How does operations strategies help a business sustain its competitive advantage and

contribute to business success?

A main goal of a business is aimed at attaining a competitive advantage, the importance

of this has been rising exponentially over time due to more competition emerging from
the global environment and the innovative technological advancements in our modern
era. A business can utilize operational strategies in order to achieve a competitive edge
by assessing its performance objectives, new product design and development,
outsourcing their operations to a lower cost market, using technology, controlling an
effective supply chain management system as well as an efficient inventory
management system, prioritizing quality management, overcoming resistance to change
and taking into account global factors. These strategies can be used to get ahead of
competition especially when they are used in tangent to a businesss strategic goals, of
maximizing profitability, increasing efficiency and productivity, reducing wastage and
costs and evaluating their quality. Qantas is an example of a business that has
effectively used operations strategies to gain a competitive advantage in the past and
can be used as reference to many of these strategies that have been implemented by
them.
To achieve a competitive advantage a business must consistently assess how well it is
achieving its performance objectives and what ways they can be improved. The main
performance objectives include quality, speed, flexibility, dependability, customization
and cost. Quality is dependent on the inputs used, the level transformation and value
adding undergone. A business has to assess the quality of its outputs as it has to
maintain a level of expectation from its consumers these expectations can extend to the
products, flexibility, durability, performance, feature, fitness for purpose, consistency. It
must either be of equal or better standards than similar products in the market. Speed is
the time taken to make an output or productivity. It is relevant as the more outputs a
business can release the more potential revenue they can receive, the speed can be
increased by utilizing cad, cam and robotics in the transformation process. Flexibility
refers to how well a business can respond to changes within a market also flexibility can
refer to changes in volume of output to accommodate the volatility demand.
Dependability is how well the the product is made, how well it fits its purpose and the
level of time and effort put into it so that it satisfies the needs and wants of consumers,
consumers want a product that will last them for a considerable length of time and will
function without defects or errors. Customization is where a business adds value to a
standardized product to differentiate it from similar products, it is much harder to
customize a tangible product whilst customizing a service is much easier and often adds
to the quality of the service in order to do this a business may need to have a really
good understanding of its targets desires though may face issues with not having as
much accessibility to the required resources or the technology required. Cost is how
much a business spends on achieving an output. A businesses main goal is too
minimize costs as much as possible often done by utilizing economies of scale,
outsourcing, using mass scale production technology or using low cost suppliers, to use
cost as a strategy to achieve a competitive advantage is referred to as cost leadership.
Outsourcing is another method a business can gain a competitive advantage. By
outsourcing, a business is contracting a part of its non core business function to a third
party so it if can free up resources and focus on its core objectives. It minimizes
repetitive tasks and helps the business reduce its costs as the contracted business can
achieve economies of scale. Aswell as this outsourcing can be highly beneficial due to
the specialization acquired by the business function as it is their core objective.
Outsourcing has become more popular now than ever due to globalization and an
integrated economy, which has opened up more possibilities, opportunities and options
for business outsourcing, by contracting in the global market a business can gain cost
advantages and also better accessibility to resources. Qantas has utilized outsourcing
as it has outsourced its maintenance of planes to Malaysia due to the cheaper costs,
Asian-based cabin staff and new Zealander pilots by doing this the company has saved
billions in costs and has been able to contract highly skilled and qualified people that
helps the business achieve a competitive advantage. Outsourcing can have risks of its
own including outsourcing company may lose motivation and reduce the standards set
by the business, loss of control, longer lead times and responses to change and weaker
relationship between employer and employee.
A buinsess can gain a competitive advantage by properly utilizing an effective and
efficient supply chain management. A supply chain is a link of multiple sources of raw
materials acquired by a business to create a final good or service. Having the right
supplier for a business is a key part of gaining a competitive advantage, as the supplier
must be cost effective and also deliver the appropriate resources whilst being efficient
and have the least lead time (time it takes for the materials to be delivered to customer)
this means there is a higher level of flexibility in the changing market. A strategy that
could be used to further a advantage is to rationalize a businesses suppliers, this will
improve the relationship between supplier and business, this way the business may
receive discounts and a better service from the supplier, the business can purchase in
bulk also to save costs and have stock in the case of an increase in demand. Due to
globalization a business have more choice of suppliers though may geographically
relocate to shorter lead times and move to a less costing area. A business may not
always choose the cheapest supplier thought the most valued for money with respect to
the materials and resources provided aswell. In order to gain more control over the
supply chain a business may backward vertically integrate (the business purchases the
supplier business). The supply chain management can also be split into Logisitics,
Ecommerce and Global Sourcing.
Logistics has been recognized as the transportation or delivery of the resources from a
supplier. Due advancements in technology logistics has become far more important and
complex. Many suppliers use Automated Ware House Trucks AWT, these are
replacements of forklifts and drivers as they are self-operated and save costs in wages,
time and reduces warehousing accidents. Logistics nowadays is more than just
transportation though methods of reducing lead times, cost and control of the flow of
materials within a supply chain.
Ecommerce is a modern-day development within supply chain management, as it is the
purchasing and selling of goods and services over the internet has made
communication like b2b and b2c much more efficient and easier. The emergence of
online shopping has become much more preferred as it is much simpler and offers more
choice to find cheaper alternatives. It uses EDI (electronic data interchange), skype and
email to communicate via supplier and customer which is much faster to reduce lag
between communication which offers better flexibility. Ecommerce also offers real time
status on inventory, if it is running into buffer stock therefore a supplier can provide the
necessary stock for the requirements of the customer which improves efficiency, by the
use of JIT.
Global sourcing is the acquirement of resources over the global market. A business may
source many of it resources from overseas as the inputs may be of lower cost. A
business may even manufacture their products overseas due to the cost efficiency and
even relocate closer to their resources or source cheaper labour to increase efficiency.
The business may even develop a global web of operations where it sources the best
value for money materials for the lowest cost from a multitude of countries taking
advantage of lower taxes and interest rates. The disadvantage is the business may
continue to move due to changes in the economy of different countries.
Another way a business can gain a competitive advantage is by inventory
management. Inventory is the amount of stock a business has at any particular time.
For manufacturing based businesses inventory is the goods and resources it stocks
whilst for service based the customers are the stock. Controlling inventory levels can be
highly beneficial for a business as the have to manage a standard level of stock so that
they are not in surplus or in deficit. If a business has too much stock it will incur higher
inventory costs whilst leave the business with a excess unusable supply, it may also be
more difficult to get rid off in the case of a change in market preference making it
obsolete, whilst having a deificit of stock will mean the business may not have enough
to supply for the demand of consumers and that will cost the business revenue and
affect its gross profit. A business must be able to carefully assess its levels of inventory
and be able to analyse the market and project the amount of stock it will require. By the
influence of new technology inventory management can become far more efficient as it
can provide real time details on stock that goes missing or defective. Inventory should
by preventing dead stock, identifying slow movement stock, maximizing sales of
demanded stock, and have some stock in hand in the case of necessity. Other that may
incur to the business that must be minimized is, freight costs, storage expansion,
insurance, handling and packaging, perishability and time for delivery. Inventory can be
broken into FIFO, LIFO and JIT. LIFO or last in first out is an inventory method that a
business uses which means the last stock that is received will be the first stock to go
out. It can be an accounting method which will show the gross profit a business will
achieve assuming the price of stock goes up over time often stating that this will achieve
more profits and provides more accurate costs of inventory per unit. FIFO or first in first
out is an inventory method that is usually used in supermarkets as it for perishable
goods that require to be sold before their used by dates. Using this method the closing
stock value will be more as it uses the newest stock first and the closing stock will be
made up of the higher cost of stock that comes last. The other method is JIT where a
business receives stock as it requires it. This method is highly cost efficient as it does
not require inventory, utilizes better working capital as less assets are in inventory.
Using this method a business has better efficiency and cost leadership. It requires a
higher level of supplier proactivity, delivery and scheduling to accommodate the needs
of the business. JIT gives higher flexibility and cost efficiency and better working capital
management though if the supplies are disrupted then the businesses production
schedule would suffer.
A business can also sustain a competitive advantage by quality management. Quality
can be perceived differently by the context of the function, though in common terms it is
measured by the consistency, reliability, durability, works in relation to advertised
features, functional for reasonable time, no defects or quality exceptions and provides
more value for money. For service based quality is based on how well the service is
carried through and satisfaction. To gain a competitive advantage a business may offer
a product of higher quality, if they cannot sustain this the business will attempt to
maintain a standard quality which is better than an inconsistency in quality. The main
quality approaches to management are control, assurance and improvement.
Quality control is where the business implements precautions and takes measures to
retain a standard quality within the production process by checking the transformed and
transforming resources thought out all the stages. The control aspect itself can be done
by feedforward controls, concurrent and feedback controls. Feedforward being
precautions and plans made prior to the production taking place to anticipate issues that
may arise. Concurrent are controls in place during the manufacturing process to prevent
issues that may be unexpected. Feedback controls are controls that made post
manufacturing done by checking the functionality and quality of the product after the
output has be finalized or delivered and also assess the customer satisfaction. Quality
control also involves establishing plans associated with achieving the performance
objectives and a measure of standard of objectives and goals. The product can be
measured by the comparing it with similar products called benchmarking or with the
industry average.
Quality Assurance is where the business measures the quality of the product and takes
corrective action to maintain satisfactory levels. It is a set of measures placed using
procedures and processes that will prevent issues or faults with the product. A business
can use quality circles where strategies are made to identify and resolve issues that are
relevant with the product. Quality Improvement is where the business attempts to
improve its quality on a continuous basis in all functional areas. A method of quality
improvement is Total Quality management which is where the business aims to improve
every function of the business. Instead of taking corrective action, the improvement
aims at making sure a low standard product never reaches the market. The business
can measure its success of improvement by the use of KPIs the aim of a business is to
have 0 defects. The better quality the more cost savings can occur, more sales, better
customer loyalty though the downsides could be that the higher quality may be too
costly to ensure quality.

Business report 1
Executive Summary
This business report will be focusing on the requirements of the business Walkervale
Fitness. This business has been established for 15 years, it is located in a shopping
centre therefore it may be within a highly saturated environment. The businesses target
market revolves around middle aged mothers. The business has recently been facing a
decline in market share due to its inability to be flexible diverse and offer the programs
that competitors are offering. The business is also impacted on its profitability due to
increased rents. The report will cover processes and strategies on how the business
can counteract these issues and retain market share and profitability. The report will
cover the importance and usefulness of a situational analysis, offer details on potential
promotional strategies that will resolve the businesses fall in market share and
additionally cover profitability management strategies that could possibly help the
business evade its financial struggles.
Situational Analysis
A situational analysis is the first component of the marketing process. A situational
analysis can utilized by a business to compare its effectiveness in an environment and
the stage it is currently within. A situational analysis can be split into a SWOT Analysis
and a Product Life Cycle Analysis. A SWOT Analysis assesses the businesses
strengths, weaknesses, opportunities and threats. Strengths and weaknesses are
influenced by the internal operations of a business. A business should make strategies
to further propel the business strength to maximize its benefits whilst implanting
strategies reduce its weaknesses. Opportunities and Threats are external factors that
the business may not be able to control to an extent. Business should always be looking
to take in opportunities