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- Herausgeber: GRIN Verlag
- Kategorie: Fachliteratur
- Sprache: Englisch
- Veröffentlichungsjahr: 2011
Research Paper (undergraduate) from the year 2011 in the subject Business economics - Offline Marketing and Online Marketing, grade: A, The University of Surrey, course: Operations Management and Business Strategy, language: English, abstract: This paper seeks to compare and contrast the differences in the way manufacturing firms and service firms operate. For this purpose the paper conducts a comparative analysis of the operations strategy of Toyota, the world’s leading car manufacturer and Ryanair, Europe’s leading low-cost airline. Firstly, it will be dealt with the competitive factors both companies need to excel at in order to gain competitive edge and sustain economic viability from a long-term perspective. Secondly, it will outline the major aspects that enable both companies to succeed in a highly competitive and dynamic business environment. In particular, it will draw on key components of successful operations strategies, such as process design, human resource management, innovation management, supply chain management and quality management. Finally, the paper concludes by summing up the key points and highlighting the respective implications. In addition, the paper provides a more comprehensive strategic analysis of Ryanair’s low-cost strategy in the appendix in order to promote understanding.
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1 Introduction
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2 Competitive factors
“A competitive factor is a feature or benefit considered key or essential to the promotion of a product or service to its intended market” (Layton， 2007). The table below shows the key competitive factors of Toyota and Ryanair in terms of order winners and qualifiers.
According to the OICA Toyota is regarded as the world’s largest car maker (OICA, 2009). It has gained a remarkable reputation of being one of the most effective and efficient manufacturers. Toyota produces cars in different segments which all offer great value for money. According to Michael Porter, “value is the ability to meet or exceed the needs of customers, and do so effectively” (Porter, 2008, xi). Toyota meets customer needs by manufacturing cars of high quality and safety standards, distinguished designs, sophisticated technology and high dependability. The latter is demonstrated by the 2006 Vehicle Dependability Study by JD Power which showed that Japanese cars are reliable and dependable in general, especially those of Toyota (Fallah, 2006). Customers can seek advice on and test drive Toyota’s cars at dealers world-wide. Every car is made-to-order according to individual customer specifications (Liker, 2004).
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Ryanair is one of the biggest and most successful European airlines dedicated to offer cheap flights. In order to make its low-cost strategy feasible it has eliminated lots of activities compared with its full-service competitors. For example, it offers no frills such as free on-board meals, movies and earplugs or free services such as lounges at airports. Furthermore, charging high fees for additional amenities and services and selling products of strategic partners are part of Ryanair’s low-cost strategy to increase revenues (Ryanair, 2009).
Nevertheless, Ryanair still manages to add significant value in a few activities which attract millions of customers each year (Ryanair, 2010a). In particular, Ryanair meets the needs of price-sensitive customers who seek affordable and safe air travel. Despite its attempt to keep costs low, it places much emphasis on quality in terms of air safety. In addition, significant order qualifiers customers might value are Ryanair’s relative punctuality and low lost baggage rate (Ryanair, 2010a).
As Porter (2008, p.38) put it: “A company can outperform rivals only if it can establish a difference that it can preserve. It must deliver greater value to customers or create comparable value at a lower cost, or do both” (Porter, 2008, p.38). In fact, in order to operate successfully and excel at key competitive factors in today’s business world companies need to adopt deliberate and emergent strategies “that reflect the conditions at hand, notably the ability to predict as well as the need to react to unexpected events” (Mintzberg, et al, 2009, p.13).
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3 Competitive strategy
Bowman’s strategic clock (Johnson, et al, 2008) depicts Toyota’s and Ryanair’s strategy relative to other car makers. Essentially their strategy has a decisive impact on the way they operate and the trade-offs they need to make in terms of performance objectives (Slack, et al, 2010).
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4 Process Design
Process design has been regarded as the lifeblood of successful operations. According to Forman et al (1997, p. 21) a “process is a series of actions, changes or functions that bring about an end or result.”
Toyota is said to lead the way in effective process design. It comes with no surprise, then, that many companies have tried to adopt the “Toyota way”, which embodies the golden rules of war: speed, simplicity, and boldness. The Just-in-Time (JIT) concept is a key component of the Toyota Production System (TPS), which means making merely "what is needed, when it is needed, and in the amount needed" (Alukal et al, 2006, p. 164). Furthermore, Toyota has consistently reduced waste and work-in-process and has focused on effective material balance and zero inventories, an approach also known as “Lean Manufacturing” (Liker, 2004). In order to ensure effective and efficient production on a high variety and high volume basis, the TPS combines various process design techniques including factory networks, cellular layout, and supplier network coordination. These factors enhance production rates and ensure high utilization of resources. In a cellular layout, for example, the workstations are u-shaped and machines are positioned in such a way that workers can operate several machines simultaneously (William, 2000). Taiichi contends that through the adoption of lean manufacturing and effective process design profits will significantly increase (Taiichi, 1990).
Ryanair, as a low-cost carrier, concentrates more on removing intermediate link processes in order to reduce costs and increase operational efficiency. As Porter (2004, p.12) points out: “A low-cost producer must find and exploit all sources of cost advantage.” Thus, compared with full-service rivals, Ryanair flies direct non-stop short-haul routes and favours secondary less congested airports that ensure lower handling costs, higher rates of on-time departures and faster turnaround times to increase aircraft utilization. Furthermore, the outsourcing of various processes to thirdparties, such as maintenance, significantly increases cost-efficiency (Ryanair, 2009). However, the key to Ryanair’s success is its website, which serves as the primary distribution channel. Customers need to purchase tickets and check-in online and print their boarding passes at home. The implementation of web technology enabled Ryanair to eliminate unnecessary processes associated with customer service, which has a direct positive impact on key performance factors such as speed, flexibility, and cost.
Even though Toyota and Ryanair use a different process system, their goal in terms of process design is quite similar, especially when it comes to reducing waste. A major advantage of their processes is the fact that “rivals will get little benefit from imitation unless they successfully match the whole system” (Porter, 2008, p.63).
