Homework

Management 312: Operations Management

Final Project

Business idea

Observing our final project, one of our objectives is to come up with business ideas that we believe will be successful focusing on characteristics of consumer demand. So, a business idea that came to my mind in business with cars, producing cars. I was thinking many times about starting a business with cars in the future, simply because nowadays consumer demand is incredibly large especially for electric cars which I believe is the future of automobile industries. To illustrate my business idea, the company will mostly focus on producing electric cars and trying to be different from our competitors which will be explained further in paper. In my opinion, one of the main characteristics of consumer demand for electric vehicles are availability, safety, affordability, taking care of the environment, etc… Now, I will focus on who my customers are and what they desire (What drives them to buy electric cars). Generally, customers for my business are people with high yearly income – wealthy individuals or households. Age group is from 30 – 50 years old which means successful individuals would buy our product. Studying business environments is very important in order to know who customers are and what they want (desire). Regarding PEST analysis, I can define what our customers desire and want. Also, analysis is showing me any possible opportunities or threats regarding my business idea. For example, if we take a look at political factors affecting my business I can say there are many opportunities because governments around the world seek for more electric cars in order to reduce pollution. There are new global agreements which are also an opportunity for us.  The immediate environment is showing us who my competitors are and if there are any new entrants. Next factor is Economic analysis which also gives us some threats but opportunities as well. It is easy to predict decreasing costs of batteries as well as decreasing in energy costs which give us big opportunities. Unfortunately, stability in the economy is unstable so we are getting threatened. Regarding Social factors the important factor is big increase in sales of electric vehicles and people are seeking for innovations. Finally, technological factors are very important in the automotive business. Some of these factors are: automation is increasing regarding business and there are many technological changes. To illustrate that every day you can do something new in technology and that is why it is so important to stay in touch with technology nowadays. PEST analysis was helpful and useful in my case to choose a particular strategy for my business idea and to see what my customers are and what they desire.

SWOT Analysis of business

StrengthsWeaknesses

Less pollution(Eco – friendly)                                  Takes time to charge

New technology                                                       Lack infrastructure for recharging

Fuel efficient                                                            Customer’s knowledge about EV

———————————————————————————————————————

OpportunitiesThreats

Public awareness of environment                             Increased competition

Possible decrease in energy cost                              Economy stability

Longer driving ranges                                                Energy failure

Business vision and strategy

Vision of my business is to provide our customers with luxury electric cars with more innovative equipment in order to satisfy customer desire, while at the same time reducing pollution and fuel emission. With that being said, by innovative I mean, more safety, affordable cars and beautiful design. Mission statement of the business is to accelerate the transition of electric cars to the market.  As you can see, my business will use a differentiation strategy. In differentiation strategy you have to stand out and differentiate from competitors. Product innovation is one factor that will stand out from other competitors in the car industry. Major competitors of business are definitely Tesla and BMW. Both companies use differentiation strategies and that is why they are different from other car manufacturers in the world. However, what would my business do differently in order to stand out from the main competitors? Electric cars will not just be good for the environment, it will also have a beautiful shape and design, and longer battery which means higher mileage. However, aspects in which we will be different from our competitors is improvements of cars and frequent software updates such as: longer driver distance, reduction in pollution, etc…

Briefly about competitors:

As I mentioned earlier, our main competitors are BMW and Tesla. To begin with Tesla. Tesla is an american car manufacturer that produces electric vehicles targeting wealthy customers especially in the US market. Tesla is pretty  young in car markets, Tesla was founded in 2003 and they were slowly growing until now where they are one of the leaders among car manufacturers.  I would say that they firstly launched production of electric cars and that makes them one of the best electric cars companies in the world. Some aspects of Tesla cars in what they differentiate from other companies is auto – pilot and supercharging.

BMW is also one of the biggest car companies in the world with a big history in the past. Company was founded in 1917 in Germany with headquarters in Munich. Also, BMW is a well known brand and they have many headquarters on every continent.  BMW is different from others in the sense that they produce cars where customers emotionally can relate. It is popular when people say, thet you fall in love with BMW every time you drive it. Company have increased their brand loyalty. Also, BMW company follows trends and in order to be different from others they follow development of technology and uses in producing their innovative cars.

Key elements for design product and services

Generally, in this strategic operation my business is using a differentiation strategy which means that we focus mainly on innovations of our product and service design. For example, improving self driving (auto pilot), innovations in safety of the car, creating longer batteries and less pollution. Everything in order to satisfy our customer’s desires and needs.  As I said in differentiative strategy businesses are seeking for innovations. In my case new softwares in cars, modern parts of the car which all make one luxury car. In order to satisfy customer wants we are setting up specific product attributes and specifications of the car. As I mentioned earlier, customer desire (wants) for specific electric cars are: experience (comfort, safety), reducing pollution and taking care of the environment (green), good performances, auto – pilot (self drives),  what are the better options for charging the car (supercharging) and higher mileage. As we use a differentiation strategy we are seeking for innovations and we want to satisfy customer desire and wants. It is on us to satisfy customer desire where I will illustrate in house of quality. However, main requirements and software for design products in this case electric cars are produced in supply chain networks which responds to our strategy. Nowadays software is a very important aspect of car design simply because with frequent softwares updates, the company satisfies customer needs and with a large amount of satisfied customers the company knows that they do quality work. It is very important if a business wants to be different from competitors, it has to continuously innovate products and services because customer desires are changing very fast in the 21st century. In the near future, my business will also focus on customization and production of car parts as well as innovation of electric cars.

In addition, house of quality are made in order to see how we satisfy customer wants and why we are different from our competitors.

Quality Management

Quality criteria

Wants                                            hows (Critical processes)                                    where

In differentiation strategy, the quality is reflected in whether you managed to satisfy customers requirements or not. Basically, that is the main goal if business wants to be successful. From the HoQ we can see what people desire and it is important to define these needs, so then business knows how to satisfy them and maintain quality. First of all, safety and comfort are perhaps the most important criteria for every customer, not just for customers that buy electric cars. With that being said, customers want reliable cars and to enjoy driving them without any doubt that something will happen. How we will satisfy this specific requirement is based on software inside the car and its design. I would say that to satisfy this desire we are talking about services not just products, because software is very important in creating cars nowadays. Software along with many sensors can detect possible accidents and it is resolved by sending information to the car.

Next requirement that customers have is personal expression where they want to fall in love with a car. We are talking mostly about the design of the car where customers will be satisfied with the model. Critical process of satisfying this specific desire is in different types of design.

Nowadays one of the most important customer needs is less pollution for our environment.  I cannot agree more, that is one of the reasons why I chose to produce electric cars and that is what our critical process is and how we will satisfy this desire. Generally, electric changes the fuel, vehicle is totally electric

Solid number of our customers love fast cars and their performances, and our answer is in the mechanical process, where we improve our cars to gain more speed. From 0 to 100 in just a couple of seconds, even quicker than many fuel cars.

Auto pilot or self drives is I would say new customer desire. Tesla is the first company that invented autopilot and there would be a big challenge for us to make our customers satisfied. We will measure this by adding more sensors and softwares in the car which guarantee more safety in auto pilot mode.

Finally, last but not least important customer requirements are higher mileage and options for better charging. With that being said, our response to these requirements are definitely upgrades in batteries and upgrading softwares to get super charging.  I would say that the length of driving electric cars is perhaps the biggest disadvantage compared to fuel cars.

My business will also use important models in order to satisfy customers desires and maintain a high level of quality. The DMAIC model will be used in customer surveys, interactions with our audience and by prototypes of our innovative cars. With the DMAIC model we want to define if any gaps exist in our critical processes, to measure criteria against benchmark, to analyse data from above mentioned activities with customers, to improve our products by redesigning them and control procedures through tools. To illustrate all this, our customers would be receiving surveys from us in order to tell us their opinions about our cars and if there is anything we could improve. Also, during the car fair we would interact with our customers by hearing from them any recommendations that would make us better. Regarding the prototypes, we would use our prototypes also at the cars fair by showing the audience what innovative and newest technology is in our products. In order to get total quality management my company will use statistical tools. There are three tools that would help my business to make TQM: Tools for generating ideas (check sheets, diagrams), Tools to organize data (contains various charts) and Tools to identify possible issues (histograms).

Supply chain Management and Inventory management

Generally, regarding what strategy my business uses, we can say that supply chain is very important for successful work of a company. In differentiation strategy it is important to have long term relationships with suppliers. With that being said, I mean that my business focuses mainly on efficient and effective supply chains. Personally, I think that for effective manufacturing processes, a company has to have a global supply chain. To illustrate that, main manufacturing parts would come from the same continent where the company is, while other also important parts would come from overseas  from time to time. The main parts of our cars are internal throughout the company. In my case, our supply chains are responsible for sensors that satisfy customer demand for auto pilot (self – driving),mechanical processes that correspond to performance desire of our customers and finally upgrades of softwares and batteries in order to improve high mileage of our cars.  Maintaining good relationships with other industrial players is also important as well as fairly sharing risks and costs in order to gain trust and mutuality. What I personally think is that a company has to accept risks and uncertainty and try to engage with customers.

Inventory management is a very important factor in the differentiation strategy of any company that uses this type of strategy. Business has to have high inventory in order to meet demand and customers desires. Generally all inventory decisions and cost decisions are related to inventory management. Because demand is high, my business always has to have a high quantity of inventory to maintain quality and satisfy customers. Almost every car manufacturer’s inventory contains equipment such as: parts of service, in progress work, finished products and mainly raw materials. However, in differentiation strategy you have to meet high demand so in my case there is a large quantity of finished goods (Cars) such as: New cars that are ready to satisfy customer needs and used cars. Raw materials are basically parts of cars, in progress work are logically unfinished cars.

Inventory arrangements and MRP – ERP framework

It is very important to have specialized warehouses where you can store your inventory. Also, the warehouses of my business would be as close as possible to the suppliers, main warehouse and market. In this case, business is trying to minimize distance between main warehouse and smaller warehouses which also means reducing delivery cost. However, in order to know the quantity of inventory in warehouses, stores or car services, my  business will use very helpful softwares called MRP and ERP framework. Firstly, MRP will help my business in managing current inventory in warehouses, our shops and car services as well as planning. Regarding ERP framework I would say that it would be more useful for my business simply because it manages all purchases, sales and manufacturing as well as other important functions in the company. Basically, all company operations would be integrated through MRP – ERP software.  Personally, I found ERP – MRP very helpful for business because it provides strategic advantage over my main competitors and it offers information to flow.

Conclusion

To conclude, I found this project helpful and useful for me, first of all to understand  how difficult it is to control all operations in a specific company and what is needed to be successful, especially nowadays where there is a lot of competition. Personally, in my opinion I think that electric vehicles are the future of car industries and it will come very soon.

References:

Bmw.com. 2021. The circuitous history of the BMW name and its rise to a global brand | BMW.com. [online] Available at: <https://www.bmw.com/en/automotive-life/BMW-name-meaning-and-history.html> [Accessed 30 November 2021].

Tesla.com. 2021. About Tesla | Tesla. [online] Available at: <https://www.tesla.com/about> [Accessed 30 November 2021].

Intelligence, P., 2021. Electric Car Market SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis, Emerging Trends, Key Players, Future Scope. [online] openPR.com. Available at: <https://www.openpr.com/news/2357565/electric-car-market-swot-strengths-weaknesses> [Accessed 30 November 2021].

Avere.org. 2021. Vision and Mission – AVERE. [online] Available at: <https://www.avere.org/mission-and-vision/> [Accessed 30 November 2021].