Chapter 13 Management and Operations Strategy. Copyright Houghton Mifflin Company13-2 Overview...
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Transcript of Chapter 13 Management and Operations Strategy. Copyright Houghton Mifflin Company13-2 Overview...
Chapter 13
Managementand Operations
Strategy
Copyright © Houghton Mifflin Company 13-2
Overview
• Organization: the way the business works
• Location: finding the appropriate business site
• People: organizing the start-up team
Copyright © Houghton Mifflin Company 13-3
Identify Your Business Processes
• Who does the work?
• Where do they work?
• What do they need to do the work?
• What information is being generated?
• Where does that information go?
A Simple Business Flowchart
Copyright © Houghton Mifflin Company 13-5
Organizing Virtually
• A business without walls
• Outsource business processes
• Form a network of strategic alliances
• Use technology to link all the pieces
Copyright © Houghton Mifflin Company 13-6
Traditional Bricks-and-Mortar Enterprise
• Differentiated from virtual by flexibility and cost
• B&M businesses not as flexible because of physical location and physical assets
• Must achieve more sales to be profitable• Cost more to launch• Solution: hybrid model where core
activities in-house; rest is outsourced
Copyright © Houghton Mifflin Company 13-7
Location Decisions
• Region, state, and community– Type of business– Your personal lifestyle goals
• Economic base—major source of income
• Financial incentives to new businesses
• Demographics—population base
Copyright © Houghton Mifflin Company 13-8
The Retail Site
• Consider the trade area– Map it
• Competition and character– Drive it
• Accessibility– Observe it
Copyright © Houghton Mifflin Company 13-9
The Service/Wholesale Site
• If customers don’t come to the site, can choose less expensive location
• Service businesses that receive clients should choose based on client expectations
Copyright © Houghton Mifflin Company 13-10
The Manufacturing Site
• Look for appropriate zoning
• Consider an industrial park– Electrical power and sewage
plants for manufacturing
• Enterprise zones– Tax incentives to bring jobs to inner cities
and rural areas
• Access to suppliers and transportation
• Cost of labor and utilities
The Lease/Build/Buy Decision
Copyright © Houghton Mifflin Company 13-12
Alternatives to Conventional Facilities
• Incubators– Shared space, support, and training– Does it provide a network of contacts, access to
expertise and capital, and access to customers?
• Shared Space– Co-location within the facility of a larger company
• Mobile locations: pushcarts and kiosks• Temporary tenant agreements
– Good for demos, samples, and personalized merchandise
Copyright © Houghton Mifflin Company 13-13
Organizing People
Copyright © Houghton Mifflin Company 13-14
Organizing Entrepreneurially
Copyright © Houghton Mifflin Company 13-15
Hiring the Right Team
• Determine which functions to fill and describe the behaviors and experience necessary for success
• Seek among current employees first• Conduct interviews that get at the
character of the person• Do background checks and call references• Consider leasing employees
Copyright © Houghton Mifflin Company 13-16
Ownership and Compensation
• Founder’s stock (144 stock)– Usually the lowest level the stock will ever be– Restricted and not registered with SEC
• Equity partners do not have to be equal partners• Don’t bring someone on as an equity partner if
you can hire that person• Use cash bonuses in lieu of stock options
where possible• Have employees work for the company at least
two years before they are vested
Copyright © Houghton Mifflin Company 13-17
Alternatives to Equity Incentives
• Deferred compensation plans linked to profits and performance
• Bonus plans• Capital appreciation rights to participate in
the company’s profit at a specified percentage
• Profit-sharing plans, which are subject to rules for retirement programs
Copyright © Houghton Mifflin Company 13-18
Take-Aways
• List what students took away from the discussion in real time