MGMT 314 Tutorial 2

Lincy Varghese Victoria Management School

Sustainable Strategy
sustain value for its current shareholders
Shareholders

The firms strategy describes how it will create an

individuals or companies that legally own one or more shares of stock in the company Stakeholders individuals or organizations who are directly or indirectly influenced by the actions of the firm
Adding a sustainability requirement means

meeting value goals without compromising the ability of future generations to meet their own needs Triple bottom line evaluating the firm against social, economic, and environmental criteria

Operations and Supply Chain Strategy

Setting broad policies and plans for

using the resources of a firm must be integrated with corporate strategy

Corporate

strategy provides overall direction and coordinates operational goals with those of the larger organization

Operations effectiveness performing

activities in a manner that best implements strategic priorities at a minimum cost

Different competitive factors imply different performance objectives

Competitive factors If the customers value these Low price High quality Fast delivery Reliable delivery Innovative products and services Wide range of products and services The ability to change the timing or quantity of products and services Performance objectives Then, the operations will need to excel at these Cost Quality Speed Dependability Flexibility (products/services) Flexibility (mix)

Flexibility (volume and/or delivery)

Trade-Offs
Management must decide which

parameters of performance are critical and concentrate resources on those characteristics For example, a firm that is focused on low-cost production may not be capable of quickly introducing new products Straddling seeking to match a successful competitor by adding features, services, or technology to existing activities
Often

a risky strategy

Order Winners and Order Qualifiers

Order qualifiers are those dimensions that

are necessary for a firms products to be considered for purchase by customers Features customers will not forego
Order winners are criteria used by

customers to differentiate the products and services of one firm from those of other firms Features that customers use to determine which product to ultimately purchase

What Drives Clockspeeds?

Technology/innovation push, customer pull, system complexity, and regulation

INDUSTRY CLOCKSPEED IS A COMPOSITE:

OF PRODUCT, PROCESS, AND ORGANIZATIONAL

CLOCKSPEEDS

Transmission Standards, Software and Handsets

Mobile Phone System CLOCKSPEED is a mix of

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Mobile Phone System SOFTWARE

APPLICATIONS SERVICES TRANSMISSION STANDARD
slow clockspeed medium clockspeed fast clockspeed

HAND SET OPERATING SYSTEM

slow clockspeed

fast clockspeed

Responding to industry structure dynamics From vertical /integral to Horizontal/modular

Operations strategy must reflect four perspectives top-down, bottom-up, market requirements, and operations resources
Corporate strategy

Business strategy Top-down

Capacity Supply networks Process technology Development and organisation Quality Speed Market Dependability requirements Flexibility Cost

Operations resources

Bottom-up Emergent sense of what the strategy should be Operational experience

Operations resources

Market requirements

What you HAVE

in terms of operations capabilities

What you DO
to maintain your capabilities and satisfy markets

What you WANT

from your operations to help you compete

What you NEED

to compete in the market

Strategic reconciliation

Operations strategy is the strategic reconciliation of market requirements with operations resources
Tangible and intangible resources Operations capabilities Operations strategy decision areas Customer needs

Performance objectives

Market positioning

Operations processes

Competitors actions
Required performance Quality Speed Dependability Flexibility Cost Understanding markets

Understanding resources and processes

Strategic decisions Capacity Supply networks Process technology Development and organisation

The operations strategy matrix

Quality Performance objectives Speed Dependability Flexibility Cost Capacity Supply network Development Process and technology organisation Market competitiveness Decision areas

Assessing Risk
All strategies have an inherent level of risk Uncertainty in the environment causes supply chain planners to evaluate the relative riskiness of their strategies Supply chain risk is the likelihood of a

disruption that would impact the ability of a company to continuously supply products or services
Supply

chain coordination risks are associated with the day-to-day management of the supply chain Disruption risks are caused by natural or manmade disasters

Risk Management Framework and Risk Mitigation Strategies

1. Identify the sources of potential

disruptions. 2. Assess the potential impact of the risk. 3. Develop plans to mitigate the risk
Risk Natural disaster Country risks Supplier failures Logistics failure Risk Mitigation Strategy Contingency planning (alternate sites, etc.), insurance Hedge currency, produce/source locally Multiple suppliers Safety stock, detailed tracking, and alternate suppliers

Tutorial Exercise
Are RIMs Days Numbered ?