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Introduction To Process View and Strategy Part2

Part 2 competitive space and strategy

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Francis Nyeko
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© © All Rights Reserved
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7 views

Introduction To Process View and Strategy Part2

Part 2 competitive space and strategy

Uploaded by

Francis Nyeko
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Process View

&
Strategy
Part 2- Competitive Space and
Strategy

Based on the Book: Managing Business Process Flow.


Competitive Product Space: PQVR/CQFF
H H
B D D
B D
A
Quality

Quality
A C A
C C
B

L H LL H
Variety Cost Efficiency
Cost =1/Cost
H
D
A A
D
Competitive Product Space: A
for dimensional space
representation of the Product
Quality

Attributes PQVR or Process


C
B B
C
Competencies CQFT.
Moving outward is better.
L H
Responsiveness =1/Flow Time
Flow Time

Process View & Operations Strategy Ardavan Asef-Vaziri August , 2013 2


Competitive Product Space

Variety
High
Another firm: expensive and
customized products.
B
One firm: low cost
and standardized
Low A products
Low High
Cost Efficiency =1/Cost

Process View & Operations Strategy Ardavan Asef-Vaziri August , 2013 3


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 Responsiveness
that its competitors High
are not able to
imitate its chosen
position. A sculpture,
not
It is a block.for
harder B
competitors to imitate
an array of
interlocked activities. Low A
Low High
Price Efficiency = 1/Price

Process View & Operations Strategy Ardavan Asef-Vaziri August , 2013 4


What is the Best Strategy
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 price
WalMart: Short flow times, low inventory, low cost, average quality.

Process View & Operations Strategy Ardavan Asef-Vaziri August , 2013 5


Focused Strategy, Efficient Frontier
Efficient frontier: the minimal curve covering all the
current positions in an industry.

World-class
High
Emergency Room
Responsiveness

Efficient
frontier
One general
facility
World-class
(non-emergency)
Hospital
Low
High Cost Low

Process View & Operations Strategy Ardavan Asef-Vaziri August , 2013 6


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.

Process View & Operations Strategy Ardavan Asef-Vaziri August , 2013 7


Strategic Positioning and Operational
Effectiveness
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
positionsEfficient
in an industry.
Firms not on the EF, are not
operation on strict trade-off, they can
High s make simultaneous
frontier improvement on more than
Responsiveness

A
one dimension. They do not
B
need to trade-off. Firms on EF
need to trade-off.
Strategic positioning: the
C direction of the
improvement from current
Low position; the position on
Low Price Efficiency High the EF the company wants
to occupy.
Process View & Operations Strategy Ardavan Asef-Vaziri August , 2013 8
Efficient Frontier
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.
Process View & Operations Strategy Ardavan Asef-Vaziri August , 2013 9
Operational Effectiveness
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
Process View & Operations Strategy Ardavan Asef-Vaziri August , 2013 10

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