Operational Strategy Concepts Assignment 1 Answer
Assignment Detail- Operational Strategy
Four perspective of operation strategy
There are many authors who have different views on this definition about the subject matter. But in between, there are ‘4 perspectives’ existing on the subject:
- Operation strategy is considered to be a ‘ a top- down’ form of reflection which defines what the business wants to achieve
- Operation strategy is also a ‘ bottom-up’ where improvements in the operations are built through various activities and strategies
- Operation strategy is also involve a lot of translating for the ‘ market requirements’ into the decision related to business operations
- Operation strategy also in words exploitation of where is different capabilities existing in the ‘ operations resources’ in the target markets
Top Down perspective
Any operation strategy must be able to reflect those decisions that are taken by the top management of the organization. Top management is responsbile to figure out the overall strategic goals and direction for the business. This is known as a top-down approach(Lewis & Slack, 2017, p. 11 ). .
Therefore, Top down approach is very advantegous in large and diversified. Becaue, large and diversified organizations consist of many decisions in the corporate strategy. In the top down approach, there are three levels- corporate strategy, business, and functional strategy. They all form hierarchy in business policy formation which form the road map of achieving objectives for improved organizational performance (Maticiuc, 2014).
Top down approach is also benefecial for those organizations who have opeations in different geographical location. Because, in those cases, top management needs to decide the type of investment, business acquisition and how cash will be allocated into various businesses units. In addition to this, each business unit within a large business organization decide about business strategy that will help the business achieve of their overall functional strategy which are ultimatly guided by corporate strategy.
For example- Helmey hotels,Trump organization work on top-down approach. In these organizations, leaders have strong personality and take decisions themselves. These leaders instruct all departments to align with their decisions. Hence, it is example of top-down approach.
There are many problems in top down approach.
In present reality, relationship exists between the strategic role hierarchy levels are much more complex than in the top town approach. Hence, top-down perspective doesn’t represent about the formation of strategies. Individual business units that exist within the business must be involved in the process of forming strategies. Bottom layer of organization must involve ideas from all the segments related to everyday experiences(Weißleder & Lackner, 2013). Hence, in other words we can also say that the top- up down perspective is also a form of experiences that are collected over a period of time occurring as real instances((Lewis & Slack, 2017, p. 12). .
It has been observed that companies decide about the future direction of their business based on operational level suggestions. Suggestions from grass root level convince them that acting in a particular manner and service to the customer is exactly what is required at a given point. Many times, the higher-level decisions are based on identifying various alternatives to the situation.
However, a post examination of those decisions may not be available. Bottom-up approach is benefecial in these kinds of situations when post examinations of decisions are difficult, irreversible or expensive. Bottom-up approach provides overall consensus and help top management to make informed and better decision-making.
In bottom-up approach, strategies are formulated based on the experiences over a period of time. It is known as the concept of emerging strategies. These strategies are usually crystle clear and are majorly taken from the real life experiences. Hence, bottom up approach is based on real-life experience rather than based on discussion in boardroom. However, bottom up approach strategies are formulated in an unstructured manner, which is fragmented and reflects the unpredictable future. Therefore, bottom up perspective might not be the best idea for specific operations. Emergent strategies are considered to be less complex and the perspective of a bottom up strategy is clearer.
For example- IBM and Toyota are good example of bottom up approach. Both companies take suggestions and feedback from ground level staff. At this point, ground level staff provides feedback and tells top management about root cause of customer dissatisfaction. It will known as bottom-up approach.
The market requirements perspective
Business operations majorly exist to serve the target audiences. Hence, one of the key decisions would be to ask a very simple yet crucial question in terms of the market, ‘how will these operations help the business in competing within their Marketplace? . Hence, it can be said that customers are king and they drive an organization. Many strategies and decisions are driven by customer preferences (Komssi,et.al.,2015). Therefore, organization itself influences the decision related to market demands as it decides upon the target market in which they want to exist. Therefore, whenever the business is trying to choose a particular market position for their organization, to a certain extent, the market itself influences the operations((Lewis & Slack, 2017, p. 13). . This makes a possibility for shifting the organizational strategy according to the market attractiveness to analyses its operations in terms of good or bad. Hence, market requirment perspective can be defined in which organization decisions are driven by changes in market(Gorm Rytter, et.al., 2007).. It is particularly useful when market is dynamics or organization is entering into new market.
For example- Vodafone is good example for market perspective. Vodafone offers different kind of customised call and data packages. Because, competitors like Airtel enter into market and develop similar products. Due to heavy competition, company is forced to change it marketing strategies. It will be known as market requirement perspective.
Operations resources, processes, routine and capabilities
The coordination of different resources has to be understood in order to understand the operations of the business. For example, the resources available in different units of the processing center, the availability of competitive staff, organization of staff in different units etc. This division of resources is mainly the reason for operational success of the overall business organization (Demeter & Boer, 2011). Whenever the operational view is limited in terms of describing their physical existence based on the need of resources is the most basic requirement for or operations in the organization.Hence, when strategies are based on available resouces of organization, it is called as operational perspective((Lewis & Slack, 2017, p.14). All the tangible and intangible resources of the organization must be included in the books for audits. These factors are not directly seen but play a major role in overall success of the company. It includes things such as
- Relationship and management of suppliers including contracts and mutual agreement
- Knowledge and experience he was in the labor market of dealing with technological resources
- Knowledge of the day today business operations and production of goods and services
- Skills and procedure for developing new product and services
- Relationships and contacts which exist in the market and help in better understanding of the trends that are existing in the current market with specific requirements by the customers.
These operational strategies affect the performance of the business and help in formulating the objectives of the organization that is based upon factors such as:
Needs of the customers- The Company Apple press has provided its customers with an experience of enjoying their favorite Apple juices that come with no added preservatives and added sugars(Lewis & Slack, 2017, p.26).
Positioning of the market- When Beaton was struck by the idea of utilizing approximately 13000 tons of a product that was called the “Ugly fruit” as they were blemished apples that were cosmetically rejected, he decided to team up with Sally Gallagher who was a specialist in food innovation to create something known as an apple press (Lewis & Slack, 2017, p.26). So positioning for the apple press is providing good quality apple juice from the apples which are considered useless because of blemish(("Lid is off Whakatu's new $30m 'black box' apple juice drink factory", 2019).
He has also cleared the fact that these apples are just a little blemished but are not the ones which are lying on the ground.
Actions taken by the rivals- Till Now, rivals have not taken any actions.
Performance objectives- The Company sets it aims high by exporting Apple juices around the world especially in the countries that accepted the apples from New Zealand.
The tangible and intangible form of resources According to Beaton, since they were not able to find a factory for doing their work, he decided to build one himself. There is gigantic High-tech plant with the worth of $ 30 million has an employee base of 27 staff members who are capable enough to produce thousands of juice bottles per, with the help of a bottling equipment imported from Crones, Germany based company (Lewis & Slack, 2017, p.26).
The capabilities of the operational unit- - The development of this huge juice plant was funded by Apollo foods that is its Parent company and also has a strategic Alliance with another company e bi the name of T&G.
The operating processes- As per Beaton, his bottling is similar to that of a BMW. He finds it extremely exciting, and admits the fact that they have a variety of Amazing ingredients that are put together with the help of world class technology to create an outstanding item for the world. Also, there is no issue with the supply of Apple juice throughout the Apple season.
All these factors are inter- connected with each other and form strategic reconciliation model for the business requirements of resources for its operations(Lewis & Slack, 2017, p.26)..
It is extremely important that the company has clear perspective of the overall performance related goals and objectives of the organization in terms of a generic performance. These objectives have to be in sync with the requirement of business, expectation of business, and the competitive factors which are required to be well defined (Lewis & Slack, 2017, p.27). However, Cost is 1 factor that is extremely different from all other objectives of performance. Hence, it is not necessary that when the cost is improved in terms of performance it will reduce the price of the goods offer to the customer. Many organizations that receive the lower cost hand the capabilities of gaining higher profit margins than by reducing the price of the product (Slack & Brandon-Jones, 2018)..
The decision areas are a set of various distances that are required to effectively manage resources available in the organization for its operations. Many authors and writers have grouped these operational strategies according to different characteristics and have preferred to them in slightly distinguished methods collectively known as the capacity strategy (Lewis & Slack, 2017, p.27). This strategy is basically concerned with the capabilities and capacity in general terms
- Supply network strategy: this strategy is mainly concerned with the operations of business that are directly interconnected within a network which includes customers, suppliers, and vice versa.
- Process Technology strategy: this strategy is basically concerned with chosen and developing the systems, machinery, and all of the processes which are either directly or relative Lee e connected with resources which are converted into final products and services.
- Development and Organization: this is concerned with abroad set off long term Strategies and distance related to the business operations.
|Pak N Save||Vodafone|
Value for money fresh fruits and vegetables
Qualified and trained staff
Accuracy of work
Promotional discounts(Shop, 2019).
Commitment with cummunity
New Zealand based company
Well trained staff
Massive market coverage
Broad subscriber base
One of top most telecom company in World
Various packages as per customers needs
Free data nights
Timely delivery of food in stores
Less processing time on billing counter ("Shop", 2019)
High internet speed-4G
Good calling speed (lower dropping rate)
Good speed for vodafone TV entertainment
|Dependability||Customers are kept informed about the reason behind fresh food at lower price||Customers are kept informed about new services. 24X7 call centres services give information and solve complains to customers|
Shop and GO feature give customer to check budget while shopping
Online shopping give flexibility to shop from home
Fuel at pumps help customers to save money on fuel
Catering services are also provided
Recipies are also provided
Data and calling pack can be altered as per customer demands
Easy to use Vodafone TV which can be connected with any service provider
Charges for product/service bought
All business operational expenses
Charges for product/service bought
All business operational expenses
In terms of quality, Pak N save delivers its commitment towards the community by fuel saving and providing best quality services based in New Zealand. While, Vodafone works on the basis of providing customized services to the customers by providing various data packages, broadband services, free data Nights, live TV, and many other cheaper services.
Pak N Save offers Fresh Food with promotional discounts at a lower price. Whereas, Vodafone is considered to be one of the most top-rated Telecom companies which provides Data Services to a broad subscriber base and has huge market coverage.
The food is delivered on time to the customers with an option of online shopping. Along with, home deliveries done by Pak N save. The company offers a lesser processing time for the customer at the billing counter. Whereas, in terms of speed, Vodafone provides a very high speed of 4g internet with low dropping rate during calls and also provides a good speed while watching entertainment on the Vodafone TV.
When both the companies are compared based on dependability, Pak N save provide its customers with well-informed information about the reason behind their services of delivering fresh food at a lower price range. While, Vodafone informs all its customers about their new services and provides a 24*7 customer care services through their call centers. Which solve the problems of the customers and provide them with adequate information.
The customers have the flexibility of checking up on their budget while shopping through the shop and go features provided by Pak N save. It also provides them flexibility by shopping from the comfort of their home online. The customers save on money with the feature of fuel at pumps along with catering services, which are provided to them. Vodafone provides a flexibility of altering the data pack as per customer needs with an easy to use Vodafone TV services.
Both the companies charge their customers for the product or services they have purchased. Along with, the business expenses and other administrative expenses.
Implications for CEO
Both companies are providing value for money services and spend lot for promotional activities. Companies can diversify market also. Both can enter into new premium market segment and serve those customers who are ready to pay extra for premium services.
Task 4 Resource Usage
Pak N Save
|Capacity||Supply Network||Process technology||Development and organization|
There should be measures to ensure fresheness of food product.
Food products with low expiry date should be given priority((Lewis & Slack, 2017, p.32).*****
|Raw Material should be preserved in accordance with government food and safety rules||There should be software to check quality process *****||There should be internal and external audit to ensure quality of food products.|
|Speed||The capacity level of invetory should be enough to serve customers best||Lead time to process order should be taken care*||Customized mobile phone app should be tracked carefully for pre orders and home delivery***||Training to staff for faster processing on billing counter|
Capability level of inventory should be tracked regularly to know about the stock.
Ordering level should be decided based on sales forecast**
|Suppliers should be well informed about delivery dates and they should be followed up to supply on time by company staff(Lewis & Slack, 2017, p.32).||Give access and authority to employees to call customers when their orders are ready.||Creation of healthy working environment|
|Flexibility||Stores should have capacity to adhere unexpected or seasonal demands*****||Suppliers must be able to send as per demand on time||There should be enough communication medium like phones, landlines, emails for faster communication(Lewis & Slack, 2017, p.32).||Customisation of promotional schemes as per customer preferences|
|Cost||Every product should be lebelled ||Contract administration cost|
Technology implementation cost*****
|Responding cost according to market and customer feedback|
The figure denotes the performance of various companies operating in the same industry relatively, with respect to cost efficiency, variety of products and services that are offered to the customer. All the major operations of the company are expected to perform at a high quality service level along with maintaining the maximum level of cost efficiency, as well. However, the operational ability of the organization is reduced because of the increased amount of variety in products and services offered to the customers which reserves in complexity E and less efficiency in production. Therefore, one of the most important ways to increase the cost efficiency is to limit the variety of production services that is being offered. Figure 2.11 a) denotes this result diagrammatically. There is a difference in balance which exists between various operations namely A, B, C, & D in terms of cost efficiency and variety. However, no single operation dominates the other operation in terms of showing a superior performance in production. However, only the operation X shows a decreased and inferior level of performance due to the fact that operation a showcases high level of variety provided to the customer at a similar cost. Also, operation C is able to provide its customer with the similar variety but at a more cost efficient structure. ‘Efficient frontier’ is basically the convex line on which operations A, B, C, D are based. These operations might be differently positioned at different times as per the market strategy adopted, but cannot be called ineffective. However, if any one of the operation lies on the efficient Frontier line, it might be considered as inappropriate balance between cost efficiency and variety. Therefore, the operation tries to reposition them in order to find a balance. There is a similar ratio which exists between both the performance objectives in operation B, but is able to achieve these objectives more effectively. There is usually a strategy which emphasizes upon increasing the effectiveness of operation X before it is repositioned(David, 2019).
This is figure 2.11a that depict the position of British Airways and its competitors before implementing the strategy. The model shows the positioning of all companies in one industry in term of cost efficiency and variety(Lewis & Slack, 2017, p.76). It is assumed in this model that all companies are providing high quality services. However, balance between cost efficiency and varieties are choosen differntly. Earlier, most of the Airlines had a twin class system with a first class and economy class offerings to its customers. Later on, the airlines introduced a business class to customers who wanted luxury travel. Hence, in the figure 2.11a variery was more but cost efficiency was less. The curve line is efficiency frontier (Lewis & Slack, 2017, p.76). Hence, the first class travellers in these airlines are declined rustically which resulted in the close down of the first class system in many airlines.
However, British Airways believed that the entire ideology of people travelling in the first class requires some redefining. This lead to refurbishing their cabins of the first class in 1994. Earlier there were 18 passenger seats in the first class which had a dimension of 62 inch seat. There before cabin crews in the airline for the first class passengers. Now, the biggest challenge in front of British Airlines was to create maximum space for their passengers within the Limited area of the Airlines. Hence, they decided to redesign the over first class cabin structure and in named it ‘ bed in the sky’ which was a seat that was comfortably transformed into a bed Technology. The passenger had the access to all facility controlling this seat like music, lights, call, etc. But, all this lead to a decline in the number of passenger seats to 14 seats from 18. British Airways was therefore able to redesign their first class unit with the unit experience especially for passengers taking a long haul flight. Thus, the curve shifts upward and new efficiency frontier is created which offered cost efficiency and variety both (Lewis & Slack, 2017, p.76).Therefore the idea of ‘erosion of delights’ and flatbeds has proved to be a winner even for the business class travellers.
Hence, we can said that there are 4 type of operation strategy. Companies in different situations will use these 4 strategies. Similarly, few more matrixes are explained for Pak N save, Vodafone and British airways which helped CEO to make informed decisions. ). British Airways was able to manage the extreme decline in first class passengers and increased its market revenue with no competition in the segment. Apple Press Company’s strategy is also well explained as per operation strategy.