Operations Strategy

Dr. Santanu Roy

MidTerm Assignment

SUBMITTED BY:
IFTEKHAR NIZAM
EMBA 14005
1. Identify and summarize the market requirements and the
operations resources of the company in this particular case.

All businesses have to reconcile two pressures or perspectives within

their operations function. The first is the market requirements perspective
and the second is the operations resource perspective. Operations strategy
itself is defined as the process of reconciling the pressures which come from
these two perspectives. Market requirements means the demands that are
placed on the operations function because of the market position the
company has chosen to adopt. So, for example, if a company has chosen to
compete by offering low cost services (as low costs per order in Hagen style)
or products into the market, the operations function must be able to
produce and deliver those services and products at low cost. Conversely, if a
company has chosen to inhabit a different part of the market, say one that
emphasizes high variety and customization, then it will demand a different
set of things from its operations function, in this case probably high degrees
of flexibility. So, an obvious pressure on any operation is to satisfy the
requirements of its markets. But the concept of operations resources is
wider than this. All operations have a history and a set of experiences from
which they have accumulated knowledge. This accumulated knowledge may
even have formed itself into a set of competencies or capabilities that allow
it to do certain things particularly well. Blindly reacting to (possibly shortterm) market demands, even if it is possible, would waste these capabilities.
An important responsibility for the operations function is to understand its
own capabilities and attempt to build on these and develop them to a point
where they provide a distinctive competitive advantage against
competitors. This is what we mean by the operations resource perspective.

The two distribution centers , one in Atlanta near the companys head office and the
other in New jersey where one of these 2 distribution centers will recieve the orders.
The represntativesorders were keyed in to the companys information system where
this information was fed down to the warehouse where each representatives order
( usually 20 -50 items) was packed . Much of the packing process was standardised
and automatic . Vice president of distribution at hagen style said that they run one of
the slickest order fulfilment operations in the world as industry benchmarking studies
show that we rae significantly superior to similar operations by having low costs per
order, far fewer packing errors and faster throughput times from order receipt to
dispatch and the only problem is that the operation was designed for high volumes but
the direct marketing business using representatives is in general on a slow but steady
decline.

2. This company faces the dilemma of moving with its markets and
therefore changing its operations resources to fit its new markets,
or alternatively, seeking out new markets which will allow it to
exploit its operations-based superiority. Which is more important to
it, its markets or its operations capability? Suggest a few options
the company could explore and explain the pros and cons of each of
the suggested options.
Any type of business needs to consider the four sets of decisions
(capacity,supply networks , process technology , development and
organization). In hagen style case, direct selling using door to door
representatives is an old fashioned market channel ,traditional customers were moving
towards using catlogues, tv shopping channels and buying from discount stores
.Recently hagen has started selling a limited range of its products through selected
discount stores and was planning to sell through a catalogue operationand 35 % of its
business would be distribute dthis way within 5 years by improving its products
margins selling through these channels but the issue is with the existing operations, IT
systems, packing lines and d ispatch arrangements as they are not designed to cope
with that kind of order where fedex would be great at that kind of delivery so the
options were either to invest in new distribution operations which would be expensive
and hagen dont have the experience . lafage cosmetics who sell their products same
hagens traditional way have been envious about hagens fulfilment operation and
have indicated that they would subcontract most of their order fulfilment to hagen and
in this case hagen will have the capacity to move their volume over to hagens
centers.
Some recommended options:

Option A: Stick with existing services to existing customers through existing

channels, minimize any new business involving new channels.
Example downsizing the benefits of downsizing are that it allows companies
to cut costs and improve efficiency, contributing to a leaner and meaner
organization. But, like anything else, the process has to be closely managed
in order to reap these benefits. Downsizing, also known as restructuring,
rightsizing, reengineering, or reorganizing refers to a permanent reduction of
workforce through layoffs and other means, and comes with changes that
affect the workforce, such as changes in job descriptions and department
consolidations.
A major advantage of downsizing is that it cuts flab and improves all round
efficiency. The jobs that contribute least to an organization's profits and
those which affect the core operations least usually become the first targets
for downsizing. The Disadvantages of downsizing can be:

It leads to loss of skilled and reliable workers. The difficulty in finding

new suitable workers makes the company ill-equipped and ill-prepared
to take advantages of new opportunities and sudden turnarounds.
Regardless of the merits of the lay-off, downsizing results in disruption
of interpersonal relationships at work, both formal and informal that
have taken root over the years.
When downsizing workers primarily due to them no longer being
necessary to the organization rather than due to their actual
performance, the workers may feel like victims of injustice. The
workers who remain feel insecure and disoriented when facing the new
realities.

The success of downsizing depends on adopting the correct methodology

and a strong leadership to manage the aftermath. Absence of strong
leadership causes employee confusion and the inability to adjust to new
demanding roles, which can lead to a loss of the benefits associated with
downsizing.
Option B: Accept that the market is changing and adapt the companys
processes and resources so that they will be capable of serving new channels to
market.
Option C : limit or abandon new channels to market and seek out new
business opportunities (such as the Lafage Cosmetics business) which allow
the company to concentrate on what it does best.
Option D : Try and develop an operation which can serve all parts of the
market including existing channels, subcontracted business from Lafage,
store delivery and catalogue customers.