It was mentioned earlier that the operation strategy basically answers three question, viz. “to whom”, “what” and “how”. This requires various types of analysis and decisions. The various topics of the chapter include these factors and their explanations like what must be thought of under operation strategy and what type of analysis should be conducted through what types of methods etc.
In order to establish the operation the strategy, it is necessary to carry out the analysis and decisions on the following four aspects.
i. Decision regarding operation field (operation domain).
ii. Customer analysis.
iii. Competition analysis.
iv. Analysis of capability and system of one’s own company.
1. Deciding operation field
Definition of operation field (in other words the operation domain) is the first problem while setting up the operation strategy. This deals with deciding the place where one is fighting.
Generally, the operation field for setting up the operation strategy refers to an industry or a market field, where the independently decision making makes sense and it is possible to carry out the decision making regarding the operation independent of other operation fields. However, this does not mean that the operation field is decided unilaterally.
Let us try to study it further with the example of electrical appliances. The industry of electrical appliances can be classified as one operation field through a wider definition. However, it includes various market fields which can be considered independently for setting the operation strategy because of difference in characteristics like those of heavy duty domestic electrical appliances and electronic components etc. Further, even in the field of domestic electrical appliances, it covers the fields of audio-visual instruments and other may also have significant meaning. Further, the domestic electrical appliances field covers vacuum cleaner, washing machines, air-conditioner, micro-wave oven and various other such products. It is also possible to establish operation strategy for each product.
It is very difficult to decide the conditions, which can satisfy everybody while defining the criteria on suitability of level of operation field. The decision with regard to what needs to be defined as operation field depends upon the position of each enterprise, e.g. Matsushita Denki (National Panasonic) may decide product-wise detailed operation fields. Whereas Mistubishi Denki or Hitachi may take a broader view for the definition and pock up domestic electrical appliances as the unit for setting up the operation strategy. Considering the difference in the circumstances for each enterprise, it may not be possible to say that the method adopted by Matsushita is correct and the one adopted by Mistubishi or Hitachi is wrong.
Again, there is another problem related to the section from which the definition is arrived at. Depending upon the section, the understanding regarding the customer needs and the competition rivals will vary, e.g. an operation division dealing with piano or a piano manufacturer shall have the other piano manufacturing companies as the competition rivals, if the operation field is read in literal sense. However, if the piano manufacturing company or the division considers manufactures of musical instruments as well as electronic musical instruments shall form the rival group. The three dimensions of customer layer, customer functions and technology (or product) are the typical sections or the opening in the case. This three dimensional approach has been explained in detail under clause 3.2 of chapter 3 in this book.
Once the operation field (domain) is decided, the battle front also gets decided. The next topic is to decided about what type of customers have to be targeted (decisions regarding the customer) and with who else the customer has to deal with (decision regarding the competition rival).
2. Customer analysis
It is necessary to carry out the customer analysis in order to arrive at a decision for selecting the customers and type of values to be provided to the customer. When all the customers within a particular operation field are targeted to be satisfied, it always leaves some dissatisfaction for all the customers. The demands of customer will vary depending upon the targeted customers. For example, in the case of a travel agency dealing with airline service, a businessman may lay importance on the punctuality of time and cutting down the time requirement, whereas general tourists shall lay more importance on expenses.
Therefore it becomes necessary to divide the customers in a number of groups in order to analyses what exactly are the demands of different types of customers. The techniques for doing so is explained under clause 2.3 of this chapter.
3. Competition analysis
Some sort of competition always exists in the market. While making effort to create distinction vis-a-vis the competition rival, it becomes necessary to know about the competition rivals and what are their capabilities and systems. It order to know these factors, competition analysis plays a major role.
4.Analysis of capability and system one’s own company
It is necessary to attain a persistent and constant capability and establish a stabilised system in order to provide a constant value to the customer and to display a distinction vis-a-vis the competition rival. The resource for capability of any enterprise is the management resource. Further, it is necessary to establish and provide value in a stable and consistent way to the customers on a continuous basis.
The management resources and the tasks of operation as assigned and distributed by the head office are taken as a starting point and the 3WH viz. “to whom”, “what” and “how” are decided on the basis of above mentioned customer analysis, competition analysis and the analysis regarding capability and system of one’s own company.
In order to establish the operation the strategy, it is necessary to carry out the analysis and decisions on the following four aspects.
i. Decision regarding operation field (operation domain).
ii. Customer analysis.
iii. Competition analysis.
iv. Analysis of capability and system of one’s own company.
1. Deciding operation field
Definition of operation field (in other words the operation domain) is the first problem while setting up the operation strategy. This deals with deciding the place where one is fighting.
Generally, the operation field for setting up the operation strategy refers to an industry or a market field, where the independently decision making makes sense and it is possible to carry out the decision making regarding the operation independent of other operation fields. However, this does not mean that the operation field is decided unilaterally.
Let us try to study it further with the example of electrical appliances. The industry of electrical appliances can be classified as one operation field through a wider definition. However, it includes various market fields which can be considered independently for setting the operation strategy because of difference in characteristics like those of heavy duty domestic electrical appliances and electronic components etc. Further, even in the field of domestic electrical appliances, it covers the fields of audio-visual instruments and other may also have significant meaning. Further, the domestic electrical appliances field covers vacuum cleaner, washing machines, air-conditioner, micro-wave oven and various other such products. It is also possible to establish operation strategy for each product.
It is very difficult to decide the conditions, which can satisfy everybody while defining the criteria on suitability of level of operation field. The decision with regard to what needs to be defined as operation field depends upon the position of each enterprise, e.g. Matsushita Denki (National Panasonic) may decide product-wise detailed operation fields. Whereas Mistubishi Denki or Hitachi may take a broader view for the definition and pock up domestic electrical appliances as the unit for setting up the operation strategy. Considering the difference in the circumstances for each enterprise, it may not be possible to say that the method adopted by Matsushita is correct and the one adopted by Mistubishi or Hitachi is wrong.
Again, there is another problem related to the section from which the definition is arrived at. Depending upon the section, the understanding regarding the customer needs and the competition rivals will vary, e.g. an operation division dealing with piano or a piano manufacturer shall have the other piano manufacturing companies as the competition rivals, if the operation field is read in literal sense. However, if the piano manufacturing company or the division considers manufactures of musical instruments as well as electronic musical instruments shall form the rival group. The three dimensions of customer layer, customer functions and technology (or product) are the typical sections or the opening in the case. This three dimensional approach has been explained in detail under clause 3.2 of chapter 3 in this book.
Once the operation field (domain) is decided, the battle front also gets decided. The next topic is to decided about what type of customers have to be targeted (decisions regarding the customer) and with who else the customer has to deal with (decision regarding the competition rival).
2. Customer analysis
It is necessary to carry out the customer analysis in order to arrive at a decision for selecting the customers and type of values to be provided to the customer. When all the customers within a particular operation field are targeted to be satisfied, it always leaves some dissatisfaction for all the customers. The demands of customer will vary depending upon the targeted customers. For example, in the case of a travel agency dealing with airline service, a businessman may lay importance on the punctuality of time and cutting down the time requirement, whereas general tourists shall lay more importance on expenses.
Therefore it becomes necessary to divide the customers in a number of groups in order to analyses what exactly are the demands of different types of customers. The techniques for doing so is explained under clause 2.3 of this chapter.
3. Competition analysis
Some sort of competition always exists in the market. While making effort to create distinction vis-a-vis the competition rival, it becomes necessary to know about the competition rivals and what are their capabilities and systems. It order to know these factors, competition analysis plays a major role.
4.Analysis of capability and system one’s own company
It is necessary to attain a persistent and constant capability and establish a stabilised system in order to provide a constant value to the customer and to display a distinction vis-a-vis the competition rival. The resource for capability of any enterprise is the management resource. Further, it is necessary to establish and provide value in a stable and consistent way to the customers on a continuous basis.
The management resources and the tasks of operation as assigned and distributed by the head office are taken as a starting point and the 3WH viz. “to whom”, “what” and “how” are decided on the basis of above mentioned customer analysis, competition analysis and the analysis regarding capability and system of one’s own company.