How might that affect her operating processes and capacity decisions? 14 Question 5: what would be a good service strategy for Kershaws operation on campus to meet the food court competition? 15 Competitors/New Entrants15 Competitive priorities16 Cost16 Quality16 Time17 Flexibility17 Core Process and Assigned Competitive priorities18 Conclusion20 Bibliography21 Case: BSB, Inc. , The Pizza Wars Come to Campus Introduction Pizza wars case is about to understand the connection between corporate strategy and the key operations management decisions.
Corporate strategy itself provides an overall direction that serves as the framework for carrying out all the organizations functions. Corporate Strategy helps to determine the market and response to any changes. It also provides the resources to develop the companys core competencies and core processes, and it identifies the marketing strategy. With the impact of changes around the industry, management has to analyze and make a good decision in order to improve the processes of the supply chain as well as to sustain the business.
The factors that will influence the efficiency of the business is depending on the coordination of managing the resources and the capabilities of managing the processes and continuously check and improve them at the best. Background The case is about BSB Inc. , operate its campus food services at a medium-sized private university in Southeast through the contract with university. For the past 10 years, BSB Inc have a reputation and already known to the campus.
These means that BSBInc. , is the only food services company that serve the entire campus of 6000 students and 3000 faculty. BSB Inc. , has appointed Renee Kershaw as a manager of food services in the university and she is responsible to manage three food-service facilities which are located at three different places in the university. The first location is the large cafeteria at the ground floor of main administration which its serve daily breakfast, lunch and dinner.
The second location is Dogwood Room which is located at second floor of administration building but serves an upscale luncheon buffet on weekdays only. The third which is a small grill located in the recreational building near the dormitories and operates at limited hour from 11 am to 10 pm and until midnight on Friday and Saturday nights. The main business objective of BSB Inc is to provide the food services to the university at the best of customer satisfaction.
Therefore, in order to understand the customer needs and market trends, Kershaw conducted surveys and from the result of data analysis she found that the students were not satisfied with the food services and about 44 percent of the customer preferred to consumed out off campus, 36 percents is those preferred food delivered from off campus and the rest would go for food prepared in dorm. With the response to the market survey, Kershaw decided to offer pizza with delivery service in order to increase customer satisfaction as well as its profits.
However, the trends of consumers changes rapidly and affect the food services especially the pizza sales were beginning dropped. Identifying the Problem When the University president announce the three future competitors of BSB Inc. ,(Dunkins Donut, Taco Bell and Pizza Hut) these means that the market will have variety of food offering to the customer. In addition of that, BSB Inc is having the problem of sales decrease due to its incompetent of maintaining delivery time. Besides, the delay of pizza delivery due to limited space at the grill, the choice of pizza toppings and combination are limited.
Question 1: Does BSB, Inc. , enjoy any competitive advantages or core competencies? In order to explain to the situation, BSB Inc or Kershaw have to understand that their business or corporate strategy should always be monitored and develop as well as its must response to any changes in the market. Previous Kershaws market survey is only valid at the certain period due to the changes of environment. In short term, the business performance maybe looks good but to sustain it, business strategies need to be reviewed and sometime revamped.
She as manager must learn to understand that the problem change in demand for pizza is due to threat of other competitions as well as the new entrants. At the present, yes, BSB Inc does enjoy the competitive advantages of being on campus for several years and have already established while the new food courts is still under construction. Besides that, the new comers will take time to penetrate the market. Look at those scenario, Kershaw and BSB Inc actually have enough time to consider and plan accordingly in order to meet these challenges.
Refer to the concepts of Competitive Advantages, according to Michael Porter, the firm that can position in the industry as leader either in cost or differentiation is known as positional advantages which same meaning of cost and differentiation advantage. Those advantages are under the concepts of Competitive Advantages. Being aware of its services (being the only one that serves food services in the campus) and its reputation, BSB Inc had utilized its resources and has the capabilities to create the competitive advantages in order to achieve the superior value towards its competitors.
These means by having three major facilities on campus, BSB Inc gets benefit of low cost in rental, manage to offer a range of menu that can be modified accordingly to customer needs and also be able to provide the delivery service that its competitors are not willing to offer due to the lower cost by using bicycles for delivery. With these strengths, BSB Inc, have the ability to utilize these resources effectively and manage them efficiency and results to be superior to its competitors (Value Creation).
Being well-managed and integrate between resources and capabilities, BSB Inc becomes Distinctive Competencies where its enjoy either to be identified as cost advantages or differentiation advantages. Advantage of Kershaw operation is she is knowledgeable of her customers needs by employs environment scanning to keep update of her market (market know how). RESOURCES Furthermore, the concepts of Competitive Advantages are illustrated by the diagram below: Cost / Differentiation Advantages VALUE CREATION DISTINCTIVE COMPETENCIES CAPABILITIES.
Competitive advantages help BSB Inc. , to gain market share by providing superior value through its differentiation advantages which refer to the delivery services. After achieving the competitive advantages, BSB Inc has to ensure to stay ahead of the competition and sustain it. Even though, its competitors are not in same category, the demand will affect the market share among the entire university. New entrants who will be Dunkin Donut, Taco Bell and Pizza Hut will affect the market share because students will prefer new tastes like snack food and fast food.
Look at those scenario, Kershaw and BSB Inc actually have enough time to consider and plan accordingly in order to meet these challenges because student center is under construction and those three new entrants will take time to penetrate the market. Meanwhile to develop the business successfully, it is important that business really know its core competencies. Core competencies are an area of specialization that company excels in. It can take the form of a product, skill or service and is normally what customers identify your company with.
According to Kay Plantes (2008), core competencies capture how you do what you do. It is a mega skill of an organization a weaving of processes, asset, specific skills, organization norms and knowledge that collectively create unique customer benefit. An organization mega-skill becomes a core competency when these criteria match: i. It produces a highly valued consumer benefit (example save time) ii. Become far superior to that of current or potential competitors iii. It is broad enough to help organization win business in new market iv.
Made it impossible for competitor to replicate your competency At the situation of BSB Inc, it is at the moderate valued consumer benefit, and the rest of criteria are beyond achievable by BSB Inc due to new entrants will be its competitors and will share the same market. Question 2: Initially, how did Renee Kershaw choose to use her pizza operation to compete with off-campus eateries? What were her competitive priorities? Renee Kershaw chose to use her pizza operation after she had begun to conduct surveys on market analysis to determine the market trends and customer needs.
In market analysis the most important key is doing research. Renee Kershaw had done the right thing. She needs to know exactly what the peoples/students who might be interested in buying her products and how many of them there are. She also needs to know the reason why the peoples/students did not purchased their food service. Tim Berry, President of Palo Alto Software Inc. did mention in his article Conducting a Market Analysis for Your Business Plan that organizations should review their market analysis at least every year. This is important to watch the changes in its market.
In market analysis there are two concepts to examine, market segmentation and needs assessment. Market segmentation is the process of identifying of customers with enough in common to design and provision of services or products that the group wants and needs. The analyst must determine the characteristics that clearly differentiate each segment. Whereas needs assessment is to identify the needs of each segment and assesses how well competitors are addressing those needs. It should include both tangible and intangible attributes and features of products and services that a customer desires.
Market needs can be grouped as service or product needs, delivery system needs, volume needs and other needs. In this case, basis of surveys are to search on customer preference and level of their satisfaction with the food they offered on campus. From the survey, Renee Kershaw realized that 44% of food was consumed off campus, 36% of food was delivered from off campus and 20% of food was prepared in dorm rooms.
Besides that 84% of the students owned cars so that they could go out and eat at the city because they were not satisfied with the variety of food offered by BSB, Inc., furthermore their schedules did not fit with cafeteria serving hours.
62% of the students owned refrigerator or microwaves in their rooms and 43% of the students consumed outside BSB, Inc. , facilities. That means 57% of the students consumed at their facilities. This is the market segmentation that she should focus on. On the other hand she should attract more students to enhance their market share. Hence she will increase the organization profit. Keeping these figures in mind she offered the students a larger variety at the grill by offering pizza and a delivery service that covered the entire campus.
This decision would reduce the number of students to go out of campus to eat off campus and the students could get their orders on campus quickly. When Renee Kershaw planned the pizza operation, she kept in mind that students have odd hours of eating and fixed, tight schedules do not necessarily suit their needs. Therefore she initiated a pizza delivery service that was flexible enough to cater to their needs. The food could be ordered on telephone when they wanted and delivered fast enough to their rooms anywhere in the campus. This convenience was one of her competitive priority. According to Lee J. Krajewski, Larry P.
Ritzman and Manoj K. Malhotra in Operations Management Processes and Supply Chains, competitive priorities are the critical operational dimensions that supply chain must possess to satisfy its internal and external customers, now and in the future. Competitive priorities can be expressed in terms of at least four basic components, cost, quality, time and flexibility. Renee Kershaw had focus on time (delivery service) and cost (reasonable price) components. She decided to expand the menu at grill to include new menu, pizza. This decision will offer more options to the students and greater variety offered at the grill.
At the same time she introduced delivery service in order to give convenience to the students by having delivered food to their rooms. To cut off the time spent for preparing pizzas and providing fast delivery and keep costs down she limited combinations of topping served. Therefore the number of standard pizzas could be preassembled and ready to cook as soon as an order received. Unfortunately this policy limits the variety of pizzas available. She also keeps costs down by delivery done via bicycles which is without petrol and minimum maintenance costs. The rental of space for three food service facilities is also at nominal rate.
In effect, her order qualifier was price and her order winner was service. On the other hand, we also analyze that Renee Kershaw was not consider a few factors which become major constraints to her operations, the factors are as follows:- i. She did not forecast for the increase of sales ii. She did not plan for increasing of orders or expansion when pizza was offered. iii. Capacity of the grill iv. Space for inventory v. Expectation for the menu range Question 3 : What impact will the new food court have on Kershaws pizza operations?
For the past 10 years, BSB Inc has been operating the food services at a medium-sized private university in the Southeast. Renee Kershaw, a manager of food services had conducted a survey to determine customer needs and market trends. From the analysis of the survey, she found that a large amount of the food being consumed by the students was not being purchased at the BSB facilities.
In order to overcome the problem and as a response to the market survey, she had decided to include pizza in their grill menu. Besides that, she also started a delivery service that covered the entire campus. The decision was a great success since it has increased sales and profits.
The university plan to build a new food court that would permit and accommodate food-service operations from three private organizations: Dunkin Donuts, Taco Bell and Pizza Hut will definitely give an impact to BSB Inc market in food supply. The impact of the new food court is there will be a substitute and competitor for BSB service.
Dunkin Donuts and Taco Bell is a substitute because the students will have other option of food variety other than provided before. On the other hand, Pizza Hut is a competitor and will definitely affect the operation of Kershaws pizza. Pizza Hut has an advantage from BSB Inc because it has a brand name.
BSB Inc should realize that there will be a change in market place when the new food court started to operate. The changing in market place indicates that the existing strategy that BSB Inc used to tackle the market is not sufficient anymore. SWOT Analysis In order to overcome the problem, Kershaw should do a SWOT analysis to find the best way to improve her product and service and compete with the new food court. SWOT analysis is a strategic planning method use to evaluate strength, weakness, opportunity and threats. Kershaw knows that the Pizza Hut is offering limited toppings and will not deliver food to dormitories.
This will be Kershaws strength since she provides a delivery service. However, this will have an impact on her pizza operations if she does not expand her toppings range and the menu range. Weakness of Kershaws pizza operation is the capacities of existing equipment and space allocated for making and cooking pizzas now were insufficient to meet demand. Since students have odd hours of eating and fixed, tight schedules do not necessary suit their needs, the pizza delivery service that was flexible enough to cater to their needs is an opportunity to Kershaws pizza operation.
Other types of snack foods (Dunkins Donut) and the fast food (Taco Bell) will be threats to Kershaws pizza operation since it is a substitute to pizza. There are a few actions or steps that Kershaw can do in order to improve her pizza operation to compete with the new entrants. To give a wider option to the customer, she will have to offer a variety of toppings. Other thing that she should do is to improve the delivery service to meet the customer satisfaction. She should also expand her capacity to meet the demand and offer new variety of fast food also to be delivered.
What competitive priority might she choose to focus on now? There are four types of competitive priorities which are cost, quality, time and flexibility. For Kershaws pizza to compete with the new food court, the competitive priority that she might choose to focus on is time. The time here is to focus on the delivery speed and also on development speed. Delivery speed is the ability of Kershaws pizza operation to quickly filling their customers order. On the other hand, development speed is the speed of introducing a new service or product in the market.
Since Pizza Hut did not offer a delivery service, it will be an advantage to Kershaws pizza to compete on time by providing a good delivery service. Before Pizza Hut come into the campus, Kershaw has already facing a problem in maintaining the delivery speed. This is because the high demand for pizzas had put a strain on the grills facilities. Initially, space was taken from other grill activities to accommodate the pizza oven, preparation and staging areas. Furthermore, groups were beginning to order pizza in volume for various on-campus functions.
Besides that, for the past couple of months, request for pizza toppings and combinations not on menu had steadily increased. This also will lead to delayed of deliveries. To overcome this problem, Kershaw need to design a new process of preparing the pizza so that it will meet the customer needs and demand and at the same time it still can maintain the fast delivery service. To do that, perhaps BSB Inc should change the grill into Pizza Restaurant that focus only on selling pizza and a few added menus that relevant and match with pizza.
By doing that, the capacities of equipment and space allocate for making and cooking pizza can be expended to meet the demand. BSB Inc also needs to hire more personnel that are trained to prepare more variety of topping to meet the customer demand. They also need to hire more personnel on delivery so that the pizza can be delivered to the customer at the fastest time. Besides that, to meet the demand for the various pizza topping and combination, Kershaw should provide a new range of menu that has more pizza topping so that the customer will have much choices.
In order to provide a wide range of topping and at the same time to maintain a fast delivery service, perhaps BSB Inc should improved the capacities of equipment and space to store the wide range of preassembled and ready to cook as soon as an order was received. On top of that, BSB Inc also can compete with Pizza Hut by providing longer service hours. By providing longer service hours, BSB Inc will able to offer service to student that have a tight schedule and odd hours of eating when the Pizza Hut is closed or when students are in the their dorm rooms.
Question 4: If she were to change the competitive priorities for pizza operation, what are the gaps between the priorities and capabilities of her process? How might that affect her operating processes and capacity decisions? The grills pizza service currently holds limited numbers of premade pizzas that is made preassembled to facilitate pizza delivery speed. By limiting the combinations of toppings available to its customers, Kershaw new pizza service can afford to offer delivery speed as its competitive priorities.
To assure faster delivery speed, Kershaw provide training for existing staff to make pizzas and hired several new staff to deliver the pizzas by bicycle. If Kershaw were to change the competitive priorities for pizza operation to variety, this will affect both the costs and services of her pizza service. Capable of producing only limited number of preassembled and ready to cook standard pizzas, Kershaws pizza service may need to install additional pizza oven, which may be complicated because of the space constraint at the grill. She may needs to find a new location for her pizza operations.
Perhaps replacement of new oven complete with technology that may improve pizza production efficiency (i. e. pizza oven with conveyor) can be considered as one of the alternative if Kershaw choose to change her pizza operation competitive priority to offer wide assortment of pizzas combinations efficiently. On the other hand, adding new pizza toppings and combinations propose the needs of additional space for storing the premade pizzas and not to forget the supplement ingredients necessary for the new pizzas toppings and combinations.
A study on new pizzas toppings and combinations preferred should be done to understand and deliver the customers pizza toppings and combinations that is profitable to serve. Kershaws pizza operating processes are as well affecting with the change in its competitive priorities. A few additional personnel to make pizza should be trained to fasten the production process, and hiring additional personnel for pizza delivery is essential to avoid delayed delivery resulting from failure to meet demand.
Kershaw may have to mark-up her pizza price to put up with the operation of her pizzas expenses. Question 5: what would be a good service strategy for Kershaws operation on campus to meet the food court competition? According to the case study Renee Kershaw has had a successful one year sales at a medium sized university in the Southeast from its pizza delivery service, but nowadays the sale is going down. Besides that the new food court is going to start its business, including types of snack, fast foods, and pizza.
Her business faces a great challenge to be sustained and to get more market share via pursuing pizza making and delivery process and inception of new food process including snacks and fast foods; It sounds a great competition takes out. Distinguishing the competitors/new entrants and their strengths and weaknesses is so important to determine our business competition weapons in specified market to get more market share and making profit. According to market assessment stated in case study in spite of being satisfied with low cost, quality and delivery, customers are dissatisfied by: * Lack of variety of pizza.
* Lack of in time delivery specially in volume orders * Lack of variety of other foods like snack or fast food * Strict time schedule in food court locations Business process is running food court process including Pizza making and delivery, Fast foods and snack; competition is getting more market share on campus. Competitors/New Entrants New food court running by Dunkins Donut offering snack , Taco Bell offering fast foods, Pizza Hut offering pizza, and off campus food services. Competitive priorities According to corporate strategy competitive priorities are Cost, Quality, Time, and Flexibility.
Establishing operation (service/product) strategy needs to determine the competitive priorities and assigning them to each core process to achieve the required service. (Krajewski, 2010) We are going to analyze and discuss competitive priorities in aspect of continuing BSB s food court business in pizza and expansion of the business with introducing new products, fast foods, snacks, while determining which core process includes these competitive priorities. Cost Customers (students) tend to get food in a reasonable/lower cost with an acceptable quality within their time constraint for food.
Cost is still a competitive weapon for Renee to get more market share. She must begin to bargain with suppliers to pursue the business process input requirements in manner of lowest possible cost while caring the consistent quality. In aspect of supplier relationship process the cost of acquiring inputs must be kept to a minimum to allow for competitive pricing. Order fulfillment process is responsible for delivering the service to the customer satisfaction, so it might include low cost operation which entrants compete on it to get more market share. Quality.
Market assessment shows that customers are satisfied with the quality of pizza on campus, so Renee must be caring of the measured quality and must pursue to negotiate it with suppliers in a consistent quality viewpoint. In aspect of supplier relationship the quality of inputs must adhere to the required specification; accurate information about the quality must be given to suppliers. Quality is measured by customer satisfaction in service process, so customer relationship process and order fulfillment process includes this competitive priority, too. Time i.
Delivery speed Delivery will remain important competition weapon as well as it is. The new entrants business process is a walk-up-and-order basis. Delivery speed is important in both supplier relationship and customer relationship. Quickly filling of customer orders strongly depends on how quickly inputs are being received. Besides that Renee must reduce the lead time spending in different stages of pizza making since receiving orders. She could plan to provide chunks from suppliers like other input material, so workforce would be responsible to prepare toppings.
The layout of process must be qualified to eliminate any elapsed time between process stages; it must implement according to defined process-pizza making, snacks, and fast foods in each of BSB locations on campus. Delivery speed is a competitive priority in order fulfillment process, too; Students are always looking for in time delivery food service. ii. Development speed If she tends to expand food court process to get more market share by offering pizza or offering new goods including snacks/fast foods, she must introduce new menu including diversity pizza toppings and new goods corresponded market requirement.
It needs powerful bargaining with suppliers in aspect of material, delivery speed, lowest cost and specified measured quality. It would be a competitive weapon as important as delivery speed. Flexibility i. Variety New entrant, Pizza Hut, offers a limited menu of pizzas so it could satisfy customers with difficulty, one of recent problem that existing food court has been faced with it. Variety sounds as a weapon for Renee, she must expand the diversity of pizza toppings corresponded market request.
She must focus on it in aspect of customer relationship process and supplier relationship process. Variety in pizza toppings let Renee to meet delivery speed for odd or volume orders as well as possible. Customization could not be Renees priority to select competitive weapon because customizing takes time and it will affect on delivery speed, the strength of hers business. Order fulfillment process variety is including this competitive weapon to meet and to maintain all probable customer demands which might raise market share.
ii. Volume flexibility Inventories are cost and will rise the cost of final service/product, while caring lowest cost is the most competitive weapon to get more market share, it sounds we couldnt plan to met fluctuations in demands via inventory process. Besides that input material for food industry couldnt be stocked for a long time, they arent durable material. Renee must be aware of possible fluctuations in demands to handle the situation in aspect of customer relationship and supplier relationship process.
She must find out activities, events, factors influence demands priorities and cause fluctuations via Environmental scanning and customer relationship process, and may handle the situation via supplier relationship process. It is possible to meet fluctuations with a strategy that adjust capacity without accumulation on inventory. Core Process and Assigned Competitive priorities According to the competitive strategy analysis which discussed above, the decisions affecting supply chain and involved processes could be categorized as follows: Customer relationship Process * Low-cost operations * Delivery speed(in-time delivery).
* Consistent quality * Variety Supplier relationship * Low-cost operations * Consistent quality * Delivery speed(on-time) * Variety * Volume flexibility New service development * Development speed * Low-cost * Delivery speed * Consistent quality * Volume flexibility Order fulfillment * Low-cost operations * Consistent quality * Delivery speed(on-time/in-time) * Variety Conclusion Against of all determined competitive priorities lowest cost, consistent quality, delivery speed, development speed, variety, volume flexibility-it is still a problem, the capacity of grill or the capacity of process!
To meet the result of an effective operation strategy the gap between capacities/ capabilities and competitive priorities must be filled. BSB has its own facilities in three separate locations in campus, regarding the competitive weapons all facilities and location must be used in optimal way. The new business process may lead to change the planned layout to scrap waste lead time or may lead to purchase new modern facilities; BSB may hire new skilled staff to increase/upgrade workforce to achieve planned competitive priorities, which could be an expansion of operations directed via corporate strategy.
Within limited time that Renee takes before the new food court is fully set up, she needs to come up with an immediate aggressive corporate strategy focusing on customer relationship and Supplier relationship and addressing her food operations capacity problems, while pursuing low-cost, consistent quality, deliver speed, variety. Competitive weapons are not static; they may change during the process according to performance assessment and market changes.
Business must forecast market and must ready to handle any possible change; it requires an environment scanning plan and a customer relationship process plan while assessing the market. Bibliography 1. Lee J. Krajewski, Larry P. Ritzman and Manoj K. Malhotra, Operations Management Processs and Value Chain (Pearson-ninth edition,2010) 2. Porter,Michael. , Competitive Advantage: Creating and Sustaining Superior Performance-(New York: Macmillan1985) pg 33 3. Dr K. K. Johan, Core Competency Vital for Effective Branding (The Star 24. 09. 2007) 4.
Kay Plantes , Core Competencies to Develop Profitable product (Wisconsin State Journal 2008) Lee J. Krajewski, Larry P. Ritzman and Manoj K. Malhotra, Operations Management Processs and Value Chain (Pearson-ninth edition,2010) p. 30 [ 3 ]. Porter,Michael. , Competitive Advantage: Creating and Sustaining Superior Performance-(New York: Macmillan1985) pg 33 [ 4 ]. Dr K. K. Johan, Core Competency Vital for Effective Branding (The Star 24. 09. 2007) [ 5 ]. Kay Plantes , Core Competencies to Develop Profitable product (Wisconsin State Journal 2008) [ 6 ].