Operations Strategy Evaluation - Research Paper Example

Operations Strategy Evaluation Table of Contents Executive summary 2 1. Introduction 3 2. Operational strategy evaluation 3 2.1. General model of operational management 3 2.2. 4 V’s profile of two operations 5 2.3. Four stage model of operational contribution 6 2.4. Competitiveness building objectives 7 3. Conclusion 9 Reference list 10 Appendix 12 Executive summary Operational strategies and performance objectives are most crucial factors for organisations. Maintaining effective value chain and proper supply chain is essential for international and national firms. Strategies and objectives help the management in evaluating and controlling operational process as per changing market situations. Apple Inc, IBM and Samsung are leading information technology and software vendors in the world. Setting up effective operational strategies and performance objectives is essential for these firms in order to cope up with the changes in customer demand, macro and micro environmental factors. This essay evaluates operational models of Apple Inc, IBM and Samsung critically for remarking limitations and advantages. 1. Introduction Operational process of leading IT firms includes three different functions (Chien, 2008). Firstly, it has been observed that the operational managers are concerned to accomplish organisational goals. Secondly, managers focus a lot towards maintaining higher productivity along with high quality (Bratton and Gold, 2000). Finally operational role of firms includes service provisions for their customers (DeBeer and Rossouw, 2005). Apple Inc, IBM and Samsung are the leading computer hardware, computer software, consumer electronics and digital distributors dealing with large number of product and service line. All the firms are dealing internationally and therefore it is imperative for the managers of the respective firms to set unique operational techniques and performance to achieve more success and competency in global market. 2. Operational strategy evaluation 2.1. General model of operational management Conventional operational model signifies three phases which are input, process and output. Resources like materials, information and customers are transformed by the management to meet the deviation of macro environmental factors. Figure 1 provides the conceptual operational systems that are adopted by the leading multinationals corporations (Dolk, 2000). Apple Inc, Samsung and IBM follow the general model and the resources like facilities and staffs are continuously developed as per changing criteria of operational management. Apple Inc and Samsung consistently emphasize on new and innovative designs, improvement of the exiting service lines, and planning and controlling for optimal use of resources (Fan, 2007). Apple Inc adopted four themes after 2012 to maintain efficient value chain in their international operational process. Firstly, they started to scale operations like manufacturing, retail, and online sales in order to adjust with the fluctuating global demand as customers’ demand for smartphone, tablet, notebook and laptop have changed rapidly (Hishamuddin, Sarker and Essam, 2012). Figure 1: General model of operational management Secondly, recession and inflation has proven to be a big challenge for these multinational organisations. They use various financial measures for increasing profitability and sustainability. Business expansion in China and other developing economies increased rapidly for reaching more customers. Thirdly, Apple Inc used new product strategy to increase the attraction of the employees. Apple TV, iWork,Apple Watch, iLife, OS X, and watchOS are the latest line of products of Apple Inc. Lastly, Apple’s iCash related problems are used as instance for developing future strategies. Therefore, it is evident that the managers of Apple Inc are more reliant on the basic model. However, IBM and Samsung’s operational managers are avoiding this basic model (Kovac, Stojkovic and Mitic, 2014). 2.2. 4 V’s profile of two operations Figure 2: 4 V’s profile Above mentioned figure states that there are four different stages like volume, variety, variation and visibility that compares two or more competitors. Volume: Operational volume of Apple Inc is largest in comparison to Samsung mobile and IBM. They are offering vast range of products and service ranges. The firm operates through 453 Apple retail stores in 16 different countries. On the other hand, Samsung and IBM also operate through global channel to sell their hardware, services and software but their operational volume is comparatively low (Krishnamoorthi and Panayappan, 2014). Variety: Apple Inc offers vast range of products and services like Mac book, iPod, iPhone, iPad, Apple Store online, and iOS App Store. It offers more option for the international customers and attracts them more. Samsung electronics also offers electronic components, smartphones, feature phone, TV, tablets and notebooks (Grinsven, 2009). Variation: Samsung and IBM are facing intense challenge of Apple Inc’s continuous innovative approach (Gilmore and Williams, 2009). Visibility: Goodwill or brand image of all three firms are high among the international customers. Advertising and promotional events also increase visibility of products (Grinsven, 2009). 2.3. Four stage model of operational contribution Operational strategy of Samsung electronics and IBM can be illustrated with the help of this model. Operational managers of Samsung electronics have identified the major they encounter in the operational systems and have developed respective solutions (Romero, 2004). Being one of the leading IT products producers they explore different option of operational practices and select the optimal or cost effective one to achieve more success (Wang and Christer, 2000). IBM explored various options for offering flawless hardware and software products and maintenance services (Hishamuddin, Sarker and Essam, 2012). Figure 3: Four-stage model of operation contribution Samsung electronics and IBM are operating globally to enjoy extended customer group (Wang, 2007). Therefore, headquarter need to link newly developed strategies with the operations in order to fulfil each and every steps. Finally, resource sharing approach provides operational advantage to the firms and they can maintain cost effective production strategies (Sharma and Yu, 2012). 2.4. Competitiveness building objectives Quality is the prime benchmark for the operational teams of Apple Inc, IBM and Samsung electronics (Stepanova, 2015). They sell high quality and advance featured gadgets to the international customers. Quality check up process of Apple Inc is better than the other two and they are also using innovation or R&D approach to increase customer attraction (Stadtler and Sahling, 2013). Figure 4: Competitive Objectives Apple Inc and Samsung have introduced one or more new product each year. Recently latest versions of iPhone, Galaxy smartphones and Tablets are offered by the organisations. On the other hand, IBM had offered instant customisation of products and service to provide more value to their customers. Dependability on the employees is higher for all these firms requires skilled and expertise staff to develop the technical products or gadgets (Wang and Lin, 2014). Figure 5: Finacial reports of Apple Inc. (Source: Statista, 2015b) Figure 6: Revenue of IBM (Source: Statista, 2015a) Figure 7: Revenue of Samsung (Source: Statista Infographics, 2015) The abovementioned graphs explain that the Apple Inc has implemented effective operational strategies and their profitability increases rapidly. 3. Conclusion Operational strategies of Apple Inc, IBM and Samsung are developed with the help of evaluating internal and external factors. The key operational performance objectives are helpful in achieving success in the near future. It has been observed that the leading organisations are using four different operational models for designing strategies. The financial statement analysis has highlighted the fact that Apple Inc enjoys stable profit over the period 2012 to 2014 as compared to its competitors. IBM had identified that there was high fluctuation in its revenue generation during the last 10 years. Similarly, Samsung electronics had encountered decline in profit after 2013. Therefore, it can be concluded that Apple Inc has devised successful operational objectives that has assisted them to become the market leader. Reference list Bratton, J. and Gold, J., 2000. Human resource management. Mahwah, N.J.: Lawrence Erlbaum. Brownlee, J. 2013. The Ultimate iOS 7 Compatibility Chart | Cult of Mac. [online] Cult of Mac. Available at: http://www.cultofmac.com/231632/the-ultimate-ios-7-compatibility-chart/ [Accessed 8 Sep. 2015]. Chien, Y., 2008. A general age-replacement model with minimal repair under renewing free-replacement warranty. European Journal of Operational Research, 186(3), pp.1046-1058. DeBeer, A. and Rossouw, D., 2005. Focus on operational management. Cape Town: Juta Academic. Dolk, D., 2000. Integrated model management in the data warehouse era. European Journal of Operational Research, 122(2), pp.199-218. Fan, M., 2007. A queueing model for mixed loss-delay systems with general interarrival processes for wide-band calls. 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Appendix Appendix1: Calculations of profitability Apple Inc (USD Mil) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Revenue  13,931 19,315 24,006 32,479 42,905 65,225 108,249 156,508 170,910 182,795 Net Income USD Mil 1,335 1,989 3,496 4,834 8,235 14,013 25,922 41,733 37,037 39,510 Earnings Per Share USD 0.22 0.32 0.56 0.77 1.3 2.16 3.95 6.31 5.68 6.45 IBM 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Revenue USD Mil 91,134 91,424 98,786 103,630 95,758 99,870 106,916 104,507 99,751 92,793 Net Income USD Mil 7,934 9,492 10,418 12,334 13,425 14,833 15,855 16,604 16,483 12,022 Earnings Per Share USD 4.87 6.11 7.18 8.93 10.01 11.52 13.06 14.37 14.94 11.9 Samsung electronic 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 revenue in US dollar 66922 71243 81761 100674 113149 128343 136951 166916 189815 171151 Revenue KRW Mil 80,629,510 85,834,604 98,507,817 121,294,319 136,323,670 154,630,328 165,001,771 201,103,613 228,692,667 206,205,987 (Source: Morningstar, 2015a; 2015b; 2015c) Appendix 2: Apple Inc operational structure: (Source: Brownlee, 2013) Appendix 3: IBM operational system (Source: IBM Knowledge Center, 2015) (Source: IBM, 2015) Read More