Product strategy options operations management

What is Product Strategy? Learn more about Product Strategy and other product management terminology in our resources library.
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The expense of this inventory could preclude the parts house from offering prices competitive with other similar firms not choosing to provide this level of service. The customer may have to wait a few days to get the desired part; if the customer cannot wait, he or she can pay more and purchase the part immediately from the competitor.

Operations strategist and author Terry Hill introduced the terms qualifier and order winner A qualifier is a competitive characteristic a firm or product must be able to exhibit to be a viable competitor in the marketplace.

Chapter 3. Product Design

An order winner is a competitive characteristic of a product or service that causes a customer to choose this firm's product or service rather than that of a competitor distinctive competence. For example, say a consumer in the market for a new automobile has a predetermined level of quality that the automobile must possess before being considered for purchase. The consumer has narrowed his or her choice down to five models of automobile that all meet this minimum quality requirement.

From this point the consumer, with all else being equal, will probably purchase the automobile that he or she can get for the least cost. In too many instances, a firm's operations function is not geared to the business's corporate objectives.

Product Strategy

While the system itself may be good, it is not designed to meet the firm's needs. Rather, operations is seen as a neutral force, concerned solely with efficiency, and has little place within the corporate consciousness. Steven C. Wheelwright and Robert H. Hayes described four generic roles that manufacturing can play within a company, from a strategic perspective. While they specifically discuss the manufacturing function, the term operations can be substituted with no loss in relevance.

These generic roles are labeled stages 1 to 4, as explained below.

Stage 1 firms are said to be internally neutral, meaning that the operations function is regarded as being incapable of influencing competitive success. Management, thereby, seeks only to minimize any negative impact that operations may have on the firm. One might say that operations maintain a reactive mode. When strategic issues involving operations arise, the firm usually calls in outside experts. Stage 2 firms are said to be externally neutral, meaning they seek parity with competitors neutrality by following standard industry practices.

Capital investments in new equipment and facilities are seen as the most effective means of gaining competitive advantage. Stage 3 firms are labeled internally supportive, that is, operations' contribution to the firm is dictated by the overall business strategy but operations has no input into the overall strategy. Stage 3 firms do, however, formulate and pursue a formal operations strategy. Stage 4 firms are at the most progressive stage of operations development. These firms are said to be externally supportive.

Stage 4 firms expect operations to make an important contribution to the competitive success of the organization. An operation is actually involved in major marketing and engineering decisions. They give sufficient credibility and influence to operations so that its full potential is realized.

Firms within Stage 4 are known for their overall manufacturing capability. Since the bulk of many, if not all, firms have the bulk of their labor force and assets tied to the operations function, it makes sense for most firms to strive for a position in Stage 3 or Stage 4. Firms can, of course, evolve from one stage to the next with few, if any, skipping a stage. In fact, most outstanding firms are in Stage 3, as Stage 4 is extremely difficult to reach. The need for an operations strategy that reflects and supports the corporate strategy is not only crucial for the success of the corporate strategy but also because many decisions are structural in nature.

In other words, the results are not easily changed. The firm could be locked into a number of operations decisions, which could take years to change if the need arose. These could range from process investment decisions to human resource management practices. Too often, marketing-led strategies leave operations to resolve the resulting issues from their unilateral view of what is best for the business as a whole.

If corporate management cannot fully appreciate the issues and consequences of relegating operations to a tactical status it could find itself needing to make structural changes that are costly, time consuming, and much too late to make the competitive impact necessary to compete effectively. Firms that fail to fully exploit the strategic power of operations will be hampered in their competitive abilities and vulnerable to attack from those competitors who do exploit their operations strategy.

To do this effectively, operations must be involved throughout the whole of the corporate strategy. Corporate executives have tended to assume that strategy has only to do with marketing initiatives. They erroneously make the assumption that operation's role is strictly to respond to marketing changes rather than make inputs into them. Examples of product goals include:.

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Just like with product roadmaps, goals should be Specific, Measurable, Attainable, Relevant, and Time-bound. Initiatives are the strategic themes you derive from your product goals and then place on your roadmap. They are large, complex objectives your team must break down into actionable tasks. The product roadmap is, after all, only the high-level blueprint.

Examples of product initiatives include:. After working with thousands of product managers across many industries over the years, we at ProductPlan have found the following 5 steps represents a best practice for developing an effective product strategy. You can use this template:. The segment it serves is between full ownership of a corporate jet or commercial travel.

The former is an expensive proposition with all the attendant problems of maintaining an aircraft. NetJets owners do not have to be involved with that. NetJets takes care of all the operational details such as maintenance, fuelling, licenses, hangers, pilots, cabin crew and so on. Commercial flying is restrictive and NetJets is customized to the flyer saving time and money.

Porter's Generic Competitive Strategies (ways of competing)

NetJets positions itself as a cost-saving company and at the same time providing a highly differentiated service. Initially, the company was set up to provide car accessories. The car market in India had just opened up and there was a craze for car accessories. Chavarria, who was trained at General Motors in the U. At this time he diversified in refurbishing cars. He set up a design company by the name of DC Design to redesign, refurbish and modify cars. Today DC Design does aircraft design and is associated with the design processes of major carmakers. The designs are meant for the discerning car buyer who may often spend more on refurbishing than they did on the original car.

The DC Design studio caters to custom car buyers. The customization of a car at a plant is very expensive. Rolls Royce did so for the Indian Maharajas. The company has focused on the niche segment for differentiation. Select customers get their cars refurbished to meet their different needs, be they swanky interiors, additions of amenities such as a fridge, television, more leg space, convert a sedan to a coupe, or change the internal configuration.

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Focus is a strategy based on a set of unique attributes in skill, talent, and thinking, resources that an organization will use to serve and profit from a very limited segment. In case an organization serves a limited segment without attendant uniqueness it may not be pursuing focus strategy by choice.

It may be an outcome of positioning error. A company requires unique skills, capabilities, and resources for the successful implementation of focus strategy. Some of these are;. A focus strategy does not work well in all situations. It becomes an attractive strategic option usually in the following situations;.

Focus strategy is especially effective when consumers have distinctive preferences and the competitors are not offering products to satisfy those preferences. The focus strategy is expected to be highly workable when the market-niche is big enough to be. A very small niche may not bring enough profit for the marketers.

Market niche becomes attractive when its growth potential is high.