Business Essays London Cinema Plan

Business Essays London Cinema Plan West London Gold Class Cinema Business Plan. Executive Summary Negotiations have been undertaken to purchase the West London cinema in Hammersmith. This is a small, family run cinema which has been having trouble competing since a new multiplex cinema opened in the new shopping centre in Shepherds Bush. The purpose of this business plan is to seek funding for the purchase of the West London cinema and for the transformation of part of it into a Gold Class or VIP type cinema. This transformation will involve the renovation of one of the screens, decoration in a classy, movie theme style and the building of a kitchen and bar area. Gold Class will give patrons the opportunity to watch blockbuster movies from the comfort of luxurious, reclining lounge chairs while enjoying food and drinks brought directly to them. If this concept works, then the prospective owners intend to repeat their success in other run down cinemas across the country. Business Summary The business objectives are to develop one of the current cinemas (which has capacity for 250 patrons) into three Gold Class cinemas each having seating for 30 patrons, decorate the lobby area in a movie theme style and build a kitchen and bar area. Once the necessary renovations have been completed, the owners will need to obtain the necessary licensing permissions, hire staff and market the concept. Current Situation and Background At present West London Cinema is a small, three-screen, family run cinema in West London. While it has seating capacity for 750 patrons, the run down nature of the cinema means that on most nights it fails to realise its potential. The cinema has had a relatively steady customer base, but the recent opening of a multiplex cinema complex in Shepherds Bush has meant that patron numbers have been down. Even before the opening of the new multiplex cinema, the cinema had already been suffering a downturn since its heyday in the mid-1980s due to external factors. These have included a rise in property prices slowly changing the demographics of the people who live in the area, shifting customer entertainment habits (people have many more entertainment options available to them today) and the fact that the window between a release in the cinema and subsequently on DVD has been shrinking and movie piracy issues. While these issues have affected the cinema in a negative way, these are also the issues on which the prospective owners believe they can capitalise. This downturn in patron numbers has meant that the cinema is unlikely to make a profit this year and with the current owners not having the funds to invest into upgrading the cinema, it is likely that the this year will be only the start of a downward earnings trend for them. In light of this, the current owners have decided to sell the cinema while it is still showing some profit. This has created the opportunity which is set out in this business plan. Financial Situation and Legal Requirements West London Cinema has been owned by the same family since 1975. It has always prided itself on its friendly atmosphere and reasonable prices. Unfortunately, the owners have not always ploughed the cinemas profits back into the business and as such, it has become a little run down with increasing numbers of complaints about uncomfortable seating, poor screen resolution and a unimpressive sound system. The owners wish to borrow  £250,000 pounds to achieve their business objectives. With respect to legal requirements, the owners will need a liquor licence, building approval from their local authority, a hygiene inspection of their kitchen and advice from a solicitor as to whether or not they are able to trademark the Gold Class name. Industry Analysis Industry Description The cinema industry as a whole is facing challenges from many sides. Consolidation within the UK market means that four groups (Terra Firma, Blackstone, Vue and National Amusements) now own over 70% of UK screens. This consolidation means that the larger cinemas are better placed to meet the challenges of a quickly changing marketplace. Unfortunately, the losers in this consolidation of the marketplace and the emerging challenges to the cinema have been the small, family run cinemas. Industry Growth Across the industry, revenue growth has been quite strong with exhibitor revenue rising by 59% from 1998 to 2004 to over  £900 million (made up of  £650 million net box office sales,  £204 million net concession revenue and  £63 million cinema advertising). Most of this revenue growth was in the multiplex part of the market where it was noted that the four leading cinema groups had been able to raise their prices even in the face of declining DVD prices. This shows that demand for the cinema experience is more than just the watching of a movie and that a market does potentially exist which the larger multiplexes fail to cater for and that can be exploited by the more agile, smaller cinemas. Future Industry Developments The increase in other entertainment options, for instance computer games, pubs, home cinemas and the ever shrinking window between the release of a movie in the cinema and then onto DVD means that the future of the cinema industry is uncertain. The trend towards consolidation will no doubt continue, but it is interesting to note that the number of multiplexes opening has plateaued, with an average of 25 a year opening between 1998 and 2002, only 6 were opened in 2004. This perhaps signals that the multiplex market has reached its full potential and that the marketplace is stabilising. However, the stabilisation of the market at the top end does not as yet seem to have filtered down to the smaller cinemas and as such, many continue having trouble turning a profit. It is the owners belief that the current market is ideal for the development of a new concept which gives movie patrons an entirely unique cinema experience Gold Class. Market Summary Market Analysis The four possible ways in which the market can be defined are: multiplex cinemas; all cinemas; all ways of watching films (including cinemas, DVDs and pay-television); and all ways of using discretionary spend (including films, going to pubs, clubs or other ways of spending time and money in or out of the home). As noted above, it is the prospective owners view that cinemas can no longer focus on the narrow definition of the market. Some guidance can be taken from the multiplexes which offer patrons an experience. Often these cinemas are attached to shopping centres and as such going to the cinema is simply part of a persons shopping day. Multiplexes, like the shopping centres to which they are appended, rely on the principle that if something is large and loud, no one will dare to think that it is anything but the best and it must be said that they do this well. Teenagers are particularly impressed by this logic. However, to the same extent that teenagers are drawn to large and loud multiplexes, older patrons are repelled by them. Market Segmentation Cinema patrons generally fall within the 15-24 year age group with over 53% of people surveyed in this age group having attended the cinema once a month or more. This declines within the 25-34 year old age group to 34% and further within the 35+ age group to 16%. These figures reflect perhaps the fact that older cinema patrons who do not enjoy the nature of multiplexes have limited options with respect to indulging in a cinema experience. Furthermore, along with work and family commitments, older cinema patrons have less free time available to them and more options with respect to how to spend that time. This means that they are more likely to want to spend more money when they do go out to make sure that they utilise their time optimally. Market Research The purpose of the market research undertaken was to determine whether the Gold Class concept has been successful elsewhere, to gauge whether or not Hammersmith is the best location for a Gold Class cinema and to establish a price point for Gold Class tickets, food and drinks. The market research allowed the prospective owners to establish that the Gold Class concept has proven successful in Australia. While it was not possible to obtain financial figures, the prospective owners were able to determine that the concept has been around for several years and they were able to test it for themselves (a sample menu from an Australian Gold Class cinema is attached at Appendix A and can also be found here: http://www.greaterunion.com.au/goldclass/moviemenu.asp). In order to determine whether or not Hammersmith was a reasonable location for a Gold Class cinema, the prospective owners researched the demographic trends and the types of new businesses that were opening in the area. They found that many new business were opening and established businesses were being renovated to meet the tastes of the new residents moving into the area. As such, it was concluded that Hammersmith was a suitable location for a Gold Class cinema. Establishing price points for Gold Class tickets, food and drinks was quite difficult as the measures against which these price points can be determined are not perfect substitutes for each other (ie does a portion of fish and chips in a Gold Class cinema equate to the same meal in a pub?). It was decided that the only feasible approach was to go for higher price points, but offer various promotions which would mean that most people would not end up paying the full advertised price. Competition Analysis As noted, the market is extremely concentrated with the multiplexes taking a lions share of box office receipts. At the other end of the cinema market, are small, family run cinemas which are often seen by the public as being run down and in need of renovation, but priced competitively. There is little between these two extremes. However, while the multiplexes offer a certain type of experience, the prospective owners believe that there is still a potential untapped niche which small cinemas can exploit and which the multiplexes would have trouble competing with in the short term. Other potential competitors are similar niche cinemas which focus on selling a lifestyle (eg cinemas which only screen independent movies). Taking a broader view of the market in which cinemas compete, the market would be the entertainment market generally. People have a limited amount of disposable income and a limited amount of time which can be spent on entertainment. As such, cinemas are also competing with bars, sporting events, home cinemas, travel and restaurants. It is submitted that Gold Class cinemas would be a strong competitor in the general entertainment market at a niche level. Competition Strengths The main competitor for the proposed Gold Class cinema is the multiplex cinema in Shepherds Bush. The multiplexes strength lies in its buying power and the cinema chains ability to obtain the latest blockbusters at the earliest possible opportunity. Due to the multiplexes size, it has the flexibility to offer promotions and tie-ins beyond anything that a small cinema can offer. In the broader sense, the cinemas other competition comes from the various restaurants and pubs found in the surrounding vicinity. However, they are not necessarily direct competitors and are not mutually exclusive unlike the multiplex (ie a person may go to Gold Class and then a pub, but they are unlikely to go to the multiplex and then Gold Class). That said, the fact that Gold Class will offer food and alcohol means that competition between the cinema and restaurants and pubs in the vicinity will increase. Competition Weaknesses The multiplexes main weakness is that it does not cater particularly well to the older market of cinema patron. Furthermore, at present it does not offer a Gold Class experience and due to its business model of trying to fill large cinemas, it is unlikely that it would move towards a model which relied on creating smaller, more intimate cinemas. Likewise, it is difficult to imagine restaurants and pubs being able to compete directly with a cinema. They both offer sufficiently different experiences to customers and it is more difficult for restaurants and pubs to add on a movie-like equivalent than it is for a cinema to offer food and alcohol. Development and Production Sales and Marketing Unique selling point At present cinemas in the UK do not offer a dedicated Gold Class or VIP cinema going experience. In cases in which such an offering has been tried in the UK, for example, the UGC chain, the idea has met with problems due to the fact that a single cinema isnt dedicated to the Gold Class experience, rather, premium seating is attached to the back section of a standard cinema. In this case, the intention is for the West London cinema to have three cinema screens dedicated for premium customers. The prospective owners recognise the demographic shift in the area around the cinema. With house prices steadily rising, the area around Hammersmith has transformed into a hub for city working people with large amounts of disposable income. This change has been mirrored in the types of new shops and eateries opening up to cater to them. These new residents are willing to spend money for a premium and individual experience. Media and promotion strategy The intention would be to choose high headline price points but at the same time offer promotional offers which would ensure that most customers never pay the full rate. The media and promotion strategy would focus on teaming up with local businesses and newspapers to offer special promotional packages (for example, the local florist could offer a two for one deal with each bunch of roses sold). Advertising campaign The advertising campaign would be highly targeted and local. It is assumed that people are unlikely to travel a long way to attend a cinema (especially if they have a local one close by). As such, the goal would be to focus on local customers and to ensure that they remained regulars. Budget A large marketing budget would not necessary as the focus would be on offering promotions such as half price tickets during the day and/or two for the price of one deals can be offered in conjunction with various local business/newspapers reducing marketing costs substantially. As the Gold Class cinema experience is unique, and marketed as an indulgence, it is suggested that many local businesses would be willing to be involved in such promotional activities. While actual advertising costs will be low, printing and distribution costs will still need to be considered. Management The prospective owners of the cinema are the brothers James and Jack West. James West has recently completed his MBA and is working for one of the UKs largest cinema distribution companies. Jack West currently works as an advertising executive. In anticipation of a sale, the current owners have taken the last three months to show James and Jack the operational side to running a cinema. Both Jack and James intend to invest  £250,000 of their own money and take on this project full-time. In addition, James and Jack have already approached a friend who runs a small restaurant to assist them with the preparation of a suitable menu and have had plans for the refurbishment prepared. It is intended that James manage the operational side of the cinema while Jack concentrate on the marketing. Projected sales and pricing strategy Pricing strategy A regular ticket at West London cinema is currently  £4 during the day and  £6 in the evening for an adult. Gold class tickets will be priced at  £8 during the day and  £12 in the evening. In addition patrons will be able to buy food and drinks which will be brought into them while the movie is playing. The average price of food items and alcoholic drinks will be approximately  £5  £10. Financial Considerations The current owners hold a long-term leasehold interest over the premises at which the cinema is located. The main costs incurred by a cinema relate to the percentage of box office takings that go to the film distribution companies. The intention behind the Gold Class concept, along with offering patrons the ultimate cinema experience, is to try to increase revenue from those areas of the business which are not subject to distribution company payments (ie food and alcohol). Projected Sales At present West London cinemas three screens have box office sales of  £174,000 to which can be added sales from the kiosk and advertising, taking annual turnover for the cinemas to  £228,000. 25% to 50% of the box office takings go to the film distribution companies. Along with running costs and wages, gross profits for the cinema last financial year were  £56,000. As one cinema will be converted into three Gold Class each having 50 seats, projected box office receipts are expected to remain the same or rise slightly (less seats at a higher price) but more income is expected to be generated from food and alcohol sales. It is anticipated that food and alcohol sales will add  £25,000 to the cinemas turnover with  £10,000 of this going on higher staff wages meaning that gross profit will be an extra  £15,000 per annum. Appendix 1 Three Years profit and loss accounts 2008 2009 2010 Sales 300,000 500,000 1,000,000 Costs of Sales (112,500) (187,500) (375,000) Gross Profit 187,500 312,500 625,000 Expenses: Advertising 25,000 15,000 10,000 Bank Charges 100 100 100 Insurance 1,000 1,000 1,000 Interest 20,000 20,000 20,000 Legal Accounting 3,000 1,000 1,000 Office Expenses 500 500 500 Postage 250 250 250 Rent 15000 15000 15000 Wages 60,000 60,000 60,000 Telephone 1,000 1,000 1,000 Utilities 1,000 1,000 1,000 Total Expenses 126,850 114,850 109,850 Net Income 60,650 197,650 515,150 Appendix 2 Three years Balance Sheets Assets 2008 2009 2010 Current Assets: Cash 675,000 870,000 1,365,000 Inventory 15,000 15,000 15,000 Other Current Assets 10,000 10,000 10,000 Total Current Assets 700,000 895,000 1,390,000 Long Term Assets 20,000 20,000 20,000 Fixed Assets 50,000 50,000 50,000 Property, plant and equipment 25,000 25,000 25,000 Accumulated Depreciation 5,000 10,000 15,000 Total Assets 800,000 1,000,000 1,500,000 Liabilities and Stockholders Equity Current Liabilities: Accounts Payable 112,500 187,500 375,000 Current Borrowing 250,000 200,000 150,000 Other Current Liabilities 126,850 114,850 109,850 Total Current Liabilities 489,350 502,350 634,850 Long Term Liabilities 60,650 60,650 60,650 Total Liabilities 550,000 563,000 695,500 Total Equity 250,000 463,000 804,500 Total Liabilities and Stockholders Equity 800,000 1,000,000 1,500,000 Appendix 3- SWOT Analysis of Business Strengths: The obtaining of a liquor licence gives the cinema a competitive advantage which is sustainable to a degree. It is unlikely that planning permission for a new cinema would be given by the local Council. As such, as far as cinemas go, a customers only option is to either attend this cinema or the multiplex. Weaknesses: It is not possible to protect the intellectual property behind the concept of a Gold Class cinema. Patrons are only likely to pay a premium price for a movie when blockbuster movies are released. A lack of hit movies could make it difficult to sell tickets. Opportunities: There are plenty of small, family run cinemas which are currently struggling. The depressed market and the Gold Class concept give the owners the opportunity to purchase cinemas at a reasonable price and turn them back into profitable enterprises. Threats: The Gold Class concept relies on people willing to spend a little more to enjoy a more luxurious cinema experience. If the economy was to falter, value added businesses like Gold Class cinemas would be the hardest hit. If the concept proved to be a success, there is nothing stopping the multiplexes from offering a similar service. There is a threat that by offering alcohol in the cinema, the problems associated with anti-social behaviour could follow. Appendix 4 Market Segments When assessing the market segments, it is important not to focus too narrowly. While the Gold Class cinema concept may seem to appeal to only a niche market, the fact that most, if not all, adults in the country have been at some point in their lives been to a cinema to see a movie means that those potential customers already share a common conceptual language making it much easier to appeal to them. It is much more difficult to appeal to someone and have them try something they have never done before. As noted above, the percentage of people who often go to the cinema drops off sharply from the age of twenty five. One of the reasons for this is that the choices of entertainment available as people become older increases and the impression of cinemas is that it is the haunt of teenagers who arent old enough to get into bars. However, this is the segment of the market with the most disposable income, who have happy recollections of going to the cinema as youths and are now expect a more grown up experience when going to the cinema. This is the market segment to which Gold Class aims to appeal. BIBLIOGRAPHY Corrigan, P. (2006), The Sociology of Consumption, Sage Publications, London

Operations Management

The process type McDonald's uses is batch process because there are moderate volume and moderate variety in their products and services. McDonald's products are semi-standardized as they are stocked pre cooked. When a customer makes an order, the product is then prepared. This shows high flexibility, for example, a customer orders a special order of McCracken without lettuce, the order will be processed within minutes. There is also high volume of production as McDonald's serves thousands of customers dally. Inning a batch process means that the speed of delivery Is dependent upon the speed and experience of the Individual worker. This process supports the business of McDonald's as they will be able to process the different types orders to cater to the different needs of customers, In the shortest time possible. To achieve that, moderate skill level of workers is required. The advantages of batch process are that it allows workers to specialist in specific lobscouse and use the speci alist equipment, different batches of different production an be made.On the other hand, there are also disadvantages of batch process. Firstly, specialization means that the workers are doing repetitive jobs, which can result to boredom. Secondly, the machinery needs to be reset and cleaned in between batches. This can be time consuming which in turns slows down the production. Also, when the hamburgers are produced by batches, they would keep them for as long as possible and eventually discard them if they were not sold. This will increase the cost for McDonald's. Operations Management OPERATIONS MANAGEMENT: as a competitive weapon mks [email  protected] ac. in http://mks507. vistapanel. net Prof. (Dr. ) Manoj K Srivastava Operations Management Area 1. The Systems Approach C O N T E N T S 2. 3. OM Definition Ten Critical Decisions 4. 5. The Cases 4V Typology of Operations 6. 7. Productivity Competitiveness 8. 9. Manufacturing Vs. Service? The History 10. The Future 1 Systems Approach Systems Approach Reduce waste†¦or enhance output†¦ 2 OM Definition What is Operations Management? What is Operations? a function or system that transforms inputs into outputs of greater valueOperations management (OM) is the set of activities that creates value in the form of goods and services by transforming inputs into outputs TYPES OF TRANSFORMATIONS †¢ †¢ Physical: Locational: as in manufacturing operations as in transportation operations What is a Transformation Process? a series of activities along a value chain extending from supplier to customer. activiti es that do not add value are superfluous and should be eliminated †¢ †¢ Exchange: Physiological: as in retail operations as in health care What is Operations Management? esign, operation, and improvement of productive systems †¢ †¢ Psychological: Informational: as in entertainment as in communication Value Engineering / Value Analysis ? Use ? Esteem ? Time ? Place 3 What Operations Managers do? ? Service, product design†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. ? Quality management†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ ? Process, capacity design†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. ? Location †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ Ten Critical Decisions ? Layout design †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. ? Human resources, job design†¦Ã¢â‚¬ ¦.. ? Supply-chain management†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ ? Inventory management †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. ? Scheduling †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ ? Maintenance †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 4 The Cases Britannica StoryInvite your enemy onto the roof, then remove the ladder Sun tzu The Art of War 36 Stratagems 1988 1988-93 Britannica (Leader, 230 years experience, 1768), $1000 Microsoft encyclopedia from funk & Wagnall’s encyclopedia Searchability, Multimedia, Graphics, Timeline (20 feet), cross-links, updating 1993 1995 Price $300 (cost of CD:$1) (in-fact you can purchase encarta encyclopedia + a PC in Britannica price) Britannica has to jump in a business which was not its strength, Price still $1000 1997 Reduced to $125, later on free online, crashed twice Innovation in Operations McDonald’s Corp Olympic Flame ? ? ? Facing Increased Competition Smarter and More Demanding Customers Less Brand Loyal Switched to hamburger bun that does not require toasting. ? Customers prefer taste of new bun ? Saves time an d money, QSVC Model ? ? ? ? 10,000 runners 15,000 miles through 42 states in 84 days Two years of planning Must plan for no-show runners and rush hour traffic ? Cost of this operation in the neighbourhood of $20 million Innovation in Operations Ginger Hotel BillDesk No-frills, June 2004 No room service, travel desk, swimming pool Wi-fi, Two type of room: Rs. 999 and Rs. 1199, Prabhat Pani, CEO, Roots CorporationBillDesk, a property of IndiaIdeas. com Ltd. , 2000 Three Arthur Anderson Executives Third-party bill collection 25 Banks, 100 companies Just apply today. It only takes a few minutes. Once you're approved, you get your very own Zipcard. Reserve one of our cars – for a couple hours or the entire Day. Do it online or use a phone. We're easy. Walk to the car, then just hold your Zipcard to the windshield. The doors will unlock, and it's all yours! Drive away†¦ and return to the same reserved parking spot at the end of your reservation. It's that simple. And remember, gas and insurance are included too. 5Operations typology: 4V Approach Differences within sectors are often greater than the differences between sectors Financial services An account management centre at a large retail bank Financial analyst advising a client at an investment bank Furniture manufacturing Mass production of kitchen units Craft production of reproduction ‘antique’ furniture Hotels Value-for-money hotel Lobby of an international luxury hotel A Typology of Operations: 4 V’s Low Volume High High how many products or services are made by the operation? how many different types of products or services are made by the operation?High Variety Low High Variation in demand Low how much does the level of demand change over time? how much of the operation’s internal working are ‘exposed’ to its customers? High Visibility Low Implications Low repetition Each staff member performs more of job Less systemization High unit costs Flexible Comple x Match customer needs High unit costs Changing capacity Anticipation Flexibility In touch with demand High unit costs Short waiting tolerance Satisfaction governed by customer perception Customer contact skills needed Received variety is high High unit costs A Typology of Operations ImplicationsHigh repeatability Specialization Capital intensive Low unit costs Well defined Routine Standardized Regular Low unit costs Stable Routine Predictable High utilization Low unit costs Time lag between production and consumption Standardization Low contact skills High staff utilization Centralization Low unit costs Low Volume High High High Variety Low High Variation in demand Low High Visibility Low 6 Productivity Effectiveness Efficiency Productivity Types of Productivity Single Factor Productivity Output Labor Output Materials Output is of quality nature Output Capital Multifactor ProductivityOutput Labor + Materials + Overheads Output Labor + Energy + Capital Total Factor Productivity Good s and Services Produced All inputs used to produce them America West’s Reverse Pyramid system This is in contrast to the approach used by many airlines of just boarding all seats starting from the back of the plane and working forward. 7 Competitiveness Competitiveness The degree to which a nation can produce goods and services that meet the test of international markets while simultaneously maintaining or expanding the real incomes of its citizens. A firm is competitive if it can produce products [†¦ of superior quality or lower costs than its domestic and international competitors. (US-President`s Commission on Industrial Competitiveness 1985, S. 6) Global Competitiveness Ranking 1. Switzerland 2. Sweden 3. Singapore 4. United States 5. Germany 6. Japan 7. Finland 8. Netherlands 9. Denmark India 51 10. Canada China 27 Competition Within Industries Increases When ? Firms are relatively equal in size and resources ? Products and services are standardized ? Industry growt h is slow or exponential Barriers to Entry ? ? Economies of scale Learning curves Capital investment Access to supply and distribution channels 8 Manufacturing vs. services Degree of Servitization Manufacturing and Service Employment Manufacturing Employment and Production Services as % of GDP Tangibility Spectrum Economic Offerings can determine prior to purchasing can only be discerned after purchase or during consumption or use customer must believe in, but cannot personally evaluate even after purchase & consumption Differences Between Goods and Services Intangibility Heterogeneity Simultaneous Perishability Production & Consumption 9 History of OM Five Eras of Operations Management Journey of Operations Management Adam Smith uge increases in productivity obtainable from technology or technological progress are possible match human and physical capital, Division of labor Eli Whitney †¢ †¢ In 1798, received government contract to make 10,000 muskets Showed that machine tools could make standardized parts to exact specifications – Musket parts could be used in any musket Significant events in operations management ? ? ? ? Division of labor Standardized parts Scientific management Coordinated assembly line (Smith (Whitney (Taylor (Ford 1776) 1800) 1881) 1913) ? ? ? Gantt charts Motion study Quality control (Gantt (Gilbreths (Shewhart 1916) 1922) 1924) 10Where are we going? Exciting New Challenges in Operations Management Changing Challenges Past Local or national focus Batch (large) shipments Causes Low-cost, reliable worldwide communication and transportation networks Cost of capital puts pressure on reducing investment in inventory Global Focus Future Just-in-time shipments Low-bid purchasing Quality emphasis requires that suppliers be engaged in product improvement Shorter life cycles, rapid international communication, computer-aided design, and international collaboration Affluence and worldwide markets; increasingly flexible production processes Changing sociocultural milieu.Increasingly a knowledge and information society. Environmental issues, ISO 14000, increasing disposal costs Supply-chain partners Rapid product development, alliances, collaborative designs Mass customization Empowered employees, teams, and lean production Environmentally sensitive production, Green manufacturing, recycled materials, remanufacturing Lengthy product development Standardized products Job specialization Low cost focus Operations Management QUESTION 1 Operations management must be managed properly in order to improve an organization’s productivity and profitability. In the Cadbury World case, several micro and macro processes are involved and those processes bring some impacts to Cadbury World. Thus, Cadbury World must possess a sustainable micro and macro processes to achieve the best outcome and performance. Micro processes that involved are easily to manage compared to macro processes because macro processes are hard to manage or manipulate (Jae, Shim, Joel & Siegel, 1999).As a result, Cadbury World must put more efforts in solving the obstacles and troubles that occurred within the macro processes. First of foremost, we will be discussing the micro processes that involved in Cadbury World case. Within the micro processes, they can make some planning on their operation and strategic management processes to enhance their business and profitability. Micro Processes| Explanation and elaboration| Company| * Cadbur y has set up a team to improve their operation management. * More tickets collectors have been assigned in the exhibition centre to manage and help visitors when they need assistance. Cadbury is always open for criticism, feedbacks and recommendation to improve their operation management. | Customers | * Cadbury always attempting to fulfill all the requirements and needs from their customers and ensure their customers will have a wonderful trip in their exhibition centre. * This is because customers will affect their reputation and brand name if they are not satisfying with the services and products that provided (Galloway, 1998). * Other than that, Cadbury has launched some new products and add more elements into their exhibition programme to attract more visitors and customers. Competitors| * Cadbury World has implemented SWOT analysis to identify their strengths and weaknesses and also the opportunities and threats from their outside environment. So that, they are able to gain th e competitive advantage among their competitors. | Intermediaries| * Cadbury requires several marketing intermediaries in promoting their activities and products. * As such, they have selected some marketing intermediaries to promote this Cadbury World exhibition event and help them to gain the profits. | Suppliers| * It is crucial to select the best suppliers to enhance the production of Cadbury.Due to this, Cadbury has implemented some analysis and works when choosing their suppliers because they always ensure their products have the high quality that can fulfill every customer’s requirements. | Table 1: Micro processes as applied to the case Cadbury World Macro Processes| Description | Demographic| * Several analysis have been implemented to analyze the preference and needs among people from different demographic profile. * This is because demographic profile is crucial when managing the requirements from different customers. Those analysis can be done according to several groups such as gender, age group, nationality, likeliness. | Natural| * Cadbury always seek for alternatives although their natural resources are still available and still able to support their operation and production. * This is because they believed that natural resources will be finished exploited in one day. So that, they want to put some efforts before the day to come. | Economic| * Economic trend must be aware from time to time to prevent Cadbury World business being affected during the economic crisis. Technological| * Cadbury always conscious and aware with the new technological and applied the technological elements into their operation system to gain the higher profits. * Besides, with the technological elements such as automated system or centralized system can help their operation system become more efficient and easy to manage the visitors that entering their exhibition centre. | Table 2: Macro processes as applied to the case Cadbury World Figure 1: Input-Transformati on-Output model (Cadbury World case) The model of input-transformation-output in Cadbury World case has been displayed in Figure 1 above.This model consisted of micro and macro processes because as mentioned earlier, micro and macro processes are very important for the operation processes in an organization. From the figure above, we will be discussing the micro processes of Cadbury World case in the form of input-transformation-output model. Those micro processes are company, customers, suppliers and competitors. Cadbury needs a lot of human resources such as manpower to carry out their daily operations process. Those manpower with the technological methods are essential to convert the raw materials from the input to the transformation process   (Tilanus, 1997).After that, the incomplete goods that in the transformation process will turn into the outputs which are products and goods that introduce to the markets. When the products introduced to market, Cadbury may get some feedba cks from publics or their customers and also their competitors. Hence, Cadbury must do some amendment on their operation processes within the internal management in their organization or review their suppliers to enhance their operation process. QUESTION 2 Process flow chart to show the ways of customers are being processed through the operation from start to finishThe process design that adopted by Cadbury World case is the product-based layout because the arrangement of the equipments in every section of the exhibition centre are clearly displayed in a logical sequence. Hence, the process design can provide the better understanding to their visitors if they wish to take a tour without guiding. This is because the product-based layout can eliminate the confusion of the visitors as the process flow is predictable and repeatable (Thompson, 1967)  . QUESTION 3 3. 1: The capacity of each processes in question 2 above The entrance 5-20 visitors x (60 minutes / 2-1/2 minutes) =  360- 480 visitors per hour The Marie Cadbury room * Original design (70 visitors x 1/3) x [60 minutes / (5 minutes + 1-2 minutes + 4 minutes)] =  131-144 visitors per hour * Peak times 70 visitors x [60 minutes / (5 minutes + 1-2 minutes + 4 minutes)] =  382-420 visitors per hour The packaging plant 30 visitors x [60 minutes / (3 minutes + 8 minutes) =  164 visitors per hour The demonstration area (15 visitors x 8 guides) x (60 minutes / 6-17 minutes) =  424-1200 visitors per hour * The shop [(60 minutes x 60 seconds)/15 seconds] x 3 checkouts =  720 visitors per hour * The restaurant: If the tables are allowed to sit with different families or groups of visitors (60 minutes/25 minutes) x 169 covers =  406 visitors per hour * If the tables are allowed to sit with one family or same group of visitors (60 minutes/25 minutes) x 53 tables =  128 visitors per hour The coffee and ice-cream  parlour (60 minutes/18 minutes) x 46 covers =  154 visitors per hour 3. 2: The project ed annual, weekly and hourly demand from the data in the case (Mid August to end of December 4. 5 months). Explain  the impact of seasonality on these figures. 1. The Entrance: 2. 5 minutes 2. The Marie Cadbury Room: 10 – 11 minutes 3.The Packaging Plant: 11 minutes 4. The Demonstration Area: 6 – 17 minutes 5. The Shop: 15 seconds = 0. 25 minutes 6. The Restaurant: 25 minutes 7. The coffee and ice-cream Parlour: 18 minutes After reviewing the case of Cadbury World, we can understand that the time required for each station in the case of Cadbury World when during the normal period are 84. 75 minutes / 3. 53 hours and 72. 75 / 3. 03 hours during the peak periods. Therefore, the projected demand are as below:- 1. Annual demand = 4. 5 x 30 x (3. 03 – 3. 53) = 409. 05 – 476. 55 hours 2. Weekly demand = 7 x (3. 03 – 3. 53) = 21. 21 – 24. 71 hours 3.Hourly demand = 3. 03 – 3. 53 hours Holiday season, weather, national celebration or event such as election can cause some impacts of seasonality that affect Cadbury World business and operation. From the Cadbury World case, the period of the exhibition event is held from mid of August to the end of December. During that period, Halloween and Christmas might influence their operation as people may wish to take a short travel to refresh themselves during these holidays. As such, Cadbury World can be a better selection. However, when the demand of seasonality increased, Cadbury World needs extra capacities to support their operation.If not, they will face some bottlenecks and affect their overall performance and profitability. QUESTION 4 4. 1 The ways that Cadbury world management has varied capacity to respond to changes in demand When the business of an organization is boosted up, this means that the demand has been increased as well. Thus, the organization need more capacities to prevent they fall into bottlenecks (Stevenson, 2010). In Cadbury World case, some bottleneck s might be occurred if they didn’t varied the capacity to respond to the changes of demand. Firstly, more ticket collected have been arranged accordingly in the entrance area during peak period.Those ticket collectors will apply the technological system such as automation system to handle the situation in the exhibition centre and also the safety of their visitors. Besides, Cadbury internal management team have implemented some actions to enlarge the space of parking lots during the peak period. After that, the shop, restaurant and ice-cream parlour areas will be amend to cater more visitors. 4. 2 The operations that occurred the bottlenecks in the process  and the ways that service can be amended to increase bottleneck capacity. Where are the bottlenecks in the process? How could service be amended to increase bottlenecks capacity? | The entrance| * Introduce online ticketing to reduce the time that needed to purchase the tickets. * Utilize information technology system to handle the safety of visitors that enter the exhibition centre. * Enhance the dependability and speed in the exhibition centre to provide the convenience to visitors. | The exhibition area| * Boost up the efficiency of Cadbury staffs that handle the visitors that enter this area. * Apply micro operation system and information technology method to reduce the delays problems and also eliminate the workload of attendant. Improve the process flow in Marie Cadbury room as it is the bottlenecks in this section. | The packaging plant| * Change the areas that show the brief videos. * Such as displaying the brief videos in the areas before entering the packaging plant to give a brief explanation and understanding to visitors. | The restaurant| * Amend the process flow because current process flow is inconvenient to visitors. * Redesign the serving points and serve more variety of food in each serving point. * So that, visitors can enjoy their favorite food without passing every serving poin ts. The restaurant design can amend to a round shape instead of row arrangement to increase the flexibility to visitors. | LIST OF REFENCES Galloway, L. (1998)  Principles of Operations Management. India: ITP. Jae, K. , Shim, Joel, G. & Siegel (1999) Operations Management. USA: Barron’s Educational Series. Stevenson, W. J. (2010) Operations Management. An Asian Perspective (9th Edition). New Zealand: McGraw-Hill. Thompson, J. (1967)  Organizations in Action. New York: McGraw-Hill. Tilanus, B. (1997)  Information Systems in Logistics and Transformation (2nd ed). USA: Elsevier Science Ltd. Operations Management The process type McDonald's uses is batch process because there are moderate volume and moderate variety in their products and services. McDonald's products are semi-standardized as they are stocked pre cooked. When a customer makes an order, the product is then prepared. This shows high flexibility, for example, a customer orders a special order of McCracken without lettuce, the order will be processed within minutes. There is also high volume of production as McDonald's serves thousands of customers dally. Inning a batch process means that the speed of delivery Is dependent upon the speed and experience of the Individual worker. This process supports the business of McDonald's as they will be able to process the different types orders to cater to the different needs of customers, In the shortest time possible. To achieve that, moderate skill level of workers is required. The advantages of batch process are that it allows workers to specialist in specific lobscouse and use the speci alist equipment, different batches of different production an be made.On the other hand, there are also disadvantages of batch process. Firstly, specialization means that the workers are doing repetitive jobs, which can result to boredom. Secondly, the machinery needs to be reset and cleaned in between batches. This can be time consuming which in turns slows down the production. Also, when the hamburgers are produced by batches, they would keep them for as long as possible and eventually discard them if they were not sold. This will increase the cost for McDonald's. Operations Management OPERATIONS MANAGEMENT: as a competitive weapon mks [email  protected] ac. in http://mks507. vistapanel. net Prof. (Dr. ) Manoj K Srivastava Operations Management Area 1. The Systems Approach C O N T E N T S 2. 3. OM Definition Ten Critical Decisions 4. 5. The Cases 4V Typology of Operations 6. 7. Productivity Competitiveness 8. 9. Manufacturing Vs. Service? The History 10. The Future 1 Systems Approach Systems Approach Reduce waste†¦or enhance output†¦ 2 OM Definition What is Operations Management? What is Operations? a function or system that transforms inputs into outputs of greater valueOperations management (OM) is the set of activities that creates value in the form of goods and services by transforming inputs into outputs TYPES OF TRANSFORMATIONS †¢ †¢ Physical: Locational: as in manufacturing operations as in transportation operations What is a Transformation Process? a series of activities along a value chain extending from supplier to customer. activiti es that do not add value are superfluous and should be eliminated †¢ †¢ Exchange: Physiological: as in retail operations as in health care What is Operations Management? esign, operation, and improvement of productive systems †¢ †¢ Psychological: Informational: as in entertainment as in communication Value Engineering / Value Analysis ? Use ? Esteem ? Time ? Place 3 What Operations Managers do? ? Service, product design†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. ? Quality management†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ ? Process, capacity design†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. ? Location †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ Ten Critical Decisions ? Layout design †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. ? Human resources, job design†¦Ã¢â‚¬ ¦.. ? Supply-chain management†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ ? Inventory management †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. ? Scheduling †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ ? Maintenance †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 4 The Cases Britannica StoryInvite your enemy onto the roof, then remove the ladder Sun tzu The Art of War 36 Stratagems 1988 1988-93 Britannica (Leader, 230 years experience, 1768), $1000 Microsoft encyclopedia from funk & Wagnall’s encyclopedia Searchability, Multimedia, Graphics, Timeline (20 feet), cross-links, updating 1993 1995 Price $300 (cost of CD:$1) (in-fact you can purchase encarta encyclopedia + a PC in Britannica price) Britannica has to jump in a business which was not its strength, Price still $1000 1997 Reduced to $125, later on free online, crashed twice Innovation in Operations McDonald’s Corp Olympic Flame ? ? ? Facing Increased Competition Smarter and More Demanding Customers Less Brand Loyal Switched to hamburger bun that does not require toasting. ? Customers prefer taste of new bun ? Saves time an d money, QSVC Model ? ? ? ? 10,000 runners 15,000 miles through 42 states in 84 days Two years of planning Must plan for no-show runners and rush hour traffic ? Cost of this operation in the neighbourhood of $20 million Innovation in Operations Ginger Hotel BillDesk No-frills, June 2004 No room service, travel desk, swimming pool Wi-fi, Two type of room: Rs. 999 and Rs. 1199, Prabhat Pani, CEO, Roots CorporationBillDesk, a property of IndiaIdeas. com Ltd. , 2000 Three Arthur Anderson Executives Third-party bill collection 25 Banks, 100 companies Just apply today. It only takes a few minutes. Once you're approved, you get your very own Zipcard. Reserve one of our cars – for a couple hours or the entire Day. Do it online or use a phone. We're easy. Walk to the car, then just hold your Zipcard to the windshield. The doors will unlock, and it's all yours! Drive away†¦ and return to the same reserved parking spot at the end of your reservation. It's that simple. And remember, gas and insurance are included too. 5Operations typology: 4V Approach Differences within sectors are often greater than the differences between sectors Financial services An account management centre at a large retail bank Financial analyst advising a client at an investment bank Furniture manufacturing Mass production of kitchen units Craft production of reproduction ‘antique’ furniture Hotels Value-for-money hotel Lobby of an international luxury hotel A Typology of Operations: 4 V’s Low Volume High High how many products or services are made by the operation? how many different types of products or services are made by the operation?High Variety Low High Variation in demand Low how much does the level of demand change over time? how much of the operation’s internal working are ‘exposed’ to its customers? High Visibility Low Implications Low repetition Each staff member performs more of job Less systemization High unit costs Flexible Comple x Match customer needs High unit costs Changing capacity Anticipation Flexibility In touch with demand High unit costs Short waiting tolerance Satisfaction governed by customer perception Customer contact skills needed Received variety is high High unit costs A Typology of Operations ImplicationsHigh repeatability Specialization Capital intensive Low unit costs Well defined Routine Standardized Regular Low unit costs Stable Routine Predictable High utilization Low unit costs Time lag between production and consumption Standardization Low contact skills High staff utilization Centralization Low unit costs Low Volume High High High Variety Low High Variation in demand Low High Visibility Low 6 Productivity Effectiveness Efficiency Productivity Types of Productivity Single Factor Productivity Output Labor Output Materials Output is of quality nature Output Capital Multifactor ProductivityOutput Labor + Materials + Overheads Output Labor + Energy + Capital Total Factor Productivity Good s and Services Produced All inputs used to produce them America West’s Reverse Pyramid system This is in contrast to the approach used by many airlines of just boarding all seats starting from the back of the plane and working forward. 7 Competitiveness Competitiveness The degree to which a nation can produce goods and services that meet the test of international markets while simultaneously maintaining or expanding the real incomes of its citizens. A firm is competitive if it can produce products [†¦ of superior quality or lower costs than its domestic and international competitors. (US-President`s Commission on Industrial Competitiveness 1985, S. 6) Global Competitiveness Ranking 1. Switzerland 2. Sweden 3. Singapore 4. United States 5. Germany 6. Japan 7. Finland 8. Netherlands 9. Denmark India 51 10. Canada China 27 Competition Within Industries Increases When ? Firms are relatively equal in size and resources ? Products and services are standardized ? Industry growt h is slow or exponential Barriers to Entry ? ? Economies of scale Learning curves Capital investment Access to supply and distribution channels 8 Manufacturing vs. services Degree of Servitization Manufacturing and Service Employment Manufacturing Employment and Production Services as % of GDP Tangibility Spectrum Economic Offerings can determine prior to purchasing can only be discerned after purchase or during consumption or use customer must believe in, but cannot personally evaluate even after purchase & consumption Differences Between Goods and Services Intangibility Heterogeneity Simultaneous Perishability Production & Consumption 9 History of OM Five Eras of Operations Management Journey of Operations Management Adam Smith uge increases in productivity obtainable from technology or technological progress are possible match human and physical capital, Division of labor Eli Whitney †¢ †¢ In 1798, received government contract to make 10,000 muskets Showed that machine tools could make standardized parts to exact specifications – Musket parts could be used in any musket Significant events in operations management ? ? ? ? Division of labor Standardized parts Scientific management Coordinated assembly line (Smith (Whitney (Taylor (Ford 1776) 1800) 1881) 1913) ? ? ? Gantt charts Motion study Quality control (Gantt (Gilbreths (Shewhart 1916) 1922) 1924) 10Where are we going? Exciting New Challenges in Operations Management Changing Challenges Past Local or national focus Batch (large) shipments Causes Low-cost, reliable worldwide communication and transportation networks Cost of capital puts pressure on reducing investment in inventory Global Focus Future Just-in-time shipments Low-bid purchasing Quality emphasis requires that suppliers be engaged in product improvement Shorter life cycles, rapid international communication, computer-aided design, and international collaboration Affluence and worldwide markets; increasingly flexible production processes Changing sociocultural milieu.Increasingly a knowledge and information society. Environmental issues, ISO 14000, increasing disposal costs Supply-chain partners Rapid product development, alliances, collaborative designs Mass customization Empowered employees, teams, and lean production Environmentally sensitive production, Green manufacturing, recycled materials, remanufacturing Lengthy product development Standardized products Job specialization Low cost focus Operations Management OPERATIONS MANAGEMENT: as a competitive weapon mks [email  protected] ac. in http://mks507. vistapanel. net Prof. (Dr. ) Manoj K Srivastava Operations Management Area 1. The Systems Approach C O N T E N T S 2. 3. OM Definition Ten Critical Decisions 4. 5. The Cases 4V Typology of Operations 6. 7. Productivity Competitiveness 8. 9. Manufacturing Vs. Service? The History 10. The Future 1 Systems Approach Systems Approach Reduce waste†¦or enhance output†¦ 2 OM Definition What is Operations Management? What is Operations? a function or system that transforms inputs into outputs of greater valueOperations management (OM) is the set of activities that creates value in the form of goods and services by transforming inputs into outputs TYPES OF TRANSFORMATIONS †¢ †¢ Physical: Locational: as in manufacturing operations as in transportation operations What is a Transformation Process? a series of activities along a value chain extending from supplier to customer. activiti es that do not add value are superfluous and should be eliminated †¢ †¢ Exchange: Physiological: as in retail operations as in health care What is Operations Management? esign, operation, and improvement of productive systems †¢ †¢ Psychological: Informational: as in entertainment as in communication Value Engineering / Value Analysis ? Use ? Esteem ? Time ? Place 3 What Operations Managers do? ? Service, product design†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. ? Quality management†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ ? Process, capacity design†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. ? Location †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ Ten Critical Decisions ? Layout design †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. ? Human resources, job design†¦Ã¢â‚¬ ¦.. ? Supply-chain management†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ ? Inventory management †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. ? Scheduling †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ ? Maintenance †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 4 The Cases Britannica StoryInvite your enemy onto the roof, then remove the ladder Sun tzu The Art of War 36 Stratagems 1988 1988-93 Britannica (Leader, 230 years experience, 1768), $1000 Microsoft encyclopedia from funk & Wagnall’s encyclopedia Searchability, Multimedia, Graphics, Timeline (20 feet), cross-links, updating 1993 1995 Price $300 (cost of CD:$1) (in-fact you can purchase encarta encyclopedia + a PC in Britannica price) Britannica has to jump in a business which was not its strength, Price still $1000 1997 Reduced to $125, later on free online, crashed twice Innovation in Operations McDonald’s Corp Olympic Flame ? ? ? Facing Increased Competition Smarter and More Demanding Customers Less Brand Loyal Switched to hamburger bun that does not require toasting. ? Customers prefer taste of new bun ? Saves time an d money, QSVC Model ? ? ? ? 10,000 runners 15,000 miles through 42 states in 84 days Two years of planning Must plan for no-show runners and rush hour traffic ? Cost of this operation in the neighbourhood of $20 million Innovation in Operations Ginger Hotel BillDesk No-frills, June 2004 No room service, travel desk, swimming pool Wi-fi, Two type of room: Rs. 999 and Rs. 1199, Prabhat Pani, CEO, Roots CorporationBillDesk, a property of IndiaIdeas. com Ltd. , 2000 Three Arthur Anderson Executives Third-party bill collection 25 Banks, 100 companies Just apply today. It only takes a few minutes. Once you're approved, you get your very own Zipcard. Reserve one of our cars – for a couple hours or the entire Day. Do it online or use a phone. We're easy. Walk to the car, then just hold your Zipcard to the windshield. The doors will unlock, and it's all yours! Drive away†¦ and return to the same reserved parking spot at the end of your reservation. It's that simple. And remember, gas and insurance are included too. 5Operations typology: 4V Approach Differences within sectors are often greater than the differences between sectors Financial services An account management centre at a large retail bank Financial analyst advising a client at an investment bank Furniture manufacturing Mass production of kitchen units Craft production of reproduction ‘antique’ furniture Hotels Value-for-money hotel Lobby of an international luxury hotel A Typology of Operations: 4 V’s Low Volume High High how many products or services are made by the operation? how many different types of products or services are made by the operation?High Variety Low High Variation in demand Low how much does the level of demand change over time? how much of the operation’s internal working are ‘exposed’ to its customers? High Visibility Low Implications Low repetition Each staff member performs more of job Less systemization High unit costs Flexible Comple x Match customer needs High unit costs Changing capacity Anticipation Flexibility In touch with demand High unit costs Short waiting tolerance Satisfaction governed by customer perception Customer contact skills needed Received variety is high High unit costs A Typology of Operations ImplicationsHigh repeatability Specialization Capital intensive Low unit costs Well defined Routine Standardized Regular Low unit costs Stable Routine Predictable High utilization Low unit costs Time lag between production and consumption Standardization Low contact skills High staff utilization Centralization Low unit costs Low Volume High High High Variety Low High Variation in demand Low High Visibility Low 6 Productivity Effectiveness Efficiency Productivity Types of Productivity Single Factor Productivity Output Labor Output Materials Output is of quality nature Output Capital Multifactor ProductivityOutput Labor + Materials + Overheads Output Labor + Energy + Capital Total Factor Productivity Good s and Services Produced All inputs used to produce them America West’s Reverse Pyramid system This is in contrast to the approach used by many airlines of just boarding all seats starting from the back of the plane and working forward. 7 Competitiveness Competitiveness The degree to which a nation can produce goods and services that meet the test of international markets while simultaneously maintaining or expanding the real incomes of its citizens. A firm is competitive if it can produce products [†¦ of superior quality or lower costs than its domestic and international competitors. (US-President`s Commission on Industrial Competitiveness 1985, S. 6) Global Competitiveness Ranking 1. Switzerland 2. Sweden 3. Singapore 4. United States 5. Germany 6. Japan 7. Finland 8. Netherlands 9. Denmark India 51 10. Canada China 27 Competition Within Industries Increases When ? Firms are relatively equal in size and resources ? Products and services are standardized ? Industry growt h is slow or exponential Barriers to Entry ? ? Economies of scale Learning curves Capital investment Access to supply and distribution channels 8 Manufacturing vs. services Degree of Servitization Manufacturing and Service Employment Manufacturing Employment and Production Services as % of GDP Tangibility Spectrum Economic Offerings can determine prior to purchasing can only be discerned after purchase or during consumption or use customer must believe in, but cannot personally evaluate even after purchase & consumption Differences Between Goods and Services Intangibility Heterogeneity Simultaneous Perishability Production & Consumption 9 History of OM Five Eras of Operations Management Journey of Operations Management Adam Smith uge increases in productivity obtainable from technology or technological progress are possible match human and physical capital, Division of labor Eli Whitney †¢ †¢ In 1798, received government contract to make 10,000 muskets Showed that machine tools could make standardized parts to exact specifications – Musket parts could be used in any musket Significant events in operations management ? ? ? ? Division of labor Standardized parts Scientific management Coordinated assembly line (Smith (Whitney (Taylor (Ford 1776) 1800) 1881) 1913) ? ? ? Gantt charts Motion study Quality control (Gantt (Gilbreths (Shewhart 1916) 1922) 1924) 10Where are we going? Exciting New Challenges in Operations Management Changing Challenges Past Local or national focus Batch (large) shipments Causes Low-cost, reliable worldwide communication and transportation networks Cost of capital puts pressure on reducing investment in inventory Global Focus Future Just-in-time shipments Low-bid purchasing Quality emphasis requires that suppliers be engaged in product improvement Shorter life cycles, rapid international communication, computer-aided design, and international collaboration Affluence and worldwide markets; increasingly flexible production processes Changing sociocultural milieu.Increasingly a knowledge and information society. Environmental issues, ISO 14000, increasing disposal costs Supply-chain partners Rapid product development, alliances, collaborative designs Mass customization Empowered employees, teams, and lean production Environmentally sensitive production, Green manufacturing, recycled materials, remanufacturing Lengthy product development Standardized products Job specialization Low cost focus

Culture Adaptation And Cultural Change Essay

Culture refers to the lifestyle or rather a system of tradition that dictates the thought and even action of a given group of people in a society. It gets its expression in the language, beliefs, customs and even food thus offering a direction for effective successful living. Culture gives one identity of the everyday symbols, customs, body language; food and social cues which becomes very difficult to lose overnight. Cultural adaptation is the processes through which an individual undergoes in order to adjust to another culture different from his normal way of life. Different countries or environment have differing cultural practices and its common for people to feel disoriented when they leave their familiar surrounding to a different environment or countries. It is quite true that culture restrains our behavior because it plays a vital role in our day to day lives. Culture socializes us into a given way of life and is responsible for determining who we are and our view of the entire world. Who we are does not only depend on our nature and personality but also the culture that surrounds us. Humans are sum and substances of nature, personality and the culture all of which contributes importantly to the final individuals. Our culture affects how we think, how we behave, who we are and how we respond to our surrounding and it is easily transmitted from generation to generation through the parents, education systems and even peers. Since culture is greatly embedded in our nature and personality, that is, culture is a central ingredient in the production of a human person; it’s a big huddle to adapt to other cultures. However, we are daily confronted with issues that call for modification, recreation and even elimination of some of the elements of our cultures. For effective cultural change to be obtained there is need to understand the underlying differences in the current culture and the culture one wants to create. Our culture is transformed by our daily pressure on what old tradition that needs to be dropped, how to combine the diverse elements of cultures that surrounds us and the daily decision of the new ideas to be included in the culture. Cultural change is possible when we define precisely the culture we are building and use those terms to inflict the necessary changes we want to make in the existing culture. As groups of people migrate from places to come together they tend to merge cultures and finally come up with a common cultural practice for all. The most common element of culture that experience drastic changes is the language especially when the groups are interested in trading with each other, they will need a common mode of communication thus the language would be quickly changed to ease trade. However, there are other elements of culture that cannot be wholly eradicated, such as food preferences and the norms that outlast the reason for their development. For cultural change to be effected all the stakeholders must be willing to change. The social nature in humans that tends to drive them to share their experiences and knowledge with others is another powerful tool in effecting cultural change. Reference: Samuel P. Huntington. Cultures Presentation: Colorado College’s 125th Anniversary Symposium, February 4, 1999.

Finding the Main Idea Worksheet and Problems