Assessment Brief No1 Operations Strategy Business Essay

There are lots of research and studies about the functions of multinational retail companies in all over the world. All these studies mainly focused on the operations strategy and performance analysis of these big companies. Yet, no studies in this area specifically discussed the operations strategy contributions of small to medium sized companies operating in the retail industry and other industries as well. The main objective of this report is to give an understandable, well structured and interesting management of operations management as it applies in a UK based family owned SME named Azam Super market. The report gives the logical path through the performance of operations management and perceptive of their strategic context. The purpose of this report is to critically analyse and evaluate of the current operations strategy of Azam Super market, with respect to operations typology (4vs). The three methods of analysis utilized in this report include trend, horizontal and vertical analyses as well as current situation like implementation of new changes, issues and organisational performance.

Results of case study not only confirmed that the smaller UK retailers have the potential to challenge the big players successfully by utilising the IT facilities, new ideas and possibilities of internet and inventory management, but also provides the selected company owners are not old fashioned and they are ready to utilise the service of information technology such as designing company own website and online shopping etc. Azam super markets organisational performances are above industry averages. In particular, comparative performance is good in medium sized company sector. The most important thing is the company owners are aware of the new trends and the immense opportunities of the implementation of information technology in their business.

A review of the academic literature on the obstacles of the functioning of the formulation of competitive role, position and objectives and operations strategies in general and particularly related to retail SMEs, recommended that significant difficulties can be found in implementing operations strategies. The study suggests that performance of operations strategy in an SME should have sizeable impact on operational performance if the progression for implementation is well structured.

Introduction

Azam Super market is a newly opened family business owned by siblings Jaswindher singh, Pervindher and Hardeep Kaur based in UK. Azam Super market is mainly focuses on grocery, offering a wide variety of Indian food and dairy products. The organisation has got 5 full time employees and 2 part time employees under the administration of Hardeep Kaur, as she looks after administrated related activities. At the mean time Jaswindher singh support the business related activities like marketing and advertising and Pervindher singh responsible for purchasing or approving of goods and services needed by the organisation. Within short span of time Azam super market gained the trust and value of the community around the area and become a strong SME in that particular area. Now business is going up to next level with a constant increase in number of customers. The owners are really busy with business promotion and the increasing number of customer becomes a difficult task for them to satisfy each and every customer’s need and to operate in their traditional way. This report discusses how operations management were selected and then implemented in a small to medium enterprise named Azam Super market. It then goes on to which stage of performance contribution has been reached.

“Little attention has been paid to the strategy-making processes of small and medium-sized firms (SMEs), or to the effectiveness of strategic planning in the SME sector. Planning often fails because of implementation problems often associated with SMEs’ lack of capability to determine and overcome potential barriers to strategic planning” (Ghobadian A & O’ Regan N , Effective Strategic planning in small and medium sized firms, Journal: Management Decision, Volume-40, Number-7, year- 2002, pp 663-671, Online www.emeraldinsight.com ). During this research it is obviously clear that Azam super market owners are not different from strategy making processes of compared to other SMEs, they clearly lack knowledge in information technology that affect the strategic planning of the firm and there is a little attention has been paid to the operations planning of the company. The tremendous growth in the nature of the industry demands to look up into different areas in which the business is operating.

It has become very clear to accept more long term planning than short term strategy for the long run of the company. In the long run of the business it should become less competitive with its competitors and unable to develop the business until they revolutionize their present business operation of traditional way in the changing global environment. It has become more necessary for Azam Super market to recognize the importance of academic approaches to the operations management.

Azam super market’s formulation of competitive role, position and objectives

Operations management is a management of the way organisation manage all activities directly related to the products and services (Slack et al. 2010 p-2).” The term operations management also offered in a selection of areas which includes production and operations management, analysis for production systems and design and engineering of production systems” (Shim J K and Siegel J G, 1999 pp 1-4)

According to Slack et al (2006 p-8) Operations management has got a vital role in small organisations as it is in large one. Apart from their size, every organisation needs to have and deliver their products and services efficiently and successfully. The most basic function of operations management has to implement new strategies within the organisation. Azam super market is planning to open 2 more retail outlets with in the areas where Asian communities are living together. The owners of the organisation are really passionate about the business and they are now realized the importance of the e commerce and other internet related opportunities to improve the business operations and explore new opportunity in the complex global environment. Innovative ideas, planning and control should increase organisation performance like dependability and flexibility. It definitely leads improved customer service and customer satisfaction. It will help the firm to retain customers in long term.

In addition, many researchers argues that the utilize of personal connections, an innovative selling focus, a strong understanding of some characteristics of formal marketing as the key features of what can be termed SME marketing. The main workforce in the SMEs scrutinized emerges to demonstrate normally entrepreneurial behaviour in the absence of founding owners. These characteristics of SME marketing are not well recognized or investigated and subsequently formed the basis of this study (Hill J, Online 1995).

A General model of operations management

Operations Strategic Objectives

The operations competitive role and position

Design

Operations Strategy

Input transformed resources

Output Products and services

Materials information customers

Improvement

Input resources

Customers

Facilities

Staff

Planning and Control

Input transforming resources

Environment

Source: Kalathummarath A N 2010 in Slack et al., 2004 p-5

Above model clearly shows how it works in an organisation. The main objectives of operations management are to reduce operational cost and to increase organisation performance. In operations strategy 3 basic things are being considered vital such as design, improvement and planning and control. By considering the current set up of Azam Super market it is obvious that hosting website and other online facilities will bring more customers and eventually that gives Azam super market a competitive edge in this industry. The introduction of website and online purchasing or other online services will place organisation in a strong position in their industry. It will also help to increase internal performance of company such as facilities of employees will improve that also affect the performance of the organisation.

Hypothetically, operations management is similar in any size of companies. Though, in practice, organizing operations in a small or medium size company has its own set of problems. Small organizations like Azam super market have exactly the same operations management problems as large ones but they can be more problematical to split from the collection of other issues with in the organization. On the other hand, small operations can also have considerable advantages. It means that smaller firms can keep up their viewpoint of excellence amongst everybody in the company and it means that they can respond very rapidly when the market demands it. (Slack et al. 2010 pp 7-11)

Operations Typology (4 V’s)

Volume: more than average number of customers from a special ethnic group and average number of customers from other ethnic group.

Variety: Medium-high since Azam Super market introduce new Indian products that is not available in the UK and also exploring new opportunities by opening 2 other retail outlets and launching of new website.

Variation: It purely based on the demand pattern of the customers. For example if customers demand for more traditional Indian foods product in a special occasions like diwali. Ramzan or other religious festivals or special parties or marriage functions it is likely to be higher than normal season.

Visibility: High visibility and medium contact skill. Even though, Azam Super market is a new organisation their owners are well experienced in business and their customer contact skills and personnel interactions with the customers and other people should be an asset for the company.

The implications of 4vs in Azam super market

All these 4Vs operations have implications for the cost of generating the products or services. To some extend position of an operation in the four dimensions is determined by the demand of the market it is serving. However, most of the operations have some discretion in moving themselves on the dimensions. (Slack et al. 2010 p-22)

Figure below show the implication of such positioning.

Volume High Low

Variety

High Low

Variation High Low

Visibility High Low

Source: Slack et al. 2010 p-23

Rising demand of Indian foods or SME super market in the UK

Financial crisis severely hit the £3 billion Indian food industry but Indians continued to be hooked on the quality ready meals and other Indian products from super markets or corner stores. Other ethnic group people are also like spicy Indian food so it has got a tremendous potential in UK retail store industry. The industry figures shows that demand for Indian meals or other grocery items increasing rapidly and super market chains are struggling to meet the demands of consumers (Anon, Online, 2009). According to wiki it is estimated that about 2% of total population of UK are Indians or Indian origins. Major cities like London, Birmingham and Leicester consist of big Asian communities it gives SMEs like Azam Super market a great opportunity to expand their business in that particular industry.

Operation strategy perspectives

“Operations strategy concerns the pattern of strategic decision and actions which sets the role, objectives and activities of the operation …………” (Slack et al. 2010, p-62) While, the operations strategy content is about “What the key decision areas that need to be addressed in developing an operations strategy are” (Slack et. al., 2010, pp 62-63). According to Slack and Lewis Operations strategy is the total outline of decisions which figure out the long term capabilities of any type of operations and their contribution to the overall strategy, through the reconciliation of market requirements with operations resources (Online, Wiki books)

The four perspectives on operations strategy

Different authors have slightly different opinions about Operations strategy. Operations strategy is undoubtedly part of an organisations total strategy but this topic has slightly different views and definitions. Operations strategy might come out in a top-down or a bottom-up method with look upon to business and corporate strategies. Likewise, an operations strategy can be built up in reaction to market needs or be based on the capacity of its operations resources (Slack and Lewis, 2002). Each perspective places a different emphasis on the nature of the operations strategy process. Below shown chart of 4 perspectives not giving the full picture of what operations strategy is. But together they provide some idea of the pressure which goes to form the content of operations strategy

Top-down

Perspective

What the business wants operations to do

What day to day experience suggests operations should do Bottom-up

Perspective

Operations resources perspective

What operations resources can do?

Market requirements

Perspective

What the market position requires operations to do

Operations

Strategy

Source: (Slack et al. 2010, p 65)

In the top down perspective shows that what the whole group or business wants to do?

In the bottom perspective where operations improvements cumulatively build strategy.

Operations strategy involves translating market requirements into operations decisions.

Operations strategy involves exploiting the capabilities of operations resources in chosen markets.

Source: (Slack et al. 2010, p 65)

In this case study about Azam super market a SME, many researches reveals that the IT offers exciting new opportunities for SMEs to develop their customer base into the global environment (Tetteh E & Burn F, Online). In order to achieve these advantages in global strategy Azam Super market needs to implement a completely different approach to the strategic planning and management. This will comprises what type of new ideas the management wants to adopt and what parts of the areas in the UK to operate and to open new retail outlets and how to allocate the finance in different areas of business. This case study reveals that Azam super market is going through “top-down” perspective of operations strategy. According to this perspective, the task for operations would be determined logically from the business strategy. Using five operations performance objectives is one way of articulating the operations task (Slack & Lewis, 2002).

Azam super market should adopt “bottom-up” perspective of operations strategy. The bottom-up perspective is one in which the organization learns from its experiences, developing and enhancing its operational capabilities as operations managers try new things out in an almost experimental fashion using their workplaces as a kind of ‘learning laboratory’ (Slack & Lewis, 2002). They already been in the market for some years and got valuable experience from the particular industry. So it has been recommended that to adopt “bottom-up” perspective of operations strategy.

The management in the system is well aware about the opportunities of internet based business. Experience from this industry is a massive advantage for them to take up their business in to next level. The only problem they are facing is Azam super market is targeting mainly a particular ethnic group. It might be a problem for them to develop more areas in future.

Operational stage diagnosis

Two professors named Hayes and Wheelwright have developed four stage models which should be helpful to evaluate the competitive role and contribution of the operations function of Azam super market.

Stage 1 – Internal neutrality

When evaluate with other stages of operations it is crystal clear that this is the poorest level of contribution by the operations function. This is inward looking and very little positive to donate towards competitive success (Slack et al. 2010, p 63).

Stage 2 – External neutrality

In this second stage this function is least helpful for the companies to instantly get in to the market in first stage, but it could be evaluating itself against the competitor’s performance and trying to adopt suitable ideas from them. By taking the best ideas and norms of performance from the rest of its industry, it is trying to be externally neutral (Slack et al. 2010, p 63).

Stage 3 – Internally supportive

In stage 3 operations they have almost reached the initial division in their market. They may not be superior to their competitors but they are generally up with the best. The operation is trying to be internally supportive by providing a credible operations strategy (Slack et al. 2010, pp 63-64)

Stage 4 – Externally supportive

In stage 4 companies are one which observes the market operations function as giving the base for its competitive success and operations appear to long term (Slack et al. 2010, p 64).

According to these theories, Azam Super market stands in stage 3 operations and they are among the best in that particular segment. . “Yet stage 3 operations still aspire to be clearly and unambiguously the very best in the market. They achieve this by gaining a clear view of the company’s competitive or strategic goals and supporting it by developing appropriate operations resources. The operation is trying to be ‘internally supportive’ by providing a credible operations strategy” (Slack et. al., 2007). They been in this business for few years and got very good knowledge and experience. But they neither comes up in the top performers category nor in the under performers category. These arguments show that Azam Super market clearly comes in Stage 3 – internally supportive operations.

Management decision to utilise the opportunities of internet related service and to open new branches with in the selected ethnic majority areas brings them to stage 4 operations. “A stage 4 company is one which sees the operations function as providing the foundation for its competitive success. Operations look to the long term. If forecasts likely changes in markets and it develop the operations-based capabilities which will be required to compete in future market conditions. Stage 4 operations are innovative, creative and proactive and are driving the company’s strategy by being one step ahead of competitors” (Slack et. al., 2007)

Conclusion

The implementation of Information technology related services operations in SMEs brings them forward in to the global economy and it eventually gives them courage to face the competition from their opponents. Electronic related services and effective organising competence are shaping the competitive performance of SMEs in global economy. The internet has become a vital role in every part of human activities like education, business, advertisement, and communication with massive innovative technologies and ideas of human interactivity. Meantime, SMEs in the UK has increased their operations in internet to expand their business with the help of its global reach. The main findings in this case study are some positive approach from the management to accept and utilise the massive opportunities of internet related services and to open new branches in other areas to develop their business.

Some limitations have been faced during the case study:

Forecasting statistics are not provided nor do the current economic stability of the organisation.

Recommendations

Focus on other minority ethnic group ( Mainly Asian community)

More focus on chilled or ready meal traditional foods