Category: Operations Strategy

Introduction

The activity of any organization requires essential basis for the successful performance and the further development of the company. Organizational effectiveness and the strategy of the organization are regarded to be the basic components of business activity. These two concepts are interconnected and mutually dependent. However, on the other hand, their connection is deeper than simple mutual dependence. Moreover, there is strong necessity to distinguish Operational Effectiveness from strategy, and, this distinguishing is one of the most crucial tasks that managers face.

OE and Strategy

Originally, both components of business activity are important and significant, however, they have different agendas. It is often emphasized that operational agenda entails the plans for continual improvement of business performance of any organization, and no trade-offs are accepted. Most researchers emphasize that failure in organizational planning makes vulnerable even powerful companies with strong strategies, thus, decreasing the Operational Effectiveness. According to Mintzberg (2000, p. 345) there is strong necessity to emphasize the following notion: The operational agenda is the proper place for constant change, flexibility, and relentless efforts to achieve best practice. In contrast, the strategic agenda is the right place for defining a unique position, making clear trade-offs, and tightening fit.

The scheme of Operational Effectiveness and strategy shows that organizational success is defined by the level of interconnectedness of these two components:

In spite of the simplicity of the scheme, it is necessary to mention that the relationship between these components goes essentially deeper than just mutual dependency. They inform, inter-add to each other. According to Wood (2004, p. 27): Operational Effectiveness is about having functions in the organization that work well. These functions are, of course, the organizations skill sets or core competencies and, therefore, must fit together and work together to implement the strategy. On the other hand, the possible strategies available to an organization are constrained, at least in the medium term, by the skill sets available to implement them. Thus, in the light of this fact it is necessary to clarify that strategy may be ambitious, however, the Operational Effectiveness may be restricted. Thus, ice cream manufacturer may have a strategy of entering a wine manufacturing industry, however, the functional skills, as well as the Operational Effectiveness will not allow to do this. Strategy requires capability, while capability restrains strategy essentially.

Strategy, in its turn, governs the allover organizational purposes and the long-range direction as well as goals. Strategy is aimed to establish the range of businesses in which the organization is planning to compete. Creating a strong strategy is essential for shaping the values for customers and stakeholders of the organization. Organizational strategy and the set of goals provide the necessary framework for the implementation of decisions, made by business managers. The business strategy is claimed to indicate the scope of each business and organizational unit and how these units will be able to compete. The strategy establishing process should be featured with the determination of portfolio of units and defining what is required for the maintenance of the organizations allover goals and what functions should be emphasized. As Kanter (1990, p. 8) stated in his research: Operational Effectiveness may also create the opportunity for strategy development by inventing new technologies or methods. For example, the experimentation to find improved glue in 3M that led to the invention of the post-it note.

Marketing Planning

The marketing dimension of the Organizational Effectiveness and Strategy is generally regarded as the product management component of the business activity. It is stated that there is no direct control over numerous price-shaping factors. Nevertheless, a product manager should be able to distinguish the high-value features, and take them into account while elaborating the business strategy. Product strategy, which is the essential component of the allover business strategy, as well as the high-value features, will only justify the previously set up price levels and add to Operational Effectiveness and cause the increase in the sphere of competitive advantage by decreasing the wastes and expenses for Research and Development. From this point of view it is necessary to give the words by Mintzberg, Ahlstrand and Lampel (1998, p. 293) who stated that it is possible to uncover the essential principle for Operational Effectiveness by evaluating the idea of personal effectiveness and defining the key factors and requirements for this. They also stated the following notion: The answers are such ideas as capability, expertise, know-how, talent, and skill. If product manager summarizes all these notions in the single word knowledge, it is possible to state that personal effectiveness is principally determined by knowledge. Moreover, this principle may be extended to the level that knowledge underwrites effectiveness for any organizations by elaborating on the forms that knowledge takes within an organization and the effects that these have. The list below does just this, starting, for the sake of completeness, with the antithesis of knowledge  ignorance  and working up through the number levels at which knowledge operates within an organization.

Marketing planners should be aware of the concepts that form the Operational Effectiveness and strategy as well as the concepts that prevent organization from creating successful strategy. Thus, there is strong necessity to take into account the fact that ignorance is the largest enemy of Operational Effectiveness. It is costly for any company in numerous ways: time wasted, materials wasted, poor quality products or services that have to be replaced, alienated customers, etc. Originally, these factors not only decrease the Operational Effectiveness, but also prevent company from successfully implementing the strategy.

Personal knowledge is the factor that may either prevent or promote the successful implementation of the strategy and increasing the Operational Effectiveness. It is the factor, which is immediately available to a person to apply to the task.

Corporate knowledge is not the sum of personal knowledge of all the workers and teams. Corporate knowledge is the experience of the standardized business and organizational processes. Kanter (1990, p.7) emphasizes the following fact: Corporate knowledge provides further leverage by coordinating and making consistent the productive activity of many people. Corporate knowledge also leverages knowledge by providing a jump-off point or platform for process improvements and the means by which process improvements are communicated and implemented.

Another factor and marketing perspective of Operational Effectiveness is the Embedded Knowledge. These are the knowledge, which are transformed into business artifacts and tools, required for successful business performance. These are closely linked with automation of business performance, and performing tasks that can not be performed by people. On the one hand the potential of these artifacts and the importance of Embedded Knowledge is absolutely unlimited, nevertheless, in practice there is strong necessity for control of these artifacts: managers responsible for this control should clearly realize the principles of managing, maintaining and improving these artifacts.

Functional Performance

Operational Effectiveness is generally aimed at improving functional performance of the organization. In the light of the fact that functional performance is the part of business strategy and the essential component Operational Effectiveness, it is necessary to emphasize that for the effective functioning, managers are obliged to lead and control the functional activities within the organization. For this purpose, there is strong necessity to measure and improve the procedures and task solving processes for which they are responsible. Thus, leveraging those processes through standardization, communication and automation is required. Leveraging, in its turn, improves the Functional Performance and Operational Effectiveness.

Conclusion

Finally, it is necessary to state that Operational Effectiveness and Strategy are not simply inter-dependable. Originally, they are closely linked to each other through various factors and components of business activity. The most important link between them is the Functional Performance, which shapes the potential success of the company. Corporate, Individual and Embedded Knowledge are the internal factors, which influence the external components of Strategy and Operational Effectiveness, consequently, there is strong necessity to maintain and expand the knowledge base for effective implementation of Strategy and Business decisions, aimed to increase the Operational Effectiveness.

It should be taken into account that Strategy may be either restricted or completed with the Operational Effectiveness. This concept is explained on the example of an ice cream manufacturer.

References

1. Kanter, R (1990) How to compete, Harvard business review. v. 68, no. 4 (1990), pp. 7-8
2. Mintzberg H, Ahlstrand, B and Lampel, J (1998) Strategy safari: a guided tour through the wilds of strategic management, Free Press New York
3. Mintzberg, H 2000, The rise and fall of strategic planning, Pearson Education.
4. Porter, M. (1996) What is strategy? Harvard business review. v. 74, no. 6 (1996), pp. 61-78
5. Wood, M. (2004) Marketing planning: principles into practice. Harlow: Prentice Hall/Financial Times, 2004.

Proposals of the authors on how to best align operational structures with strategy

Kaplan and Norton (2006) first looked at six ways in which organizations may choose to align their structures with strategy. In one of the oldest models, the authors assert that companies may choose to align their structure with strategy through centralized functions. This mode was quite common during the industrial era because it provided a means of gaining from economies of scale.

However, the lack of adaptability in this method caused organizations to look for other routes such as decentralization by product and geographical region, matrix functions, networked organizations, Velcro organizations and even virtual organizations.

Regardless of all these tactics, this quest to find the right organizational structure is often fruitless because the right way to bring out value in an organization is to focus on the balanced scorecard.

The writers believe that one should look for a structure that creates the least amount of problems and then work out a system for aligning that structure with the organizational strategy. In doing this, there are four perspectives that the proposal handles. In terms of operations strategy, the perspective that would best fit is the process perspective.

In the process perspective, business units decide to share or synergize their processes and hence generate savings or gain other benefits. Usually, it may be possible to find companies sharing functions such as distribution, research, manufacturing and purchasing. Therefore, amalgamating these processes does lead to substantial gains by the economies of scale.

Furthermore, a business unit with a core competency can share that capability with another business unit and thus lead to value addition.

For example, in technology drive organizations, a core competency such as the use of optics in Canon Incorporated caused it to benefit from the same optics in its other products. This type of perspective deals directly with operational structures because business processes are what constitute operational structures (Slack et. al, 2007).

Four perspectives

Kaplan and Norton (2006) beleive that the sources of value creation through the scorecard occur at these levels: customer level, growth and learning level, process level and financial level.

In the customer’s perspective, the authors affirm that when firms align their various business units then this is likely to lead to better results because of an ability to deliver the same value in various outlets (if the organization is a franchise).

Alternatively, customer perspectives sometimes arise out of the sharing of certain relationships common to various units. This implies that services will be delivered conveniently and the products will be better created. Customers can also get more comprehensive services in one organization compared to what they would normally get from specialist providers.

The other perspective that can alter corporate strategy is the process perspective. As explained earlier, this aspect comes about when business units arise and then synergize certain processes that are common to them. It leads to cost savings and efficiency.

Learning and growth is also another perspective that can arise out of the synchronization of knowledge management as well as human capital development. This creates an enterprise wide advantage because today’s business environment is characterized by a need to develop intangible assets. Those who do not take the time to do so may not be in a position to increase their value and hence beat their competitors.

Organizations can do this in various ways. For example, if a firm happens to be a multinational then it can take advantage of its wide employee pool in order to fill its management positions. A case in point is General Electric which accords its various workers opportunities for promotions from different geographical units and this has created a vast number of experienced management.

Alternatively, companies may choose to develop their employees through training opportunities in different product units. Knowledge management can also be done through the sharing of knowledge management ideas between various business units.

Lastly, the financial perspective is mostly achieved through the efficient use of business resources such that most wastage is eliminated during production, purchase or distribution. Conversely, organizations can also get opportunities to work on their corporate governance through the balanced scorecard and this will ensure effective use of company materials or finances without those losses that arise out of unethical use.

Certain business units may also have a lot of commonalities and can be easily synchronized. Therefore effectively integrating those units can lead to a lot of cost savings.

Furthermore, some business units may have better relationships with certain external parties compared to others. Bringing these levels together could cause disadvantaged sectors to benefit from those sectors that already have established themselves (Kaplan and Norton, 2006).

Conclusion

The article endorses the use of the balanced scorecard as a method for aligning structure and organizational strategy. Through the four perspectives, one can see how the balanced scorecard does lead to value creation.

References

Slack, N. Chambers, S. and Johnston, R. (2007). Operations Management 6th Edition. NY: Prentice Hall

Kaplan, R. and Norton, D. (2006). How to implement a new strategy without disrupting your organization. Harvard Business Review 84(3), 100-109

Introduction

Before it was acquired by DHL in 2003, Airborne Express had already become one of the fastest-growing companies in the United States of America. It operated in both domestic and international markets. Through its direct operational tactics and strategies, it delivered letters, small packages, freights, and documents in a time-sensitive manner. To survive the prevailing intense competitive operational market, Airborne acknowledged the need for lowering operational costs through the deployment of cost reduction strategies. For example, by establishing the foreign trade zone (FTZ) approach, it ensured any consignment would be held without the payment of duty unless it was necessary. By tailoring its services to suit the needs of different customers while ensuring flexible operations, Airborne was sure of acquiring a sizeable express market share. Airborne had developed unique domestic and international operations and strategies. However, this paper only offers an analytical discussion of the company’s international operation and strategy.

International Operation

Following the advent of globalization, different companies have pursued the internationalization strategy to secure a global market share. Airborne understood the need to exploit international markets. According to Hill, by 2002, Airborne Express had extended its services to over 200 nations, which accounted for 11 percent of its total revenue (245). Nevertheless, it did not operate its own freights in the international markets. Instead, it contracted space, which would be availed in passengers and cargo planes. It is crucial to question whether this move was well aligned with the need for increasing the company’s performance and productivity to help it in competing with its rival companies. In my view, companies should deploy operational and strategic initiatives that ensure that they reach a large number of consumers of their services and goods. In response, Airborne’s exploration of an internationalization strategy that leveraged the benefits of globalization was a well-calculated strategy. It appreciated the awareness of the extent to which globalization has altered how firms conduct businesses at international fronts. Owing to the witnessed technological, communication, and general infrastructural developments, Child et al. agree that businesses such as Airborne Express can now supply or distribute goods and services in virtually every geographical location around the globe (664).

Venturing into international markets is a risky endeavor because companies are required to be strategically prepared and organized to overcome any cultural impediments, currency differences, and language barriers, including the prevailing regulatory and legal environments. Such elements may be inconsistent with an organization’s policies. In my opinion, companies such as Airborne Express that do not have extensive resources to aid them in overcoming obstacles that interfere with their operations in international commercial bases should consider altering their policies to suit the particular market. According to Child et al., although such companies may be using the same brand name, they are predominantly characterized by non-homogeneity in organizational policies (665). Hence, it suffices to conclude that Airborne Express’ decision secure space in both cargo and passenger planes via strategic alliances and local foreign agents was satisfactory to overcome the challenges.

Strategies

Internationalization

Several reasons explain why organizations may consider diversifying their markets to include international markets. For example, as Child et al. assert, the emergence of demand potentials in foreign markets is one of the common reasons (666). In my judgment, sales expansion, the acquisition of new resources, the need to minimize risks, currency depreciation, and local market saturation account are the major drivers of business internationalization. One may need to find out the extent to which Airborne Express benefited from this strategy that facilitates the achievement of economies of scale. However, responding to the above issue, the reader should realize that effective business operations in foreign nations require the selection of an appropriate entry and operations strategy. In line with this observation, Airborne Expresses owned facilities in foreign nations such as London, New Zealand, Australia, Singapore, and Hong Kong (Hill 245). While these facilities functioned like those in the domestic market, the company had its distribution operations in the international markets mainly executed by large, localized, and well established foreign agents. Such an operational strategy in these foreign markets reduced the chances of the company encountering challenges associated with operating in an unfamiliar culture.

Entering new markets, especially foreign commercial zones, requires organizations to exercise substantial caution. While organizations can develop strategies to cope with entry challenges related to their internal structure, the case of Airborne Express confirms that indeed dealing with macro-environmental factors in a foreign nation is problematic. Based on my opinion, developing an appropriate entry strategy can ensure that an organization maximizes the existing knowledge and experience in operation in foreign nations. Such strategies include opting for franchising and licensing before focusing on full ownership arrangements. As Child et al. assert, “All firms operate within an environment, which directly or indirectly affects the way they function” (669). Consequently, as evidenced by the case of Airborne Express, successful colonization of new markets should include an effective entry strategy. Nonetheless, I find it crucial to point out that the internationalization strategy has operational cost reduction implications. For Airborne Express, the internationalization was easier due to the existence of effective communication and technology mechanisms. For example, even in the international market, the company could track its operations through the FOCUS system.

Strategic Alliances

One of the major challenges encountered by organizations operating in an environment of fierce competition entails securing enough capital to enhance their economies of scale. While UPS and FedEx reduced the cost of holding inventories by establishing global air express services to guarantee just-in-time deliveries, Airborne Express lacked adequate financial resources to pursue a similar strategy. In my point of view, the company’s adoption of a variable cost strategy, which entailed entering into strategic alliances with businesses that had elaborate ground delivery systems, as appropriate. For example, its strategic alliance and joint venture with Mitsui not only enhanced its operations in Japan but also increased Airborne Express’ financial capability following an investment of 40 million USD in the form of preferred stocks and a further commitment of 100 million USD in aircraft financing (Hill 248). In other words, strategic alliances constituted an important success story for Airborne Express in its international market.

Conclusion

Internationalization constituted an important growth strategy explored by Airborne and its competitors such as UPS and FedEx. However, new markets often present challenges in terms of aligning organizations’ culture with the prevailing local tastes and preferences, attitudes, and beliefs. Possible entry modes that may work in foreign markets include franchising, exporting, and joint ventures such as mergers and acquisitions. Indeed, while Airborne Express’s competitors chose to establish their international airlift capabilities coupled with distribution networks similar to those deployed in the US market, the company pursued a variable cost strategy through premeditated alliances and contractual arrangements. The strategy proved effective, especially upon noting that Airborne Express lacked the financial capability necessary for it to imitate its competitors.

Works Cited

Child, John, et al. “SME in the International Business Models: The Roles of Context and Experience.” Journal of World Business, vol. 52, no. 5, 2017, pp. 664-679.

Hill, Charles. Airborne Express: The Underdog. University of Washington, 2011.

This study looks at the operations strategy from two perspectives. That is from the viewpoint of organizational capabilities, resources, and competencies, and the market perspective. Initially, decision-making was based on resources. However, the marketplace is more volatile and competitive hence the market-driven perspective. Lowson (2003) acknowledges that an operations strategy is a relatively new discipline. Although both perspectives may serve the overall strategy of an organization, Lowson (2003) says that blending both to form a taxonomical cluster may increase competitiveness and help in defining an organization.

Lowson (2003) looks at the two perspectives historically. The study acknowledges that the type of operations strategy depends on a particular industry and varies from firm to firm. It also reflects core capabilities and tends to be time-bound (long term, medium term, etc). The study is critical in forming a breakdown of the operations strategy to make sure that there is no misrepresentation of clarity between operations strategy and popular operational solutions such as logistics strategy.

He says that strategy is hierarchical. At the peak is the organizational strategy and at the bottom is the species. Operations strategy is a building block composed of a class (a grouping of organisms), subclass (a narrower operations strategy), order taxonomies, genus taxonomies, and finally species (individuals with common characteristics e.g. technologies). These form the Operations Strategy Composition Matrix (OSCM).

Lowson identifies with the change in demand patterns, personalization, and customization levels compared with the past. He says that these changes have informed needs for lean production, flexible workforce, agility, and flexibility in production. Against this backdrop, an organization needs to formulate a strategy. He offers customization of operations strategy formulation by blending resources and market demands.

In conclusion, Lowson shows that decisions that form operations strategy are customized to certain environmental forces. In decision making perspectives are drawn from the customer, product uniqueness, and services. However, there is a lacuna in Lowson’s research. Lowson tends to rationalize decision-making without putting into consideration the external and internal forces that may dictate the use of particular decisional elements. There can be a relationship between certain elements eliminating the need for clustering. Furthermore, some situations call for operations strategy customization to fit into the situation.

Additionally, Lowson concludes that business environmental factors play a significant role in the determination of a firm’s operation strategy even in an emerging economy. The specific nature of the business environment also influences the choice of the operation strategy. Besides, they were able to establish that the size of the company and the nature of ownership are important factors to consider when determining the operations or manufacturing strategy. Thus, further research should be conducted to find out how managers formulate operations strategies with these two factors as the variables of the study.

Reference

Lowson, R 2003, The Nature of Operations Strategy: Combining Strategic Decisions from the Resource-Based and Market-Driven Viewpoints, Management Decision, Vol. 41 no. 6 pp 538-549.

Introduction

The activity of any organization requires essential basis for the successful performance and the further development of the company. Organizational effectiveness and the strategy of the organization are regarded to be the basic components of business activity. These two concepts are interconnected and mutually dependent. However, on the other hand, their connection is deeper than simple mutual dependence. Moreover, there is strong necessity to distinguish Operational Effectiveness from strategy, and, this distinguishing is one of the most crucial tasks that managers face.

OE and Strategy

Originally, both components of business activity are important and significant, however, they have different agendas. It is often emphasized that operational agenda entails the plans for continual improvement of business performance of any organization, and no trade-offs are accepted. Most researchers emphasize that failure in organizational planning makes vulnerable even powerful companies with strong strategies, thus, decreasing the Operational Effectiveness. According to Mintzberg (2000, p. 345) there is strong necessity to emphasize the following notion: “The operational agenda is the proper place for constant change, flexibility, and relentless efforts to achieve best practice. In contrast, the strategic agenda is the right place for defining a unique position, making clear trade-offs, and tightening fit.”

The scheme of Operational Effectiveness and strategy shows that organizational success is defined by the level of interconnectedness of these two components:

In spite of the simplicity of the scheme, it is necessary to mention that the relationship between these components goes essentially deeper than just mutual dependency. They inform, inter-add to each other. According to Wood (2004, p. 27): “Operational Effectiveness is about having functions in the organization that work well. These functions are, of course, the organization’s skill sets or ‘core competencies’ and, therefore, must fit together and work together to implement the strategy. On the other hand, the possible strategies available to an organization are constrained, at least in the medium term, by the skill sets available to implement them.” Thus, in the light of this fact it is necessary to clarify that strategy may be ambitious, however, the Operational Effectiveness may be restricted. Thus, ice cream manufacturer may have a strategy of entering a wine manufacturing industry, however, the functional skills, as well as the Operational Effectiveness will not allow to do this. Strategy requires capability, while capability restrains strategy essentially.

Strategy, in its turn, governs the allover organizational purposes and the long-range direction as well as goals. Strategy is aimed to establish the range of businesses in which the organization is planning to compete. Creating a strong strategy is essential for shaping the values for customers and stakeholders of the organization. Organizational strategy and the set of goals provide the necessary framework for the implementation of decisions, made by business managers. The business strategy is claimed to indicate the scope of each business and organizational unit and how these units will be able to compete. The strategy establishing process should be featured with the determination of portfolio of units and defining what is required for the maintenance of the organization’s allover goals and what functions should be emphasized. As Kanter (1990, p. 8) stated in his research: “Operational Effectiveness may also create the opportunity for strategy development by inventing new technologies or methods. For example, the experimentation to find improved glue in 3M that led to the invention of the post-it note.”

Marketing Planning

The marketing dimension of the Organizational Effectiveness and Strategy is generally regarded as the product management component of the business activity. It is stated that there is no direct control over numerous price-shaping factors. Nevertheless, a product manager should be able to distinguish the high-value features, and take them into account while elaborating the business strategy. Product strategy, which is the essential component of the allover business strategy, as well as the high-value features, will only justify the previously set up price levels and add to Operational Effectiveness and cause the increase in the sphere of competitive advantage by decreasing the wastes and expenses for Research and Development. From this point of view it is necessary to give the words by Mintzberg, Ahlstrand and Lampel (1998, p. 293) who stated that it is possible to uncover the essential principle for Operational Effectiveness by evaluating the idea of personal effectiveness and defining the key factors and requirements for this. They also stated the following notion: “The answers are such ideas as capability, expertise, know-how, talent, and skill. If product manager summarizes all these notions in the single word ‘knowledge’, it is possible to state that personal effectiveness is principally determined by knowledge. Moreover, this principle may be extended to the level that knowledge underwrites effectiveness for any organizations by elaborating on the forms that knowledge takes within an organization and the effects that these have. The list below does just this, starting, for the sake of completeness, with the antithesis of knowledge – ignorance – and working up through the number levels at which knowledge operates within an organization.”

Marketing planners should be aware of the concepts that form the Operational Effectiveness and strategy as well as the concepts that prevent organization from creating successful strategy. Thus, there is strong necessity to take into account the fact that ignorance is the largest enemy of Operational Effectiveness. It is costly for any company in numerous ways: time wasted, materials wasted, poor quality products or services that have to be replaced, alienated customers, etc. Originally, these factors not only decrease the Operational Effectiveness, but also prevent company from successfully implementing the strategy.

Personal knowledge is the factor that may either prevent or promote the successful implementation of the strategy and increasing the Operational Effectiveness. It is the factor, which is immediately available to a person to apply to the task.

Corporate knowledge is not the sum of personal knowledge of all the workers and teams. Corporate knowledge is the experience of the standardized business and organizational processes. Kanter (1990, p.7) emphasizes the following fact: “Corporate knowledge provides further leverage by coordinating and making consistent the productive activity of many people. Corporate knowledge also leverages knowledge by providing a ‘jump-off point’ or ‘platform’ for process improvements and the means by which process improvements are communicated and implemented.”

Another factor and marketing perspective of Operational Effectiveness is the Embedded Knowledge. These are the knowledge, which are transformed into business artifacts and tools, required for successful business performance. These are closely linked with automation of business performance, and performing tasks that can not be performed by people. On the one hand the potential of these artifacts and the importance of Embedded Knowledge is absolutely unlimited, nevertheless, in practice there is strong necessity for control of these artifacts: managers responsible for this control should clearly realize the principles of managing, maintaining and improving these artifacts.

Functional Performance

Operational Effectiveness is generally aimed at improving functional performance of the organization. In the light of the fact that functional performance is the part of business strategy and the essential component Operational Effectiveness, it is necessary to emphasize that for the effective functioning, managers are obliged to lead and control the functional activities within the organization. For this purpose, there is strong necessity to measure and improve the procedures and task solving processes for which they are responsible. Thus, leveraging those processes through standardization, communication and automation is required. Leveraging, in its turn, improves the Functional Performance and Operational Effectiveness.

Conclusion

Finally, it is necessary to state that Operational Effectiveness and Strategy are not simply inter-dependable. Originally, they are closely linked to each other through various factors and components of business activity. The most important link between them is the Functional Performance, which shapes the potential success of the company. Corporate, Individual and Embedded Knowledge are the internal factors, which influence the external components of Strategy and Operational Effectiveness, consequently, there is strong necessity to maintain and expand the knowledge base for effective implementation of Strategy and Business decisions, aimed to increase the Operational Effectiveness.

It should be taken into account that Strategy may be either restricted or completed with the Operational Effectiveness. This concept is explained on the example of an ice cream manufacturer.

References

1. Kanter, R (1990) How to compete, Harvard business review. v. 68, no. 4 (1990), pp. 7-8
2. Mintzberg H, Ahlstrand, B and Lampel, J (1998) Strategy safari: a guided tour through the wilds of strategic management, Free Press New York
3. Mintzberg, H 2000, The rise and fall of strategic planning, Pearson Education.
4. Porter, M. (1996) What is strategy? Harvard business review. v. 74, no. 6 (1996), pp. 61-78
5. Wood, M. (2004) Marketing planning: principles into practice. Harlow: Prentice Hall/Financial Times, 2004.

Introduction

Kraft Foods Company is a North American business entity with vast interests in manufacturing and distribution of consumer food items such as snacks, consumer drinks, convenient food items, and an array of grocery items (Rankin 1).

The business entity sustains a stable operation base in over 155 countries around the world. The company enjoys a stable and reliable market share in all locations. However, it faces stiff competition from Nestle, which is its main business competitor.

The company portfolio comprises over 11 market brands that garner more than $ 1 billion across the world (Rankin 4). Prominent brands in the company include Jacob and Maxwell house coffee, LU biscuits, Oreo, Nabisco biscuits, Oscar Meyer meats, and Philadelphia cream cheese.

Kraft Foods Company operates over 223 outfits that facilitate its manufacturing, processing, and packaging ventures around the world. Kraft Foods Company operates as a public company and is a member the New York City stock exchange.

In 2008, the company acquired listing at the Dow Jones industrial average. In 2010, the company effected an acquisition of Cadbury brand, consequently spurring a massive boycott on all its related products (Rankin 11).

Swot Analysis

Kraft Foods Company is a business entity that operates in a competitive and dynamic business environment. The company endeavours to maximise on all factors that promote its operations. There are multiple factors that determine success or failure of the company in all areas of operation.

In order to guarantee corporate excellence, Kraft Foods Company should strive to maximise on its strengths and improve on its weaknesses (Rankin 12). The company should seize all opportunities that guarantee its bright future in the corporate landscape.

Above all, the company should identify and tackle all threats that linger in its horizon. If not dealt with, such threats could herald unprecedented challenges for the company (Rankin 17).

The strengths, weaknesses, opportunities, and threats (SWOT) analysis of the company presents a clear picture of all facets of the company with regard to its operations.

Strengths

Kraft Foods Company has several strengths that compliment its operations across the world. The company enjoys a strategic advantage in its position as the second largest entity in food manufacturing and processing (Rankin 21). The company ranks second after Nestle Company.

This is an obvious strength for the company because it commands a huge and influential share in the market. The company also enjoys a massive presence in the market across North America and the world (Rankin 21).

Such presence is advantageous because it offers the company a strong market visibility. This guarantees performance and profitability in the future.

Kraft Foods Company has a reputation for its prowess in manufacturing and processing of foods and assorted beverages. The company has several brands in various market segments across America, Asia, and Europe. This situation gives the company a competitive market advantage over its competitors in the market.

The brand image of Kraft Foods Company is strong, sustainable, and progressive (Rankin 24). The company should strive to maintain and propagate its brand image because it guarantees success and progress in the market. Most brands within the company profile have a long history and heritage in the market.

Customers identify with most brands within the company profile because those brands command a sustained presence in the market.

In fact, the company has several brands whose heritage dates over 100 years. Such brands present a strategic advantage for the company because customers understand and trust them (Rankin 25).

Immeasurable strength lies in Kraft’s elaborate distribution of networks in the market. The company effectively merges the traditional and contemporary distribution channels. This guarantees availability of products in the market, thereby spurring growth and expansion in the market (Welch 17).

The company effectively utilises a distribution that anchors on guided store delivery and distribution networks. Through such networks, the company monitors the movement of their products in the market.

This system offers a direct approach to monitoring, evaluation, and assessment of products in the market (Welch 17).

The company conducts periodical research and evaluation to determine the safety and sustainability of their products. This accords an opportunity for the company to assess market reception with regard to their products.

The research findings offer a roadmap for the company in their quest for healthy and safe products (Welch 19). The company runs various programmes to ensure that their products are innovative, healthy, and meet all safety requirements.

Such efforts are critical for the company because they facilitate and guarantee compliance to safety standards and requirements. Above all, such efforts ensure and guarantee a healthy and sustainable consumer base in the market.

Research and development programmes entrench the sustainability and competitive advantage of the company (Welch 23).

The company enjoys strength in the fact that customers in the market know the Kraft brand. As earlier mentioned, Kraft Foods Company has been in the market for many decades. Therefore, its products are popular in various segments of the market.

The products of Kraft Company appeal to consumers in all age brackets. This is an advantage because it widens the customer base of the company (Welch 23).

The company maximises on this by ensuring that their products address all consumer needs and preferences within their client base. This ensures that customers remain loyal and dedicated to the Kraft brand.

Over the years, the company has built a global network of outlets and food processing plants through rigorous expansion efforts. This accords the company an opportunity to explore and venture into new and under-exploited markets (Welch 27).

Through such efforts, the company projects an image of a global and ubiquitous commercial entity. This in turn builds and sustains confidence in the company’s ability to offer quality and healthy products to their consumers.

The company should amass the positive energy in this domain to ensure future success in the market. Through its global networks, the company taps the potential in various market segments across the world.

The company maintains a global presence through constant engagement with clients and business partners within the global community (Welch 27).

Overall, Kraft Foods Company ranks second to Nestle. However, the company is a market leader in production and sale of snacks. The company enjoys a competitive edge in the snack segment as compared to other business competitors in the market.

This is a strength that Kraft Company can seize in its effort to consolidate and sustain its command in the global market. The company should direct attention to such strong areas to guarantee its hegemony in the global and regional markets (Gaspar 43).

Weaknesses

Kraft Foods Company is weak in terms of its overall performance in the market. The acquisition of Cadbury upped Kraft’s profit ratio in a commendable way. However, it presented numerous challenges because it heightened the company’s debt pressure.

Such pressure shrinks the company’s ability to perform in a highly competitive corporate environment (Gaspar 43). For instance, the company faces stiff competition from market rivals such as Nestle and Harshey.

High debts and stiff competition in the market is a lethal combination of factors for any commercial entity, and Kraft Foods Company is not an exception. This means that the company should brace for tough and challenging times in the market.

The company has a commendable presence and command in the global market. However, it scores poorly in terms of concentration and distribution of outlets in areas beyond America and Europe. The company is yet to open outlets in high potential areas in the global market.

This emanates from its slow and ineffective strategy. The company lacks a robust expansion programme to guarantee dominance and command in the global market (Gaspar 47). Lack of an elaborate expansion programme denies the company vital opportunities for growth in the market.

The company has a weakness in terms of expansion and entry into new market zones. The company is over dependent on corporate acquisitions and buy-outs (Marcic 12). This approach to expansion presents various challenges for business entities.

For instance, in 2010, Kraft Foods Company effected a complete acquisition of Cadbury brand. This move presented challenges for the company after consumers staged a boycott against their products (Marcic 15).

It is evident that such acquisitions could back fire, thereby jeopardising the operations of the company. This scenario compounds the company’s inability to venture into new markets. This is a major weakness for Kraft’s Food Company (Marcic 16).

The company puts more emphasis on its existing niche in the market as opposed to new and uncharted territories. Competitors could exploit the weakness to initiate a market onslaught against the company.

In business, it is common for competitors to take advantage of structural and organizational weaknesses of their rivals.

This is a likely scenario for Kraft Company because of their current weakness with regard to market expansion and occupancy (Lamb 22). This weakness threatens Kraft’s presence and dominance in the global market.

Opportunities

Kraft Food Company continues to enjoy unprecedented growth and hegemony despite various challenges and occasional hiccups in the market (Lamb 27). The company has to address a number of issues in order to guarantee its success and stature in the market.

Amid challenges and weaknesses, the company has numerous opportunities that could spur its growth and success in the market. The company can pursue available channels to overcome its debt hurdle and other relates challenges that are responsible for its poor performance in the market (lamb 28).

Firstly, the company can embark on extensive expansion efforts to increase its presence in the market. The expansion efforts should target areas that have high market potential. Such areas include China, India, Korea, and Africa.

These areas have high potential for commercial activities because of various factors such as population and favourable government policy (Crosson 47).

Through expansion into new market territories, the company could increase and consolidate its market share, thereby increasing its profitability. The company can utilise the existing networks and influence of Cadbury to introduce fresh and innovative products in new markets (Crosson 48).

Secondly, the company can re-invent itself in its current markets by introducing radically distinctive and healthy products. Consumers are increasingly demanding fresh and healthy products in the market.

The company can seize this opportunity by increasing production of organic products in their markets. For instance, the company can venture into supply of fresh products from the farm. Such a strategy will endear the company to its clientele (Crosson 52).

Threats

Kraft Foods Company faces numerous challenges in its operations within the market. The company faces threats arising from the Cadbury acquisition. The transaction caused uproar within the British market. This caused a massive boycott against Kraft’s products in the affected market (Daft 31).

This issue threatens to curtail the performance and command of market share in the future. The company must accelerate efforts to regain confidence and trust among its customers. The acquisition presented numerous challenges for the company thereby affecting its performance in the market (Daft 32).

The company must avoid such pitfalls in future to ensure good performance in the market and maintain its profitability.

The company has to contend with heightened competition from Nestle and Harshey. The two market giants pose a monumental threat to the dominance of Kraft Food Company. The company must engage in activities that diffuse threats within its market (Daft 34).

The company must adopt strategies and mechanisms geared towards reduction and mitigation of threats. The food and beverage market is highly competitive. Kraft Food Company must initiate several preservative measures to guarantee and protect its commercial territory.

The company must ensure loyalty among its customers and embark on product diversification in the market (Daft 41). Such restructuring will ensure sustainability and dominance in the market.

The Split of Kraft Foods Company

In October 2012, Kraft split into two companies. The two companies are Kraft Food Group and Mondelez International (Askew par 1). Mondelez continued with Kraft’s interests in vending of snacks while Kraft Food Group commenced on efforts to consolidate the grocery market in North America.

The split was a calculated move to diversify and venture into new market locations (Askew par 3). The split was an effort towards consolidation of the company’s global presence and dominance. Above all, the split had the primary aim of ensuring expansion of Kraft’s operations in North America (Askew par 3).

The split presented an opportunity for the company to revise its internal organisational structure in a bid to increase efficiency and organisational performance.

The split would turn Kraft’s portfolio into a strong point of departure towards prosperity and heightened activity in the market (Askew par 4). Through the split, Kraft intended to ensure that resources channelled towards improvement and intensification of positive input within its market portfolio (Askew par 4).

Recommendations

In light of the above SWOT analysis, it is evident that Kraft Foods Company has a bright and progressive future in the food and beverages market. With the right approach, the company has a competitive advantage over its competitors in the market.

However, Kraft Food Company must take several decisive steps to ensure good performance in the market. The company should intensify its expansion efforts to ensure wide and appropriate coverage in unexploited markets. This will definitely increase its profitability and dominance in the market.

The company should strengthen existing brands to ensure maximum returns. This will help in cutting costs and avoiding excessive wastage of resources.

The company should seize the opportunity presented by its split to amass the positive energy in the moment. The split should enable the company to reach far-flung markets that are hitherto unexploited.

The company should reenergise its organisational machinery to enable eventual creation of innovative brands that capture the mood of consumers in the market. The company should exploit its numerous strengths and opportunities to guarantee future profitability and success in the market.

However, it is important for Kraft Foods Company to put effort into addressing its weaknesses and threats. This will ensure its growth and propagation in a highly competitive business environment.

Works Cited

Askew, Katy. Profile: Split to Bring Greater Focus for Kraft. 2012. Web.

Crosson, Susan. Managerial Accounting. London: Cengage Learning, 2011. Print.

Daft, Richard. Management. London: Cengage Learning, 2012. Print.

Gaspar, Julian. Introduction to Business. London: Cengage Learning, 2012. Print.

Lamb, Charles. Essentials of Marketing. London: Cengage Learning, 2011. Print.

Marcic, Dorothy. Understanding Management. London: Cengage Learning, 2012. Print.

Rankin, Lee. Kraft Foods Company: The Bare Essentials. Newyork: Taylor & Francis, 2012. Print.

Welch, Patrick. Economics: Theory and Practice. Newyork: John Wiley & Sons, 2011. Print.

Introduction

Many successful organisations implement powerful strategies that ensure that their customers get the intended services or goods in a timely manner. The presence of effective leadership creates the best opportunity for pursuing goals, acquiring raw materials and adding value to all stakeholders. Operations strategy (OS) is a critical concept that can take a company from point A to B and maximise profitability. The purpose of this paper is to give a detailed analysis and description of the content and process of every OS. It will go further to present a detailed plan for developing and implementing OS in an organisation.

Operation Strategy: Content and Process Aspects

The concept of OS has become crucial for corporations that what to remain relevant in their respective industries and overcome competition. Waters (2008) defines it as any detailed plan specifying the procedures and utilisation of various resources that can support the implemented or targeted business strategy. Some of the outstanding aspects of OS include location of the organisation, size and the most appropriate facilities (Angus 2019).

Managers will go further to consider this attribute to recruit skilled workers, present the desired technology and create processes that can maximise performance. Control methods are also critical since they guide the entire process and ensure that emerging problems are identified in a timely manner (Stahl et al. 2016). This concept echoes the attributes of operations management (OM). This is the case since OM is aimed at planning, coordinating and organising activities that can create value and support the delivery of high-quality services and goods.

OS is subdivided into these two aspects or parts if it is to deliver the intended results: content and process. Bell and David (2015) indicate that content will focus on the unique decisions that organisational leaders consider to pursue the most appropriate strategy and promote performance. For instance, leaders will follow this aspect to decide who completes what roles, how procedures will be undertaken and what human resources and raw materials will be required to support the intended OS. More often than not, companies will have specific committees or boards that make actual decisions to influence operations and performance. With such inputs, it can be impossible for organisations to pursue their goals diligently and eventually emerge successful.

Process is the second aspect that determines the effectiveness, sustainability and success of every implemented OS. Hill and Hill (2017) define process as any procedure a given corporation adopts to formulate or pursue the intended strategy. This kind of framework tends to describe the stages or models that are guided by the content or decisions made. These two aspects will work synergistically to ensure that the adopted OS transforms performance and eventually delivers positive outcomes in a given firm.

Developing and Implementing Operations Strategy

Although OS is a powerful model for improving performance, business leaders should be able to develop and implement it effectively by focusing on the existing issues and anticipated goals. This is something critical since OS is intended to guide all structural aspects, decisions and operational capabilities that have to potential to give the company a competitive edge over its rivals and eventually add value to every customer (Hill & Hill 2011). Those in leadership positions should, therefore, develop the best OS for the organisation.

The first issue to consider when designing an effective OS is to focus on the intended core area. This approach is essential since a company will have to consider specific fields that have the potential to deliver the intended results. For instance, a given manager might decide to develop an OS that will improve competitiveness, transform final services or products, improve customer experience, or revolutionise the existing corporate strategy. With this kind of information, the first step is for such a leader to focus on the best content or decisions that resonate with the intended results (Hill 2005). The next step during the development process is to consider a number of tips.

For instance, he or she might examine how other companies are pursuing similar goals, develop a superior mission statement, determine how to improve competitiveness through continuous differentiation and conduct a strengths, weaknesses, opportunities and threats (SWOT) analysis (Wandiga, Kilika & James 2017). The acquired ideas will inform the most appropriate decisions and eventually support the development of a powerful strategy.

When it comes to implementation, companies should consider various issues that can support or disorient the entire process. Leaders can begin by introducing the most appropriate framework for undertaking the entire process. The right people, resources, devices and systems will be identified before launching the initiative. A change model is also needed to inform all stakeholders and present numerous ideas for OS implementation (Slack & Lewis 2017).

Managers should consider stakeholders’ views in order to reduce opposition. The process should also be informed by the established mission statement and corporate goals (Slack, Brandon-Jones & Johnston 2016). The concept of continuous monitoring is instrumental in addressing emerging challenges and ensuring that stakeholders’ demands are met.

Conclusion

The above discussion has identified OS as a critical process in any given corporation. It entails the formulation of evidence-based decisions and introducing frameworks that will add value to the targeted stakeholders. Business leaders should begin by examining the trends in the industry and the anticipated goals to develop befitting OS models. This will be followed by the involvement of all participants to implement it successfully and eventually deliver positive results.

References

Angus, RW 2019, ‘Problematic search distance and entrepreneurial performance’, Strategic Management Journal, vol. 10, no. 12, pp. 2011-2023.

Bell, G & David, J 2015, ‘What if corporate governance fostered executive dignity?’, Journal of Applied Business and Economics, vol. 17, no. 4, pp. 30-45.

Hill, A & Hill, T 2011, Manufacturing operations strategy, texts and cases, 3rd edn, Red Globe Press, New York, NY.

Hill, A & Hill, T 2017, Operations strategy: design, implementation and delivery, Macmillan International Higher Education, New York, NY.

Hill, T 2005, Operations management: strategic context and managerial analysis, MacMillan, New York, NY.

Slack, N, Brandon-Jones, A & Johnston, R 2016, Operations management, 8th edn, Pitman, Dublin, OH.

Slack, N & Lewis, M 2017, Operations strategy, 5th edn, FT/Prentice-Hall, New Jersey, NJ.

Stahl, GK, Tung, RL, Kostova, T & Zellmer-Bruhn, M 2016, ‘Widening the lens: rethinking distance, diversity, and foreignness in international business research through positive organizational scholarship’, Journal of International Business Studies, vol. 47, no. 6, pp. 621-630.

Wandiga, EN, Kilika, JM & James, R 2017, ‘Linking operations strategies with customer based competence and firm performance in the context of knowledge based intensive sector: a theoretical review’, International Journal of Business Management, vol. 12, no. 8, pp. 234-248.

Waters, D 2008, Operations strategy, Thomson, Stamford, CT.

Galanz’s Competitive Strategy

Galanz is a company that is based in China. Its main business is the manufacture and sale of microwaves. The company faces a lot of competition from other established companies, such as LG, Panasonic, Toshiba, and Samsung, among others. The company has had a long way en route establishing itself as a competitive organization considering the major players in the industry are few, but well established organizations.

Initially, the company was only producing microwave ovens for sale in the domestic market. It used to purchase key components and production technology from Japan. The company then started its own Original Equipment Manufacturing (OEM) business. This attracted foreign brand owners to outsource their production to Galanz. The company then transformed into an Original Design Manufacturing firm.

The combination of OEM and ODM facilitated its brand being recognized in the overseas market. The other competitive strategy that the company applied is low cost production. It had cheap labour and land, both of which facilitated in lowering the production cost.

This was the major strategy that led to a large volume of sales as the company is able to offer its products at a relatively low price compared to the competitors (Thompson and Frank 552). In addition, the company had an R&D department that had undisputed capabilities of developing highly competitive and innovative products. Finally, the company has a brand name that is well recognised, both in China and abroad.

The competitive strategies of Galanz are successful for a number of reasons. First, the low cost production enables the company to sell its products at a low cost. Second, the R&D facilitates quality production. Third, its strong brand has won the loyalty of customers across the globe. The three aspects combined have contributed to a successful competitive strategy for Galanz.

Galanz’s Operation Strategies

The company also worked towards changing and improving its operational strategies in its bid to succeed in the global market. The aim was to make the operations more effective and efficient and lower the cost of operation. This would be effective in boosting the competitiveness of the company.

The operations manager was responsible for following up the company’s operation strategy. The operations manager makes decisions to manage the transformation process that converts inputs into finished goods or services that are ready for consumption. The manager also oversees the supply chain, which is also effective in ensuring a successful operation strategy. Initially, the company was buying magnetrons from its competitors.

However, the competitors cut their supply of magnetrons to Galanz as its growth continued to escalate, prompting Galanz to start its own manufacture of magnetrons. This was one of its operational strategies that propelled the company to succeed. The company then started its own OEM and later transformed it to an ODM. It could, therefore, be able to produce Galanz microwave ovens with its own brand, rather than purchasing some components from competitors.

The company had operations in the Original Brand Manufacturing firm in the domestic market. The company was able to develop and produce its own magnetrons with the Original Design Manufacturing. This ensured that the company was able to deal with the previous shortage of magnetrons. It also ensured constant supply of microwave ovens.

The operational strategy of Galanz was successful because the company was able to meet the market demand that was increasing as the company’s growth continued. Galanz was able to produce sufficient magnetrons enough for its microwave oven production. At home, the Original Brand Manufacturing (OBM) facilitated brand recognition in the domestic market. The operational strategy further helped in the production of quality microwave ovens.

The company’s operations manager has control over the quality of magnetrons. He or she is able to ensure the magnetrons are of the desired quality. Therefore, the end product is of desired quality as the whole production line is managed by the organization’s operations manager.

How Galanz operation strategies support its competitive strategies

For an organization to be successful in the market, the operation strategy should be able to support the competitive strategy. At Galanz, the operation strategy has been successful in supporting the competitive strategy of the company.

First, it is important to note that the major competitive strategy of the company is low cost production, which enables it to sell products at highly competitive prices compared to those of its close competitors. Secondly, its R&D has also been instrumental in increasing the competitiveness of the company by facilitating innovation.

Its operation strategy, on the other hand, has seen the formation of the OEM business and then transformation into the ODM. This has boosted the company’s production of magnetrons. The company also has its own OBM in China, which has helped in domestic brand recognition.

The ODM and the OBM have helped in further reduction of the production costs for Galanz. Producing its own magnetrons is much cheaper compared to purchasing them from other companies. Further, the production development of ODM has also facilitated R&D and innovation, consequently supporting its competitive strategy. OBM, on the other hand, helps in increasing brand recognition as a competitive strategy.

“How the company should set priorities and utilize its resources and capabilities to gain competitive advantages in the marketplace”

The company has achieved breakthrough in the market by selling its products at low prices. This has led to some of its competitors withdrawing from the market following the stiff competition it provided them. It claimed that price wars were a defence of the company and the objective was to destroy its competitors. Galanz had succeeded in this strategy. However, the business world is said to be dynamic. An organization only survives in the long run following its ability to cope with the changes that occur daily.

The company started to experience challenges for its future growth and development after years of market domination by Galanz, both in China, as well as in the overseas countries. There are worries on whether its current low cost strategy will still be successful in the future. It is clear that there are some changes that have to be implemented to keep the company in the competition.

Galanz is supposed to take a competitive position in the market by setting its priorities right. First, the world is trending towards technology and most products over the past few years are produced based on technology. The future of business organizations is highly dependent on their ability to embrace technology and utilize it effectively. Galanz should prioritize its resources by investing in technology. In doing so, the company should also be keen not to deviate from its low cost strategy.

The differences between OEM/ODM versus OBM in terms of production, design, marketing, distribution, and customer service

The OEM and the ODM firms were the two business strategies that Galanz turned to after its supply of magnetrons was cut by its previous suppliers, who also happened to be the company’s major competitors. Therefore, the OEM and the ODM production were aimed at producing magnetrons for the manufacture of microwave ovens for sale in the overseas market (Bonaglia 38). The two production modes produce and design the magnetrons, but the branding and distribution is done by another company.

The two modes helped the company to produce magnetrons at a low cost that facilitated its low cost strategy in the global market. In terms of design, the OEM and ODM helped the company design its own brand that helps it switch to a business direction of, “Created in China”, rather than “made in China.” The OEM and ODM further marketed and distributed the company’s products in the international market.

The OBM model was targeted to the domestic market. It produced and designed its own brand, instead of outsourcing to the competitor companies. The OBM further marketed and distributed its products in China. The customer services it offered were all meant for the domestic market. The aim of OBM was to strengthen the brand in the domestic market. Galanz was successful in using the models in that each of them specialized in its market targets, thus they produced efficiently to satisfy the market needs.

Galanz’s strategy of introducing OBM in international market

Currently, the OBM is purely targeted at the domestic market. It is aimed at strengthening the company’s brand in the domestic market and winning its competitive advantage in China. An original brand manufacturer refers to a company that sells a product that has been produced by another company or that includes a component of another company as its own brand.

This is a strategy that is seen as able to add an extrinsic value to the product (Bonaglia 39). In the case of Galanz, the brand has already established itself in the international market. Therefore, the company does not need to introduce its OBM in the international market.

Galanz should continue with its OEM and ODM business strategies. The two businesses have proven to be successful in the international market. They have facilitated the growth and development of Galanz and its competitiveness. It should be noted that business strategy is a factor that facilities the success of the organization. Facility strategy, on the other hand, considers the amount of capacity, among other factors.

Facility strategy would, therefore, consider the capacity of Galanz to manufacture microwave ovens. The company manufactures microwave ovens and then sells them to the international market through the brand name of another company (Bonaglia 38). However, the selling company always refers to the manufacturing company, which is Galanz in this case.

The ODM mode allows a firm to make products, but the products are branded and sold by a different firm. With any of the two models, the original manufacturing company will always get credit for the manufacture. Therefore, the brand name for Galanz under ODM or OEM will be maintained and there is no need to change the models.

Advantages and disadvantages of technology in Galanz’s success

Galanz started to invest in R&D in the year 1995 with the aim of facilitating new design and development in the organization. It focused on new technologies to improve and boost its marketability. Galanz realised a number of advantages out of the technology. New technology helped Galanz cut down the cost of production.

This was beneficial in that it helped the company produce at lower costs. Secondly, the new technology helped Galanz produce more differentiated products. This added to the quality of its products, as well as the marketability and competitiveness of the organization. Quality control systems should be put in place to ensure quality production.

The systems should be developed on technological knowledge. The products that a company makes should satisfy customer needs fully. Factors that add up to constitute quality include availability, field service, quality of design, and quality of conformance. Third, the company started to receive more orders for its products as a result of the new technologies (Panneerselvam 60).

However, the technology did not come without any disadvantages. For instance, the company had to spend a significant amount of its fortunes to invest in the R&D. It was approximated that the company spent about 3% of its annual revenues to invest in the new technologies. This reduced its income in the short-run.

How technology affected Galanz

Technology affected Galanz in that the total sales in the long-run increased following an increase in demand for its products. The technology also helped Galanz localize the design of its products to suit its target market. Technology played the role of increasing and improving the quality of its production and lowering the cost of production, leading to the success of Galanz.

The challenges that faced Galanz and how it overcame the challenges

The road to success for Galanz was not an easy one. Galanz encountered several challenges on its way to its current position. First, the company was initially not producing its own magnetrons. Instead, it was buying them directly from its competitors, such as LG and Panasonic. The supplier companies cut the supply of magnetrons because of fearing the threat that Galanz was setting in terms of competition. In dealing with this challenge, Galanz established an OEM with the aim of manufacturing its own magnetrons.

Galanz was initially named as Guizhou down Product Factory and it was in the business of producing down leather products and selling them to abroad markets. On joining the microwave market, the company faced a challenge in that there were already established companies in the market. The microwaves at the moment were expensive and unaffordable to many people.

In addition, the technology for producing microwave ovens, as well as the technical expertise was not available in China. This presented a big obstacle for the company in its bid to start the microwave business. Liang Senior went a step further to ensure that the production of microwaves took place in China, instead of importing the microwaves by bringing in the technology and expertise needed for the job. This saw enabled him set up a factory in China.

Mr. Liang’s achievements that lead his company to greater success

The current success by Galanz can be traced to the contributions of Liang Senior, who is the Vice Chairman and CEO of the company. In fact, the credit for the company’s success can be given to him. He made a number of achievements in securing this success. The first achievement by Mr. Liang was to start up the microwave ovens manufacturing company in China. Initially, there was no technology and technical expertise in China to manufacture microwaves.

Mr. Liang purchased the equipment for this manufacture and brought in people who had the expertise to carry out the manufacture. This was the first and the most important achievement. Mr Liang carried out the initial project planning and scheduling. He did all the necessary controls to ensure that the equipment was installed successfully. Among the scheduling activities he carried out were bringing in experts and assigning them tasks, as well as developing a work breakdown structure for them.

Another achievement by Mr. Liang was his successful efforts to sign a contract with overseas companies to outsource the designing and branding of magnetrons. There was no technology for such production in China at the time the company was entering the microwave ovens market.

Mr. Liang outsourced this production, a step that was very successful in starting up the growth of Galanz. He also created an Original Equipment Manufacturing model whereby the company would be manufacturing its own magnetrons, instead of outsourcing the production.

Suggestions

Galanz can be considered a successful company since the entry of Mr Liang Senior. The company has been able to establish a low cost strategy that has seen it edge out most of its rivals, even forcing some to leave the market completely. However, there is a chance that the organization can still improve and achieve greater success in the future. However, the company has to be in a good position to face the future market challenges, some of which it is already encountering.

In terms of strategy, the organization should hold on to its low cost strategy. However, it should adopt a differentiation strategy and market focus strategy at the same time. Under differentiation, Galanz should be producing microwaves that have improved features compared to those of its competitors.

On market focus strategy, the company should be focusing on different markets and their requirements. In turn, Galanz should produce microwave ovens that meet the market demands of the different focus markets to be able to penetrate more markets (Christensen, Antony, and Roth 218).

In terms of management, the Mr Liang should ensure that the operations managers have the full control of the company’s production activities. This will enable them to track and realise any default that may compromise the quality of the microwave ovens in time. The managers should also be highly skilled and have the relevant knowledge to enable them cope with the market conditions now and in the future. The management structure should be flat to facilitate communication across the organization.

Capacity planning should also be considered by Mr Liang in his bid to achieve greater success for the organization. The organization should position itself such that it will be able to produce enough microwaves to meet the increasing demand (Christensen, Antony, and Roth 218).

This will be important in preventing the customers from walking away to rival companies. The operational diagram should be made as effective as possible and less hierarchical to increase production efficiency. The customer service at the organization is good. However, it can still be improved to enhance customer satisfaction further. To do this, Mr Liang can increase the number of customer representatives in the organization and ensure that they have sufficient knowledge to address all the issues raised by the customers.

Works Cited

Bonaglia, Federico. Meeting the Challenge of Private Sector Development: Evidence from the Mekong Sub-Region. Paris: OECD, 2006. Print.

Christensen, Clayton M, Scott D. Anthony, and Erik A. Roth. Seeing What’s Next: Using the Theories of Innovation to Predict Industry Change. Boston, MA: Harvard Business School Publishing Corporation, 2004. Print.

Panneerselvam, Ranganathan. Production and Operations Management. New Delhi: PHI Learning Pvt. Limited, 2012. Print

Thompson, John L, and Frank Martin. Strategic Management: Awareness & Change. Hampshire, UK: Cengage Learning EMEA, 2010. Print.

Introduction

The Carrefour Group is a multinational retail corporation with headquarters in France. It is among the top global leaders within the hypermarket sector with approximately 1,452 stores. The company has an interest in regions such as Europe, South America, Asia, and North Africa. Among the notable products retailed by the company are convenience stores, warehouse clubs, hypermarkets, discount stores, and supermarkets. The current operating income of the company is €2.347 billion with total equity of €10.2347 billion. At present, the company has more than 381,277 employees. This paper will review different aspects of operations management about the Carrefour Company.

Work process

The operations model in Carrefour’s operations management supervises the reaction rate and screens all production processes from product creation to distribution channel. The model helps with following costs and effectiveness of the operational channels, such as apparatus and human resources, besides the utilization of these channels in the most cost-effective way. Also, it tracks externality and internality variables that are subject to the speed of execution such as productivity within a specific period, the reaction by the client, and the nature of item discharged into the production process. These factors apply to cost, productivity, dependability, and quality in the entire operations process (Teece 156). In particular, the Carrefour Company has set up an effective operation administration display that balances the variables to create a flowing transition from production to distribution in the most effective manner. The Carrefour Company has a proficient production model, which is unique in tracking the productivity process from procuring goods from suppliers to distributing the goods to different stores and eventually selling to customers.

The above capacities are joined at the central planning point which envelops costing, velocity, quality, adaptability, and reliability to make a smooth ceaseless operation model that works like PC starting with one section then onto the next. The Carrefour Company is aligned with the human resource department, finance department, marketing department, operations department, and supply chain department. The operations administration arrangement of the Carrefour Company incorporates the aspects of proactive planning, systematic development, strategic implementation, and consistency in disclosure (Andrea 27). The procedure is supported by process maps, status reports, production activities, human resource use, and quality in the output over a definite duration of time.

Essentially, the operations administration frameworks at the Carrefour Company incorporate part of cost, constancy, pace, quality, and adaptability. These variables determine the strength or weaknesses of the operations module at the company. These aspects are attainable through quality conveyance, continuous expansion, and innovativeness through the company’s research and development division (Teece 143). Specifically, these variables are part of the systems and apparatuses, which are vital in the specialty of operations administration at the company as summarized in appendix 1 and appendix 2. For instance, a specialized procedure of comprehension in the operations at the company includes operations administration, its application, and assessment criteria (Bowman 5).

The aspect of speed manager response rate monitors utilization throughout the production and marketing process as the primary inputs. Speed assists in tracking costs and efficiency of labor productivity tools such as machinery, human labor, and optimal use of these aspects at a minimal cost. Besides, it tracks externality and internality variables that are dependent on the speed of performance such as efficiency in the period between production and delivery, the response by the customer, and the quality of product released into the market (Koren 405).

Despite having this efficient operations management system, the company has not fully established a mechanism of monitoring progress at the micro-level, and majorly depends on macro auditing in decision making. Notwithstanding having this proficient operations administration framework, the Carrefour organization has not completely settled a competent strategy for observing production efficiency at a macro level. At present, the company largely depends on macro production tracking tools that cannot pinpoint inefficiencies within each unit of production design. As a result, the company has struggled with consequences on poor decision making, dynamics in the production, and imbalances between different factors of production (Smithson 161).

Business productivity reflects the ideal usage of distributed variables in the creation of products at the most cost-effective module. From the above refection, it is clear that the Carrefour organization should integrate the Flexible Monitoring System (FMS) to balance the quality variables that determine the magnitude of production sustainability in the short run and long run (Koren 403). Despite lower rates of return beneath the projection, the general impact of adopting the FMS is that the company will have advantages that will exceed its restrictions. For example, when the FMS is completely embraced as proposed, the company will be in a position to manage expenses from production and logistics management (Smithson 164).

Even though the value of the Carrefour venture is lower than often anticipated, the FMS will make it reasonable since it manages the element of costs in managing operations by ensuring that optimal productivity is achieved at the least possible cost (Bowman 6). Also, the part of productivity as a consequence of FMS will push the generation logistics management towards manageability over a long period. Fundamentally, the prompt adjustment of the proposed FMS will contribute towards supportability in the part of cost, reliability, velocity, quality, and adaptability of the current operations management module (Teece 145). In particular, the increased productivity at the least cost will give room for the development of different products without expanding the physical production utilities. More space means more products being created inside the same production lines. Because of expanded yield, the Carrefour business will grow as the organization becomes more attractive for the investors (Koren 409).

Since the end goal is to accomplish quality operations administration, the current performance management matrix should be occasionally moved up to track the various working operations models such as proportion examination in operation administration, which is perfect in proactive management of the entire performance matrix in the short term and long term production activities. These variables are achievable through quality assurance, production expansion, and inventiveness as part of the performance management (Bowman 7). The modification of performance management variables as a strategy is fundamental in the specialty of operations administration at the Carrefour Company (Koren 405). Notwithstanding, having proficient operations administration framework will enable the Carrefour Company to completely track the component of checking advancement at miniaturized scale beside the large scale production cycle across different divisions within France and beyond (Teece 153).

Product and service design

The organization has assorted food products and keeps on growing new product lines that satisfy the demand of customers. Case in point, the convenience store, warehouse club, hypermarket, discount store, and supermarket products have been rolled out by the company to tap the global market. The products are exhibited as having high quality and value. The diverse production ability has positioned the company as a global leader in different retail businesses across the globe.

Quality management issues

Exploring the operations administration arrangement of the Carrefour Company is vital to considerably arranging and realizing quality management, which works by reducing expenditure through planning and managing the production budget. The Carrefour organization has an ideal quality management strategy to balance the cost against output as part of its primary generator of competitive advantage. To accomplish this, the current cost management frameworks are intermittently moved up to present numerous working channels, for example, quality affirmation in operation administration that is good at tracking progress in the short term and long term (Bowman 8).

The business model of the Carrefour Company is managed like a corporation with different interests in retail products. The business is managed as divisions, which work as partitioned branches that are managed from a central point. This has improved the company’s rating in the global business market in balancing competing interests in different divisions. The company has a simple logistic plan in getting credit from banks due to its large capital structure (Andrea 25). Because of the balanced and stable financial management framework, the Carrefour Company has remained extremely aggressive and feasible in terms of its business sector extension procedures.

The technique for reviewing the performance management variables at the Carrefour Company is adjusted to correspond to quality assurance strategies across the departments such as logistics, human resource, production, research and development, and supply chain. To guarantee success in performance management, the quality administrators at the Carrefour have adjusted both the performance trackers and complete production cycles across different divisions as independent entities (Teece 134). As a result, the quality management strategies that guarantee long term commitments are satisfied in the production cycle in each division (Andrea 22). This is conceivable because this model of operations administration framework takes into consideration the operations process aggressiveness as it manages the superfluous overhead expenses from waste and underutilization of production inputs (Koren 403).

Capacity planning

The abilities displayed by the Carrefour Company presents yet another part of its general process management, as far as procedure and limit are concerned. The organization runs a dynamic corporation that is divided into different food, beverages, and nutritional additives that are retailed in convenience stores, warehouse clubs, hypermarkets, discount stores, and supermarkets. These structures frame a portion of generation lines for distinctive process management. The decision approach at the Carrefour is marked by a consultative structure characterized by endorsements originating from the top managerial staff comprising of capable and experienced managers. The organization depends vigorously on operations administration in choice-making (Andrea 24). For instance, the proposed expansion in the Indian market in the year 2017 was supported by comprehensive market research (Carrefour Group par. 6).

The capacity planning systems at the Carrefour incorporate planning, development, implementation, and discovery. Reflectively, the process captures a process map, compliance requirements, review structure, and resources employed within a specified period in business. Since capacity planning is properly balanced at Carrefour, the system has remained efficient due to consultative decision science, which ensures that the sustainability of the manufacturing process is guaranteed. For instance, there is a performance tracking system which monitors the costs of running the production and supply chain process, the time it takes to complete each production schedule, and the general flow of activities from one unit to another (Carrefour Group par. 6). The above aspects have guaranteed effective and sustainable capacity planning to ensure that the manufacturing process meets the basic operation efficiency matrix.

To achieve quality capacity planning in manufacturing, the forms of production system monitoring at the Carrefour are periodically upgraded to introduce multiple operating system models, which are compatible with tracking and analysis the flexibility, optimality, and cost-effectiveness of the manufacturing process. The capacity planning systems at the Carrefour include the aspects of cost, dependability, speed, quality, and flexibility (Carrefour Group par. 6). These variables are achievable through value delivery, value addition, and creativity in the planning for the right capacity. High standard operations management system acts as the engine that supports implementers of business strategy to comprehensively verify rationale for supporting current, predicted, and actual results for every step upon introduction of a functional system in the production schedule. Fortunately, the Carrefour has strategies on the ground to track the decision science, optimal operations, and cost-effectiveness to ensure that the production process is profitable and sustainable.

Forecasting techniques

Utilization of all the essential capabilities has empowered the Carrefour Company to manage its position as a global leader in the aggressive business sector. Thus, the company is a central cause of a business that has kept on grasping quality operations administration in terms of steady organizational communication culture, proficiency, and ideal asset use in delivering food products to customers across the globe (Koren 403). The corporate methodology proposed by the administration of the Carrefour Company is to guarantee long term production capacities.

For the execution of the methodology, the administration has been proactive in equalizing both the transient and long term goals as part of the decision matrix. This fete is achieved by making arrangements for assets in innovation, preceded with the development of the new product through continuous research, and directing different experts to distinguish market demands by different segments of customers. It is evident that appropriate coordinating of delicate aptitudes, for example, group building, authoritative viability, initiative, choice-making, critical thinking, imagination, adaptability, and group building is well integrated into the management aspect of the company’s operations matrix (Teece 138).

Through enhanced flow in the production schedule, the Carrefour organization is set to quickly and considerably pick up from the unwavering quality perspective when contrasted with its rivals. Since customers will have the capacity to get their request inside of a shorter time, the organization stands to gain from consumer loyalty and referrals (Bowman 7). Since the length of time of conveyance has diminished by around 33% of its past rate following the integration of six sigma system, the organization is equipped to profit from economies of scale because of expanded ability to create and disseminate within a short time will guarantee increased productivity for different product lines currently being produced by the Carrefour Company (Andrea 27).

Layout and facilities planning

The Carrefour Company divisions are situated in strategic regions in France and different parts of the world. Since the business targets different clients, the company is known for its extensive hyper-store facilities that retail different product lines. This translates into expanded production volume across the globe (Carrefour Group par. 6). The Carrefour divisions are connected with dynamic and efficient organization environment through the state of art production facilities and employee recreational centers. This strategy has empowered the Carrefour Company to emerge as a vivacious domain for employees, who are motivated by the ideal work environment. As indicated on the company website, Carrefour has a healthy work environment that encourages employee innovativeness and creativity (Carrefour Group par. 6).

The maintenance approach adopted by the Carrefour Company is comprehensive of the exploratory perspectives, for example, the specialized procedure of comprehension of the operations and legitimate utilization of measurable devices. These devices are basic in checking and dealing with the logistics behind the business capacities in different facilities. These variables are legitimately adjusted as demonstrated in the productivity of the business, in terms of store size across the globe.

Conclusion

From the above research, it is apparent that the value creation model cannot align cost-effectiveness when logistics of operation are aligned to a single operational system. For instance, lack of strong control systems and poor benchmarking approach will compromise the organizational strategy of cost reduction, customer satisfaction, and reduction of risks when the supply chain management function is managed from different units. In the case of Carrefour, the operations management models are well balanced. However, the company should adopt the IFM system to improve on efficiency tracking. Besides, the IFM system will ensure that the operations management channel at the company is streamlined and efficient to support the short-term and long-term production needs.

Works Cited

Andrea, Arnaldo. “Understanding how Formal and Informal Communication affect Purchasing, Manufacturing and Logistics Integration.” Advances in Management 4.7 (2011): 22-32. Print.

Bowman, Singh. “Corporate Restructuring: Reconfiguring the Firm.” Strategic Management Journal 1.4 (2003): 5–14. Print.

Carrefour Group. Operations Management. 2016. Web.

Koren, Caren. “Manufacturing Capacity Planning Strategies.” Manufacturing Technology 58.3 (2014): 403–406. Print.

Smithson, Samuel. “Analysing Information Systems Evaluation: Another Look at an Old Problem.” European Journal of Information Systems, 7.3 (2008): 158-174. Print.

Teece, David. “Business Models, Business Strategy, and Innovation.”Long Range Planning 43.1 (2010): 172-194. Print.

Appendices

Appendix 1: Operation Management Model at Carrefour

Appendix 2: Actual Representation of the Operation Model