Operation Management

1. Chapter 2
BBT2435| TOUR OPERATION MANAGEMENT
Prepared by KAMELIA CHAICHI
Alex Hill and Terry Hill

2. Lecture outline
• INTRODUCTION
• What is STRATEGY?
• LEVELS of strategy within a business
• DEVELOPING a strategy
• IMPLEMENTING a strategy
• Critical REFLECTIONS
• SUMMARY

3. • What is STRATEGY?
The long-term plan of a business is
called the business strategy. The role
of each of the individual business
functions, such as operations,
finance, and marketing, is to find ways
to best support the business strategy.

4. What is strategy?
DIRECTION
WHAT to do
HOW to do it
Operations strategy concerns
developing the CAPABILITIES of an
organisation to reflect the NEEDS of its
customers and markets

5. FUNCTIONAL
Levels of
strategy
CORPORATE
BUSINESS UNIT

6. Corporate
•Where to INVEST or
DIVEST
• SALES REVENUE
priorities
IMPLEMENTATION
Allocation of investment FUNDS

7. Business unit
DIRECTION OF BUSINESS UNIT
Companies/organizations tend to split their
total business activity into ‘functions’ in order
to handle the complexity that comes with size.
It is particularly crucial that all these parts are
brought back together at the level of strategy
and work as a ‘whole’ business.
IMPLEMENTATION
•WHICH functional tasks to
invest in
• HOW to invest in these tasks

8. Functional
DIRECTION OF FUNCTION
Support COMPETITIVE
DIMENSIONS within a market for
which it is solely
or partly RESPONSIBLE
IMPLEMENTATION
• Meeting competitive REQUIREMENTS
• Selecting APPROACHES to attain
improvement goals
• Implement the PLAN

9. BUSINESS STRATEGY
Defines the long-term plans for the company
OPERATIONS STRATEGY
Develops a plan for the operations function focusing on specific competitive
priorities in order to meet the long-term plan
Competitive priorities: - Cost
Quality
Time
Flexibility
DESIGN OF THE OPERATIONS FUNCTION
Developed to focus on the identified competitive properties
Structure: Facilities, flow of goods, technology
Infrastructure: Planning & control system, workers, pay, quality

10. Functional

11. Understanding MARKETS is the FIRST step
in strategy development

12. Understanding customer requirements
QUALIFIERS
Get and keep a service or product on a customer’s
SHORTLIST
ORDER-WINNERS
WIN you the order once you are on the shortlist
Order qualifiers?
They are the basic criteria that permit the
firms products to be considered as
candidates for purchase by customers.
Order winners?
They are the criteria that differentiates
the
products and services of one firm from
another.
A brand name car
can be an “order
qualifier”
Repair services can be “order
winners”
Examples: Warranty, Roadside
Assistance,
Leases, etc.

13. > KEY IDEA 1
Understanding CUSTOMER
requirements:
• AVOID general descriptions
• IDENTIFY and WEIGHT order-winners
and qualifiers
> KEY IDEA 2
All functions must be involved in the
discussion on HOW to GAIN, RETAIN
and GROW CUSTOMERS and
MARKETS

14. Steps in Developing a Manufacturing Strategy
1. Segment the market according to the product group
.
2. Identify product requirements, demand patterns, and profit
margins of each group.
3. Determine order qualifiers and winners for each group.
4. specific performance requirements.
•What is the OPERATIONS process?
•What are the key MARKET
requirements?

16. The process of strategy
development
Alternative
APPROACHES
• TOP-DOWN vs BOTTOM-UP
•MARKET-DRIVEN vs MARKET-DRIVING

17. Top-down approach
CORPORATE
BUSINESS UNIT
FUNCTIONAL

18. Bottom-up approach
Consolidated into formal STRATEGY
EMERGING sense of what strategy
should be
Day-to-day EXPERIENCES and
LEARNING

19. Market-led orientation
MARKET
MARKET
DRIVES
OPERATIONS
OPERATION
S
An organisation with a market orientation thinks that its most
important asset are it’s customers. The firm believes that, as
long as it is able to identify potential customers, find out what
they want, and then produce that for them, it will remain
successful

20. Market-driving orientation
MARKET
OPERATION
S
OPERATIONS DRIVES MARKET
Firms with a product orientated approach to selling, try to sell whatever they can make,
without trying to find out if it's what the customers want. Sony grew hugely successful
using this policy, and became famous for this approach. The most clear example was
the Walkman, launched in the
late 70’s, marketing professionals said it would not sell because it had no recording
facility
a generation of teenagers proved them wrong. A more up to date example is Apple,
the iPhone being the latest in a long line of product led launches.

21. Alternative approaches
Aspect Prison Camp Restaurant
Strategic
OBJECTIVES
STRATEGY for
meeting these
objectives
PROCESS of
developing and
implementing
strategy

22. Aspect Prison Camp Restaurant
Strategic
OBJECTIVES
• ESCAPE from the camp
• Get 250 men out
• Make MONEY
• Produce GOOD FOOD
STRATEGY for
meeting these
objectives
• Create SMOKE SCREEN
• DIG 3 TUNNELS
• PRIMO
• Market-driving
• Resource-based
• CRISTIANO
• Market-driven
• Market-led
PROCESS of
developing and
implementing
strategy
• TOP-DOWN
• PLANNED • BOTTOM UP
• EMERGENT
Alternative approaches

23. Summary• What is STRATEGY?
– Direction and Implementation
• LEVELS of strategy
– Corporate - Business - Functional
• Strategy DEVELOPMENT
– Understand market
– Develop capability to support or drive
market
• Market REQUIREMENTS
– Order-winners and Qualifiers
• APPROACH to developing strategy
– Top down vs Bottom up
– Market-led vs Resource-based

24. CASE FOR
TUTORIAL
APPLE