Operating Models - Extra Flashcards
How can coordination companies grow?
- Grow by extending reach to defined customer segments in new markets or by increasing services to meet new (related) customer demands
How can replication companies grow?
Growth through acquisition or organically
What is a growth consequence of higher standardization?
What is a growth consequence of higher integration?
- Integration: acquisition more challenging, but facilitates organic growth
- Standardization: Enables acquisition through rip-and-replace
What are some caveats when going from diversification to unification if a change in operating model is needed?
- Key operations are decided upon.
- Strategy will stay the same (same products to same customers)
- Central ERP system and processes are implemented to become more efficient
- Transition might be difficult due to change in power structure and reducing the authority of local managers
- Can be costly and risky
What does integration between business processes facilitate?
End-to-End processes
What does integration across business processes facilitate?
Shared face to customer
What is unification?
- High integration, high standardization
- Often integrated supply chains
- Implementation of large packaged systems to support standardization and integration
- Processes are constantly re-engineered
- Focus on cost cutting, increased quality, safety and security
- Centralized management environment, leveraging economies of scale
- Minimal variation, so best suited to commodity providers
What is replication?
- Low integration, high standardization
- Success of the business depends on global innovation and efficiency by standardized processes
- BU’s are run independently, but with the same IT infrastructure and standardized core processes
- Value is added through economies of scale and new and improved products
- BU managers limited discretion over process design
- Local decision making somewhat allowed
- Growth through acquisition or organically
What is coordination?
- High integration, low standardization
- BU’s share some common customers, suppliers, partners
- Goal is not low cost, but best service to customers
- Company-wide thinking on BU level
- BU have unique processes
- Integration fosters product expertise while enhancing customer service
- Customized service to retain high-value customers
- Grow by extending reach to defined customer segments in new markets or by increasing services to meet new (related) customer demands
What is diversification?
- Low integration and standardization
- BU’s have few common customers, suppliers, partners
- BU often run autonomously, with their own operating model
- These BU often offer different products to different customers
- Growth through organic growth of a BU or through acquisitions
- May pursue brand recognition
- May pursue economies of scale through shared service centers
With diversification, what is the focus on in the core diagram and how does it visually look like?
Shared technologies (SSC) -> shared processes -> Potentially BU specific data -> Potentially BU specific customers
You have processes that are separate on the sides. They do not touch. In the middle you have some technology circles that do not touch.
With unification, what is the focus on in the core diagram and how does it visually look like?
Shared customers -> shared processes -> shared data -> shared linking technologies
Shared data in the middle with multiple technology circles around it. There is a big block of shared customers touching the technology circles. Around the sides of the circle there are shared processes that can also have technology circles in or around them
With coordination, what is the focus on in the core diagram and how does it visually look like?
Shared customers -> shared data -> shared linking technologies (portal to access data) -> potentially BU processes
Key customers on the right, big data in the middle. Around the data one circle with linking technology. You can include business processes. They are than standing up and can or can not touch the linking technology.
With replication, what is the focus on in the core diagram and how does it visually look like?
Shared processes -> linking technologies -> potentially BU specific data -> potentially BU specific customers
You put in some core processes. These can be circled with linking technologies. Than you can put in some extra (ERP) linking technologies that do not touch processes
What is business strategy?
It provides direction and an impetus for action. They are multifaceted, encompassing decisions to which markets to operate in, how to position the company in the market and which capabilities to develop and leverage.
