also considered corporate strategy by
– Provide focus for an organization some companies
and exploits its core competencies –Requires innovation in value chains,
• Core Competencies: Strengths operations design, and day-to-day
unique to an organization management activities

Strategic Planning • Dimensions

 Environmental
• Process of determining long-term goals,  Social
policies, and plans for an organization  Economic
• Helps an organization build a strong Global Supply Chains & Operations
position to achieve its goals, despite Strategy
unforeseen external factors
Multinational Enterprise
Levels of Strategy, P1
- An organization that sources, markets,
• Corporate Strategy and produces its goods and services in
several countries to minimize costs,
–Defines businesses in which
maximize profit, customer satisfaction,
corporations participate and develop
and social welfare.
plans for:
Operations Design Choices
• Acquisition and allocation of
resources among strategic business - Decisions made for determining the
units (SBUs) process structures that are best suited
for producing goods or creating
• Business Strategy
services
– Helps make decisions about the
Address:
competitive priorities that SBUs
need to pursue to gain 1. Types of processes
competitive advantage 2. Value chain integrations and
outsourcing
 3. Technology
4. Capacity and facilities
5. Inventory and service capacity
6. Trade-offs

Infrastructure

- Focuses on non process features and the

capabilities of an organization

Includes:

 Workforce

 Operating Plans and Control Systems

 Quality control

 Organizational structure

 Compensation systems

 Learning and innovation systems

 Support Services

Hill’s Four Key Decision Loops

Mc Donald’s

Mc Donald’s

• Vision: be the world’s best quick-service

restaurant experience

• Strategies:

a. Be the Best Employer

b. Deliver Operational Excellence

c. Achieve Enduring Profitable Growth

• Sustainability Initiatives

 Build a sustainable McDonald’s

that involves all facets of our
business.

 Commit to a three-pronged
approach—reduce, reuse, and
recycle.

 Work with suppliers and outside

experts to continuously improve
purchasing decisions and
evaluation of supplier
performance regarding animal
welfare.