Topics 1 - 7 Flashcards
Visions of a business
states the general direction of its operations and development
values of a business
the important “Key principles” of its operations and development
sustainability of a business
ensuring that the business can survive both at present and prosper in the long term - requires consideration of factors besides its financial performance
characteristics of a vision statement
where the organization is going
clear, visible and passionate
big and audacious
single sentence, descriptive, time frame
Dimensions of sustainability
Economy profit, society people, environmental planet
many business want to ensure that their current business is ok and functioning and also able to fully operate in the future to be a long-term successful business and go out of business
5 capital model
natural human social manufactured financial
Industry analysis
used to identify the sources of profit in the external environment
relevant to both corporate level and business level strategy
Corporate strategy
concerned with deciding which industries the firms should engage in and how it should allocate its resources among them. Such decisions require assessment of the attractiveness of different industries in terms of profit potential
Business strategy
concerned with establisheding competitive advantage - by analysing customer needs and preference and ways in which firms compete to serve customers we identify the general sources of competitive advantage in an industry
Environmental influences
PEST: Political Economical Social Technological
How to create value
know your customers and firms must understand its suppliers and maintain a good relationship with them
Industry environment
customers, suppliers and competition
What is value
created when the price the customer is willing to pay for a product exceeds the costs incurred by the firm
What is customer surplus
the difference between the price they actually pay and the max price they would actually pay and the max price they are willing to pay
- the stronger competition is among producers, the more of the surplus is received by customers as customer surplus
3 factors impacting profitability
value to customers
intensity of competition
bargaining power of industry members
5 forces model
buyer power supplier power substitute competition threat of new entrants industry rivalry
Buyer power
high when buyers have many choices
to reduce - lock them in! make it difficult to switch or loyalty points
Supplier power
high when industry has few choices
to reduce- locate alternative supplier
Threat of New entrants
high when its easy for new competitiors to enter
to reduce- increase entry barriers eg capital requirement, economies of scale, legal barriers
Substitute competition
high when there are many alternatives
to reduce - make customers reluctant to switch, develop your business
Industry rivalry
high when competition is high in the industry
to manage- survive competition with a strong competitive advantage
reduce it by monopolising the industry
what is strategy ?
- based on a companys vision
- a general plan that direct the company to achieving the best potential, and to compete for the present and prepare for the future
Porters Generic Strategy model
source of compeitive advantage:
low cost
differentiation
Competitive Scope:
Narrow
Broad
Broad cost Broad Differentiation Focus cost Focus differentiation
Treacy & Wiersema’s Value Disciplines Model
Product Leadership
Customer intimacy
Operational Excellence
Operational Excellence
want to focus on improving the production process to improve efficiency and reducing costs
Product Leadership
You want to focus on development of tech - best product
Customer intimacy
want to cater for customers every need and requirement to satisfy customers - more personal
Treacy & Wiersema’s Value Disciplines Rules
- focus on one discipline
- reasonably maintain the other two- good customer service
- continuously improve
Value Chain Analysis
Step by step processes that add value to the final product (goods and services)
Why are most customers wiling to pay more for certain products eg meals ?
due to the value that has been added eg service, not having to make it yoursle f
novelty aspect
experience
the skills - paying for work the chef has done
- paying for additional materials
What are Primary Activities?
primary activities are inputs to outputs
what are Inbound logistics ?
involve the incoming delivery and storage of raw material
what are Logistics ?
Delivery from supplier to you and you supplying to consumers
having a warehouse to store your products, maintenance, storage
delivery trucks, supplier of material, warehouse and refrigerator
How do logistics add value?
storage units can provide value to your business due to fresher products eg if you work in a restaurant
- when supplier delivers fast product is fresh and hence better quality
What are operations?
involves the transformation from raw material into finished products
process to create a final product eg assembling of materials - operation adds value as it is done with appropriate and optimum skills to create high quality products that is better than what a nonqualified person can do
what are outbound logistics?
involves the storage of finished products and the delivery to customers eg serving stead, getting the product to the customer
- business efforts
marketing and sales
involves the promotion of the products snd brand image - how are you going to create a brand image ?
What are support activities ?
the ones that facilitate the primary activities
Firm infrastructure
includes assets, fittings processes, management structure, staff policies that makes up the companies eg desks
Procurement
about the sourcing of raw material and other resources from various suppliers. Decisions including supplier selection ,negotiations , logistical arrangements
Process improvement
A business is a collection of interrelated tasks, initiated in response to an event that achieves a specific outcome
Types of Business Processes
Customer facing
Business facing
Production Planning Process
Customer Facing
service and understanding customers needs are important and how to serve the customer
- eg taking orders
Business Facing
efficiency is ipmortant - doesnt look highly into customer requirements
Production planning process
scheduling the production
What is a KPI
Key performance indicators eg average time taken
Theoretical benchmarking
comparisons of KPIS against design specifications and / or standards
Historical benchmarking
comparisons of KPIs results performance that happened before (how is the new system better)
Internal benchmarking
comparisons of KPIs within an organization eg running a chain of beauty stores and
External benchmarking
comparisons of KPIs with other organizations
Transformation process
physical - as in manufacturing operations
locational - as in transformation or warehouse
exchange - as in retail operations
physiological - as in health care
psychological - as in entertainment
informational - as in communication
5 main types of processes
project job shop batch assembly line contiunous
project
the product is one of a kind - each product will have customised processes
job shop
the product is highly customised but the production process is reasonably standard
batch
standard products with many varieties eg home made pickles or jams
assembly line
highly standardised - same product will be produced with the same process operating throughout worki g hours
continuous
no varities, 24 ho0ur production
Processes to get ‘the best of both worlds’
modular design
mass customisation
modular design
your final product is to be assembled by mixing and matching different standard components (modules) that are mass produced (per units cost kept low)
mass customisation
allow your customers to order products with personalised specifications - based on the order, quickly assemble the customised product with the required modules
Information systems 4 components
people
process
tech
data
How do Information Systems Deliver Value ?
create revenue Streams Generate growth Gain competitive advantage improve customer satisfaction improve productivity reduce costs
What is TPS?
Transaction processing Systems - transactions happen when data worth capturing is generated
System used: the cash register, barcode scanners etc
What is the primary function of a TPS?
to capture and store data - details of each transaction - summarises data to generate total sales per period or to compare percentages
What is DSS?
decision support system
What is CRM?
customer relationship management system
What is ERP?
enterprise resource planning system
What is SCM?
supply chain management systems
What is CRUD
output from tps: create, read, update, delete (calculate and summarise)
- is about TPS storing data in a database
- calculates and sumarise are the basic analysis carried out by tps
Decision support system
decision in an organisation typically happens at the managerial and strategic level
in order to make good decisions, managers need to be supported by good information
how can a TPS help a DSS
basic analytical functionalities of a tps can produce basic information that is required for making decisions about certain processes in a company by looking at past or presnt data
DSS applications
optimisation
Goal-seeking analysis
What-if analysis
optimisation
a study to find input values necessary to maximise/minimise the level of output eg how much should I spend on advertising (input) in order to to max sales (output)
goal seeking analysis
a study to find the inout values necessary to achieve a desires level of output (backward solution) eg how much should I spend on advertising in order to sell $50,000
what if analysis
a study on the likely impact based on changes in assumptions about proposed solution and or changes in the structure of the model eg what if I spend 1000 more on advertising how much more / less profit will I make
Collaboration support systems
communication, cooperation and coordination
Collaboration happens when multiple parties work together, by involving more parties more effort can be utilised to achieve better results
4 types of collaboration support systems
groupware
content management systems
knowledge management systems
workflow management systems
Enterprise Resource Planning systems
connects and coordinates all the departments in the organization. Data and info are collected and processed in a central information systems and shared throughout the organisation
- it intergrates all the departments and functions and levels of an organization into a single IT system so that employees can make enterprise wide decisions
Supply Chain Management
basic value is added for customers
eg fish cleaning and preparing factor - fillets - f. fingers factory- fingers - supermarket orders- orders - customer
What are push and pull factors in a supplier customer relationship?
push = standardised non-perishable
production is based on: supplier demand forecast
Pull= customised products
based on customers orders and specifications
Measuring the performance of Supply Chains
IF-OT-IS
In full, on time, In specification
Common problems about supply chains
- lack of transparency across supply chain (helpful information such as inventory level and market information are not shared - trade secrets, don’t a good channel to share info
- restricted communications - often restricted to transactional level such as order quantities, prices, payments
- long and uncertain lead times - time between placing orders and receiving products are lengthy and uncertain - results in uncertainty for buyer
What is the Bullwhip effect ?
when communication is minimal, transparency is low, lead times are long and uncertain, slight changes in consumer demand can trigger major fluctuations in ordering and inventory behaviour
