Functional Level Strategy

Question 1

Discuss the aspects of functional level strategy

Answer 1

• strategies aimed at improving effectiveness of operations
• improves company’s ability to create superior
• efficiency
• quality
• innovation
• customer responsiveness
• improves customer experience:
• through differentiation
• lower cost structures
• creating better value than rivals

Question 2

List the functional steps to achieving superior efficiency (4)

Answer 2

Economies of scale 
Learning effects experience curve
Flexible manufacturing and mass customization
Marketing 
Materials management and supply chain
R&D strategy 
Human resource strategy 
Information systems 
Infrastructure

Question 3

Describe the marketing strategy

Answer 3

Refers to position that company takes regarding

• pricing
• promotion
• advertising
• distribution
• product design

Question 4

Define customer defection rates

Answer 4

Percentage of customers who defect every year

• defection rates determined by customer loyalty
• loyalty is a function of the ability to satisfy customers

Question 5

Discuss the role of R&D

Answer 5

Purpose is to help company achieve higher efficiency and reduce cost structures

• boost efficiency by designing products that are easy to manufacture
• reduces assembly time and parts required
• close coordination with production
• lowering cost structure by pioneering process innovations
• reduce process setup times
• flexible manufacturing
• important source of competitive advantage

Question 6

Discuss the role of the human resource department

Answer 6

• hiring strategy: hires people with attributes that match strategic objectives
• employee trainning: upgrade employee skills to be more efficient
• self managing teams: members coordinate own activities and make own hiring, trainning, work, and reward decisions
• pay for performance: linking pay to individual and group performance to improve productivity

Question 7

Purpose of information system

Answer 7

• Web based info can automate many company activities
• can potentially affect all activities
• regulates interaction between
• company and customers
• company and suppliers

Question 8

List the value creation functions (4)

Answer 8

Infrastructure (leadership)
Production
Marketing
R&D
Information system
Human resources

Question 9

Describe the two dimensions of quality

Answer 9

• Quality=Reliability
• do the jobs they were designed to do with exceptional results
• Quality=Excellence
• perceived by customers to have superior attributes

NB: strong reputation for quality allows company to differentiate its products

Question 10

Discuss how to improve quality as reliability (5 step chain)

Answer 10

TQM based on the following 5 step chain reaction:

1. Improved quality means reduced costs
2. As a result productivity also improves
3. Better quality=higher market share which allows for increased prices
4. This increases profitability
5. Thereafter company creates more jobs

Question 11

Business model for quality improvement (4)

Answer 11

Philosophy 
Supervision
Environment
Standards
Training
Commitment

Question 12

List Deming’s 7 steps in a quality improvement program

Answer 12

1. Company must possess clear business model
2. Management should enforce view that mistakes defects and poor quality are not acceptable
3. Quality of supervision should be improved
4. Managers should foster environment where employees can feel free to express opinion and concern
5. Work standards should include motion of quality to promote defect-free output
6. Employees should be trained in new skills
7. Commitment of all is necessary for better quality

Question 13

List methodologies needed to implement reliability improvement

Answer 13

Build org commitment to quality
Create quality leaders
Put focus on the customer 
Identification of processes and sources of defect
Implement ways to measure quality 
Create goals and incentives 
Solicit input for employees 
Create long term relationships with suppliers 
Create model that improves manufacturing
Break down barriers among functions

Question 14

List steps in improving quality as excellence (4)

Answer 14

• Prioritise attributes that are most important to customers
• design products and associate services to embody the important attributes
• choose which attributes to promote and position them in customers’ minds
• constant improvements in attributes and development of new product attributes

Question 15

Discuss the importance of superior innovation

Answer 15

Creating unique competencies that result in superior innovation is key to competitive advantage

• innovation can:
• result in the creation of new products in the market that meet customer needs better
• improve on existing products
• reduce costs
• innovation can be copied so it must be continuously improved

Question 16

Describe the process in building competencies in innovation

Answer 16

1. Building skills in basic and applied research
2. The selection and management of a project
   - utilising product development funnel
   * idea generation
   * project refinement
   * project execution
3. Creating cross-functional integration
4. Utilising product development teams
5. Partly-parallel development process

Question 17

Discuss how to achieve superior responsiveness from customers

Answer 17

Customer responsiveness: giving the customers what they want, when they want it, and at a price they are willing to pay. This should not compromise customer profitability

• focus on customer
• showing leadership
• improving employee attitudes
• bring the customer into the company
• satisfying customer needs
• timely
• customisation to accomodate different customer groups

Question 18

List the different level strategies

Answer 18

Functional level strategy
Business level strategy
Corporate level strategy
Global level strategy