Question

Choose one of the 3 competitive advantages (cost, differentiation, response) and then identify 3 of the 10 different OM decisions that you believe have the largest impact on a firm's ability to implement the chosen strategy? What I am looking for is your understanding of which of the OM decisions are most directly tied to the successful implementation of the chosen strategy. Remember, it is the WHY behind your answer that is what makes your response more relevant to your boss.

Answer 1

Competitive advantage is a set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition.There are three different types of competitive advantages cost, diffentiation, response

Cost comeptitive advantages:-  

Cost competitive advantage is when a company is able to utilize its skilled workforce, inexpensive raw materials, controlled costs, and efficient operations to create maximum value to consumers. Costs can be kept at a minimum in many different ways.The current trend is for companies to cut down on the extras they offer to customers. For example, the airline company Ryanair is removing two of its three toilets in each airplane to increase the number of seats and drive down ticket costs. Companies may also receive government subsidies, which help to pass on lower costs on to their customers. There are a few other important ways that costs can be kept lower in order for a company to use a cost competitive advantage. Technical companies such as BMW, Lexus, and Boeing use product design and reengineering to create efficient cost-effective products. Product design is important to companies that use cutting-edge technology.  Reengineering is used by companies that are able to cut costs by redesigning and creating improvements to their products, such as Apple.

Benefits of Cost Advantage strategy

1. Better cost means better prices which is good for the company. The company might have more margins or pass on the margins to consumers to gain market share.

2. If customers are getting a better price, they will definitely buy the product and this helps with market penetration and more volumes being achieved.

3. A company which wants to achieve cost advantage will always be focused on development and innovation. Such a company would want to find out processes and adopt technologies which will reduce the cost.

How to get a Cost advantage over competitors:-

1. A major reason China is one of the highest competing nations in the world is the lower cost of labour.Companies can find out ways to reduce the cost of labour to control costs and arrive at a cost advantage

2.In many products, there are government subsidies provided. Companies can take the benefits of these subsidies and lower the cost of the product

3.The best way to reduce costs is through innovation. This is why many companies consistently have good expenditure towards research and development.

What are Operations:-

At a general level it can be understood as the organisation of resources, such as raw material, people, or equipment to either manufacture or deliver a product or service. It is sometimes more easily understood as a series of jobs or processes which must be undertaken in a particular order to ensure that products are manufactured to a high quality when they are required, and then delivered to the customer or end user. There are a number of key considerations in operations management, in that whilst there are similar responsibilities and activities undertaken by operations managers irrespective of the organisation in which they work, every organisation is likely to have adapted or tailored their processes to meet the specific needs of their own products and services and customer base.

Three strategic Operation Management Decisions:-

1. Design of goods and services – this basically defines most of the requirement in undertaking each of the OM decisions. It involves designing the products and services to be offered. For instance, product designs normally determine the lowest volume of costs and higher grade of quality as well as other features of sustainability and human resources required.
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3. Quality Management: Be clear on the customer’s demands and then meet those expectations. Use market research to determine customer needs and batch quality assurance testing on products and services in production. Quality management is the act of overseeing all activities and tasks that must be accomplished to maintain a desired level of excellence. This includes the determination of a quality policy, creating and implementing quality planning and assurance, and quality control and quality improvement.
4. Supply Chain Management: Determine the best strategies to streamline, be cost effective, and to develop trusted partners. Supply chain management includes the collection of materials, the manufacture of products and the delivery to the consumer. Supply chain management is vital to businesses because it can help reduce costs with better efficiency from suppliers and leaner inventories, provide better customer services with faster delivery and react faster to market demands and innovations.