Introduction to Business Operations and Services

This document provides an introduction to business operations and services, focusing on the concept of operations management and strategies for improving operations at a global level. It discusses the case of Mercedes-Benz and explores tools and techniques for operational improvement. The document also provides advice on operational strategies that can be implemented to capture market share.

INTRODUCTION TO
BUSINESS
OPERATIONS AND
SERVICES

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Explanation of operational improvement strategy at global level..........................................1
2. Operational strategies that are implemented to capture market share.....................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Operations are process of transforming raw material into finished products or services so that
customers demands can be achieved. Operations management is concept by which administration
of organisation ensures that operations reaches to maximum efficiency so that company can earn
higher profits (Uhl and Gollenia, 2016). It includes processes like planning, organising and
controlling actions that are necessary to increase overall performance of business. German car
manufacturer Mercedes – Benz is a global brand which deals in cars, buses, ambulances and
trucks, situated in Stuttgart, Baden – Wurttemberg. The logo of brand is very famous as it is
three – pointed star inside the circle and was designed by founder Gottlieb Daimler. In this
report, there will be explanation about introducing operations improvement strategy of
organisation. The strategy will include tools and techniques that will assist in effective decisions.
At last, operational strategies will be advice which can be implemented to capture market share.
MAIN BODY
1. Explanation of operational improvement strategy at global level
Operations are daily activities that any business perform so that there are smooth
functioning of tasks. It is process by which companies transform their raw materials as inputs
like manpower, resources, machines are converted into finished products. Operations
management on the other hand is concept by which operations are planned and execute in such a
way that it increases overall performance of organisation (Heizer, Render and Munson, 2016)
(Roberts, 2018). In case of Mercedes – Benz there is problem arising in case of quality and there
is need that company put efforts to improve its strategies related to improving strategies related
to quality. Some of the tools and techniques are as follows:
Cause and Effect Diagram: This tool examine potential causes of event happened in operations
or organisation. This put reasons into categories which helps in showing relationships between
factors. It is also known as fishbone diagram because the complete diagrams looks like skeleton
of fish. With the help of this diagram, Mercedes – Benz will begin with identifying problem and
possible causes those are reasons for this issue in organisation. This is essential for organisation
to expand the business to smaller down the business activities into smaller and manageable
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categories. Hence this help in tracking and controlling the activities effectively along with
managing demand and supply of the firm.
(Source: Cause and Effect, 2019)
In context of Mercedes – Benz there are possibly different causes by which it's quality is
effecting and which is leading to loss in sales revenues. The reasons are as follows:
Machines: In this factor it is analyse that is there any type of maintenance related issues
with tools used in machinery (Zhao, Fan and Yan, 2016). This also finds out need for update or
replace so that cause can be minimise. Mercedes – Benz is facing issues related to quality of
products they are offering in market place to customers. So there is need that management looks
on this aspect to find out is machines are cause of poor quality product. In this case company can
improve there machines by doing proper research and make them as per the needs and wants to
capture large market share effectively.
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Illustration 1: Cause and Effect. 2019

Manpower: This factor includes analysing current workforce of organisation and tries to
find out elements in which they are lacking. This find out reasons for new recruitment, training
and development, transfers, promotions, etc. Mercedes – Benz will examine that is there
adequate number of workforce available to perform activities, employees are skilled enough to
meet set targets in terms of quality, right personnel is placed on right positions, etc.
Materials: This aspects analyse raw material related problems like quality of resources,
on – time delivery, cost incurred in procuring it, etc. Mercedes – Benz has faced issue where it
has to recall vehicles as there were problems in brakes, batteries and alternators (Reim, Parida
and Örtqvist 2015). This arises need that company check quality of materials and equipments it
is using in making vehicles or in process of assembling. This lead to financial losses as well as
hinder its brand image and profits margins for future products.
Measurements: This factor analyse measurements effectiveness and efficiency in
recording actual performance of operations. This also find out that is there any type of need to
replace the equipments which are used in measuring productivity and quality (Yang and et. al.,
2017). In case of Mercedes – Benz there is some kind of defect in quality machines because
without proper evaluation vehicles are not delivered in market. Issue of recalling clearly shows
that there is presence of some kind of deviations in quality control measures.
Methods: In this aspect of cause and effect diagram, it is analyse that is there any process,
tools or methods which are causing issue to operations of business. This also includes rules,
regulations, policies, strategies which is leading to delays or obstacles in processes. In context of
Mercedes – Benz it can be analyse that there is some issues which is leading to decrease in
quality of vehicles which is effecting its market position in the auto-mobile industry.
Mother Nature: Environment plays an important role in aspects of business directly or
indirectly. This factor analyse the causes of natural environment which is hindering operations of
business like climate changes, dust, pollutions, etc. Mercedes – Benz can analyse role of
environment which has direct or indirect effect on its operations or products so that corrective
can be taken.
TOTAL QUALITY MANAGEMENT (TQM): It is a management tool which aims at
customer satisfaction with continuous improving efficiency of products, processes, services,
operations and organisational culture. This management tool uses information and
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communication so that quality can be effective integrate into activities and culture of
organisations (Chatzoudes, Chatzoglou and Vraimaki, 2015). Mercedes – Benz will apply
different principles of total quality management so that it can improves its products and regain its
positions again in industry:
Customer-focused: This principles focuses on customer as every effort and operation
which is carried out in organisation. Quality which is maintained in processes should be
according to expectations of consumers. Mercedes – Benz has to focus on every operation in
designing, manufacturing and after sale services that it should be valuable in terms of qualitative
aspects for buyers. In order to gain attention of customer firm has to focus on the needs and
wants of consumer as make changes as to provide better services. Hence the department of
research and technology must put emphasis on changing trends and must be focused on
achieving desire aims and objectives.
Continual improvement:Major aspect of TQM is continuous improvements in processes
so that quality can be enhanced. These improvements can be of both analytical and innovative
nature so that effective solutions are find out for improvements. Mercedes – Benz needs to
empower its employees to come up with creative ideas of performing routine tasks.
Communications: During introducing changes in operations and processes of
organisation there is need that management maintains effective flow of communication. This
refers that employees are informed by policies, strategies, vision, mission, objectives, etc.
Mercedes – Benz with the help of effective communication can build and maintain morale and
motivation of workforce so that they do not hesitate to come up with creative ideas for improving
quality of processes (Braithwaite and Christopher, 2015).
Fact-based decision making: In order to continuously improve processes there is need
that management have complete relevant information for making decisions. Plans and strategies
made on the basis of estimation fails often. Mercedes – Benz needs to make decisions which are
based on factual information so that they actually helps organisation in improving quality of
processes.
Strategic and systematic approach: A essential approach in managing quality is strategies
and systems so that improvements can be introduced. Mercedes – Benz needs to formulate
strategic plans by which quality becomes core component for improvements. These plans also
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helps achieving organisational vision, missions and objectives by providing qualitative products
in market place.
Process – centered: Basic fundamental part of TQM is focusing on process which is
series of step that organisation undertakes to provide products or services. Mercedes – Benz
needs to define process clearly, measures actual performance and monitors continuously so that
deviations can be detected on time with corrective actions.
Lean Production: This is management tool that focuses on eliminating waste while ensuring
quality. This approach can be applied to every factor of business like production, design,
distribution, marketing, etc. This tool aims at cutting down activities so that cost can be reduce
and business becomes more efficient in operations (Lee and et. al., 2015). Mercedes – Benz
needs to apply techniques of lean production so that it can become effective in reducing cost and
enhancing quality of operations. Some of the techniques are as follows:
Andon: This is feedback system which helps manufacturing unit in identifying status of
production, alerts and empowering workforce to stop process in case of deviations. This will help
Mercedes – Benz to address issues immediately as problem occurs with the help of real – time
communication tool for production departments.
Bottleneck Analysis: This helps process of manufacturing in decreasing number of
stoppage so that performance of operations can be improved. This will strengthen the weak areas
of manufacturing processes that are operated by Mercedes – Benz in vehicles manufacturing.
The company can have access to essential information about the processes leading up to the
bottleneck, the bottleneck itself, and what takes place directly after the bottleneck. Apart from
this it also reduce the waste which is made by company during the production process. This
provide solution minimize the waste and improve the manufacturing process of the company.
Continuous Flow: There is need that there is continuous flow in series of production so
that there is minimal or no buffers in between sequences of operations steps (Jaeger and Matyas,
2016). This will help Mercedes – Benz to eliminates waste in whole process of production so
that company can become cost – effective. Beside this company must have inventory stock
which use to fulfil the needs and requirement of the company. The management of Mercedes
Benz must make sure that there must be constant flow in the market as it help in increasing the
sales volumes of the company along with the market revenue.
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Gemba (The Real Place): This is philosophy which states that managers need to be
present on physical place where production activities are carried out. This will assist Mercedes –
Benz in understanding real issues that occurs in production process and monitors staff on
personal basis.
Heijunka (Level Scheduling): This is form of production that schedules production
operations into smaller activities in the sequence of procedure which assist in making products.
This decrease cost of inventory for Mercedes – Benz as there will be smaller steps in
manufacturing which leads to reduction in wastage of time.
Just-In-Time (JIT): This technique is based on principle of producing products on
demand of consumers instead of demand estimated by company. Mercedes – Benz will get help
in reducing cost of inventory, increase cash flow and this acquires less space as there is no stock
in warehouse.
KPIs (Key Performance Indicators): This is metrics which tracks and encourage progress
in direction of achieving critical objectives of organisation (Neelankavil, 2015). This will help
Mercedes – Benz effectively align management strategies and policies with business goals and
effective in identifying waste. The company has to focus on Key performance area as to identify
such as quality in delivering services to consumer . Along with this, company has to focus to
maintain demand and supply of the market as this will aid in increasing profitability and
productivity of the company. Selecting the right one will depend on your industry and which
part of the business you are looking to track. Each department will use different KPI types to
measure success based on specific business goals and targets.
PDCA (Plan, Do, Check, Act): It is a methodology to implement improvements which
states that establish Plan and set targets, Do as implement and execute plans. Check whether set
performance is achieved or not, Act to review the plans and take corrective actions. Mercedes –
Benz by this will be applying scientific approach to make improvements in operations.
Deming Theory: This was developed by statistician Dr. W. Edwards Deming who has
philosophy that improving quality will help companies to decrease expenses and improve overall
productivity (Visnjic, Wiengarten and Neely, 2016). There are different management philosophy
which becomes standard for transforming qualitative aspects in operations and products or
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services. Mercedes – Benz can also applies this tool so that it can improve quality of vehicles and
build its brand image affectively again. The points are as follows:
Create continuous plans towards improvement:This purpose that there should be long –
term plan to acquire quality rather than sorting to short – term solutions. This will help
Mercedes – Benz to estimate and prepare its operations for future opportunities so that it can
have competitive edge in industry.
Adopt new philosophies: This directs organisation towards embracing qualitative aspects
in whole operations of business. This also states that customers need are identifies before
reacting to competitors to design competitive products. This will assist Mercedes – Benz in
creating vision for quality and implementing it on every organisational level.
Lesser dependency on inspections: This point states that there is no need to depend on
inspections to find out quality issues or to improve it. Such processes does not improve quality
aspects instead increase cost of production. This implies that quality is kept in mind from start
till last step of production which can be helpful for Mercedes – Benz in managing quality in
production.
Improve constantly: This deming theory states that there is need that systems and
processes are improves on continuous basis with analysis (Piercy and Rich, 2015). This also lay
emphasis on training employees who are personally handles operations of production. This will
assist in reducing waste activities in manufacturing process of Mercedes – Benz to enhance
productivity.
Implement leadership: There is need that in continuous improvements, managers
understands employees and the tasks they perform in organisation. This will help Mercedes –
Benz in encouraging participation from employees with different leadership style like
participative, transformational and supportive so that productivity can be enhanced.
Eliminate fear: This management principles allows personnel to perform with full
efficiency and does not fear in expressing ideas and issues. This will increase motivational level
of employees and encourages them to put efforts in achieving objectives of Mercedes – Benz.
This also facilities open communication channel so that fear can be eliminated effectively.
2. Operational strategies that are implemented to capture market share
Market share is one of biggest indicator to evaluate performance and success of business
and important source of earning sales revenues. This indicates percentage of share a organisation
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have in overall industry. Operational strategies are plans by which organisation allocate its
resources so that production process are effective (Reid and Sanders, 2019). Audi is German car
brand which designs, manufactures and promotes luxury vehicles and is part of Volkswagen
group. BMW is Bayerische Motoren Werke which is also German auto-mobile company dealing
in luxury vehicles like cars and bikes. There are different operational strategies that can be used
by Audi and BMW to capture market share of Mercedes – Benz, are as follows:
Innovation: It is important that in order to stay ahead of competitors need to be
innovative in its operations. This can be done with the help of technological changes. Audi and
BMW needs to introduce innovative products in market so that it can overcome competition
from Mercedes – Benz in terms of introducing new products. This can be done with
implementing cutting – edge technology. This can be done by recognising new channels and
buyers for innovative product and attract existing customers of Mercedes – Benz. This
operational strategy will help Audi and BMW to attract buyers of Mercedes – Benz and capture
its share of market in auto – mobile industry.
CO2 emissions: European government has come up with new law in which carbon
emission standards are revised according to environmental conditions. This is applied to whole
auto – mobile industry and thus to Mercedes – Benz, Audi and BMW and it is their duty to
compile with these regulations. This will lead to changes in designing engines and applying
checking system in real environment so that they are up – to standards of Europe new law
(Larson and Chang, 2016). In case when Mercedes – Benz is facing difficulties in home country
so it will hard for company to cope up with international challenges. This creates opportunities
for Audi and BMW to capture existing market share in European countries and increase their
profits.
Eco – friendly design: According to future opportunities and changes in environmental
conditions there is need that auto – mobile industries and companies come up with new design.
These products will be eco – friendly and contains no harm for natural environment with
maintaining qualitative aspects as well. In the case when Mercedes – Benz is struggling with
keeping up the quality standards of existing product it will be difficult for company to come up
with new designs. In this scenario there is opportunities for Audi and BMW to innovate their
designs with the help of research and development department so that they can capture market
share of company and become leader in industry (Jovanovic, Engwall and Jerbrant, 2016).
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Managing Inventory: In order to be cost effective and make changes in pricing policies
there is need that eliminating waste activities in operation is important. One of the cost that Audi
and BMW can reduce is cost of inventory by producing vehicles when demanded by customer.
For this companies can apply Just – In – Time management tool which allows business to
manufacture product when there is a demand by buyer which reduces inventory cost. This will
help companies to meet specific demand and expectations of customers so that they can capture
market share of Mercedes – Benz.
Continuous Process Improvement: These days organisational objectives aims at
achieving more productivity and be cost effective in industry. Thus there is need that there is
process of continuous improvements which aims at reviewing objectives, systems, material
handling, work flow, decreased cost, etc. Audi and BMW need to apply this operational strategy
so that it can always have scope for correction and seek perfection in operations. This will help
in increasing capacity, efficiency and overall productivity for companies which will be helpful in
maintaining and improving quality of product (Slack and Brandon-Jones, 2018). So this
operational strategy can help Audi and BMW to attract customers of Mercedes – Benz and gain
its share of market.
All the above operational strategies need to back up with research and development
activities so that Audi and BMW can be effective in overcoming competition. In present
situations Mercedes – Benz is facing issues like poor quality, recalling of vehicles and dis –
satified customers. This will help other auto – mobile companies to capture it's market share if
planned effectively. In that case operational strategies can be implemented effectively according
to organisational mission and vision and increase its market share (Sadgrove, 2016).
CONCLUSION
It can be concluded from above report that operations are process of manufacturing raw
materials and transforming it into finished products. Operations management on the other hand is
concept by which operations of organisation is manage effectively. There are management tools
and techniques like lean production which eliminates waste activities, cause and effect diagram
which helps in identifying causes and effects of operational issues. Deming theory puts different
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management philosophies which helps in improving overall quality of operations. TQM is
process by which there is continuous improvements in operation's processes by seeking
perfection in every step. This report also includes different operational strategies by which
companies can capture market share of different organisation of same industry.
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REFERENCES
Books and Journals
Uhl, A. and Gollenia, L. A. eds., 2016. A handbook of business transformation management
methodology. Routledge.
Heizer, J., Render, B. and Munson, C., 2016. Operations management. Pearson Australia Pty
Limited.
Roberts, J., 2018. Multinational business service firms: development of multinational
organization structures in the UK business service sector. Routledge.
Zhao, J. L., Fan, S. and Yan, J., 2016. Overview of business innovations and research
opportunities in blockchain and introduction to the special issue.
Reim, W., Parida, V. and Örtqvist, D., 2015. Product–Service Systems (PSS) business models
and tactics–a systematic literature review. Journal of Cleaner Production. 97. pp.61-75.
Yang, M. and et. al., 2017. Value uncaptured perspective for sustainable business model
innovation. Journal of Cleaner Production. 140. pp.1794-1804.
Chatzoudes, D., Chatzoglou, P. and Vraimaki, E., 2015. The central role of knowledge
management in business operations: Developing a new conceptual framework. Business
Process Management Journal. 21(5). pp.1117-1139.
Braithwaite, A. and Christopher, M., 2015. Business Operations Models: Becoming a Disruptive
Competitor. Kogan Page Publishers.
Lee, Y. K. and et. al., 2015. Market orientation and business performance: Evidence from
franchising industry. International Journal of Hospitality Management. 44. pp.28-37.
Jaeger, A. and Matyas, K., 2016. Transformation of the EFQM approach from business towards
operations excellence. Production Engineering. 10(3). pp.277-291.
Neelankavil, J. P., 2015. International business research. Routledge.
Visnjic, I., Wiengarten, F. and Neely, A., 2016. Only the brave: Product innovation, service
business model innovation, and their impact on performance. Journal of Product
Innovation Management. 33(1). pp.36-52.
Piercy, N. and Rich, N., 2015. The relationship between lean operations and sustainable
operations. International Journal of Operations & Production Management. 35(2).
pp.282-315.
Reid, R. D. and Sanders, N. R., 2019. Operations management: an integrated approach. John
Wiley & Sons.
Larson, D. and Chang, V., 2016. A review and future direction of agile, business intelligence,
analytics and data science. International Journal of Information Management. 36(5).
pp.700-710.
Jovanovic, M., Engwall, M. and Jerbrant, A., 2016. Matching Service Offerings and Product
Operations: A Key to Servitization Success: Existing conditions, such as product
characteristics or market attributes, may determine the success of a move toward
servitization. Research-Technology Management. 59(3). pp.29-36.
Slack, N. and Brandon-Jones, A., 2018. Operations and process management: principles and
practice for strategic impact. Pearson UK.
Sadgrove, K., 2016. The complete guide to business risk management. Routledge.
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