1.2 strategy
TRANSCRIPT
-
8/19/2019 1.2 Strategy
1/20
Operations Strategy
Ronald S. Lau, Ph.D.
HKUST – ISOM
-
8/19/2019 1.2 Strategy
2/20
Course outline
2
Module 1: Strategic
Planning and Decisions
Module 2: Managing
Business Process
Flows
Module 3:
Synchronizing Supply
and Demand
Module 4: Process
Improvement and
Quality Management
Operations Strategy
Strategic Issues of
Supply Chain Design
Strategic Issues of
Process Design
Resource Allocation
Decisions
-
8/19/2019 1.2 Strategy
3/20
Intended learning outcomes
Operations strategy Identify the common competitive priorities and ways to enhance
major competitive dimensions
Discuss the increasing contribution of operations in businessstrategy
Give examples of strategic decision areas of operationsmanagement
Describe with examples the order winners and order qualifiers
Identify how operations strategy can set an improvement pathby overcoming the key trade-offs
3
-
8/19/2019 1.2 Strategy
4/20
Basic concepts of business strategy
Strategy A road map for what must be
done collectively to achieve aspecific organizational goal
Business strategy is about gainingcompetitive advantage through: Strategic positioning
Operational effectiveness
Branding and customer relationship
4
http://www.google.com.hk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.clipartpanda.com/categories/road-map-clipart&ei=nZnMVKyvG8398QXDhILwCQ&psig=AFQjCNHNjCMHaC8kvXkOqvqWsFgtHrXC1A&ust=1422781185656685
-
8/19/2019 1.2 Strategy
5/20
Business strategy
Operations strategy
Distinctive
competencies
Assessment ofglobal business
conditions
Other functional
strategies
Strategic planning hierarchy – 1
Product/Service plans
Competitive priorities
5
-
8/19/2019 1.2 Strategy
6/20
Is there any future for Shan Zhai smartphones?
Shan Zhai (
) “A bandit stronghold outside government control”
Main source of fake or pirated products
For discussion… Why Shan Zhai is a Chinese phenomenon?
Their price, quality, and innovation?
How can any startups compete in acrowded market already dominatedby Apple and Samsung?
6
-
8/19/2019 1.2 Strategy
7/20
Let’s help a smart phone startup to create abusiness plan
7
-
8/19/2019 1.2 Strategy
8/20
The growth story of Xiaomi
The company Founded in 2010 by Lei Jun, now one of China’s richest men
Released the first smartphones in August 2011
#1 in China’s smartphone sales market
Business model Very slim profit margin, but not just
another knock-off
Cross sell accessories and software
Sell primarily from its own online store
Active use of social media to promotebrand awareness and advocates
Begin targeting other countries, such asBrazil, Mexico, and Russia
8
http://www.mi.com/en/
http://www.mi.com/en/
-
8/19/2019 1.2 Strategy
9/20
If you sense calm, just because youare in the eye of the storm.
— Tom Peters
Even if you are on the right track,you will get run over if you just sitthere. — William Roger
In a competitive world…
9
-
8/19/2019 1.2 Strategy
10/20
Business strategy
Operations strategy
Distinctive
competencies
Assessment ofglobal business
conditions
Other functional
strategies
Strategic planning hierarchy – 2
Product/Service plans
Competitive priorities
10
-
8/19/2019 1.2 Strategy
11/20
Common competitive dimensions
11
-
8/19/2019 1.2 Strategy
12/20
Order qualifier vs. Order winner
Order qualifier A screening factor
Basic product/service characteristics must be present
Order winner A differentiating factor
Most desirable product/service characteristics that can stand outthe competition
How to create sustainable competitive advantage? Making new order winners
Multiple competitive dimensions
12
-
8/19/2019 1.2 Strategy
13/20
Business strategy
Operations strategy
Distinctive
competencies
Assessment ofglobal business
conditions
Other functional
strategies
Strategic planning hierarchy – 3
Product/Service plans
Competitive priorities
13
-
8/19/2019 1.2 Strategy
14/20
Hayes and Wheelwright’s four-stage modelof contributions from operations
Internallyneutral
Stage 1Correct theworst
problems
Holding theorganization back
Externallyneutral
As good as thecompetitors
Stage 2 Adopt bestpractice
Internallysupportive
Clearly the bestin the industry
Stage 3Link strategywith operations
Externallysupportive
Redefiningindustry
expectations
Stage 4Give anoperationsadvantage
I n c r e a s i n g s t r a t e g i c
i m p a c t
Increasing operations capabilities
14
-
8/19/2019 1.2 Strategy
15/20
Some strategic decisions that may beaddressed in an operations strategy
15
-
8/19/2019 1.2 Strategy
16/20
Key issues in operations strategy
16
Goal Being physically efficient Being market responsiveFocus Efficiency:
Fast Inventory turns
High capacity utilization
Responsiveness:
Reduce lost sales
More variety
Cost
concern
Manufacturing, inventory
holding, transportation, and
handling costs
Inventory obsolescence, lost
sales, and poor service
OM
strategy
Large batch sizes to
achieve scale
Set minimum order quantityto reduce handling/order
processing costs
Full truck load shipments
Pay a premium for flexibility:
Faster transportation, lower
capacity utilization, andsmaller batches
Postpone differentiation
Reduce low value added
variety
-
8/19/2019 1.2 Strategy
17/20
Operations frontier and trade-offs betweenvariety and cost efficiency
X
Cost efficiency
V a r i e t y
A
C
D
B
The “efficientfrontier” A
X C
D
Cost efficiency
V a r i e t y
B
The new “efficientfrontier”
B1
17
For discussion: How to create competitive advantage throughoperational effectiveness and strategic (re)positioning?
-
8/19/2019 1.2 Strategy
18/20
Current position and strategic direction ofmovement in the competitive product space
18
Cost efficiency
V a r i e t y
Improvement through increasingfocus on variety
Improvement through increasingfocus on cost efficiency
-
8/19/2019 1.2 Strategy
19/20
Internet channel vs. traditional retail stores
19
Cost efficiency
V a r i e t y
Cost savings of theInternet channel
Wal-Mart stores
If the stores need to carryincreased assortment
Wal-Mart.com
-
8/19/2019 1.2 Strategy
20/20
Example: McDonald’s
20
Business Strategy
Gain competitive advantage by creating high customer
value with fast food that has consistent quality
Operations Strategy Responsive service
Low cost
High conformance quality
Process Structure Assembly line approach
Standardization
Flexible workers
How should operations be structured to developcapabilities that support business strategy?