Dr. Ron Lembke
Mission and Vision?
 Vision: reason for existence, long-term
 Mission: how to accomplish the Vision
To provide society with superior products and services-innovations and solutions that improve the quality of life
and satisfy customer needs--to provide employees with
meaningful work and advancement opportunities and
investors with a superior rate of return.
(Merck mission statement)
2015
Values & Ethics
 How we’re going to behave
 Behaviors, Ethics – What about suppliers?
 Shapes decision making
August, 2015
Mission Statement
 “Without a clear mission, an
organization is unlikely to achieve its
true potential, because there is little
direction for formulating strategies.”
 Wouldn’t the same be true about people?
My Favorite Guru
 When you think of
something, put it on a
list.
 Check your lists
regularly.
 Don’t get sucked into
email distractions.
 Get rid of the clutter
you don’t need.
Impact of Operations
 Enterprise Resource Planning systems
 Data Mining – data warehouses
 Data Analytics – ongoing search for improvement
 E-Commerce – flawless execution
 Globalization – suppliers everywhere
 What about subcontractors?
 Sustainability – there’s gold in them thar hills
What is strategy?
 A Plan for achieving the Mission
 Core Competencies
 Company’s distinct abilities
 Source of competitive advantage
 Skills that differentiate the firm from its competitors
 What you could never dare trust to anyone else
 Soft drinks: the secret sauce
 Automobiles: designing engines
 Competitiveness:
 A firm’s relative position in comparison to other firms in
the marketplace
Strategy
 Strategy: a plan for achieving the mission
 Each functional area (accounting, finance, marketing)
determines its “supporting mission”
 Tactics: the methods to be used to achieve the strategic
goals.
 Must support mission, corporate values
Michael Porter
Three ways to achieve corporate mission:
1. Differentiation: Make your product different and / or
better
2. Cost Leadership (lower prices): Wal- Mart, Southwest
Airlines
3. Quick Response: Pizza Hut, FedEx
Purchasing Triangle
Quality
Price
Speed
“Don’t be sad; two out of three ain’t bad” -Meatloaf
Competitive Dimensions
 Cost – make it cheap
 Quality and Reliability – make it good
 Speed – make it fast
 Reliability – deliver when promised
 Responsive – exactly what the customer wants
 Cope with Change – change volume
 New product speed
 Customer support
 Quality – much harder to assess than speed or cost
Focus
Competitiveness
 Order qualifiers: screening criterion that allows your
products to be considered
 deliver on-time, reliability, general quality
 Order Winners: criterion that differentiates your
service/product above the competition
 price, quality, reliability
 “nice to haves” become “must haves” over time
 How will you beat the competition?
Responsiveness – Supply Chain design
 Price / Quality / Speed?
 Decoupling Point
 Make to Stock – ready on the shelf – Breyer’s
 Assemble to Order – parts waiting for an order – DQ
 Make to Order – Raw Materials waiting – Cold Stone
 Engineer to Order – Anything you want – Home made
Design
MTS
ATO
MTO
ETO
Produce
Assemble
Deliver
Impact of Life Cycle
Pandora
YouTube
iTunes
XM
AM/FM
Sony HX
Introduction
Growth
CDs
Records
MiniDisc
Cassettes
DAT
8-Track
Maturity
Decline
Impact of Life Cycle
DVD Audio
Introduction
Growth
Maturity
Decline
Records
Impact of Life Cycle
 Introduction: develop product, small-scale
production, customized, expensive
 Growth: ramp up production, marketing, increasing
standardization, lower prices
 Maturity: standardized, volume production,
optimization, falling prices
 Decline: cost minimization, eliminate unprofitable
products
Productivity
 Productivity = Outputs / Inputs
 Partial:
Output/Labor or Output/Capital
 320 miles driven / 8.2 gallons of gas = 39 mpg
 25 tons of strawberries / 50 acres = 0.5 tons/acre
 Multifactor:
Output / (Labor + Capital + Energy )
20 tons of strawberries / ($2,250 chemicals + $2,500 hoop
house costs + $1,250 Planting + $12,000 harvesting)
= 20/18,000 = 0.00111
Multi-Factor
Productivity
Increases
 Take labor and capital into
account
 “percentage increase in
output that is not
accounted for by changes in
the volume of inputs of
capital and labour.”
Source: Economist, 2009