In this assignment, my focus will be on Malaysian low-cost airline company - AirAsia Berhad (AirAsia). First of all, I will explain about operations management and operations strategy. Then, in literature review part I will describe some OM decision area

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University Degree Business and Administrative studies

MASTER OF BUSINESS ADMINISTRATION

MGT 6206: OPERATIONS MANAGEMENT

SESSION: JAN 2012

INDIVIDUAL CASE STUDY

LECTURER: ANTHONY VAZ

Ruslan Sansyabayev

I12000706

Table of Contents

Chapter I: Introduction        4

1.1 Operations Management        4

Chapter II: Literature Review        6

2.1 Operations Strategy         6

2.2 Location Selection Strategy        9

2.3 Capacity Planning and Control         10

Chapter III: Background of the Organization        12

Chapter IV: Analysis of OM Strategy Decisions        13

4.1 Business and Operations Strategy        13

4.2 Capacity Planning and Control         17

4.3 Location Selection Strategy        19

Chapter V: Recommendations        22 

Chapter VI: Possible Organisational Barriers        23 

Chapter VII: Learning Points        24 

Chapter VIII: Conclusion        25 

GANNT CHART        26

REFERENCES        27

LIST OF FIGURES

Figure 1         5

Figure 2.        7

Figure 3         8

Figure 4         13

Figure 5.        14

Figure 6         18

Figure 7.        19

LIST OF TABLES

Table 2.1        17

Table 2.2        17

Chapter I

Introduction

1.1 OPERATIONS MANAGEMENT

The aim of this assignment is to choose an organization, analyse the way in which the organisation’s operations strategy complements its business strategy and compare 3-4 decision areas within the operations of the organization from an operations management perspective. In this assignment, my focus will be on Malaysian low-cost airline company - AirAsia Berhad (AirAsia).

First of all, I will explain about operations management and operations strategy. Then, in literature review part I will describe some OM decision areas which related to organization areas. After that, I would like to describe AirAsia background and several operations strategies that this organization applies. Finally, there will be some parts of recommendations and personal reflections.

The process how firm produce services or goods is operations management. (Slack et al., 2007) Everything that people eat, wear, every service expected in the supermarket and every movie that people watch at the cinema – all have been produced.

The field of operations management (OM) has been evolving for many years and may broadly be construed as incorporating supply chain management, quality management, product and process design, project management, and other topical areas. OM is defined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services (Chase et al., 2006).

Basically, every organization makes a product. It can be goods, such as cars or computers, or offer intangible services, such as education or insurance. At the heart of every organization is the set of operations which makes this product. Operations management considers the way in which these central operations are designed, planned, organized and controlled. In this time, many organizations have put much more emphasis on operations management (Waters, 1999). In addition, operations management deals with decision making related to productive processes to ensure that the resulting goods or services are produced according to specifications, in the amounts and by the schedule required, and at minimum cost (Shim and Siegel, 1999). Slack et al., (2007) mentioned that operation management is very useful and important because it is about creating goods and services upon which everyone depends.

Therefore, it plays an essential role in the success of any organization and organization will not succeed if they cannot deliver goods or services at the right time and the right place or cannot provide the best quality product. Operation decisions directly affect the size, shape, quantity, quality, price, profitability and speed of delivery of a company’s output. (Greasley, 1999) Also, operations management is important because it affects many changes in the business world, changes in customer preference, changes in what people want to do at work, changes in how people want to work, where they want to work, and etc. Finally, operations management is challenging, promoting the creativity which will allow organizations to respond to so many changes is becoming the prime task of operations managers.

Figure 1 The relationship between the operations function and other functions of the organization.  Adopted from: Slack et al., (2007), p. 6.

Slack et. al.(2007), expressed that operations management is very important and effective in organizations; if operations management work well, it will provide 4 advantages to the organization, such as:

1). Reducing the costs of production;

2). Increasing revenue and increasing customer satisfaction;

3). Reducing the amount of investment;

4). Provide the basis for future innovation.

Chapter II

Literature Review

2.1 Operations Strategy

According to Management Study Guide, the word “strategy” is come from the Greek word “stratçgos”; stratus (meaning army) and “ago” (meaning leading/moving). Basically, strategy can be defined as “A general direction set for the company and its various components to achieve a desired state in the future”. Strategy results from the detailed strategic planning process”. However, the most suitable definition gave Johnson et al. (2005): “the direction and scope of an organization over the long-term, which achieves advantage in a changing environment through its configuration of resources with the aim of fulfilling stakeholder expectations”. Hayes et all (2005), mentioned that effective operation strategies need something consistent and contribute to competitive advantage.

Barnes, (2008) said that strategy can be described as three levels in an organization:

  • Corporate level strategy: The main level of strategy is corporate level strategy. Corporate level strategy is strategy which specified on long-term and for the whole organization. For instance, when any organization has many different business units, those businesses will be managed by corporate level strategy. It means that corporate level strategy is concentrated on how those business units should be. Usually, mission and vision statements are shown strategy of organizations.
  • Business level strategy: Business level strategy shows how a business unit competes within its industry, and what organizations aims and objectives have to be. Business level strategy depends on organization’s corporate strategy. However, in organization which has one business unit, business level strategy is usually together with corporate level strategy.
  • Functional level strategy: This level strategy is concerned of the individual function of organization, for example; human resources, marketing, accounting, etc. Therefore, the functional level strategy is mainly focused how each function of organization conduces to the business strategy and what their strategic objectives should be. (Barnes, 2008)

 

Figure 2 Levels of strategy. Adopted from (Barnes, 2008, p. 23)

Slack et al. (2004), identified five performance objectives that appropriate for every type of operation. Focusing on one or more of these objectives can be a result of competitive advantage to the organization.

  • Quality is the ability to produce product or service in good quality and without errors. In other words, it is about doing things right so that error-free goods and services are delivered that are fit for their purpose. Quality is a major source of customer satisfaction or dissatisfaction. Poor quality products or poor quality of service are likely to put the customer off returning, leading to future lost sales.
  • Flexibility is the ability change what operation does quickly. For instance, it is the ability to change the mix of products and services it is offering to the customer or ability to react to demand changes and increase or decrease the volume of output in response or the ability to bring new product/service designs to market quickly.
  • Speed is the ability to produce product quickly in response to customer demands and spending short time between when a customer orders a product and customer product receiving.
  • Dependability is all about consistency. It is the organization ability to transport products or service to customers with guaranty what was promised.
  • Cost is the ability to produce at low cost. If the cost of producing the product is lower, the lower price that can be offered to customers, as a result; there will be increase in sales and profits.
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Every of this performance objective has some effects, while; Slack et. al., (2007) expressed that all of them affect cost. Therefore, to improve cost performance is to improve the performance of the other operations objectives (shown in Figure 1.2).

Figure 3 The relationship between the five operations performance objectives.  Adopted from: Slack et al., (2007), p. 52.

However, according to Barnes (2008), every organization cannot focus on every operations performance objectives because it can lead to confusion in organization. As a result, every organization should choose which performance objective they will focus more than other. This concept is ...

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In this assignment, my focus will be on Malaysian low-cost airline company - AirAsia Berhad (AirAsia). First of all, I will explain about operations management and operations strategy. Then, in literature review part I will describe some OM decision area
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