Evaluation of the operations strategy:
· Internal and external consistency - Looking at the operations strategy along the seven dimensions, they all support the operations mission and the business strategy.
· Contribution to competitive advantage - Systemic strategy creates unmatched consistency in operations that has been difficult to imitate.
“Operations must have a plan for how to meet customer demands profitably while avoiding constant crisis. An operations strategy is as integral to long-term profitability and success as any other element of corporate strategy. A succinct and well-communicated operations strategy provides a consistent context for the decisions made throughout the company. Without a definition of where the company is going and how it intends to get there, how can any operational decision be deemed good or bad? An operations strategy that addresses production (process technology, layout, facilities, planning and control), supply chain (suppliers and customers) and integration of Operations with the rest of the organization (HR, IT, R&D, Finance, Sales/Marketing, etc.) can provide that missing link. The right operations strategy, well-implemented, enhances an organization's competitive position in its chosen markets.” (3)
Customer perspective
“Kaplan and Norton do not explicitly define what a perspective means, but they list the four main perspectives that an organization (whether profit or non profit) must have” (4):
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Financial perspective: In profit organizations, this involves the shareholders, while in non profit organizations, it involves those subsidizing or financing the organization.
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Customer perspective: The customer perspective is concerned with: Customer selection, Customer acquisition, Customer retention, Customer growth
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Internal (business) process perspective: Involves: Operations management processes, Customer management processes, Innovation processes, Social and regulatory processes.
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Learning and growth perspective: This involves developing the human, information and organizational capital.
“Some important facts about the perspectives and their ordering:
- The perspectives are arranged in descending order of measurability, urgency, tangency and visibility.
- The organization's mission, vision, core values, and main goals are in terms of the higher perspectives.
- The detailed strategies are in terms of lower perspectives.” (7)
The value proposition is the mix of commodity, quality, price, service and warranty that the organization offers to its customers. The value proposition is aimed at targeting certain customers, that is, it has certain target segments. There are four broad classes of value propositions:
- Best buy or Low total cost: Affordable prices, reliable quality, quick service. For instance, Southwestern Airlines, a much touted case in business studies, adopted a best buy strategy.
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Product leadership and innovation: The cutting edge products or industry leaders. Companies like , offer such a value proposition.
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Customer complete solutions: Tailor made for the customer's individual needs and preferences. offers customer complete solutions.
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Lock in: The concept was introduced by . “The organization tries to get a large number of buyers in a position where they are left with practically no alternative but to buy their products. For instance, they sell certain auxiliary products at cheap prices, which are not compatible with products made by other organizations. Lock in strategies exploit high for the customers making them stick to the organization. Lock in related to the concept of . The software company has often been accused of lock in. It can be argued that IBM's SNA strategy was one of lock-in. IBM ensured that SNA was required at key points in their mainframe architecture. As the SNA specification was complex, incomplete and subject to change by IBM, the competition was unable to provide an effective alternative. This locked customers into buying IBM products to ensure compatibility. Different value propositions suit different target segments of customers. The actual value proposition offered by an organization may have a mix of the above components.” (2)
Conclusion. The operations strategy is successful only if it enables the organization to profitably and routinely meet the needs of the markets the company chooses to serve. The first step, therefore, is to understand the needs of the market. You must begin by identifying and then prioritizing the requirements of the markets. These include cost, quality, speed of delivery, accuracy of promise date, pre- and post-sales support, flexibility, technical leadership, rapid product introductions, integration with other systems and participation by customers in product design.
Sources:
1.
2. Service Management: Operations, Strategy, Information Technology (Hardcover)
by , , 640 pages
Publisher: McGraw-Hill Education; 3Rev Ed edition (8 Aug 2000)
3.
4. http://en.wikipedia.org/wiki/Strategy_map
Market Orientation and the Learning Organization Stanley F. Slater, John C. Narver Journal of Marketing, Vol. 59, No. 3 (Jul., 1995), pp. 63-74
2007 ABR & TLC Conference Proceedings Hawaii, USA 1 Relationship Marketing And Its Effects On Customer Retention Palto Ranjan Datta, London College of Management Studies, UK
Thing Cuong, Breyer State University London Centre, UK Hoang Thien Nguyen, Breyer State University London Centre, UK Ha Nguyen, Breyer State University London Centre, UK
6. Relationship Marketing and Sustained Competitive Advantage Authors: Rowe W.G.; Barnes J.G. Source: , Volume 2, Number 3, 1998, pp. 281-297(17)
7.
by Adrian Payne - 1998 - 320 pages‘Designing a customer retention plan'. The Journal of Business Strategy, 13 (2) 24—28, by permission of Faulkner and Gray.
8.
by Robert S. Kaplan, David P. Norton - 2004 - 324 pages
9. by Merlin Stone, Bryan Foss – 2001
10. by Neil Woodcock, Merlin Stone, Liz Machtynger - 2000 - 190 pages
