May 25, 2008

Operation Strategy Lesson 6 Exercise

The importance–performance matrix is used by operations to prioritise the particular competitive factors or performance objectives on which they should be concentrating. The gap between ‘customer importance’ and ‘company performance’ should drive any improvement action.

I’m going to apply this technique to the “Nespresso Capsule” described in my 2nd blog (http://blogs.warwick.ac.uk/chiaraserini/entry/operation_strategy_lesson/)

The importance–performance matrix method is split in 5 steps.

Step 1 deal with selecting one product or service into one market: “Nespresso Capsule” offering includes coffee, tea, cappuccino and herbal tea tastes. In order to avoid generalities on the matrix I’m going to focus only on the coffee capsules.

In the Step 2 relevant competitive factors have to be identified. For this product the selling is direct from producer to the immediate purchasers (that are also the ultimate consumers). We’ve to focus on what is relevant for those last mentioned ones. We’re analyzing a quite good product so, in order to debate over the way it’s managed, let’s consider factors that may be improved. Splitting these factors according to the 5 performance objectives let’s focus on:

  • Quality: Error Free products, Taste, Reliable products
  • Dependability: On-time arrival of products, Knowledge of delivery time
  • Cost:Productive process, Low Prices

Step 3 and 4 require to rate these factors and operation performance (on a 1-9 importance scale - 1 is the best, 9 the worst). This is my analysis (we’ve to remember that is a quite subjective one)

Factors and operation performance subjective rates

In the Step 5 we’ve to plot the points on the importance-performance matrix. In order to put the factors on the matrix I’ve assigned them a letter (A to G).

This is the (subjective) result: Importance Performance matrix

The analysis shows that a really urgent action has to be developed in order to reduce the price (G) for customers. Competitors are increasing in number (Lavazza, Costadoro, Gaggia..), in service offering and price competition.

Assuming that customers do not care about the productive process (F), this factor appears in the appropriate area. In my opinion this is one of the most important “weapon” in the “price war” so has to be considered more in the improve area then in the appropriate one. As mentioned above and in my 2nd blog, we’re dealing with a very good product so it didn’t surprise me that reliable (C) / error free (A) products and taste (B) are in the appropriate area. Attention has to be paid on services – on time arrival of products (D) and knowledge of delivery time (E) - directly connected to the sales that need to be improved especially in this growing competition contest.

References:

Slack, Nigel and Lewis, Michael (2008), "Operations Strategy", Prentice Hall, Great Britain

University of Warwick(2008), "The Warwick MBA: Operations Strategy, Lesson 6", Warwick Business School.

http://blogs.warwick.ac.uk/chiaraserini/entry/operation_strategy_lesson/

http://www.nespresso.com/precom/home_uk_en.html

http://www.lavazzamodomio.it/home.jsp?http_sez=0&ecommerce=1

http://www.costadoro.it/espresso/capsula-caffe.asp

http://www.gaggia.it/linee_famiglia_professionale.asp?CA_ID=27


- One comment Not publicly viewable

  1. Desmond Yarham

    Chiara,
    A sensible choice of product following your earlier analysis for lesson 2. You explained the underlying principles behind the importance/performance matrix well – resources should be chanelled into improving the features considered to be important by customers.
    Your selection of 7 important factors from 3 of the generic performance objectives was fine. It is interesting that a product is involved (the Nespresso capsule) yet it is the service provision of the product that requires improvement.
    I agree, price does appear relatively high when compared with competitors, the Tassimo capsule system is less costly for both the machine and the capsules and the latter can be purchased from most supermarkets.
    Provision Costs of the Nespresso capsule should be considerably less than competitors as they are sold direct to the consumer – this area requires urgent action and should be quickly dealt with.
    Distribution mechanisms are different to Nespresso’s competitors and effort must be made to keep them competitive.
    Interesting conclusions.
    rgds
    Des

    25 May 2008, 12:38


Add a comment

You are not allowed to comment on this entry as it has restricted commenting permissions.

Trackbacks

May 2008

Mo Tu We Th Fr Sa Su
Apr |  Today  | Jun
         1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30 31   

Search this blog

Galleries

Most recent comments

  • This lesson's exercize (in particular Q1 and Q2) has been modified after Andrew Charlwood's comment.… by on this entry
  • Question 3: In my opinion it's important that, in companies where management changes often and quick… by on this entry
  • This is a good, well argued answer, although I am not sure that working ten hours a day can be consi… by Andrew Charlwood on this entry
  • In your last answer, you argue that it is important to write down the nature of the psychological co… by Andrew Charlwood on this entry
  • Although there is no consensus and agreement about what constitutes a learning organisiation, there … by Andrew Charlwood on this entry

Blog archive

Loading…
Not signed in
Sign in

Powered by BlogBuilder
© MMXIV