Chapter 2BBT2435| TOUR OPERATION MANAGEMENT

Prepared by KAMELIA CHAICHI

Alex Hill and Terry Hill

Lecture outline

• INTRODUCTION

• What is STRATEGY?

• LEVELS of strategy within a business

• DEVELOPING a strategy

• IMPLEMENTING a strategy

• Critical REFLECTIONS

• SUMMARY

• 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.

What is strategy?

HOW to do it

DIRECTION

WHAT to do

Operations strategy concerns developing the CAPABILITIES of an organisation to reflect the NEEDS of its customers and markets

FUNCTIONAL

Levels of strategy

CORPORATE

BUSINESS UNIT

•Where to INVEST or DIVEST

•SALES REVENUE priorities

Corporate

IMPLEMENTATION

Allocation of investment FUNDS

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.

DIRECTION OF BUSINESS UNIT

IMPLEMENTATION

•WHICH functional tasks to invest in

•HOW to invest in these tasks

Business unit

DIRECTION OF FUNCTION

Support COMPETITIVE DIMENSIONS within a market for

which it is solelyor partly RESPONSIBLE

Functional

IMPLEMENTATION•Meeting competitive REQUIREMENTS•Selecting APPROACHES to attain

improvement goals•Implement the PLAN

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

Functional

Understanding MARKETS is the FIRST step in strategy development

Understanding customer requirementsQUALIFIERS

ORDER-WINNERS

Get and keep a service or product on a customer’s SHORTLIST

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

theproducts and services of one firm from

another.

A brand name carcan be an “order

qualifier”Repair services can be “order

winners”Examples: Warranty, Roadside

Assistance,Leases, etc.

> KEY IDEA 1 Understanding CUSTOMER requirements:• AVOID general descriptions• IDENTIFY and WEIGHT order-winners and qualifiers

> KEY IDEA 2All functions must be involved in the discussion on HOW to GAIN, RETAIN and GROW CUSTOMERS and MARKETS

•What is the OPERATIONS process?•What are the key MARKET

requirements?

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.

The process of strategy development

Alternative APPROACHES

•TOP-DOWN vs BOTTOM-UP•MARKET-DRIVEN vs MARKET-DRIVING

Top-down approach

FUNCTIONAL

CORPORATE

BUSINESS UNIT

Day-to-day EXPERIENCES and LEARNING

Consolidated into formal STRATEGY

Bottom-up approach

EMERGING sense of what strategy should be

Market-led orientation

MARKETMARKET DRIVES

OPERATIONS

OPERATIONS

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

Market-driving orientation

MARKET

OPERATIONS DRIVES MARKET

OPERATIONS

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 facilitya 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.

Alternative approaches

Aspect Prison Camp Restaurant

Strategic OBJECTIVES

STRATEGY for meeting these objectives

PROCESS of developing and implementing strategy

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

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

CASE FOR TUTORIAL

APPLE