competitive advantage and operations management

Operations Management 3
Purchasing
a. The product available for purchase is a pair of Chanel shoes. There are a number of things that I would take into consideration. Buying behavior is strongly related to whether the purchase is a high-involvement purchase or a low-involvement purchase. A high involvement purchase would involve significantly more time and research than might be the case for a low involvement purchase. Therefore, the amount of research, consideration and time that one would take for this pair of shoes will be dependent on whether the consumer views this purchase as high involvement or low involvement. As Deshmukh and Das (2012) note, social class can be a determinant of consumer behavior, and a pair of Chanel shoes is definitely one of those products. For some, this is a low involvement purchase and for others a high involvement one.
For me, this purchase fits a bit in the middle. The shoes cost enough to make me pause and question if I really need them, but on the other hand, this is not something I would need to save for two years to acquire. I would definitely want these shoes to be of excellent design, shoes that I could wear to the finest occasions that I will attend, and that are versatile enough to handle a number of different situations. Ideally, this would be a purchase that will last for me for years, and they will be good enough shoes for me to wear even if I buy many other amazing pairs of shoes over the coming years. I would, however, also research the price. Not only would I try to find the design I wanted online, but also shop around a bit to get the best price that I could. Chanel shoes can be very expensive so I would definitely want to save money if it all possible – paying full price for something like this could add several hundred dollars to the purchase price, and I am pragmatic enough to avoid that if at all possible. I don’t know if I could be frivolous at any income level, because that’s just not in my nature.
So I would evaluate the Chanel shoes on the two dimensions of design and price. I assume that at the price point I’ll be paying that the shoes will be of exceptional quality. If there were any doubts on that front I would choose another brand to research that I can trust. So I am looking for a design that can take me through a number of different types of events, ideally, and probably go with a few different outfits. I want these shoes to be flashy, and attract attention, and they need to be able to do this in a variety of different settings.
I would then also evaluate the price. Of course, I have to be prepared to pay close to the full price for the shoes that I want, so this is a secondary consideration, but I also want to be able to get these shoes at a discount if at all possible, and again really just because that’s my nature to save money if I can. Why wouldn’t I want two pairs of Chanel shoes for the price of one pair? So while the price is secondary, it is still taken into account. Lastly, I also have to try the shoes on. They must fit. It is not incomprehensible to have shoes that don’t fit well if they look great, but ideally the fit has to be good enough for them to be comfortable and that I can walk in them. So that is the third factor that I will take into consideration with this purchase.
So these factors encompass search attributes, like being able to conduct the research I want to conduct, and to find the shoes I want once I decide what designs I favor. But I also want the experience of owning these shoes to be incredible, because of the investment that they represent. Credence attributes are of course would relate to the image that these shoes convey (Halton, 2019). – how I feel when I wear them and how others perceive me when I wear them. I would definitely want to portray a certain image with these shoes. Because of that, for example, I would want a design that stands out, rather than a relatively plain design. There are Chanel shoes with a plain design and those would not stand out to anybody, so I would probably look for a design that speaks for itself, and tells the world those things about me that I want my shoes to tell.

Case Study
1. Lawn Care’s current strategy is to be a premium supplier of seeds and fertilizers for lawns. The mission doesn’t seem well-defined, sticking mainly with the abstraction “the right product to the right customer at the right time”, which provides zero useful guidance. The company’s value chain at this point is largely on the inbound logistics and operations, which is uses to create best-in-class products. It seems okay at outbound logistics, is unsure about its marketing and does not seem to handle service all that well – at least, ensuring that its products are used correctly does not appear to be a key part of the value chain for this company (QuickMBA, 2010).
Without an application service, the major stages in its value chain are clearly operations and inbound logistics, in that order, as these are the components of the value chain that allow Lawn Care to produce best-in-class products. It markets them reasonably well, but also appears maybe that the company struggles to communicate why its products are the best.
2. Lawn Care’s current strategy has a critical problem, one that underpins this case. The major issue here is not that a competitor has an application service, it is that the end user is often not using the products correctly. The engineering and inbound logistics that went into creating these products should ensure that the company’s products are recognized as best-in-class. However, marketing is typically required to communicate the reasons why one product is better than another. If the marketing that Lawn Care is not doing does not deliver this, then the marketing is one of the problems in the company’s value chain. The second value chain problem is that the company is not providing the right service to its clients. This means that they clients are not using the products in such a way that the product superiority is apparent. As such, much of the value extracted from the first two stages of the value chain is lost on the end user, and that creates an opportunity for competitors to win market share with cheaper products, because Lawn Care’s differentiation strategy is not being executed effectively. Furthermore, the lack of mission and vision that provides specific guidance cannot be helping. This is a secondary problem but if the company’s vision was something about creating the best lawns and fairways in the world, that vision would help to frame the business as something other than engineering excellence, and call the post-sale service aspects into question a little more clearly. So there are issues with the mission and vision.
3. The company doesn’t have to implement its own application service, but it can have a program to designate third party companies as “approved applicators” or some such thing. Further, the company can create YouTube training videos and other educational materials to ensure that everybody, including the end user, understands why Lawn Care’s products are the best, and how to get the most value out of them. By doing that, the company is broadening the scope of its mission – focusing on the end product that the customer wants, which ultimately is a great soccer pitch, golf course or whatever. Broadening this scope allows the company to tackle the marketing and service deficiencies in its value chain as well, ensuring that the engineering it undertakes early in the value chain does not get squandered. Such an approach also shores up these areas of weakness that the competitors are most likely to exploit.
4. One of the interesting things is while this strategy is focused more on improving marketing and service, operations also plays an important role. Basically, operations needs to be able to explain how to apply the products under a variety of conditions and for a variety of goals, and it needs to be able to explain what they’ve done to make the company’s products best-in-class. That means they need a technical writer and product marketing manager, probably, to ensure that these roles are filled by people who can more effectively bridge engineering, purchasing and the communications function, so that the marketing people can do their thing armed with the correct knowledge about why their product is exceptional.
5. My final recommendation is to reframe the mission through the lens of the end user, or at least the buyer. They want gorgeous grass and aren’t super fussed how that happens. So the company needs to think like that when it is talking to the end user. Definitely create videos to explain how to get the most out of the products, and definitely get to the point where the company can set up an authorized reseller and applicator program, something that conveys prestige upon the people who are doing the applications and confirms for the end user that the company has undergone proper training and been certified by the company.
Competitive Advantage
eBay has first mover advantage in its space, which has allowed it to build both brand advantage and technological advantage. The name brand helps people think of eBay first when listing, or searching, and the company’s technological advantage can make for a better experience for both buyers and sellers. Getting into the game first was key for eBay, as it built early lessons into its business and has done so consistently, such that competitors are forever trying to catch up to eBay. eBay has struggled to maintain dominance in its industry but still maintains these sources of competitive advantage, and has used them to help the company finance research and development to keep them ahead of the technology curve. One move that the company made was to purchase and then spin off PayPal, a company that was created in part to serve the eBay market. eBay has since invested in a number of other ventures in order to expand its presence in online merchandising.
Southwest Airlines has a good brand reputation at a time when most airlines do not. Customer service is another area where they foster this reputation, and deliver a better in-flight experience than most other domestic airlines. Initially Southwest sought to differentiate itself with a better in-flight experience and has the in-flight experience at their competitor airlines has deteriorated, Southwest only looks better in comparison. That it delivers this experience and low prices has made it a formidable competitor (Zhang, 2018). Southwest has been able to grow now to the point where it has multiple hubs outside of the southwest, and it challenges United for the number of passenger numbers flown. While it still trails American and Delta, Southwest remains one of the big four, something that would not have been possible if it had not successfully differentiated itself in its early years. That separation continues to be a significant source of competitive advantage, and has earned Southwest a loyal following, something most airlines struggle to win outside of their loyalty programs. Further, Southwest staff are also loyal and enjoy working with the company, something that cannot always be said of employees at other airlines.
Starbucks has many competitive advantages. First, it has more locations than its competitors and it almost single-handedly created the space in which it operates, giving it a better reputation than competitors like McDonalds or Dunkin Donuts have. This combination of brand power and massive number of locations makes Starbucks a formidable competitor among mainstream quick service restaurants, outperforming all over coffee competitors and taking it towards the top of the industry (QSR, 2017). Starbucks has been able to leverage its competitive advantage in coffee, for example, to expand into the retail and institutional coffee spaces, and expand into breakfast and snack food, both areas that have helped to fuel the company’s growth. Starbucks furthermore has a global scope and is listed among the world’s most valuable brands (Interbrand, 2019). Starbucks also gains competitive advantage by being able to run both company-owned stores and franchised locations, and this flexibility allows it to control market entry, and also allowed it to expand much faster than any competitor in the coffee shop business was able to do.
Apple has several competitive advantages that it utilizes. First, the company all but pioneered customer evangelism, and it benefits from this loyal fanbase to this today. This in turn allowed Apple to innovate at a rapid pace and become the leader in consumer electronics during several critical years when mobile communications were entering the mainstream. The result is that today Apple still has a decent market share in a number of products, a massive ecosystem, tens of millions of loyal customers, and beyond that, years of success have made it one of the largest companies in the world by revenue and with a massive cash stockpile that it can use to invest in any project it deems worthy. Apple’s success took some time, but they made many right moves, and today benefit from both their innovation expertise, the financial position, the marketing expertise and the power of their brand, which is today the most valuable brand in the world (Interbrand, 2019). Each of these advantages has allowed Apple to thrive – knowing it can release new products, be creative and innovative, and then also to know that it has a stable core market year over year, but also a ready market for any new products that it releases.
References
Deshmukh, G. & Das, R. (2012) Consumer buying behaviour for high involvement products. Asian Journal of Management. Vol. 3 (3) 153-157.
Halton, C. (2019) Credence good. Investopedia. Retrieved March 26, 2020 from https://www.investopedia.com/terms/c/credence-good.asp
Interbrand (2019) Best global brands. Interbrand Retrieved March 26, 2020 from https://www.interbrand.com/best-brands/best-global-brands/2019/ranking/
QSR (2017) The QSR Top 50. QSR Magazine. Retrieved March 26, 2020 from https://www.qsrmagazine.com/content/qsr-50
QuickMBA (2010) The value chain. QuickMBA.com. Retrieved March 26, 2020 from http://www.quickmba.com/strategy/value-chain/
Zhang, B. (2018) The 10 best airlines to fly in North America. Business Insider. Retrieved March 26, 2020 from https://www.businessinsider.com/best-airlines-in-north-america-for-2018-skytrax-2018-10