Page 336 - Operations Strategy

WHAT is THE RolE of AlignmEnT? 311

Figure 9.2 In operations strategy ‘fit’ is the alignment between market and operations
capability

Line of fit

Market requirements Y Alignment between

market and operations
capability

X
Level of operations resource capability

example dow Corning’s Xiameter service 1

For years Dow Corning was a silicon business with a market position built on service and tech-
nical excellence. Customers had been willing to pay top prices for pioneering technology, pre-
mium products and customised service. Yet, as the market matured it became clear that some
customers were becoming increasingly price sensitive. The premium price strategy was under
attack both from large competitors that had driven down costs and from smaller competitors,
with lower overheads. Which was when the company adopted a ‘needs-based’ approach to seg-
mentation, attempting to identify the basic drivers for customers’ purchase decision.
It revealed four segments that could be plainly related to the operations requirements for
serving them.
1. Innovative solution seekers – who wanted innovative silicone-based products.
2. Proven solution seekers – customers needing advice on existing proven products.
3. Cost-effective solution seekers – customers who may even pay premium prices for a product, if
it could take costs out of their business by improving their productivity.
4. Price seekers – experienced purchasers of commonly used silicone materials, wanting low
prices and an easy way of doing business with their supplier.
Each of these segments held a distinct message for Dow Corning’s operations. For innovative
solution seekers, work with customers’ R&D to develop new products. For proven solution seek-
ers, help sales staff to exploit the range of existing products. For cost-effective solution seek-
ers, give sales staff a thorough understanding of customers’ processes and help to match their

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