Service Operations Management - Assignment Example

Service Operations Management Question: “The purpose and place of a service firm in the market begins with an entrepreneur’s idea and an unmet need” (Fitzsimmons & Fitzsimmons, 2014, p. 30). Part A 1. Strategic Service Vision The strategic service vision of any service firm describes how the company effectively identifies and addresses a need in the market (Heskett, 1986). Therefore, the strategic service vision provides a descriptive analysis of the gap which exists in the market that the company seeks to fill, how the company intends to fill the gap and how effectively the organisation fills the gap. The strategic service vision model is made up of various elements and links (Fitzsimmons, Fitzsimmons &Bordoloi, 2014). The elements describe the issues related to the need and how the company attempts to fill the need while the links describe how effective the internal processes of the organisation are in helping it to effectively and profitably operate in the market. The first element, service delivery, describes how an organisation uses features such as its human resources, technology and procedures to provide quality services and differentiate its services from those of the competition (Fitzsimmons et al., 2014). The second element of the strategic service vision model of firms describes the important elements of strategy (Heskett, 1986). The third element, service concept, describes how the elements of the organisation in question appeal to the needs of the clients. Lastly, the target market segment describes the most important characteristics of the target markets for the service that the organisation offers (Fitzsimmons et al, 2014). 2. Application of the Strategic Service Vision to Qantas This strategic service model adequately describes Qantas Airways. Qantas Airways is an international carrier that is based in Australia. The following is a description of the various ways in which this strategic service model adequately describes the airline. Regarding the element of service delivery system, Qantas relies on its human resources, technology and internal procedures to differentiate its services from those of the competition and provide barriers to entry by the competitors. Currently, the carrier dominates the Australian market, thanks to its broad range of services, support from the Australian government and a commitment to continuously improving its service offering (Qantas, 2015). The broad range of services of the company include the following: Qantas Domestic, Qantas International, Qantas Freight, Qantas Loyalty and Jetstar Group (Qantas, 2015).Currently, the organisation runs a complex service improvement programme that is based on the objective of making Qantas International a sustainable brand of the company. To achieve this objective, the company has been focused on two things related to the service: opening up the Asian aviation market and becoming the best service for global travellers (Qantas, 2015). The programme contains goals that cover various aspects of the service delivery system of the company such as the way it allocates capital, its global destinations and the quality of its services (Qantas, 2015). By using this approach, the company not only defines the most important features of its service delivery system, but also constantly improves its position in the market. Regarding the second element of the strategic service vision model, which is the operating strategy, Qantas operates as a full-service airline yet it incorporates the elements of low-cost carriers. In theory, these two strategies (full-service and low-cost operations) are considered incompatible (Garcia, 2015). Low-cost carriers attempt to achieve cost leadership by only focusing on delivering the basic and most essential services to clients at drastically reduced prices (Garcia, 2015). On the other hand, full-service carriers attempt to serve a wide array of clients by providing services that suit the diverse needs of their clients (Bjelicic, 2007). However, Qantas has managed to develop and implement an operational strategy that incorporates the aspects of low-cost carriers in its operations as a full-service carrier.Also, the operational strategy of Qantas covers the following: accelerating cost reduction, increasing the level of punctuality and reducing the number of types of aircraft that form the fleet of the company from 11 to 7 (Qantas, 2014). For the third element – the service concept, Qantas Airways has been focused on meeting the needs of two dominant market segments: that for low-cost carriers and the main one for full-service carriers. The company established a subsidiary airline calledJetstarAirways to effectively provide low-cost services to the market segment that requires such services on long-haul routes. The idea at the time was to accelerate the rate of growth of the company while making it hard for new low-cost carriers to enter the market (Bjelicic, 2007). For the fourth element of the strategic service vision model, the target market segment, Qantas Airways targets two specific market segments: customers who are looking for low-cost carrier services and those who are interested in full-service carrier services. Based on these two segments of the market, the company has modelled its services to address the needs of the individuals who form each market segment. It is important to point out that the way Qantas operates reflects how the various elements are interlinked. For example, the company’s service offering reflects the actual needs of the customers who make its market segments. This implies that the service offering of the company is aligned to the needs of its customers. Also, the way the company operates indicates that it is committed to maintaining its unique selling proposition by keeping its operational costs at a bare minimum while at the same time improving the quality of its services. The company seeks to optimise its operations by accessing new routes and carefully expanding its services (Qantas, 2015). To achieve these objectives, the company relies on operations that involve carefully allocating its available capital so that it maintains its market share value (Qantas, 2015). Therefore, the service delivery system of the company supports its operating strategy. Also, the service offering of the company is leveraged over its overall costs of operations. The following table summarises the elements of the service delivery model relating to Qantas. Service Delivery System Operating Strategy Service Concept Target Market Segments Important features? Focus on addressing the needs of the clients Constantly improving the workplace culture A focus on continuous improvement of operations Elements of strategy? Adoption of new A380s as a replacement of the old aircraft the company has been using. Reduction of operational costs Investment in service delivery by improving quality of services Results produced for customers? Increased weekly flights to various destinations across the world Characteristics of market segments The leisure-premium market segment is defined by high-net worth individuals travelling for leisure. The business-traveller segment is defined by individuals looking for efficiency and affordability in air travel services. Capacity? Can comfortably serve clients in the domestic, regional and international markets, thanks to its right-sized fleet, effective human resource capability and other resources. Investments? Invests in new-generation airplanes to reduce costs of maintenance Perceived by target market? Perceived as one of the most punctual airlines in the world regarding departure times. Dimensions used to segment market Geographic: domestic, regional and international Psychogaphic: business traveller and premium leisure Quality standards? Emphasises on the safety of the customers and employees always. Control of quality and cost? Effective utilisation of capital to return Qantas International to profitability Perception of service concept? Effective service regarding lounges and on-board services Importance of various segments & what needs does each have? Premium – premium on-board needs Business-traveller – convenience, faster connection times, affordable rates Differentiate from competitors? Qantas uses the full-service model to compete in all the major market segments. The company relies on Qantas International to compete in the international market segment, Jetstar to compete in the business traveller market segment and Qantas Domestic for the local market. Results? Qantas International is back to profitability. Seeks to grow in the rest of the Asian market Efforts? Investing in lounge redesign, training of staff on customer services and streamlining other internal operations How well are the needs being served? Qantas International is designed to serve the needs of the international market. The company seeks to grow its operations in the Asian market in a bid to meet the needs of the regional market segment Increased investment in lounges is meant to help the company meet the needs of the premium leisure market. Part B 3. Stages of Service Firm Competitiveness The four stages of service firm competitiveness are as follows: available for service, the journeyman, distinctive competence achieved and world class service delivery (Fitzsimmons et al., 2014). All these stages are characterised by the way in which a service firm operates and delivers value to its customers. Given that the essence of competitiveness is to constantly improve the quality of service that a firm offers and the way the firm operates, it follows that any competitive firm should use various tools to improve its operations and the quality of its services (Dixon, Freeman &Toman, 2010). 4. Application of Service Firm Competitiveness to Qantas Qantas Airlines is at the third stage of competitiveness, that is, the distinctive competence achieved stage. Firms that are at this stage of competitiveness are characterised by the way their managers exercise a sense of vision and the desire to profitably create value for and deliver it to the customer (Fitzsimmons et al., 2014). Also, the senior managers of a company that is at this stage of competitiveness rely on the operations managers of the firm to sustainably deliver the envisioned value and constantly improve the service offering of the firm (Chase & Hayes, 1991). It is by using this approach that firms which are at this stage of competitiveness effectively differentiate themselves from the competition. The senior management team of Qantas has managed to envision a service offering that delivers value to the clients of the company. The basis of the service offering of the company is to address the needs of clients in the market. The company has managed to develop a service offering that addresses the needs of clients who need low-cost carrier services on the one hand and those who need the full-service airline offering on the other (Qantas, 2015). Moreover, the current level of competitiveness of Qantas Airways is based on two important things: the transformation that the company underwent starting from 2013 and the emphasis that its managers place onsatisfying customers (Qantas, 2015). Back in 2013, the company embarked on an ambitious programme of transforming its business model. The company sought to use its capital, brand value within the Australian market and diversity to lay the foundations for a permanent transformation of its service delivery model (Qantas, 2015). On the other hand, the strong focus of the company on addressing the needs of its customers is another important attribute that shows that the company is at this stage of competitiveness (Qantas, 2015). The company constantly improves the services that it offers to its clients by adding benefits to the basic service that the clients pay for. Examples of the benefits that the company provides to its clients include advanced lounges, exceptional customer service and top-of-the-range aircrafts. Therefore, the way that Qantas serves its customers, its service offering and the role that the company’s operations managers play in constantly improving the quality of service are factors that show that the company is at the distinctive competence achieved stage of competitiveness. The highest stage of competitiveness for service firms is the world-class service delivery stage. The world-class delivery service stage is characterised by how an organisation manages to create and successfully maintain competencies that its competitors find difficult to replicate (Fitzsimmons et al., 2014). The essence of firms that are in this stage is that they have managed to create very strong value offering for their clients and that their present focus is on new markets and services (Fitzsimmons et al., 2014). Qantas has managed to build a compelling service value. Therefore, its focus should be on becoming a world-class service delivery firm. To achieve this objective, the company should seek to establish world-class standards in all its services. This covers the measure of punctuality regarding the departure of flights, the level of customer service provided to clients when on board and the quality of the fleet in terms of replacing B747 types of aircraft with the more modern and dynamic A380s. In addition, the company should look out for new markets and seek to replicate its success. What this means is that the company should seek to replicate its superior performance in the new markets that it seeks to enter. If the company succeeds in doing so, it would have achieved standards that characterise the fourth stage of service firm competitiveness. References Bjelicic, B. (2007). The business model of low-cost airlines: Past, present and future. In S. Groß & A. Schröder (Eds), Low cost airlines: Strategies, business processes and market environment (pp. 11-30). Berlin: Erick Schmidt Verlag. Chase, R. B., & Hayes, R. H. (1991). Beefing up operations in service firms. Sloan Management Review, 33(1), 15-26. Dixon, M., Freeman, K., & Toman, N. (2010, July-August). Stop trying to delight your customers. Harvard Business Review. Fitzsimmons, J.A., Fitzsimmons, M.J., &Bordoloi, S. K. (2014). Service management: Operations, strategy, information technology (8th ed). New York: McGraw- Hill. ​ Garcia, M. (2015, October 20). Qantas CEO shares his secrets for operating low-cost and full-service airlines together. Skift. Retrieved from https://skift.com/2015/10/20/qantas-ceo-shares-his-secrets-for-operating-low-cost-and-full-service-airlines-together/ Heskett, J. L. (1986). Managing in the service economy. Boston, Massachusetts: Harvard Business School Press. Qantas. (2015). A strong, sustainable future: Qantas annual report 2015. Retrieved from https://www.qantas.com.au/infodetail/about/investors/2015AnnualReport.pdf Qantas. (2014). Shaping our future: Qantas annual report 2014. Retrieved from https://www.qantas.com.au/infodetail/about/investors/2014AnnualReport.pdf Read More