Page 94 - Operations Strategy

THE RElATivE imPORTAnCE Of PERfORmAnCE ObJECTivEs CHAngEs OvER TimE 69
Introduction stage

When a product or service is first introduced, it is likely to be offering something new in
terms of its design or performance. Few competitors will be offering the same product
or service, and because the needs of customers are not perfectly understood, the design
of the product or service could frequently change. Given the market uncertainty, the
operations management of the company needs to develop the flexibility to cope with
these changes and the quality to maintain product/service performance.

Growth stage
As the volume of products or services grows, competitors start to develop their own
products and services. In the growing market, standardised designs emerge. Standardi-
sation is helpful in that it allows the operation to supply the rapidly growing market.
Keeping up with demand could prove to be the main operations preoccupation. Rapid
and dependable response to demand will help to keep demand buoyant, while ensuring
that the company keeps its share of the market as competition starts to increase. Also,
increasing competition means that quality levels must be maintained.

Maturity stage
Eventually, demand starts to level off. Some early competitors will have left the mar-
ket and a few larger companies will probably dominate the industry. The designs of
the products or services will be standardised and competition will probably emphasise
price or value for money, although individual companies might try to prevent this by
attempting to differentiate themselves in some way. So operations will be expected
to get the costs down in order to maintain profits or to allow price cutting, or both.
Because of this, cost and productivity issues, together with dependable supply, are likely
to be the operation’s main concerns.

Decline stage
After time, sales will decline and competitors will start dropping out of the market. To
the companies left there might be a residual market, but if capacity in the industry lags
demand, the market will continue to be dominated by price competition. Operations
objectives will therefore still be dominated by cost.

Changes in the firm’s resource base

At other times the focus for change may be within the resources and processes of the
operation itself. New technologies may require a fundamental rethink of how opera-
tions resources can be used to provide competitive advantage. Internet-based tech-
nologies, for example, provided opportunities for many retail operations to shift, or
enhance, market positioning. Other operations-based changes may be necessary, not to
change, but merely to maintain a market position. They may even reflect opportunities
revealed by the operations-based capabilities of competitors. For example, for the last
two decades much of the focus of change in US and European automotive companies
was within their operations processes, mainly because of the lower operations costs
realised by their Japanese competitors. Again, this balance may change as niche markets
become more distinctive. But this is the point: although different industries may have

M02 Operations Strategy 62492.indd 69 02/03/2017 13:01