Lecture 2 – Introduction Part II
Competitiveness
Strategic Planning
BU 375
Agenda
Mission/Vision/Value Statements
Basic Definitions
Competitiveness from the Consumer’s Point of View
Competitive Priorities from the Firm’s Perspective
Strategic Planning – General Considerations
General Operational Framework
Operational Strategy – What is it? How Does it Work? Why Does it
Matter?
Decision Categories
Development of a Strategic Operations Plan
Productivity
Mission/Vision/Values Statements
Mission Statement should provide a clear and concise view of:
• What the company does and what it has to sell
• Who it sells to and a description of the marketplace in which it operates
Vision
• Where we want to take this company
• Where we want to be in 5 or possibly 10 years
Values
• Common beliefs that individuals share within a company that will enable it
to achieve its long-term vision
How a Firm Works with a View for the Future
Some Basic Definitions
Strategy – a company’s plan to continue fulfilling it’s
current mission (what it wants to provide), while it
simultaneously works towards where it wants to be in
the future (vision)
Competitiveness – the degree to which a firm can meet market needs on market
terms, while maintaining or increasing its real income
Strategic Planning – the managerial process to take an organization from where
it is today to where it wants to be tomorrow (corporate vision)
Productivity – measurement of how well we utilize resources to maintain a
certain level of output
Competitive Priorities from the Producer’s Perspective
Cost
• How can we do what we do at a lower cost without compromising quality of the goods and
of the accompanying level of customer service?
Quality
• What levels of quality do customers expect and can we make goods that meet or even
exceed them?
Flexibility
• How good are we at modifying what we do to meet individual customer requirements?
Do we want to sell a generic ‘one size fits all’ or do we want to build a business on
customization or a combination of the two?
Delivery
• Can we deliver on time or earlier? Are we constantly late? Can we meet periodic short-
term delivery requests?
Real Life Factors that Affect Our Ability to Compete
• Do we have a clear understanding of what we want to make
or sell?
• Can we work as a group of people towards a common goal?
• Do we provide a climate that fosters the notion of core
competencies?
• Do we have the ability to build upon our experiences (and
mistakes) to develop next generation products?
Strategic Planning
Approach can be dependent upon the size of the firm
Larger firms take a more formal approach:
Compose a strategy development team
Assess current performance levels
Commission a market survey
Take a formal approach that documents progress and creates accountability
A car assembly plant versus a smaller machine shop
production unit
Considerations common to both Large and Small Firms
Development or revision of the current mission statement
Dependent upon core values of the organization
Expression of Long-term Goals
So Why Does it Even Matter?
Because when a firm becomes content with the status quo, you can be
assured that others will be committed to continuous improvement in terms of
product quality and price, and in productive efficiencies
Because firms that increase value-added (i.e. through productive efficiency &
product quality improvements) will:
Gain the attention of their customers
Have the cash reserves to enable them to be sustainable during short-
term downturns
Have cash for future productive improvements
PRACTICAL Strategic Operations Decisions
(Things that an Operations Manager Needs to Address)
1. Facility & Technology
2. Capacity
• Are economies of scale sufficient to meet competitive goals?
• Does it take into account future demand trends and perceived needs?
3. Vertical Integration
• Will ownership of production, further processing (if applicable), and
distribution fulfill sustainability goals
• Will extending operational control to a wider segment of the supply chain
provide concrete benefits in terms of co-ordination?
Strategic Operations Decisions (cont’d)
4. Vendor Relations
• There is a continuum between extremes
• Vendor sees you as an adversary who wants to buy inputs of equal or
greater quality at the most favorable terms possible
• Vendor acts a collaborator or ally to smooth out product defects, outages
etc. to mutual satisfaction
5. Product Mix/New Product Developments
• Operations managers need:
• To be onboard for new product developments to succeed
• Foster a co-operative relationship with marketing arm of the firm
• To be flexible and cater to detailed product attribute requirements
Strategic Operations Decisions (cont’d)
6. Quality Control Systems
• What equipment or process technologies are required to delivery
prescribed level of quality?
• What numerical controls will be put in place to measure quality of output
to internal criteria?
• Who performs ongoing monitoring?
• Workers or independent QC department?
