Operations Management for Competitive Advantage

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According to Slack and Lewis (2002), operation strategy involves actions taken by the management that determine the long term position of either service or manufacturing operations and their significance to the overall strategy.

Each industry has its own operation strategies that are implemented differently. A closer look into Going Inc.’s Service and Manufacturing Divisions, it is evident they have different objectives and operate in distinct conditions.

Going Inc.’s Service division mission statement is “Become the most successful provider of air travel solutions for the business traveler”.

Although Going’s Inc.’s airline service business has experienced a downturn in its operations for the past twenty months in comparison with the whole industry averages; consultants view this to be as a result of decrease in on-time delivery, luggage handling and whole customer service.

So Going Inc. operations strategy is aimed to address these three areas of short term fixes although other measures too needs to be considered.

With the current economic hard times, business travelers are seeking cheaper air travel means so Going Inc.’s competitive strategy still remains a major issue for the firm’s executives (Career Education Corporation, 2005b).

Going Inc.’s Manufacturing Division mission statement is “Become the premier private airplane provider”. The Manufacturing Division produces and sells small privately owned airplanes and has been carrying on its business successful since its inception three years ago.

Although comparing with industry competitor, Bezna, Going Inc. is still lagging behind. Initially, Going’s strategy was to build elegant and expensive small airplanes targeting a small demand, but it has turned out that the demand is too high than expected for its product.

Going Inc. is faced by the problem of shortsightedness in demand of its planes, capacity and process upgradation (Career Education Corporation, 2005a).

By the fact that the service division and manufacturing divisions are operating in different industries or sectors, it holds that the operations strategies taken by either the division are bound to be very different.

The two divisions operate in different market conditions in terms of nature of business, competition forces, target markets and other areas, and are faced by quite different challenges. The divisions have different niches and objectives to achieve within its own timeline.

The Service Division is focusing to increase demand of its products and increase its clientele base while Manufacturing Division main challenge is to satisfy the great demand for its products thus focuses on increasing its production capacity, and to improve its processes.

The Service Division operating strategy is more of marketing while the Manufacturing Division operating strategy is more on product development and differentiation.

The Service Division has to engage in numerous promotion campaigns of its products and packages to potential customers, it has to create product awareness for its clients to know what it offers and the benefits accruing to its products. The Manufacturing Division’s marketing strategy is to fly a branded name of an airplane.

Unlike the Service division, which has been operating inefficiently, the Manufacturing Division has been operating successfully in producing and marketing its products.

The Service Division has had a satisfactory customer response until its operations succumbed; its quality management strategy is aimed at the big budget frequent traveler and aims to ensure the best quality over its competitors in the first and business class service.

The Manufacturing division has been drawn back in production by average quality, and reworking of dispatched products, its quality management strategy is aimed to improve quality control by 100 percent inspection.

Location strategy adopted by the Service and Manufacturing Division are very different. For the Service Division flies airplanes to all its major destinations and every state and has established major hubs in the East, Central, Mid-West and West regions in the United States and its location strategy aims to expand more in other markets and establish more hubs.

The Manufacturing Division has an assembly hanger in the Houston, Texas with its headquarters in New York. It has no intentions of expanding to new regions in terms of infrastructure or built new hubs to tap on its customers (Chase et al, 2005).

In achieving the location strategy and expanding into new markets, the Service Division is faced by the challenge of high costs of running a hub in the major airports where its target clients are and also in coordinate its dispersed business operations.

It also has to manage its international logistics efficiently to ensure results. The Manufacturing Division is not faced by a location strategy challenge as it has its kind of products do not require strategic positioning.

Both the Service and Manufacturing Divisions capacity and process strategies are faced by a challenge of potential entrants into the market and new substitute products and services in the market.

Both divisions focus on the high end market customers and with the current economic wave, manufacturers and service producers are coming up with packages that suit the clients more. With this risk at hand, the divisions should also aim at expanding their operations by also diversifying into the low end markets.

For both the Service and Manufacturing Divisions, the human resources, job design strategy is not working effectively and can fail if not corrected. Both divisions have had problems with trade unions due to minimal wage increases and recruitment of employees.

Employees have complained for not being engaged in the company’s operations and they do not receive adequate training. This could lead to strikes, demotivation and rampant employer-employee conflicts; also lack of proper training makes the employees ineffective in production.

Maintenance and reliability strategy adopted by the Service Division is faced by the challenge of increased maintenance, repair, and training costs for the time it is been in operation. Its air carriers are out of service 18 percent more than the industry average.

The Manufacturing Division’s quality costs and owner warranties almost the equal the industry average although control costs are a major challenge in this kind of an industry (Slack & Lewis, 2002).

In the Service Division the scheduling strategy is challenged by long delays and connecting late arrival as compared to other carriers in the market. Going, Inc. has 225 inland destinations and flies to every state around the United States on its

schedule together with its Europe and Asia destinations. In comparison with Southwest Airlines ply 53 airports in 27 US states. In the Manufacturing Division, the plant has a lead time of 16 weeks to build a plane taking orders on a first come, first serve criteria. Comparing the plant Bezna which has a lead time of 11 weeks, this shows that scheduling of orders is still a challenge to attain its objectives.

Both the Service and Manufacturing Divisions’ supply chain management strategies are targeted to the United States market with the service division operating an elongated supply operating in four major hubs in the United States and the manufacturing division uses US manufactured parts only.

Although the US market is viable, but the divisions are faced by an undiversification risk, and any stagger of the US market could affect their operations. The managements have to diversify their risk and to include foreign suppliers in their supply chain (Boer, 2003).

Reference List

Boer, H. (2003). Guest editorial: New challenges in operations management. International Journal of Operations & Production Management, 6, 1108 – 1113.

Career Education Corporation. (2005a). Manufacturing Division. Information Technology. Web.

Career Education Corporation. (2005b). Service Division. Information Technology. Web.

Chase, R., Jacobs, F., Aquilano, N. & Agarwal, N. (2005). Operations Management for Competitive Advantage. Sabine, TX: Mcgraw Hill.

Slack, N. and Lewis, M. (2002). Operations strategy. Harlow, Essex: Prentice Hall.

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Operations Management for Competitive Advantage

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