Module 2 Flashcards
Performance Measurement
Definition - the act of quantifying the outcomes of a business activities (provides an objective basis for decision making).
- Financial Measures (sales, profit, ROA)
- Customer and Market (market shares, customer satisfaction)
- Quality (product recalls, defects, warranty repairs)
- Time (speed, variability, delivery time, tardiness)
- Flexibility (design/volume flexibility)
- Innovation (new products, development, patents, staff turnover)
- Sustainability (taxis waste, workplace safety violations)
Productivity Equation
Productivity = Quantity of Output / Quantity of Input
Value of a Loyal Customer (VLC)
Definition - quantifies the total revenue of a customer over their life cycle.
VLC = (P) x (CM) x (RF) x (BLC)
- P = Revenue per Unit
- CM = Contribution Margin (percent)
- RF = Repurchase Frequent (# of purchase per year)
- BLC = Buyer’s Life Cycle = 1 / Defection Rate = 1 / (1 - Retention Rate)
Competitive Advantage
Definition - the strategic superiority of a firm over its competitors (not easily duplicated).
Competitive Priority
Definition - the strategic focus that a firm choose to achieve competitive advantage.
Order Qualifiers
Definition - basic performance expectations of customers (meeting or exceeding is not a competitive advantage).
Order Winners
Definition - a performance characteristic that customers use to differentiate the products and/or services of a firm from its competitors.
Search Attributes
Definition - the characteristics of a good or service that a customer can determine prior to purchase.
Ex. color, price, freshness, style, fit, feel, smell.
Experience Attributes
Definition - the characteristic of a good or service that can be determined only after purchase or during consumption.
Ex. friendliness, taste, wearability, safety, fun, and customer satisfaction.
Credence Attributes
Definition - any aspects of a good or service that the customer must believe in, but cannot evaluate after purchase and consumption.
Ex. expertise from advisor, surgeon, mechanic, etc.
Cost Leadership
Definition - high volumes of standardized products by taking advantage of economies of scale and learning curve effects.
Differentiation
Definition - creating a unique product or service in terms of quality, time, flexibility, and innovation.
- Quality
- Time (speed and reliability)
- Flexibility (design and volume flexibility)
- Innovation
Focus Strategy
Definition - focus on a niche market segment.
Corporate Strategy
Definition - the businesses in which the firm will participate.
Ex. to start a new restaurant business.
Business Strategy
Definition - the market segments and competitive priorities.
ex. student population low cost, fast foods.
Operations Strategy
Definition - how to execute its business strategy (how a firm’s processes are designed to product the type of goods and services to support the firm’s business strategy).
- Operations is a core competency for a firm.
ex. appropriate kitchen equipment to handle high volume fast foods.
