Issues Relating to Operations In a Global Context - Research Paper Example

Topic: Issues Relating To Operations In A Global Context Pages: 11 Word Count: 1895 Sources: 10 Table of Content Strategic Models 2 BalancedScorecard (Kaplan & Norton, 1996) 2 Introduction 3 Application 4 Strategic Models - 2 4 Sand Cone Model: (Ferdows & De Meyer) 5 Introduction 5 Application 6 Strategic Models - 3 6 Introduction: 6 Application 8 Strategic Models -4 9 Introduction and Application 9 Reference: 11 Strategic Models - 1 Balanced Scorecard (Kaplan & Norton, 1996) Introduction The concept of Balanced Score card was introduced by Kaplan and Norton in the year 1996, and is defined as "integrated management method based on key performance indicators which analyzes the strategy of a company or company unit as well as relevant external and internal aspects and identifies how these interact." (Glossary, 2008) Prior to the concept of Balanced Score Card, decision makes primarily relied upon financial data to take decisions. This course of action often resulted in a myopic point of view for the managers. Unlike previous metrics driven indices that only relied upon financial data, a balanced scorecard takes into account the holistic picture of the company. The balanced scorecard includes qualitative insights in addition to quantitative measures like financial statements to give the decision makers a bird's eye view of the past health and also the future course of action of the company. A Balanced Score Card measures performance in each of the following heads: Financial Customer Internal Business Process Organisational Learning and Growth While financial measures like Return on Investment, sales and profit values, continue to be critical, new units like quality measures (warrantee/replacement/return/refund costs), employee skill and satisfaction measures (attrition/training/redeployment cost), future growth measures (R&D costs) are also taken into account. Application Wells Fargo and company is a diversified financial services company based at San Francisco, California and offers a range of financial products. The company has been termed as one of the safest banks in the world. (The World's Safest Banks 2007, October 2007) It was the first major financial company to launch online banking activities, and has pioneered various best practices in the financial domain. (San Francisco, February2001) Wells Fargo bank used Balanced Score Card to identify its future growth path. Within 3 years of implementing the insights it got from a BSC, it was voted as the best online bank. As a result of the BSC, it increased its customer base by 4.5 times, and also decreased its cost per customer by as much as 22%. Additionally, it was able to add over 750,000 online customers over a 2 year period. (Beiman I. and Johnson J.C., n.d.) Strategic Models - 2 Sand Cone Model: (Ferdows & De Meyer) Introduction The conventional manufacturing strategy model states that there is a trade-off among the four basic manufacturing capabilities- Quality, Dependability, Speed and Cost, unless there is slack in any one of the capabilities. However, the Sand Cone model proposed by Ferdows and De Meyer suggests that there is a hierarchical relationship amongst the four given capabilities. While from a short term perspective, advance in one of the capabilities may require the decision maker to trade off any one or more of the capabilities, it is indeed possible to achieve excellence in all the four capabilities in an hierarchical, staged manner. In order to create a long term manufacturing capability, the decision makers should aim to enhance quality of the manufactured items. Once this drive has achieved a set of milestones, the dependability of the manufacturing system has to be taken care of. Once these two capabilities have been assimilated, the next capability requiring attention would be flexibility, or reaction speed. Finally, once these three capabilities have been fixed, the decision makers should strive to achieve cost reduction. If this flow is maintained, it is possible for a company to achieve excellence in all the four capabilities. The basic thought process of this theory is the belief that these dependencies are built upon the other, and not by trading off one at the cost of the other. The name "Sand cone model" is derived from the fact that for a sand cone to be stable, the base and the middle layers need to be strengthened. Only after the base levels have been taken care of, the company can go on to add the final layer, cost reduction, to its manufacturing set up. (Par Marie-Hlne J., and Terri F., 2002) Application One of the companies that implemented and finally developed long term manufacturing capabilities is Samsung Heavy Industries Shipyard. Samsung invested heavily on acquiring advanced expertise in CAD/CAM. Engineers and technologists were trained in better designing technologies and were offered better tools. This helped Samsung Heavy Industries Shipyard achieve long term and sustainable improvement in both quality and cost. (Rhee1 S. and Kim J., 2000) Strategic Models - 3 The Gaps Model of Service Quality (Parasuraman, Zeithaml, and Berry) Introduction: Providing quality services to consumers is critical for a company, as a better quality service leads to increased market share, more business with existing customers, fewer lost customers, higher protection from price warriors, and fewer mistakes requiring the company to get back to the designing table and redo. (Albrecht & Zemke, 1985). The gaps model of service quality was proposed by Parasuraman, Zeithaml, and Berry in 1985. This model puts the customer and her expectations in the epicenter and positions marketing and service strategies, and the thought direction of the company towards developing organization's tasks that are required to bridge the gap between the expectations and perceptions of the consumer. They key to long term relationships between the consumer and the business organization is bridging the gap between the expectation and the perception. Prerequisite to bridging this vital gap are four other gaps that are also known as provider gaps. (Haksever C., Cook R. and Chaganti R., n.d.) These four gaps are: 1. Knowledge gap - This refers to the companies' ignorance, or misinterpretation of consumers' expectations. 2. Service design and standards gap: This refers to the wrong selection of service design and standards 3. Service performance gap: The service performance gap, as the name suggests, is the inability of the company to deliver the right service standards 4. The communication gap: The communication gap refers to the difference between the service quality promised by the companies' marketing and advertising campaigns/merchandise and the service quality actually delivered by the company. (Carey W.P., March 2007) Application The gaps model was successfully used by IKEA to deliver a superior experience to consumers. IKEA is a retailer of home products and it sells accessories, flat pack furniture modular bathrooms and kitchens through company owned retail stores. IKEA is in retail segment, and hence it is imperative for it to understand its consumers' expectations clearly. Understanding customer expectation is key to designing better products and designing of delivery platforms. To understand its consumers' expectations, IKEA used the "Wish mode" where select, loyal consumers were invited and asked to create a "wish-list"- a list that explains their ideal shopping experience. Despite having more than 6 decades of experience in serving retail consumers, this exercise gave IKEA many new insights about consumer expectations. IKEA incorporated all these findings and that resulted in a massive increase in consumer satisfaction. As a result, consumers spent more time in the store, and expectedly, spent more in the store buying IKEA products. (Carey W.P., March 2007) Strategic Models -4 Classifications of Operational Stages (Hayes & Wheelwright) Introduction and Application Hayes and Wheelwright, in their seminal work, Capability and maturity- four stages, describe four phases of manufacturing competitiveness. Though Singapore Air Force is not a manufacturing organization, it has developed itself by utilizing the insights gained from 4 stages model. Stage I (Internally neutral): Stage 1 represents those companies that are only reactive in nature as far as manufacturing readiness is considered. These companies have minimal manufacturing excellence, and the manufacturing setup is expected to deliver goods without any" surprise". These companies rely heavily on other USPs to target the market, like marketing prowess, or unique positioning or designing. In the context of armed forces, this represents a situation where the organization is expected to face local, scattered threats. Weapons available to this organization are rudimentary, and the training is minimal, or autonomous. Stage II (Externally neutral): Stage II companies represent those companies that do not derive any strength due to its manufacturing abilities. Conversely, the manufacturing abilities of these companies are at par with the market standards, and the manufacturing set up is not considered as a weak link. For an armed force, this represents a stage when it is at equilibrium with its external forces. Joint operations among the various arms (Army, Navy and Air force), special training, bilateral and multilateral exercises with allied armed forces are few of the characteristics of an armed force that is externally neutral. Stage III (internally supportive): The manufacturing set up in these companies is synchronized with other internal abilities, and contribute to the overall competitiveness of the company. While the manufacturing expertise in itself is not an USP, but it contributes significantly to the competitiveness that the company enjoys. An armed force in this stage would be able to take part in humanitarian activities in foreign soil and face mild hostilities. Members of an armed force of this stage would receive training in latest technologies and strategies. Soldiers would be part of various exercises with allied forces to imbibe the best practices. Stage IV(Externally supportive): As the name suggests, Stage IV companies possess manufacturing organisation that is highly competitive. In other words, the manufacturing set up is externally supportive, and playing a critical role in helping the company achieve an edge over its competitors. Such companies tend to be though leaders and pioneers of innovation, and adopt a long term approach to innovation and R&D. An armed force in this stage would have a process maturity that would let it forecast future developments in technology as well as new strategies. Additionally, this armed force would be always ready to assimilate new developments. The Singapore Air Force, SAF, is presently in the 3rd phase, and is striving towards the 4th stage. (Hua T.L., 2006) Reference: Albrecht, K., & Zemke, R. (1985). Service America: Doing Business in the New Economy. Homewood, IL: Dow Jones-Irwin Beiman I. and Johnson J.C., (No Date), Chapter 2, Balanced Scorecard in Developed and Transitional Economies, retrieved November 23, 2008, from http://www.adb.org/Documents/Books/Balanced-Scorecard/chap2.pdf Carey W.P., (March 2007), Keeping Promises: Closing the Services Gap, retrieved November 23, 2008, from http://knowledge.wpcarey.asu.edu/article.cfmarticleid=1395 Glossary, (2008), Thyssen Krupp Steel, retrieved November 23, 2008, from www.thyssenkrupp-steel.com/nachhaltigkeitsbericht2004_2005/en/service/glossar.jsp Haksever C., Cook R. and Chaganti R., (No Date), Service Quality For Small Firms: Can The Gaps Model Help, retrieved November 23, 2008, from http://sbaer.uca.edu/research/sbida/1997/PDF/03.pdf Hua T.L., (2006), A Knowledge-based SAF: The Paradigm of the SAF for the 21st Century and Beyond, retrieved November 23, 2008, from http://www.mindef.gov.sg/safti/pointer/back/journals/2000/Vol26_2/7.htm Par Marie-Hlne J., and Terri F., (2002), Blaze the trail for sustainable value Creation in the supply chain, retrieved November 23, 2008, from http://web.hec.ca/chaine/fichiers/texte_auto/CR02-04.pdf Rhee1 S. and Kim J., (2000), Building Competitive Capability in Manufacturing: A Cumulative Approach, retrieved November 23, 2008, from http://koasas.kaist.ac.kr/bitstream/10203/5031/1/2000-176.pdf San Francisco, (February2001), News Release, "Wells Fargo First Major Bank To Launch Nationwide Wireless Banking", retrieved November 23, 2008, from https://www.wellsfargo.com/press/wellswireless20010207year=2001 The World's Safest Banks 2007, (October 2007), Global Finance Annual Survey, retrieved November 23, 2008, from http://www.gfmag.com/index.phpidPage=612 Read More