Operations Management: an International Perspective - Literature review Example

The formulation of an effective operations strategy is highly significant in the restaurant industry because of a highly competitive external environment and presence of numerous competitors. This research focuses on developing an effective operations strategy for a new restaurant in Cardiff named Divine by following the recommendations of five primary competitive priorities or objectives. 1. Introduction Divine Restaurant’s 3 full-service chain of restaurants currently caters to an extensive clientele in London, Manchester and Birmingham. Coinciding with its expanding customer base, the restaurant facilities, which previously only comprised of a bar, have been expanded through the integration of a dine-in area in each of the restaurants that have a capacity to serve 125 customers at once. According to the data provided by professional services firm, PricewaterhouseCoopers (2014), the value of United Kingdom’s restaurant industry currently stands at a over £40 billion with customer’s demonstrating a desire to experiment with the high-end spectrum of the industry by refusing to compromise on quality and taste. In this scenario, Divine’s entry into the rapidly growing restaurant industry in Cardiff can be deemed as a worthwhile opportunity however, the company’s ultimate success in this endeavor is associated with the development of an efficient, reliable and effective operations strategy so as to enhance the restaurant’s capability to remain competitive in the market and achieve its outlined corporate objectives. As noted by Lewis et al. (2010, p. 1032), a company’s ability to maximize its competitive advantage is rooted in the formulation of its operations and supply strategy. In the light of this understanding, the purpose of this research is to examine the notion of designing an effective operations strategy for the purposes of promoting a company’s competitiveness. For meeting the aims of the research and presenting objective and valid findings, the analysis which has been conducted in this paper focuses on 1) examining the concept of ‘competing through operations’ by conducting an assessment of related scholarly work on the subject 2) identify the company’s key competitors in the market 3) performing a comprehensive appraisal of how the stated restaurants compete through their operations and 4) presenting recommendations for the company’s operations strategy while, acknowledging the limitations of the outcomes and providing a guideline of further research into the topic. 2. Literature Review In their scholarly work titled The Importance of Operations Management Problems in Service Organizations, Wright and Mechling (2002) postulate that the identification of issues and inconsistencies in the realm of operations management and operations strategy establishment is of utmost significance specially for businesses that are operating on a small to medium scale. The researchers highlight that for a majority of the percentage of companies key which belong to the service sector, critical operational issues encompass: sales forecasting, the allocation and organization of resources in addition to quality management (Wright and Mechling 2002, p. 77). The implications of Wright and Mechling’s (2002) analysis suggest that if an organization intends to boost its competitiveness in a tough external business environment it should demonstrate the ability to execute a comprehensive operations strategy which is able to cope with the highlighted problems. According to the research of Roth and Menor (2003) in Insights into Service Operations Management: A Research Agenda, the authors advocate a perspective which states that operations strategy is a fundamental element of the wider service operations management (SOM) framework. Furthermore, the assessment which has been conducted by Roth and Menor (2003, p. 156) establishes that a firm’s management of its resources and capabilities, as per the stipulation of its operations strategy is conducive to the achievement of “…superior performance and a sustained competitive advantage”. This aspect identifies how organizations can create a focused operations strategy to not only create but retain and maintain competitiveness by the aid of a SOM framework which is governed by the strategic management of operational issues. In his book titled Operations Management: An International Perspective, Barnes (2008) examines the concept of operations management from a multifaceted perspective by establishing the impact of external factors on operations-related issues of organizations. The key premise of Barnes’s (2008) discussion is based upon identifying how operations strategy can be linked with the corporate, business and functional level strategies of the firm to contribute to the creation of competitive advantage. In his work, the author identifies that a strategic direction in the management of operations can aid the prioritization of business activities to advance competitive abilities and underline opportunities for operations to match the strategic direction of the business (Barnes 2008, p. 23). 3. Operations Strategies in the Restaurant Industry Divine Restaurant prides itself in offering an international menu to its customers which is a blend of local, Indian, Italian and Latin flavors. Given the company’s vast and distinct range of dish offerings, the key competitors of the restaurant have been identified as Las Iguanas (a themed Latin restaurant), The Old Cottage (a country, bar, dining room and pub whose food embodies the tranquility of British country life), Mint and Mustard (a restaurant which aims to redefine the taste of Indian food through a fusion of national and international flavors), Jamie’s Italian (celebrity chef, Jamie Oliver brings the Italian culinary experience to Cardiff with this popular eatery and offers quality, taste and ambience with class). The key to operations strategy formulation lies in identifying the objectives which an ideal framework of service operations management should be able to attain (Wild 2002, p. 37-38; Jones and Robinson 2012, p. 34). According to Collier and Evans (2011, p. 65), this can be achieved by focusing on aligning the firm’s competitive priorities which “represent the strategic emphasis that a firm places on certain performance measures and operational capabilities within a value chain”. Collier and Evans (2011, p. 65) assert that the premise of defining an organization’s competitive priorities is based upon identifying customer requirements and then fulfilling those demands by formulating a competitive advantage. While, the basis on which competitive advantage is created maybe variable, Collier and Evans (2011, p. 65) assert that in a general setting firm’s competitive in accordance with five primary competitive objectives which are that of cost, flexibility, dependability, speed and quality. By applying the recommendations of these characteristics on the operations of Divine Restaurant’s competitors – Las Iguanas, The Old Cottage, Mint and Mustard and Jamie’s Italian the restaurant’s activities can be appraised for the purposes of deriving an effective strategy for Divine Restaurant Cardiff which integrates the positive points of appraised strategies while, eliminating their drawbacks. 3.1 Quality The significance of providing quality food and service is unparalleled in the restaurant industry because it is closely linked to the level of customer satisfaction (Brown 2003). However, it is important to understand that the concept of quality is associated with the varying scenarios and therefore, cannot be deemed as fixed. For example, while a certain class of menu may demand the use of fresh tomatoes another menu maybe suited to the use of canned tomatoes, however, the selection of one over the other does not render the other as that of inferior quality (Brown 2003). However, in the case of all four major competitors of Divine Restaurants, a critical element of the eateries’ quality agenda is their use of fresh produce that is directly procured from farms across the United Kingdom and internationally. As reported by Klopcic, Kuipers and Hocquette (2013, p. 155), the United Kingdom along with France and Germany has emerged as one of the largest markets for organic produce across Europe. Given this trend the procurement of fresh and organic produce can be outlined as critical consideration in the formulation of Divine’s operations strategy. 3.2 Speed An analysis of online customer reviews and recommendations for the competitor restaurant reveals that promptness of service is least available at Mint and Mustard and Jamie’s Italian during peak hours. However, it is important to highlight that none of the restaurants’ menus provide guests with an estimated serving time for any category of foods. 3.3 Flexibility Slack (2005, p. 1201) postulates that perceiving flexibility as a notion that is strictly associated with the manufacturing sector is a misconception because this aspect is closely related with all components of operations management. In this case, flexibility can be regarded as the an organization’s ability to change. In two out of four competing restaurants namely Las Iguanas and The Old Cottage the service flexibility is high because of the menu offering is extensive with the presence of numerous options. Consequently, Mint and Mustard has high delivery flexibility while, Jamie’s Italian is marked by low flexibility in all spheres of operations. 3.4 Cost According to Walker (2007, p. 369) the integration of technology to maximize efficiency and minimize costs is steadily becoming a norm in the restaurant industry with the adoption of point-of-sale systems (POS) which have the ability to govern managerial, administrative and operational issues from order receiving, processing to the handling of transactions (see figure 1). Fig. 1 Point-of-Sale (POS) System Source: Dahmer and Kahl All of Divine’s competing restaurants, possibly because of the large influx of customers on a daily basis employ a POS system for managing operations and enhancing efficiency. As stated by Hudson and Brown (2003, p. 20) the integration of a POS system can boost company profits therefore, if a restaurant chooses not to launch a POS system for operations management it may be characterized by inefficiency. 3.5 Dependability The enhancement of internal and external dependability is conducted in the restaurants by the maintenance of inventory management systems, most likely just-in-time (JIT) because the implementation of this model minimizes inventory holding costs and can maintain the freshness of produce in a restaurant setting. 4. Conclusion The analysis of operations strategies that are being implemented by Divine Restaurant’s competitors are marked by the utilization of technology such as point-of-sale systems (POS) to aid in the effective management of operations in addition to the execution of inventory management principles such as just-in-time (JIT) to maintain ingredient and produce quality for providing customer satisfaction. While, the examination of secondary data has been critical for the purposes of this research its limitation includes the unavailability of primary sources to better comprehend internal operations management mechanisms of companies. Implications for further research include examining new technological trends in restaurant operations management for minimizing costs, maximizing revenues and building greater profit. References Barnes, D. (2008). Operations management: an international perspective. Cengage Learning EMEA. Brown, D. R. (2003). The restaurant managers handbook: how to set up, operate, and manage a financially successful food service operation (Vol. 1). Atlantic Publishing Company. Collier, D. A., & Evans, J. R. (2011). Operations Management. Cengage Learning. Dahmer, Sondra J., and Kurt W. Kahl. Restaurant service basics. Wiley, 2008. Hudson, T. J., & Brown, D. R. (2003). Building restaurant profits: How to ensure maximum results. Ocala, Fla: Atlantic Pub. Group. Jones, P., & Robinson, P. (2012). Operations management. Oxford: Oxford University Press. Klopčič, M., Kuipers, A., & Hocquette, J. F. (2013). Consumer attitudes to food quality products: Emphasis on Southern Europe. Wageningen: Wageningen Academic Publishers. Lewis, M., Brandon-Jones, A., Slack, N., & Howard, M. (2010). Competing through operations and supply: the role of classic and extended resource-based advantage. International Journal of Operations & Production Management,30(10), 1032-1058. PricewaterhouseCoopers. (2014). Pubs and restaurants. http://www.pwc.co.uk/hospitality-leisure/issues/pubs-and-restaurants.jhtml Roth, A. V., & Menor, L. J. (2003). Insights into service operations management: a research agenda. Production and Operations management,12(2), 145-164. Slack, N. (December 01, 2005). The changing nature of operations flexibility. International Journal of Operations & Production Management, 25, 12, 1201-1210. Walker, J. R. (2007). The restaurant: from concept to operation. John Wiley and Sons. Wright, C. M., & Mechling, G. (2002). The importance of operations management problems in service organizations. Omega, 30(2), 77-87. Read More