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Amazon.com Operational strategy Essay

AQuestion 2: What are Amazon.com’s competitive priorities and what should its operation strategy focus on?

Competitive priorities:

– Keep the position of market leader.
– Maintain the fast delivery.
– Low price focus
– User friendly website.

Operational strategy:

Promote the website, especially in this time of the year, during the holidays. People will be reminded of the website, and maybe visit the website because of the promotion. When the visitors are on amazon.com, they must experience a nice shopping-environment. This can be done by constantly improving the website’s user friendliness, this can be done by improving the search engine for example. Or something as easy as changing some colors to match the season.

Question 4: FedEx built its business on quick, dependable delivery of items being shipped by air from one business to another. Its early advantages included global tracking of shipments using Web technology. The advancement of Internet technology enabled competitors to become much more sophisticated in order tracking. In addition, the advent of Web-based businesses put pressure on increased ground transportation deliveries. Explain how this change in the environment has affected FedEx’s operations strategy, especially relative to UPS, which has a strong hold on the business-to-consumer ground delivery business.

Because FedEx lost their initial competitive advantage (UPS became a threat as they were able to deliver large volume of shipments because of the advanced Internet technology as well), they had to come up with new operations strategies to remain competitive:

– FedEx Ground

– FedEx Home

FedEx now focuses on low-cost operations and dependable delivery, to gain a new competitive advantage.

Question 6: Although all nine of the competitive priorities discussed in this chapter are relevant to a company’s success in the marketplace, explain why a company should not necessarily try to excel in all of them. What determines the choice of the competitive priorities that a company should emphasize for its key processes?

It really depends on the specific market you are operating in as a company. The company should focus on the most marketable assets by implementing demographics and forecasting future opportunities. Top quality may influence the development speed and low cost operations could conflict with your volume flexibility.

BChad’s Creative Concepts started as a small company producing custom made wooden furniture. Business was good, and Chad Thomas decided to expand his business. Now, Chad added a standard line of furniture to his business. The priority is still on the custom made furniture, therefore the standard line is put on the second place, leading to unfinished products and a big inventory.

Question 1: What types of decisions must Chad Thomas make daily for his company’s operations to run effectively? Over the long run?

Chad has to make operational decisions. In the long run, these decisions are Strategic decisions.

Question 2: How did sales and marketing affect operations when they began to sell standard pieces to retail outlet?

By changing to selling standard pieces in retail outlets next to the custom pieces, Chad has start promoting his business, because now there are serious competitors, which are easily reached by the customer. The whole production process changed, because now standard pieces are produced in the factory as well.

Question 3: How has the move to producing standard furniture affected the company’s financial structure?

The sales of the standard line are increasing steadily, but still the most dollars of the sales come from the custom made pieces. However, the financial situation is not optimal, because lots of dollars are spend on inventory.

Question 4: What might Chad Thomas have done differently to avoid some of the problems he now faces?

Thomas could make a second factory, focused on only producing standard pieces. By doing this, he can terminate the problem of priorities. So, by doing this, he can decrease the inventory.

Extra questions

Question 1: Explain the competitive priorities for both product lines (customized furniture and standard furniture) The priority of the company is the department of the customized furniture. But with both departments, there are different priorities. For customized furniture, the priority is to create a creative design, with the highest quality possible. For the standard furniture, the priority is deliver on time and a good price-quality ratio.

Question 2: Identify the OPP (Order Penetration Point) of each productlines The OPP for the custom made pieces of furniture is the moment Chad’s staff start working on a project. The whole project is specifically made for one customer from the beginning. The OPP for the Standard pieces is the moment that a customer buys the (already fully assembled) product. At that moment in time, the pieces are for that specific customer.

Question 3: Which flow strategy would be the most effective for each of the product lines? For the custom made pieces flexible is the best strategy. This focuses on individual pieces. For the standard pieces, the line strategy is the best strategy. This strategy focuses on the whole line, not on individual pieces.

Question 4: What would you advice Chad’s to do to solve the current problems? We would advise Chad to start a second factory. The current factory should be used for only the custom pieces. The new factory can be used for the standard pieces. With the two production processes separated, you can eliminate the problem of priority.

Discussion questions

1It´s a job process, a process with the flexibility needed to produce a wide variety of products in significant quantities. With considerable complexity and divergence in the steps performed. We think it´s easy to have high customer contact with internal customers, because internal customers are closer to the company.

2This sign implicates that the employees do not have any word in the company. Some customers could think that the employees are not good in performing their job, without any responsibility. Next to this, the employees could feel like they are not important to the company. So this sign works in a bad way.

Furthermore, the sign implicates that the employees are very limited in their actions, and furthermore, this leads to low customer contact.

This sign is exactly the opposite of how the employees at Ritz Carlton work. Employees at this hotel have all the resources and responsibilities a man can have. Stories go round that hotel managers fly in products from other countries, just for customer satisfaction. In this case, with the sign, the employees´ hands are tied, and by this, customer satisfaction is not at its maximum.

CQuestion 3: How do the process strategies of eBay and McDonald’s differ and how do their choices relate to customer-introduced variability?

eBay (mass customization)
McDonald’s (repetitive focus)

eBay customers are less involved regarding the variability. They offer many different products for many different interests, and the customer basically buys whatever he or she wants: low involvement. McDonald’s on the other hand wants to know more specifically, what their customers want as they have less products to offer and are able to change their product line more often during the year. Lately, McDonald’s organised a contest where the customer could compose their ideal hamburger. The winning hamburger is now being sold for a set time period.

Question 4: Medical technology can outfit a patient with an artificial heart, or cure vision defects with the touch of a laser. However, hospitals still struggle with their back-office processes, such as getting X-ray files from radiology on the fourth floor to the first-floor view boxes in the emergency room without having to send a runner. More than 30 percent of the estimated 30 billion health transactions each year are conducted by phone, fax or mail. To what extent, and how, can information technology improve productivity and quality for such processes? Remember that some doctors are not ready to give up their pads and pencils, and many hospitals have strong lines drawn around its departments, such as pharmacy, cardiology, radiology ad paediatrics.

Basically, information technology cannot only improve productivity and quality, but thinking more practically, it could save lives as all medical systems in a hospital work through faster and more advanced technologies. Understandably, it has to be 100 percent reliable and feasible and that’s probably the current reason for some doctors, mentioned in the question, to keep working in an old-fashioned way that is – for them – safer and more reliable, but probably not as fast as up to date advanced information technologies available.

Question 5: Consider the range of processes in the financial services industry. What position on the customer-contact matrix would the process of selling financial services to municipalities (1) occupy? The process of preparing monthly fund balance reports (2)? Explain why they would differ.

1. Front/Hybrid office
2. Back office

The first process requires some interaction to high interaction with the customer (municipality). It lies somewhere in the middle, as you’re not working with individual clients (which require high interaction) but a client (municipality) that needs regular updates and interaction on the process. Preparing monthly fund balance reports is a continued routine process that requires low to none interaction and is the same with all customers.


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