Cost Efficient Frontier in British Airways: Operational Strategy Assessment Answer
Assignment Title: Operational Strategy
Authors have defined four perspective of the operational strategy in different manner based on the subject matter. The top down approach of the operational strategy gives a reflection of what the organization is trying to achieve. There’s a lot of translating which is involved in the market requirement of the operational strategy that defines the dissidence taken. It also follows the bottom up approach in which the improvements within the operation of the business is achieved through Strategies and activities. The various capabilities of the operational strategy are exploited in terms of the resources available for the target market. Report also discuss about cost efficient frontier in British airways. In Moonbar company, marketing perspective has also been discussed.
Top down perspective
In basic terms, the top down approach is decided by the management of the organization and the leadership who is responsible for formulating decisions based on the operation strategy. The basic aims and objectives of the organization are decided based on this approach. Since, most of the big organization comprises of many Strategies and distance that are related to the corporate existence, the top down approach becomes extremely beneficial. This approach in his diversifies ID and has a wide scope of existence comprising of three levels namely; e corporate strategy, functional strategy and business strategy (Lewis & Slack, 2017, p. 11 ). Hence, it helps in achieving the objectives and goals of the organization by forming the policies in business and providing a guiding map for expected performance of the organization.
It is the top management which takes the decision selected to finances, investment, procurement, resources, etc. In the overall business management. When the organizations caters to different geographical locations, it becomes even more expensive for the organization and the decisions related to the cash allotment, business investment in each location, and the overall functioning of the business in the given area has to be managed. The operational strategy therefore helps in achieving the overall functional success of the business which is guided by the top management and the corporate approach in business.
Bottom- up perspective
There is a requirement of evolving the overall business strategy is regularly as per the situation of business by forming updated strategies. The top down approach does not justify the complexity of statistical hierarchy which is existing in the organization at a realistic level. Therefore, there is always a requirement of involving ideas and suggestions from all the levels of the organization, so that the best possible solution for a problem can be developed. These ideas and suggestions are usually taken from the real life experiences of employees dealing with customers on a daily basis (Lozano et.al., 2019). All the situations are different in every situation, therefore, no one standard solution will apply to all. This can also be explained in terms of saying that the ideas and suggestions only come through time and experience of real situations and dealings.
Various level of the organization has different ideas and suggestions for the top management. In most cases, the lowest level working on the organization which is directly dealing with the customers has the maximum number of suggestions for improvement of the organization and its strategies. Therefore, it is important that the top leaders of the organization take the suggestions seriously in order to develop the most appropriate service and product for its customers. In addition to this, all the levels in the organization have different alternatives as a solution to various problems which they handle on a daily basis ((Lewis & Slack, 2017, p. 12). . All is alternate is must form the basis of formulating the most suitable operational strategy for the business.
Hence, whenever there is a requirement of examining the decision taken by the organization post its implementation can be done with the help of a bottom up approach. This kind of approach is basically helpful in situations which are difficult to analyses later on, and can successfully provide an overall accumulated report presented to the management for more advanced decision making process.
The main criterion which defines the bottom up approach is the real life experiences of situations handled by employees of the organization on a daily basis. Therefore, the crust of this approach comes from the real situations and instances rather than from any theoretical information. Bi strategies cannot be formulated under there are situations happening in reality and can only be developed over a period of time after gaining enough experience from each situation. Every situation what is dealt by the employees on daily basis has something to teach the organization. There is always uncertainty and unpredictability related to the bottom up approach which makes it an unstructured form of strategy. One solution which is formed after a given situation might not be the best solution in the similar situation sometime later. Therefore, all these strategies are emergent in nature and keeps on reflecting the present situation in a more Complex manner each time. But, bottom up approach gives it a more clearer appearance and tries to put it in a structured Manner.
For example: both the companies Toyota through which they understand the real experiences and Expectations of the customers on their products and services take suggestions from the bottom most level of employees. Both these companies follow the bottom up approach appropriately. Toyota TQM is purely based on bottom up approach in which quality circles are made and employee participation, feedback and enggagement is extremly required (Talib, 2013).
The market requirements perspective
Customer is the king when it comes to the business of providing products and services two people. Everything revolves around the customer in such kind of approach, where your organization tries to deliver the best possible product as required by the customer. In other words, it is the customer driven approach which drives an organization to formulate its policies and strategies accordingly((Lewis & Slack, 2017, p. 13). All the strategies of the organization are influenced directly by the demands of the customers and their requirements for the product and services of the company. On the contrary, we can also say that it is the organization which decides its target audiences, which then decide the strategies of business. In this way both the customer and the organization influence each other, but the customer is the priority always. All the business organization work towards meeting the satisfaction level of their target audiences and formulate strategies to operate in the business environment by keeping in mind a very important question- ‘ how in the strategy of the business operation make the organization stand apart and tackle the competition existing in the market already’? In most of the cases when an organization tries to formulate a stagnant position for itself in the market, it is the customers which keeps it rolling providing it more dynamic existence. The market strategy of the organization in terms of its operations can be both good or bad what is decided by the attractiveness it provides to the customer. Therefore, any kind of a change in the market directly influences the strategies of the organization. Thus, theorganization has to keep working towards preparing more dynamic policies especially, while entering the new market segment.
For example: The company Samsung provides many handsets to cater different customer segment to its customers according to their needs and requirements. Samsung provides cheap handset for lower middle class and Galaxy note premium mobile phones for upper middle class segment (Wambui, 2013).
Operations resources, process, routine and capabilities
The resources in the organization have to be distributed in such a manner, that all the operations of business can be carried out smoothly. Therefore, it is important for the management to take decisions pertaining to the requirement of each department and its resource availabilities (Merton, 2012). Such as the requirements for adequate staff members, processing and operational Strategies for each level of the business, different Strategies for different units in the organization, etc. If the management is able to distribute its resources effectively with the organization, there are higher chances of its success in the business perspective. Any miss-management related to the procurement or availability of resources can lead to the failure of business operations which will require further action for amendments in strategy. The operational perspective is basically formulation of strategies based on the need and availability of the resources in the organization related to both tangible and intangible items. The intangible items, for example entries that have not been recorded in the books of accounts can you play a major error at the time of auditing (Lewis & Slack, 2017, p.14). . Therefore, it is necessary that strong policies are made for maintaining the resources which are both seen and unseen in nature.
For example- Apple is known for its premium quality and advanced technology. To maintain premium quality, Steve Jobs made sure that every policy and business operation must work in the direction to provide premium services and product.
The business performance is affected by the operational strategies it adopt while the production of goods and services for its clients. It might include the following elements:
- Need of the customer- companies have provided the customers with tailor made requirements to satisfy them in terms of products and services of the organization (Lewis & Slack, 2017, p.26). For example, Moonbar company is providing snacks bar which are actually healthy and contains ingredients in quantity as promised (Shaw, 2019). . Please provide the reference for Moonbar and Snacksbar
- Positioning of the market- the company Moonbar was developed by Richard King. Thought of providing healthy snack bar whose nutritient value doesn’t go down during proceesing.
- Actions taken by the Rivals- no rival reactions for taken on this stance till date.
- Performance objectives- the Snakcbars of this companyare being exported Malaysis and company aims to expand its export to worldwide.
- The tangible and intangible form of resources- it was the owner’s decision to contract manufactures to make snacksbar because owner didn’t have enough funds. However, owner is careful not to compromise on quality (Lewis & Slack, 2017, p.26).
- The capabilities of the operational unit- The owner doesn’t have any manufacturing units
- The operating processes- The moonbar has premium nuts. The recipe of snackbar is true reflection of its ingredients. Extrusion process is not used to give it shape of snacksbar. Because, extrusion process change the molecular structure as well as nutritional value.
Every factor in this production is interconnected and the business requirements are formed through a strategic reconciliation of resources into its production and operations.
Every organization has to make sure that the goals and objective they define must be completely synchronized with the market existence, competition in the market, expectation of the customers, needs of the business, investment, competitive factors, revenue sources, expansion,etc.. Each one of these factors is supposedly well-defined in an organization which performs up to the mark in the industry (Phillips et.al., 2018). But, cost is still one of the factors which can define the success or failure of any organization because of its uncertainty and Management complexity. It has been noticed in many cases that even when the product is low priced it is able to satisfy the customers to the maximum possible extent and result in producing more revenue than the product which is highly priced (Lewis & Slack, 2017, p.27).
it is mandatory for the organization to take a well-balanced and analyses decision in terms of its operations for the smooth functioning of the business in the long run. This is basically related to the capacity and capability of the organization in terms of:
- Supply network strategy- all the strategies which have a direct connection to the network of operations in the business including customers, vendors, suppliers, workers,etc.
- Process Technology strategy- the choice of Technology into business directly affects its smooth functioning and operation. Therefore, any decision related to the technological advancement and up gradation must be thoroughly analyzed before implementation. Because the final product will be formed after using a lot of resources, which cannot go wasted just because of fault in technological decision.
- Development and Organization: the long term strategies of business related to its development comprise of a broad set of objectives and goals for the company.
Best price in industry
Clean and hygenic rooms
("SkyCity Auckland - Hotels | Restaurants | Bars | Casino | Entertainment | Conventions", 2019)
Broad customer base
Lower call drops
Timely wait services
Internet speed is high
Call connecting speed is good
|Dependability||Customers are informed immidiatly about any updattions||IVR facility is there to support customers 24X7|
Services are flexible
|Packages can be customised as per customer requirements|
Hotel Maintenance expenses
Network maintenance charges
There are two companies that provide extremely high quality services in New Zealand known by the name of Skycity Hotel and Vodafone. Both of these companies are committed in terms of providing high class services to its customers by meeting their demands effectively. Both the organizations provide tailor made services for the customers in terms of designing their products as per their specific needs and requirements. Skycity hotel best customer services. On the other hand, Vodafone provides customized services to its customers at cheaper cost for their comfort.
- Online booking to is provided as a service to its customers by the hotel company. Similarly, Vodafone is providing online services to its customers to purchase their products and services from the comfort of their home without many efforts.
- Both the companies have a higher rate of dependability for the customer as they provide transparent decisions of adopting the strategy by providing full information to the customers.
- Flexibility is offered by both the companies which cater to the customers’ needs of the customer’s to the full satisfaction level.
- No extra amount of money is charged from the customer unnecessarily, and only charged for the services they purchase plus taxes and other related expenses.
Implication for CEO
Both the company’s has a huge customer market with diversity in its operation as per the region in which there exist. Therefore, the operational Strategies and marketing activities must be in sync with the requirements of customer expectation. Both have full chances of entering a new premium segment within the market for customers who are ready to pay for the premium services they purchase from the company.
Resource usage for Skycity Hotel
|Capacity||Supply Network||Process technology||Development and organization|
|Quality||There should be quality management system to check and ensure cleaniness, hygiene level of hotel rooms and food services (Lewis & Slack, 2017, p.32)..||Suppliers must provide quality household and kitchen products.||Kitchen and housekeeping staff must have latest technological equipments****||Surprise visit to check quality|
|Speed||There should be enough room, raw material of food and preventive maintennace of other facilities****.||Order processing time should be lesser and orders should be fullfilled ontime(Lewis & Slack, 2017, p.32).||Online tracking, mobile apps should be there for speeding bookings||Training to staff to use new equipments|
There should be enough wait staff to fullfill customer requirement
Inventory of linens, toiletories and raw material for food preparations
|Suppliered should be followed up and monitored regularly so that they can give their best performance||Staff should be trained to utilize latest equipments.||Supportive and motivational organizational culture****|
|Flexibility||Stores should have enough space to keep all housekeeping and kitchen stocks****||Suppliers should be flexible enough to send urgent orders||There should be official communication among staff through emails, text etc.||Hotel works 24X7 hence, staff should have flexibility in leaves and shift management|
|Cost||The products should be stacked and their cost should be noted down.||Cost to manage relationship with suppliers|
To buy new equipments
|Training of staff|
The efficient Frontier
All the organizations working in the market are expected to provide best quality service, maximum level of satisfaction to the customer, reasonable pricing, variety in products, flexibility, dependability, maximum Returns, cost efficiency,etc. Hence, companies need to create balance between cost and variety of products/services. This trade off is called efficient frontier. Efficient Frontier can be defined as a convex line on which all the variety of products ABCD lies. Different strategies might be adopted at different point of time but none of them can be tagged as ineffective. Therefore, it is extremely important that a balance of the Frontier line is maintained in terms of cost efficiency and performance.
EFFICIENT FRONTIER FOR BRITISH AIRWAYS(before and after)
The implementation of strategy in terms of British Airways Positioning with respect to its competitors is explained in above hand drawn figures. All the companies are positioned with respect to cost efficiency and variety by assuming that all of them provide maximum customer satisfaction and quality. But,each organization has different strategies in terms of meeting cost efficiency requirements. For example, there was a twin class system availability offer to the customers by most of the airlines which was later converted into a luxury business class travel (Lewis & Slack, 2017, p.76).. This resulted in less cost efficiency, which led to decline in first class travellers dramatically.
But, British Airways try to understand the ideology of the people in which they analyses the fact that first class Travellers were reduced in because of the cabin and space issue in the flight. They came up with the idea of redefining the space in the same airline. However, the space issue was one of the biggest challenges for the Airlines as there was Limited area for redefining according to the requirement of the customer. But, with the help of Advanced technology British Airways developed a cabin structure by the name of ‘ bed in the sky’ that was a seat which could be turned into a bed with all facilities available. Although, the number of seats in the airline declined from 18 to 14, but it provided customer satisfaction to the maximum possible extent. The customers readily welcomed this and they started coming back to the first class service of the Airlines. The cost efficiency curve upwards providing a new Frontier with cost efficiency and variety well balanced.
All companies utilize only the four kinds of business operational strategies in most of the cases. For example, the matrix was able to explain the operational Strategies for Skycity hotel, Vodafone and British Airways along with providing guidance to the management for taking well-balanced decisions. The strategy adopted by British Airways help it in in gaining competitive advantage by providing world class service in the first class capacity. The operational strategy of Moonbar snacks is also explained effectively in this segment