OPERATIONAL MANAGEMENT/ ALAN STEVENSON
AHZID MAHMOOD
Access to HE Diploma Assignment Brief.
PATHWAY TITLE:
ACCESS TO HE DIPLOMA BUSINESS
UNIT TITLE:
OPERATIONS MANAGEMENT
OUTCOME
2.
NUMBERS
Understand the importance of strategic operations
COVERED BY THIS management
ASSIGNMENT:
STUDENT:
ASSESSOR:
Alan Stevenson
INTERNAL
VERIFIER:
DATE VERIFIED:
DATE SET:
7th-MAR-2011
DATE
FOR 28th-MARDATE SUBMITTED:
SUBMISSION:
2011
BACKGROUND INFORMATION/TEXTBOOK REFERENCES
Resources from Course Plan; Websites; Hand-outs; textbooks
ASSESSMENT CRITERIA:
2.1 Discuss differing operations strategies
2.2 Evaluate operations strategy in a given scenario
2.3 Identify the strategic importance of operations management in the decisionmaking process
TASKS:
1. Discuss the four approaches of operations strategy - give examples and present
the pros and cons of each.
2. Use the Polar Axis method to produce a diagram depicting the performance
objectives of the company in the Ryanair case.
3. Discuss how important the “operations element” was to the success of Ryanair’s
strategic decision and whether this is always the case.
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Learning Outcome 2 – Understand the importance of strategic operations
management
2.1 – Discuss differing operations strategies
There are four main approaches to setting an Operations Management strategy –
“Bottom-Up”; “Top-Down”; “Operation Resources”; & “Market Requirements”.
Discuss each approach - give examples and present the pros and cons of each.
2.2 – Evaluate an operations strategy in a given scenario
a) Use the five axes of the “polar representation” of Performance Objectives to
produce a diagram depicting the performance objectives of the company in the
Ryanair case.
OPERATIONAL MANAGEMENT/ ALAN STEVENSON
AHZID MAHMOOD
b) Once you have drawn your diagram, write a short passage justifying your evaluation of
each axis. (approx 50-80 words per axis.)
Ryanair has not always been as successful as it is today. When the company entered the
market in 1985 its original aim was to provide low-cost flights between Ireland and
London as an alternative to British Airways and Aer Lingus. However, economies of
scale are vital when attempting to reduce costs and offer low prices. Ryanair, with its
small fleet of old-fashioned, second-hand airplanes, could not match its larger
competitors and ended up with a IR£20m loss after its first six years of operation.
In 1991 Ryanair decided to rework its strategy:




it switched to flying only one type of airplane allowing savings through standardisation of
parts, maintenance and servicing;
it switched to using smaller, ‘second-rank’ airports (such as Luton, Stansted, Prestwick
etc.) which cut down on landing fees, parking fees etc.,
the absence of in-flight meals means turnaround time on the ground is minimised which
helps reduce airport fees and charges;
it cut out all “frills” such as in-flight meals and up-market lounges and has developed a
low-cost online booking service;
The company strategy is clear – lowest fares; safe flights; on-time flights. Nothing more –
no hotel vouchers, no meal vouchers and the minimum acceptable customer service.
(Source: Operations Management, 4th edn., Slack et al., pp65)
2.3 – Identify the strategic importance of operations management in the decision-making
process
a) Discuss how important the “operations element” was to the success of Ryanair’s
strategic decision.
b) To what extent are “operations” always involved in Strategic Decisions? Provide
some examples in your answer.
2.1 – Discuss differing operations strategies
There are four main approaches to setting an Operations Management strategy –
“Bottom-Up”; “Top-Down”; “Operation Resources”; & “Market Requirements”.
Discuss each approach - give examples and present the pros and cons of each.
OPERATIONAL MANAGEMENT/ ALAN STEVENSON
AHZID MAHMOOD
Operation strategy-Process
There are four main perspectives on operations strategy
1. Top down
2. Bottom up
(What the business wants operations to do)
( What day-to-day experience suggests operations should do)
In management and organizational arenas, the terms "top down" and "bottom up" are
used to indicate how decisions are made.
3. Operation Resources (What operations resources can do)
4. Market Requirement ( What the markets position requires operations to do)
These four approaches are the factor which influence the creation and formulation of an
operation management as well as business strategy
1. Top down
Organization needs a strategy to position the company to the global level which are
based on the decision about what type of business the group want to be in, the location
they wan to operate, and allocating the cash between it various businesses, these type of
decision are usually from the Corporate strategy in which the every unit of the business
in the corporate group put together their own business strategy setting out their own
individual mission and objectives. Business strategy sets the general direction of the
organization to it customers and that where the top down approach is implemented /
interpreted by the different function areas of the company such as Marketing, Finance,
and Operation in their functional strategies.
So the top down approach on operation strategy is that it should take place in the
hierarchy of strategies. It influence be a as for example if a greeting card company Carte
Blanch decides to expand the company rapidly, and realizes in the long term all the other
OPERATIONAL MANAGEMENT/ ALAN STEVENSON
AHZID MAHMOOD
greeting cards companies with major market share will be able to survive but the
companies with smaller share will be less likely to survive in the long term, then therefore
the company need to consider it growth. So, the understanding to the operation strategy
is to clearly invest in the Labour, machinery, equipment and factories etc.
For example: If the organisation’s business strategy is to offer low prices, then the
operations task should be to achieve low costs in operations and if the business strategy
is based on offering customers fast delivery, then the operations focus to achieve speed
in operations.
Pros:
Simplicity (making a decision with more people is might be complex)

Speed (making a decision with more people will typically take more time).
Cons:

Low participation (this is likely to influence the implementation of the plans
in a negative way).

Requires a lot of knowledge at the top level.

Does not use specialized knowledge which may be present in the lower
echelons of the organization.
Reference (Nigel Slack, 2004)
2. Bottom up
OPERATIONAL MANAGEMENT/ ALAN STEVENSON
AHZID MAHMOOD
In simplest term bottom up approach, in the operation strategy is in which the
organisation study from its experiences and developing its operational capabilities as the
operations managers try new thing in experimental style while also using their places at
work as learning laboratory.
Advantages of the bottom-up approach i

Participation (this is likely to influence the implementation of the plans in a
positive way).

Does not require a lot of knowledge at the top level.

Leverages specialized knowledge which is present in the lower echelons of
the organization.

Empowerment of Employees - Encourages creativity at lower levels
Disadvantages of the bottom-up approach include:

Complexity (making a decision with just a few people is more simple).

Time-consuming (making a decision with just a few people will typically be
faster).
3. Market Requirement
Usually organisation’s compulsory objectives is to satisfy it target market and the
operation that is fail to do that is obviously less likely to survive in the long term as the
understanding it market is usually through a marketing function.
The market approach is important to operation management. In order to ensure that
operations is qualifying the right mix and level in it performance objectives which are off
course quality, speed, dependability, flexibility and cost, it is important to understand the
requirement of market.





Quality
Speed
Dependability
Flexibility
Cost
 Priority of performance objectives:
The priority of performance objective is identified by the specific need and want of the
customers and the activities of the organisation’s competitors.
 Customers influence on performance objectives
Obviously, it is important for the operations to seek the satisfaction of their target market
through developing their five performance objectives. Say for example if the target
market is going for cheaper value products as well as same for the services, then all
things considering operation will focus on it cost performance. If the target market insists
on error-free product or service then operation will focus on its quality performance. As if
the customers emphasis a fast delivery making speed an important focus for operation
as well as if they are insisting reliable delivery which will also make dependability a
OPERATIONAL MANAGEMENT/ ALAN STEVENSON
AHZID MAHMOOD
strong focus for operation and If the customers are looking forward/expecting innovative
product or service then the operation must but also should higher flexibility in order to
get it innovations to their target market.
The priority of each performance objective is always influenced by the factors that are
valued by the customers but Some organisation work extremely hard to build a image of
their customers needs and wants in to the operations such as example of Kwik-Fit which
ha build a string reputation for servicing, as its had establish since 1971 overall he
company is one of largest automotive part repair and replacement firms in the world,
regardless to all the doubts which were impression to the public by the some other motor
repairing companies although the Kwik fit did ensure and advertise some of he statement
such as
4. Operations resource
This fourth and the final approach in the operation strategy is based on the influential
theory of business strategy. This approach responds to the market requirement by
providing the capabilities in order to satisfy the requirement of their market. Marketing
managers use these techniques to understand the requirements of markets and same
with the operations managers by using technique to manage their productive resource.
Constraints and capabilities
Organisation need to consider it powers to produce products and service in order to
satisfy it target market and to choose which part of the market it wants to be in.
Restriction and limitation from the operation must be taken in to consideration for
example: if a company has chosen to compete by offering low cost services or products
into the market, the operations function must be able to produce and deliver those
services and products at low cost. Conversely, if a company has chosen to inhabit a
different part of the market, say one that emphasizes high variety and customization,
then it will demand a different set of things from its operations function, in this case
probably high degrees of flexibility. So, an obvious pressure on any operation is to satisfy
the requirements of its markets.
2.2 – Evaluate an operations strategy in a given scenario
a) Use the five axes of the “polar representation” of Performance Objectives to
produce a diagram depicting the performance objectives of the company in the
Ryanair case.
OPERATIONAL MANAGEMENT/ ALAN STEVENSON
AHZID MAHMOOD
Cost
1985 Performance
1991 after Performance
Dependability
Speed
Flexibility
Quality
After failing to compete with their rival and ended up in £20m loss in their first six years.
In 1991 Ryanair decided to rework its strategy and once again to identify their
performance objective based on their new planned strategy and expand by offering lowcost basic service,
The diagram shows two hectogram shaped circle, the blue is the 1985 performance and
the red is 1991 performance objective.
Evaluation
 Cost
Ryanair, effective resource utilisation of staff, technology, raw materials and finance enables it to
reduce operations costs combined with a no-frills service offer that ensures delivers optimum levels
of value for a growing number of customers seeking low cost flights to and in and around Europe!
Before, the cost was 90 % important concerned to ‘Ryanair’ especially in their early time
of establishment. Plan was to offer the lowest cheap fair, and because In the long run,
even the most competitive price structure may not attract customers if the quality, speed,
flexibility and dependability fall below a certain standard. So then in their new strategy
(showing in the red line they decided to take care on the other objectives which
constrained the cost to 80%.
Cost: The most critical cost factor for any airline operations is fuel prices. There are
enormous fluctuations, and, unlike its competitors, Ryanair has committed to a policy of
OPERATIONAL MANAGEMENT/ ALAN STEVENSON
AHZID MAHMOOD
not imposing fuel surcharges. Thus any fluctuations have to be absorbed by Ryanair. As
a result, Ryanair reported its first annual loss in 2009 when oil prices were at a record
high. (BBC Online News, 2 June 2009)
One type of aircraft (means large orders to one single supplier of aircraft part and getting
the opportunity of negotiating down prices and discounts as such), (using secondary
airports and cutting down the cost of landing
 Dependability
This relates mostly to flights being on schedule and reliability of luggage service. The
figures for the third quarter of 2009 indicate 89% on-time flights and 0.3 missed bags per
1,000 passengers (Table 1). This compares very favourably with competitors, where
punctuality is similar, but the missed bag/passenger ratio is orders of magnitude higher.
This excellent record has to do with the fact that Ryanair offers only point-to-point flights,
thereby eliminating the risk of luggage mismanagement during connecting
 Flexibility
Customers have a high degree of flexibility in choosing the level of service since only the
basic airfare is charged and any additional services must be paid for. Increasing flexibility
for the customer would mean offering additional options. From Ryanair’s perspective,
flexibility comes with diversification of supplementary services on the one hand, and, with
increasing market strength, the ability to negotiate alternatives for various service
sectors, such as maintenance agreements, outsourced functions, etc.
 Quality
Quality: In the long run, even the most competitive price structure will not attract
customers if the quality of the service offered is below a certain standard. This includes
maintenance, efficient booking and luggage handling, reliability, punctuality, and
interaction with Ryanair staff.
 Speed
Speed: The areas where speed matters most for Ryanair are turnaround time of aircrafts,
reservations, luggage handling, and aircraft maintenance, all of which have a direct
impact on costs. Although Ryanair has implemented many steps to increase speed, it
also depends on service providers that are not directly under its control.
2.2. Ryanair’s five performance objectives
To maintain or ultimately increase Ryanair’s competitiveness, it is useful to analyse its
operations with the help of five performance objectives:
various service sectors, such as maintenance agreements, outsourced functions, etc.
Cost: The most critical cost factor for any airline operations is fuel prices. There are
enormous fluctuations, and, unlike its competitors, Ryanair has committed to a policy of
not imposing fuel surcharges. Thus any fluctuations have to be absorbed by Ryanair. As
a result, Ryanair reported its first annual loss in 2009 when oil prices were at a record
high. (BBC Online News, 2 June 2009)
For example, the Directors and Senior managers may wish to implement a business
strategy of “the latest, fastest, most technologically sophisticated response system
EVER!!” – but Operational Resources may not allow this (lack of adequate skill,
OPERATIONAL MANAGEMENT/ ALAN STEVENSON
AHZID MAHMOOD
limitations of existing technology etc.) – thus a “next-best-thing” approach will need to be
implemented by Ops Mgrs – whatever that may look like.
oR … feedback from customers (the “Market Requirements”) may indicate that a lot more
Personal Service is needed and so a business and Ops Mgt strategy of providing real
people to answer telephone enquiries and much less “push-button” automated response
is required.
These four factors that influence decisions when creating, writing and formulating the
‘Ops Mgt strategy’ (and also the business strategy!) have both good points and bad
points about them …
The effects/ influence of these four factors on the formulation of Operations Management
strategy is what you are asked to show understanding and awareness of …
http://su-bc.org/PDF/essays/MAN9N4.pdf
2.3 – Identify the strategic importance of operations management in the decision-making
process
a) Discuss how important the “operations element” was to the success of Ryanair’s
strategic decision.
b) To what extent are “operations” always involved in Strategic Decisions? Provide
some examples in your answer.