ROOM - strategic role: cost leadership and good and service differienciation Flashcards
what are operations?
Processes that transform and add value to inputs to produce outputs
Not only concerned with manufacturing businesses, but businesses that provide services
operations management
The organisation and coordination of operations processes in order to efficiently and effectively achieve the goals of the business
“the value chain”
The result of effective operations management
How can we achieve a competitive advantage
- Cost leadership (Reducing costs to be the be on price)
2. Product differentiation (Make your good or service stand out in the crowd)
cost leadership
Aiming to have the lowest costs or be the most price competitive (Still profitable) in the Market
Many businesses significant costs are contained within operations functions such as raw materials, labour, processing as well as inventory
Cost saving measures that operation managers can use include:
Developing economies of scale
Use of standard components
Minimisation of wastage
economies of scale
an increase in the scale of the businesses operations can reduce average costs
efficiencies result in lower costs per unit produced and in turn a lower price can be charged to the customer
standardised components
the same components/parts can be purchased and used on multiple products and all around the world
minimisation of wastage ‘lean approach”
designed to eliminate waste – ‘lean’ in this case means no excess
waste is non-value adding, though it does add cost
if waste is minimised then production processes are more efficient and improve profitability.
good/service differencitation
Distinguishing your product in some way from competitors.
Many different forms of differentiation, the intended differentiation will be different for goods and for services
varying the product feature
changing the options available for your product.
varying product quality
businesses can produce the same product however with differing quality levels and differing price
varying augmented features
offering customers any add on that alter the original product.
Customising to your needs
measures to achieve service differentiation
EMPHASIS TIME SPENT ON A SERVICE
LEVEL OF EXPERTISE BROUGHT TO A SERVICE
QUALIFICATIONS AND EXPERIENCE OF THE SERVICE PROVIDER
