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
 Attract and retain global talent
Vision and Mission
 Vision – The ultimate
result of action
 What an org. would
like to happen as a
result of the action
that it does.
 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 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.
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?
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.
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.
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
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
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
Can encompass everything related to product
or service that influences value
Broad Product Line
Product features
Product Services
Status Symbol
Technical Innovation
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)
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
OM’s Contribution to Strategy
Operations
Decisions
Specific
Strategy Used
Examples
Quality
Product
FLEXIBILITY
Sony’s constant innovation of new products
HP’s ability to follow the laptop market
Process
Design
Volume
Southwest Airlines No-frills service
LOW COST
Location
DELIVERY
Pizza Hut’s five-minute guarantee at lunchtime
Federal Express’s “absolutely, positively on time”
Layout
Human Resource
Supply Chain
Speed
Dependability
Maintenance
Differentiation
(Better)
QUALITY
Motorola’s automotive products ignition systems
Spice Nepal’s network
Conformance
Performance
Inventory
Scheduling
Competitive
Advantage
IBM’s after-sale service on mainframe computers
Fidelity Security’s broad line of mutual funds
AFTER-SALE SERVICE
BROAD PRODUCT LINE
Cost
leadership
(Cheaper)
Response
(Faster)