The Market Led And Operation Led Business Essay
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Published: Mon, 5 Dec 2016
Operations, strategy and operation strategy. In order for Just Us to have a successful venture in the united kingdom, its operational strategy must be spot on in order to achieve a competitive advantage in the industry it intends to operate in however considering the two words ‘operations strategy’ it looks like an oxymoron as operational can be argued to be related to the day to day running of the business venture. Furthermore it can be argued to be a process of ensuring specific task are carried out effectively and efficiently in the running of the business activity. refer However a strategy can be argued to be the direction and scope an organisation takes in the long term which avail it the opportunity to achieve a competitive advantage in the ever changing environment by configuration of its resource and core competence in order to fullfill its stakeholders expectation.(Johnson 1997)
However it is pertinent to note that there is a difference between operational and operation as operation relates to the resource required to create goods and service more so operations management is significantly concerned with the organisational resources, however most importantly is the way that an organisation’s operations function manages its scare resources would also affect its ability to meet the objectives of its stakeholder thereby highlighting the essential of operations management in an organisation strategy implementation. (Johnson et al 2005)
Strategy can be classified into three level namely the corporate level strategy, the highest level of strategy and also the master plan for the entire organisation which looks at the industry in which the organisation operates, what competitors might be doing. In fact it set out the long term direction and scope for the whole organisation normally expressed in its corporate vision and mission statement. The business strategy is concern with how a business unit competes in its chosen industry. It looks at how to implement the organisation’s strategic objectives. Finally functional strategy the bottom level of strategy looks at how resources are used to carry out the organisational objectives. It includes how many employee need to be recruited, what is the budget set for energy etc. Though it is the lower level of strategy, it drives the overall success of the strategy as it handles the pivotal structures of the strategy. (Slack et al 2007)
Operational strategy is the pattern of decisions and action strategically inclined which set the activities and objectives of an organisation consistent over time thereby availing the organisation a source of competitive advantage, however the operations strategy of an organisation has a direct relationship with the three classification of strategy. It could surface in a top-down or bottom up process relating to the corporate and business level of strategy. More so it can be developed in order to position its self in the competitive market commonly known as responding to the market requirement (Market led). Finally it can develop as a result of the organisations inherent core competences and dynamic resources. (Slack and Lewis 2002)
As Just Us intends to embark on commencing its operations in the UK having being a successful company in Canada, considering that the coffee industry is quite mature, the competitive rivalry is quite high, having a top-down approach to its strategy can be argued to advantageous as it enhances the chances of Just Us having a well co ordinate strategic plan to this venture as it would have considered all the aspects of strategy and also considered its implications. This approach would give the senior management of Just Us maximum control of the entire operations. It would also result in Just Us being more proactive than reactive. (Hayes et al 2005)
However as advantageous as this may be it is pertinent to note that the coffee industry in the Uk is quite dominantly multinational like Starbuck and Costa Coffee who have taken this approach of strategy in the past and later restructured their strategic process in order to embrace current best practice. Such strategic approach consumes time and money more so it encourages a ‘head in the sand’ attitude as whatever is not in the plan wouldn’t be done even though its helpful to the strategic objectives. Furthermore it encourages unnecessary beaucracy that could result in Just Us been too slow to react in an ever changing dynamic environmemt. (Prahalad and Hamel 1990)
Despite the advantages of top down approach, it is quite incompatiable with the values of Just Us and wouldn’t be favourable to Just Us as it intends to start its operations in the UK. However a bottom up approach to strategy could be argued to be ideal for the investment plans of Just Us.
Bottom up approach to strategy is a strategic approach in which the operational strategy emergences through a series of operation experience. This can be decision taken taken as operational manager respond to the challenges of running a business over time which can now be a coherent pattern recognisable as the organisation operational strategy. It is highly likely to involve an incremental process in which operations manager experiment with new approach tothe operations of the organisation otherwise known as emergent strategic approach. (Leonardo Barton 1997)
In 1997 when Just us was incorporated in Canada, this approach to strategy for its operations have been what have piloted the company with its vision to build a business on quality, professionalism and innovation for the benefit of all its stakeholder.
In retrospect it has engage in a series of experimental operation project with its vision as a guide and emerged a successful business built on a solid operational strategy. This same approach can be implemented as it embarks to invest in the UK’s coffee industry acknowledging that the industry is already matured more so only a unique strategy is essential to attract a loyal base of customer taking note of the various competitors in the industry. However it is essential to note that the Canadian coffee industry is quite different to the UK coffee industry and success in the Canadian market using this approach doesn’t guarantee a similar succeed, but generally this would be a better approach as compared to the top down approach. It is pertinent to note that it is more inclined to be able to be responsive to the turbulent external environment and also address some of the shortcoming of the top down approach such as a ‘head in the sand’ attitude
Market led and Operation led
Analysing the competitive environment of the coffee in the UK, it is pertinent to note that the competitive rivalry is quite intense with many competitors having little differentiation. It is highly recommended that a market led approach is adopted as it would be of immense advantage to the company especially in fulfilling its corporate objectives of maximizing a competitive advantage.
Nonetheless Draft(2003) argued the resource of a company such as its assets, operation processes, capabilities, information and knowledge within the control of the company enables the company to implement strategies that improves its efficiency and effectiveness. This simply implies that the resource of Just Us is also very essential in its operational strategy. These resources in particular includes its human resources, infrastructures such as it ICT capabilities used in its operations in order to achieve excellences
Coffee like most products is judged on its quality and also goes a little more because coffee is an everyday commodity. Quality means different things to different people, in fact quality can take different meaning depending on the perspective it is checked from. But for this report, quality would be looked at from a customer perspective and a producer perspective.
From a customer perspective every business organisation produces goods or services in order to be sold to the customer. By this act it then fulfil its ultimate objective of maximizing shareholder wealth. This implies that the customer is king in this relationship and it’s her perception that matter. It is the customer perception of the goods or services can equate to the quality of the goods or service. However certain criteria must be considered by the customer in order to associate a product with a high quality or low quality based on their experience with the product and also what the customer is willing to pay. This could be its fitness for use as the customer must judge whether the product have been able to meet the customer needs, reliability and conformance of the product depending on the segmentation of customer being targeted. (Refer)
From the producer perspective it is important to have some criteria in which the quality of its goods and services are rated. Before a good or service is actually produced, a production process must be put in place and there must be some specification stipulated otherwise known as the quality of conformance however because it’s the customer is king, the customer is the end user of the product, it’s the customer view takes centre stage. (refer)
A Critical Evaluation on Quality
Drawing from the finding of the investigation of the competitor currently in the UK coffee industry in which Just Us would face, it is quite imperative that quality is part of the operation framework strategy with the likes of Starbuck and Costa Coffee already established as quality brand. For Just us to competitively survive in the Uk’s coffee industry, quality of its entire operations must be a priority. There are modern approaches for just us to manage its quality.
Total Quality Management
With the matured coffee industry Just Us would be competitively better off if total quality management technique is adopted however it can be argued to a process of ensuring a zero defect philosophy to the management of all resource and relationship in the organisation and also developing a culture in the organisation that encourages continuous improvement as it strives to meet customer expectation. It is pertinent to note that TQM integrates all the quality management efforts of all the various business unit in an organisation and have been responsible for the global success of Toyota. (refer)
Just us adopting a TQM methodology for managing its quality would improve its system for production and service delivery, thereby reducing the level of waste in its operation and enhancing the quality of its products and reducing cost of operation. TQM encourages continuous improvement of its process not as a one-off but as part of the business philosophy. This would be of immense benefit to Just Us as it intends to venture in the coffee that is already mature. TQM encourages getting it right the first time and also zero defects, this would imply adequate training for personnel which could have some cost implication. However implementing TQM into the operations process would minimise the cost of quality such as the prevention cost, inspection cost, internal failure cost and external failure cost in the long run (refer)
How TQM can be implemented by Just Us
The philosophy of TQM can be implemented by Just us taking an approach that focus on meeting the needs of the customer and also exceeding the expectation of the customer. Adequate studies of customer’s behaviour can be obtained from the information system operational in the company or from data mining company. TQM encourages a team approach whereby ownership of the procedure is collectively taken. Just Us must ensure this is incorporated into its recruitment and training of its workforce as TQM is a business philosophy. Furthermore TQM is a business philosophy, the culture of the organisation should be one that encourages zero defect that is getting things right the first time which the six sigma can ensure a systematic total reduction through its DMAIC approach. (refer)
This can be defined as a process of ascertaining the production capacity needs of an organisation in order to meet fluctuating demand pattern of its products or services. It is also the task of setting an appropriate capacity of operation that can effectively respond to the level of demand that would be place upon it. (refer)
For Just us commencing operations in the coffee industry, the importance of capacity planning cannot be over emphasised as it’s important that appropriate balance between capacity and demand is reached. This is due to its cost implication as any capacity level more than demand would imply under-utilization of that capacity resulting in a high unit cost of the good or service. This would further limit its competitiveness in the industry especially in a matured industry like the coffee industry. However in such a situation all demand would be mate and apparently no revenue would be lost but, that the surplus capacity can result to a cost as the entity would have to accommodate for excess capacity. However excess capacity could enhance the speed of response to customer’s demand and also better the flexibility of the product. (refer)
It is highly recommendable that Just Us adopts a pull through system in its capacity planning as this responds to customer demand only when an order is placed thereby making operation’s cost effective and also more competitive in the industry. However haven highlighted the essential for Just us to adequately plan its capacity, it is pertinent to note that a discrepancy normally occurs between the capacity of an organisation and the effective demand from its customers could result in resource not been adequately utilized or demand not been mate. The ultimate goal of capacity planning is to minimise this situation. (refer)
Capacity planning options available to Just Us
Level Capacity Plan
This is a situation where the processing capacity of an organisation is set at a uniform level throughout the planning period regardless of the flunctuation that may occur in the demand forcast. This technical implies the same staffing and production level would be maintained irrespective of the demand pattern. Relating to Just Us operations, this can achieve a stable employment which would help staff morale especially as there would be a high level of staff-customer contact, more so there would be a higher level of process utilization resulting in a high productivity with resultant low unit cost.(refer)
However this industry is quite perishable with fluctuating demand over the period. It is not possible to have a flat demand for this product more so producing at a flat pace would end up resulting in a cumulative amount of inventory. In addition this would accumulate to a high cost of operation thereby making it less competitive especially in a matured coffee industry. This would result in productivity with low quality which wouldn’t be appropriate for Just us in its venture to invest in the industry.
This is actually the opposite of a level capacity plan and is a situation in which the capacity inherent in an organisation is matched to the current level of forecasted demand. It is a challenging capacity planning technique as demand pattern in this industry flunctates a lot so different resources needs would be required to be able to serve the flunctating demand. This implies different category of staff would be working in different shift times. Shift pattern would be arranged in such a way to match with the forecasted demand pattern, the use of full time staff, part time staff and subcontracted staff would be have to be considered intently in order to enhance the effective use of the resource available in the company. Overtime ,one of the quickest and also convenient method of adjusting capacity would have to be encouraged. (Refer)
This would minimise waste as the company resources would be put to adequate use and also satisfy customer demand through the various demand period however Just us would face the challenge of ensuring that the product and service quality are adhered to. There is also an ethical issue can arise as a result for Just Us as the idea of responding to the fluctuating forecasted demand pattern with increasing and decreasing the work force can be seen as treating people in a totally unacceptable manner. In fact hiring people on a temporary contract can lead to anxiety in the work place thereby affecting the quality of operations. (refer)
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