osml2 - om strategy
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OPERATIONSMANAGEMENT
OPERATIONSSTRATEGYFORCOMPETITIVE ADVANTAGE
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SHOULDICEHOSPITAL
Located In Toronto Canada
World famous Hernia repair Hospital
Rate of infection, complications and recurrence is
less than 0.5% (12 times lower than competitors)
Average recovery time 4 days, half compared to
its competitors
Patients from 115 countries
Patients participation in all aspects Facilities designed to encourage exercise and
rapid recovery
Capacity properly planned7000 surgeries in 5
operating rooms and 89 beds Lifetime support through annual follow up
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MISSIONSTATEMENTOFFEDEX
FedEx will produce superior financial returns for
shareowners by providing high value-added supply
chain, transportation, business and related
information services through focused operatingcompanies. Customer requirements will be met in the
highest quality manner appropriate to each market
segment served. FedEx will strive to develop mutually
rewarding relationships with its employees, partnersand suppliers. Safety will be the first consideration in
all operations. Corporate activities will be conducted
to the highest ethical and professional standards.
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MISSIONSTATEMENT- THEWALT
DISNEYCOMPANY
The mission of The Walt Disney Company is to
be one of the world's leading producers andproviders of entertainment and information.
Using our portfolio of brands to differentiate our
content, services and consumer products, we
seek to develop the most creative, innovative andprofitable entertainment experiences and related
products in the world.
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MISSION
Mission - where are
you going?
Organizations purposefor being
Provides boundaries &
focus
Answers What do we
provide to society?
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FACTORSAFFECTINGMISSION
Mission
Philosophy &
Values
Profitability& GrowthEnvironment
Customers Public Image
Benefit to
Society
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MISSION/STRATEGY
Mission - where you are going
Strategy - how you are going to get there;
an action plan
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STRATEGY
Action plan to achieve
mission
Company has abusiness strategy
Functional areas have
strategies to exploit
opportunities andstrengths, neutralize
threats and avoid
weaknesses
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STRATEGYPROCESS
MarketingDecisions
OperationsDecisions
Fin./Acct.Decisions
CompanyMission
Business
Strategy
Functional AreaFunctional Area
Strategies
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STRATEGIES& COMPETITIVE
ADVANTAGE
Ability of the firm to outperform its industry
i.e. to earn a high rate of profit than the
industry norm
To achieve a competitive advantage, a firm
must create more value than its competitors
Differentiation
Cost leadership
Response
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COMPETINGONDIFFERENTIATION
Create uniquebundles ofproducts/services that will be high ly
valued by customers
Can encompass everything related to
product or service that influences value
Broad Product Line
Product features
Product Service
Experience differentiation
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COMPETITIVESERVICESTRATEGIES
(DIFFERENTIATION)
Making the Intangible Tangible
(memorable)
Customizing the Standard Product
Reducing Perceived Risk
Giving Attention to Personnel Training
Controlling Quality
Note: Differentiation in service means being
unique in brand image, technology use, features,
or reputation for customer service.
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COMPETINGONCOST
Maximize value as defined by customers
Does not mean low value or low quality
Establishing a low cost position relative to
competitors through
Optimum utilization of resources
Economies of scale
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COMPETITIVESERVICESTRATEGIES
(OVERALLCOSTLEADERSHIP)
Seeking Out Low-cost Customers
Standardizing a Custom Service
Reducing the Personal Element in Service
Delivery (promote self-service)
Reducing Network Costs (hub and spoke)
Taking Service Operations Off-line
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COMPETINGONRESPONSE
Flexibility - ability to match changes
Reliability - scheduling
Timeliness - design, production, delivery
Requires institutionalization within the firmof
the ability to respond
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COMPETITIVEENVIRONMENTOF
SERVICES
Relatively Low Overall Entry Barriers
Economies of Scale Limited
High Transportation Costs
Erratic Sales Fluctuations
No Power Dealing with Buyers or
Suppliers
Product Substitutions for Service
High Customer Loyalty
Exit Barriers
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WINNINGCUSTOMERSINTHE
MARKETPLACE
Service Qualifier: To be taken seriously a certain level
must be attained on the competitive dimension, as
defined by other market players. Examples are
cleanliness for a fast food restaurant or safe aircraft foran airline.
Service Winner: The competitive dimension used to
make the final choice among competitors. Example is
price.
Service Loser: Failure to deliver at or above the
expected level for a competitive dimension. Examples
are failure to repair auto (dependability), rude treatment
(personalization) or late delivery of package (speed).3-17
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ISSUESINOPERATIONSSTRATEGY
Research
Preconditions
Dynamics
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RESEARCHCHARACTERISTICSOF
HIGHROI ORGANIZATION
High product quality
High capacity utilization
High operating efficiency
Low investment intensity
Low direct cost per unit
From the PIMS program of the Strategic Planning Institute
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PRECONDITIONS
Strength and Weakness of competitors
Possibility of new entrants, substitute products and
commitment of suppliers and distributors Current and prospective environmental, technological
legal and economic issues
Product life cycle
Resources available within firm and OM functions Integration of OM strategy and company strategy
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DYNAMICS
Changes within the organizations
Changes in the environment
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STRATEGYDEVELOPMENTAND
IMPLEMENTATION
Understand issuesresearch, preconditions,
dynamics
Do a SWOT AnalysisForm a strategy for competitive advantage
Identify critical success factors and supporting
activities
Group activities into organizational structure
Build and staff the organization
S P L
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STAGESINTHEPRODUCTLIFE
CYCLE
Introduction
Growth
Maturity
Decline
Gro
wthrate
LCD TVLED TV Plasma TV Flat
screen
CRT TVs
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Best period to increase market share
R&D engineering are critical
Introduction Company
Strategy& Issues
Product design and development are critical
Frequent product and process design changes
Excess capacity
Short production runs
High production costs Utmost attention to quality
Quick elimination of market-revealed design
defects
OM
Strategy
& Issues
LIFE
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CompanyStrategy &
Issues
Practical to change prices or quality image
Marketing is critical
Strengthen niche
Growth
OM
Strategy& Issues
Forecasting is critical
Product and process reliability
Competitive product improvements andoptions
Shift toward product oriented process
Enhance distribution
LIFE
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CompanyStrategy &
Issues
Poor time to increase market share
Competitive costs become critical
Poor time to change price or quality
Defend position via fresh promotional and
distribution approaches
Maturity
OM
Strategy
& Issues
Standardization - Increasing stability of
manufacturing process
Less rapid product changes and more minor annualmodel changes
Optimum capacity
Long production runs
Re-examination of necessity of design changes
LIFE
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LIFE
CompanyStrategy &
Issues
Cost control critical to market share
Decline
OM
Strategy
& Issues
Little product differentiation
Cost minimization
Overcapacity in the industry Prune line to eliminate items not
returning a good margin
Reduce capacity
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CSFSOFMICROSOFT
It focuses on one businesssoftware
It thinks globallyoperates and sells
Senior management involved in productdevelopment process
It recruits and retains top people in its field
Emphasizes on speed to market
Activity Mapping: Southwest Airlines Low Cost
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y pp g
Competitive Advantage
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