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  • The correct answer is “C” – value chain. See next slide
  • The correct answer is “C” – customer service function. See slide 9-16.
  • The correct answer is - “it depends”. Students should be able to discuss the different situations it’s appropriate to use each layout.
  • Leonard Maltin describes “You’ve Got Mail” as “a long, but entertaining remake of THE SHOP AROUND THE CORNER, with Meg Ryan as the proud proprietor of a neighborhood bookstore, and Tom Hanks as the head of a superstore chain poised to put her out of business.” In Ch 24, Customer Service, Kathleen is sitting in the Fox Bookstore when a customer asked an employee for a book. The employee has no idea – Kathleen gives them the author and suggestions for other books
  • value Chain

    1. 2. Value Chain Management: Functional Strategies for Competitive Advantage McGraw-Hill/Irwin Contemporary Management, 5/e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved. chapter nine
    2. 3. Learning Objectives <ul><li>Explain the role of functional strategy and value-chain management in achieving superior quality, efficiency, innovation, and responsiveness to customers </li></ul><ul><li>Describe what customers want, and explain why it is so important for managers to be responsive to their needs </li></ul><ul><li>Explain why achieving superior quality is so important and the challenges facing managers and organizations that seek to implement total quality management </li></ul>
    3. 4. Learning Objectives <ul><li>Explain why achieving superior efficiency is so important and the different kinds of techniques that need to be employed to increase it </li></ul><ul><li>Differentiate between two forms of innovation, and explain why innovation and product development is a crucial component of the search for competitive advantage </li></ul>
    4. 5. Four Ways to Create a Competitive Advantage
    5. 6. Toyota’s Product Lineup Figure 9.2
    6. 7. Functional Strategies and Value-Chain Management <ul><li>Functional-level strategy </li></ul><ul><ul><li>plan of action to improve the ability of each of an organization’s departments to performs its task-specific activities in ways that add value to an organization’s goods and services </li></ul></ul>
    7. 8. Question? <ul><li>What is coordinated sequence of functional activities necessary to transform inputs into finished goods? </li></ul><ul><li>A. Input chain </li></ul><ul><li>B. Transformation series </li></ul><ul><li>C. Value chain </li></ul><ul><li>D. Value string </li></ul>
    8. 9. Functional Strategies and Value-Chain Management <ul><li>Value chain </li></ul><ul><ul><li>coordinated series or sequence of functional activities necessary to transform inputs into finished goods or services customers value and want to buy </li></ul></ul>
    9. 10. Functional Activities and the Value Chain
    10. 11. Functional Strategies and Value-Chain Management <ul><li>Value-chain management </li></ul><ul><ul><li>development of a set of functional-level strategies that support a company’s business-level strategy and strengthen its competitive advantage </li></ul></ul>
    11. 12. Functional Strategies and Value-Chain Management <ul><li>Product development </li></ul><ul><ul><li>engineering and scientific research activities involved in innovating new or improved products that add value to a product </li></ul></ul><ul><li>Marketing function’s task is to persuade customers a product meets their needs and convince them to buy it </li></ul>
    12. 13. Functional Strategies and Value-Chain Management <ul><li>Materials management function </li></ul><ul><ul><li>controls the movement of physical materials from the procurement of inputs through production and into distribution and delivery to the customer </li></ul></ul>
    13. 14. Question? <ul><li>Which function provides after sales service and support? </li></ul><ul><li>Production function </li></ul><ul><li>Sales function </li></ul><ul><li>Customer service function </li></ul><ul><li>Call center function </li></ul>
    14. 15. Functional Strategies and Value-Chain Management <ul><li>Production function </li></ul><ul><ul><li>responsible for the creation, assembly or provision of a good or service, for transforming inputs into outputs </li></ul></ul><ul><li>Sales function </li></ul><ul><ul><li>plays a crucial role in locating customers and then informing and persuading them to buy the company’s products </li></ul></ul>
    15. 16. Functional Strategies and Value-Chain Management <ul><li>Customer service function </li></ul><ul><ul><li>provides after sales service and support </li></ul></ul><ul><ul><li>Can create a perception of superior value by solving customer problems and supporting customers </li></ul></ul>
    16. 17. Improving Responsiveness to Customers <ul><li>Good value-chain management requires marketing managers to focus on defining the company business in terms of customer needs </li></ul>
    17. 18. What Do Customers Want? <ul><li>A lower price to a higher price </li></ul><ul><li>High-quality products </li></ul><ul><li>Quick service and good after-sales service </li></ul><ul><li>Products with many useful or valuable features </li></ul><ul><li>Products that are tailored to their unique needs </li></ul>
    18. 19. Customer Relationship Management <ul><li>Customer relationship management </li></ul><ul><ul><li>technique that uses IT to develop an ongoing relationship with customers to maximize the value an organization can deliver to them over time </li></ul></ul>
    19. 20. Impact of Increased Quality on Organizational Performance Figure 9.4
    20. 21. Improving Quality <ul><li>An organization able to provide, for the same price, a product of higher quality than a competitor’s product is serving customers better </li></ul><ul><li>Higher product quality can increase efficiency </li></ul>
    21. 22. Total Quality Management <ul><li>Total quality management (TQM) </li></ul><ul><ul><li>focuses on improving the quality of an organization’s products and stresses that all of an organization’s value-chain activities should be directed toward this goal </li></ul></ul>
    22. 23. Steps to Successful TQM Implementation <ul><li>Build organizational commitment to quality </li></ul><ul><li>Focus on the customer </li></ul><ul><li>Find ways to measure quality </li></ul><ul><li>Set goals and create incentives </li></ul><ul><li>Solicit input from employees </li></ul>
    23. 24. Steps to Successful TQM Implementation <ul><li>Identify defects and trace to source. </li></ul><ul><li>Introduce just-in-time (JIT) inventory systems. </li></ul><ul><li>Work closely with suppliers. </li></ul><ul><li>Design for ease of production. </li></ul><ul><li>Break down barriers between functions. </li></ul>
    24. 25. Focus on the Customer <ul><li>Identify what customers want from the good or service that the company provides </li></ul><ul><li>Identify what the company actually provides to customers </li></ul><ul><li>Identify the gap that exists between what the customers want and what they get (quality gap) </li></ul><ul><li>Formulate a plan for closing the quality gap </li></ul>
    25. 26. Facilities Layout, Flexible Manufacturing, and Efficiency <ul><li>Facilities Layout </li></ul><ul><ul><li>strategy of designing the machine-worker interface to increase production system efficiency </li></ul></ul><ul><li>Flexible Manufacturing </li></ul><ul><ul><li>strategy based on the use of IT to reduce the setup costs associated with a product assembly process </li></ul></ul>
    26. 27. Figure 9.5 Three Facilities Layouts
    27. 28. Discussion Question? <ul><li>Which facilities layout is the best to use? </li></ul><ul><li>Product layout </li></ul><ul><li>Process layout </li></ul><ul><li>Fixed position layout </li></ul><ul><li>Contingency layout </li></ul>
    28. 29. Facilities Layout <ul><li>Product layout </li></ul><ul><ul><li>machines are organized so that each operation is performed at work stations arranged in a fixed sequence </li></ul></ul><ul><li>Process Layout </li></ul><ul><ul><li>self contained work stations not organized in a fixed sequence </li></ul></ul>
    29. 30. Facilities Layout <ul><li>Fixed-Position Layout </li></ul><ul><ul><li>the product stays in a fixed spot and components produced at remote stations are brought the product for to final assembly </li></ul></ul>
    30. 31. Changing a Facilities Layout Figure 9.6
    31. 32. Flexible Manufacturing <ul><li>Aims to reduce time required to set up production equipment </li></ul><ul><li>By redesigning the process setup times and costs can be drastically reduced </li></ul><ul><li>Able to produce many more varieties of a product than before in the same amount of time </li></ul>
    32. 33. Just-in-Time Inventory and Efficiency <ul><li>Just-in-time (JIT) inventory system gets components to the assembly line just as they are needed to drive down costs </li></ul><ul><li>Major cost savings can result from increasing inventory turnover and reducing inventory holding costs </li></ul>
    33. 34. Self-Managed Work Teams and Efficiency <ul><li>Self-managed work teams produce an entire product instead of just parts of it </li></ul><ul><li>Team members learn all tasks and move from job to job </li></ul><ul><li>Can increase productivity and efficiency </li></ul>
    34. 35. Process Reengineering and Efficiency <ul><li>Process Reengineering </li></ul><ul><ul><li>fundamental rethinking and radical redesign of the business process to achieve dramatic improvement in critical measures of performance </li></ul></ul>
    35. 36. Two Kinds of Innovation <ul><li>Quantum product innovation </li></ul><ul><ul><li>results in the development of radically different kinds of goods and services because of fundamental shifts in technology brought about by pioneering discoveries </li></ul></ul>
    36. 37. Two Kinds of Innovation <ul><li>Incremental product innovation </li></ul><ul><ul><li>results in gradual improvements and refinements to existing products over time as existing technologies are perfected, and functional managers learn how to perform value-chain activities in better ways </li></ul></ul>
    37. 38. Strategies to Promote Innovation and Speed Product Development <ul><li>Product development </li></ul><ul><ul><li>management of the value-chain activities involved in bringing new or improved kinds of goods and services to the market </li></ul></ul>
    38. 39. Strategies to Promote Innovation and Speed Product Development <ul><li>Involve both customers and suppliers </li></ul><ul><li>Establish a stage-gate development funnel </li></ul><ul><li>Establish cross-functional teams </li></ul>
    39. 40. Strategies to Promote Innovation and Speed Product Development <ul><li>Stage-Gate Development Funnel </li></ul><ul><ul><li>technique that forces managers to make choices among competing projects so that functional resources are not spread thinly over too many projects </li></ul></ul>
    40. 41. A Stage-Gate Development Funnel Figure 9.7
    41. 42. A Stage-Gate Development Funnel <ul><li>Product development plan </li></ul><ul><ul><li>specifies all of the relevant information that managers need to make a decision about whether to go ahead with a full-blown product development effort </li></ul></ul>
    42. 43. Members of a Cross-Functional Product Development Team Figure 9.8
    43. 44. Managing the Value-Chain: Some Remaining Issues <ul><li>It is manager’s job to collect relevant information about the competitive environment </li></ul><ul><li>Future intentions of competitors </li></ul><ul><li>Identity of new customers </li></ul><ul><li>Identity of new suppliers </li></ul>
    44. 45. Boundary-Spanning Roles <ul><li>Boundary-Spanning roles </li></ul><ul><ul><li>Interacting with individuals and groups outside the organization to obtain valuable information from the environment </li></ul></ul>
    45. 46. The Nature of Boundary-Spanning Roles Figure 9.9
    46. 47. Movie Example: You’ve Got Mail <ul><li>How well do the workers respond to customers in the Fox Bookstore? </li></ul>