amp Strategy Part 2 Competitive Space and Strategy Based on the Book Managing Business Process Flow Competitive Product Space PQVRCQFF Quality Variety H L H B A C D Quality ID: 250128
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Slide1
Process View
&
Strategy
Part 2- Competitive Space and Strategy
Based on the Book: Managing Business Process Flow.Slide2
Competitive
Product Space: PQVR/CQFF
Quality
Variety
H
L
H
B
A
C
D
Quality
Cost
H
L
H
B
A
C
D
Quality
Cost Efficiency =1/Cost
H
L
H
D
C
B
A
Quality
Flow Time
H
L
H
D
C
B
A
Quality
Responsiveness =1/Flow Time
H
L
H
A
B
C
D
Competitive Product Space:
A for dimensional space
representation of the
Product Attributes PQVR or Process Competencies CQFT.
Moving outward is better.Slide3
Competitive
Product Space
One firm: low cost and standardized products
Another firm: expensive and customized products.
Low
Variety
B
A
Cost Efficiency =1/Cost
High
Low
HighSlide4
Strategic Positioning
Defines those positions that the firm wants to occupy in its competitive product space. The current position and direction.
A firm must ensure that its competitors are not able to imitate its chosen position. A sculpture, not a block.
It is harder for competitors to imitate
an array of interlocked activities.
Price Efficiency = 1/Price
Responsiveness
B
A
Low
High
Low
HighSlide5
Zara:
timely yet limited variety at modest cost and quality.
Aravind and
Shouldice:
low cost, high quality, minimal variety, average to long response time.
Corolla: flow shop, decentralized assembly plants close to market, short flow time, low cost.Ferrari: job shop, only a single plant in Italy, longer flow time, high cost.
McMaster-Carr: a materials, repair, and operations (MRO) product distributor, a process with high flexibility, high quality, short response time, but at a high priceWalMart: Short flow times, low inventory, low cost, average quality.
What is the Best StrategySlide6
Focused Strategy, Efficient Frontier
Cost
Responsiveness
World-class
Emergency Room
World-class
(non-emergency)
Hospital
One general
facility
Efficient frontier
Low
Low
High
High
Efficient
frontier:
the minimal curve covering all the current positions in an industry. Slide7
Focused Strategy, Focused Operations
Focused Strategy:
Committing to a limited, congruent set of objectives in terms of demand (product, market) and supply (input, technologies, and volumes).
A focused process
is not limited to a few products.
Focused process: one whose products all fall within a small region of the 4 dimensional product space.
Plant Within Plant(PWP): The business strategy is diverse. But the entire business is divided into several mini-plants each with focused processes. One PWP may focus on low cost, the other on quick response.Slide8
Strategic Positioning and Operational Effectiveness
Responsiveness
A
B
C
Price Efficiency
Low
High
Firms located on the same ray share strategic priorities
. World
class firms are on the efficient frontier
. Efficient frontier is the minimal curve covering all the current positions in an industry.
Strategic positioning: the direction of the improvement from current position; the position on the EF the company wants to occupy.
High
Low
Efficient operations
frontier
Firms not on the EF, are not on strict trade-off, they can make simultaneous improvement on more than one dimension. They do not need to trade-off. Firms on EF need to trade-off.Slide9
Trade-off:
decreasing on one dimension to increase on the other dimension. World class firms also try to push the EF outward. As technology and management
practices advance
, the EF moves upward. But the impact is not the same in all industries.
If I have one more line to define Operations Management Understand Trade-off.
Different companies intentionally choose different processes to accomplish the same goal. McDonald vs. In & Out.Different processes lead to different advantages and disadvantages. We always facing trade-offs. It is not difficult to deliver books very fast. It is not difficult to deliver books at a very low cost. But, it is difficult to deliver book fast and at a low cost.
Efficient FrontierSlide10
Operational effectiveness
: developing operations strategy (resources, processes, values, competencies) that support the strategic positioning (customer value proposition) better than the competitors.
How does effective differ from efficient?
Conventional Management Definition:
Effectiveness; doing right things.
Efficiency; doing things right. Operations Management Definition: Cost Efficiency: achieving an output with minimal level of input and resources. Low cost Operations.Effective Process:
supports execution of company’s strategy in the four dimensions of C/Q/F/T. Synchronized process does good in all 4 dimensions.
Operational Effectiveness