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Management Chapter09

Management Chapter09






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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

Management Chapter09 Management Chapter09 Presentation Transcript

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