OM 300 1nd Edition Lecture 3 Outline of Last Lecture 1 Mission and Strategy 2 3 Strategic Approaches to Competitive Advantage Outline of Current Lecture Finish Operations Strategy and Start Design of G S Ch 5 1 SWOT Analysis 2 Strategic Planning and Core Competencies 3 4 Global Operations Strategy Options 4 G S Selection 5 Product Life Cycle Current Lecture Issues in Operations Strategy 1 Resources view 2 Value Chain analysis 3 Porter s Five Forces model a Rivalry Threat of substitutes Buyer Power Supplier Power Barriers to entry 4 Operating in a system with many external factors 5 Constant change These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Look up and study Product Life Cycle Figure 2 5 in book Strategy Development Process Figure 2 6 1 Analyze the environment a SWOT analysis b Understand the environment customers industry and competitors 2 Determine the Corporate Mission a State reason for existence identify the value it wishes to create 3 Form a Strategy a Build a competitive advantage Strategy Development and Implementation 1 Identify key success factors 2 Build and staff the organization 3 Integrate OM with other activities The operations manager s job is to implement an OM strategy provide competitive advantage and increase productivity Strategic Planning Core Competencies and Outsourcing 1 Outsourcing transferring activities that traditionally been internal to external suppliers 2 Accelerating Due to a Increased technological expertise b More reliable and cheaper transportation c Rapid development and deployment of advancements in telecommunications and computers 3 Subcontracting contract manufacturing 4 Outsourced Activities a Legal Services Travel Services Payroll Production Surgery Theory of Comparative Advantage 1 If an external provider can perform activities more productively than the purchasing firm then the external provider should do the work 2 Purchasing firm focuses on core competencies 3 Drives outsourcing Risks of Outsourcing Table 2 2 1 Advantages a Cost savings b Gain outside expertise c Improve operations 2 Disadvantages a Neg impact on employees Rating Outsourcing Providers LOOK AT TABLE 2 3 1 Insufficient analysis most common reason for failure 2 Factor rating method 3 Points and weights assigned for each factor to each CHAPTER 5 Design of Goods and Services The first rule of Business YOU HAVE TO HAVE PRODUCTS THAT SELL Product Design is a business issue Goods and Services Selection 1 Organizations exist to provide goods or services to society 2 Great products are the key to success 3 Top organizations typically focus on core products 4 Customers buy satisfaction not just a physical good or particular service 5 Fundamental to an organization s strategy with implications throughout the operations function 6 Goods or services are the basis for an organization s existence 7 Limited and predicable life cycles requires constantly looking for designing and developing new products 8 New products generate substantial revenue Product Design The objective of the product decision is to develop and implement a product strategy that meets the demands of the marketplace with a competitive advantage Product Strategy Options Differentiation o Shouldice Hospital only treats hernias Low cost o Taco Bell Rapid Response o Toyota Product Life Cycles May be any length from a few days to decades The operations function must be able to introduce new products successfully Look at PLC graph in book and know how cash flow and revenue work through each stage
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