Delivery in day(s): 5
Diploma in Business
Unit Number and Title
Unit 4 Operation and Management
Operation management is the heart of every organisation. It involves activities that transform input into usable output that generates value to the organisation and to customers. Operation management discuss about the operation activities which are similar to characteristics i.e. planning, designing, locations, layouts, managing and coordinating and operational strategy which is linked with the business strategy. It would also explain about the call out services along with factors affecting the poor communication that affects the RAC quality, productivity and capacity. Risk analysis procedures are properly detailed in vertical integration by applying the probability matrix in the report. At last, quality improvements techniques have been analysed and recommended to RAC to improve their problem of price and speed.
Operation management is the process of designing and monitoring, controlling the process of production and redesigning business operations in the production of goods and services. The key characteristics of operation in RAC Motoring services are:
Operational strategy refers to the same pattern of decision for the operational functions that support the overall business strategy. The RAC operational strategy focuses on capacity, quality and productivity to be maintained in competitive environment. The strategy clearly defines the strategy mission and vision statements (Baines.et.al. 2009). It matches with the market needs and enables interaction between the other functions, avoids errors between process characteristics and products and services, ensure that the quality meets the corporate and market requirement. Operational strategy which includes decision making for product design, process, capacity, location, layout, quality, production planning, inventory and supply chain which supports the business strategy of RAC that are cost, time, quality and variety.
The call out services at RAC is basically refers to the customer services challenges faced by the organisation. The organisations now outsource their call out services which provide them the benefits for customer satisfaction. The callout services are sales and customer acquisition, answering services, car rental reservations, customer relation and loyalty management, reservation sales, warranty support, maintenance and repairs reminder, roadside assistance program, customer care and service. However this call out services faces numerous challenges like scalability, customer expectations, data based decision making, best fit technology etc which can have both positive and negative impacts. RAC can improve their customer services by facing these challenges like first call resolution, 24 hours multi channel customer services, automatic call distributor and many more (Zettner.et.al. 2012).
The factors contributing to poor satisfaction are:
The other factors affecting the poor customer satisfaction may be personal issues of employees, not providing correct solution to the customer, incentives and salary not connected with the results and many more.
RAC has supposed that its organisation is under performing from its competitors in terms of speed and prices. By vertical integration, the organisation can be benefited or it may have negative impacts too depend on the risk the organisation is bearing. It’s a risky strategy that includes complex and expensive operations yet organisation prefer for this integration without analysing the risk factor. The organisation has to analysis the risk and transaction cost by probability matrix which involves heavy set up cost and its result are also doubtful (Rothaermel, 2015). In RAC the risk is analysed on the basis of transaction matrix:
The reason why RAC has adopted vertical integration is market is risky; integration would explore the business opportunities and removes barrier to entry in international markets and allows price discrimination.
Market structure also helps in vertical integration by analysing the risk in RAC:
The vertical integration fails if there is small number of buyers and sellers there would be high trading risk in the transaction. And if there are few buyers for the automobiles with many seller then buyer dominate and the risk still exist for RAC organisations because buyer has many options for the similar product. In both the cases the organisation is having high risk for vertical integration. On the other hand if the buyers are many and the sellers are few then sellers dominate and this would benefit the RAC for vertical integration. So it depend on the probability matrix that the organisation would have the advantage for going for vertical integration by analysing the risk factors (Novak and Stern, 2009).
For improving quality at RAC there are different steps which need to be recommended:
The report explains about the operation management, its characteristics that involves designing, planning etc and how the operation strategy had help the RAC in decision pattern that are directly linked with the business strategy to achieve the competitive advantage in terms of cost and time. RAC call out services and the problem in meeting the customer services is detailed with the factors affecting poor customer satisfaction. The report further concludes about the risk analysis in vertical integration by using market structure matrix and transaction matrix. At the end, it recommends the quality improvements steps that should be considered by RAC for providing better customer services.
Books and Journals
Baines, T., Lightfoot, H., Peppard, J., Johnson, M., Tiwari, A., Shehab, E. and Swink, M., 2009. Towards an operations strategy for product-centric servitization. International Journal of Operations & Production Management, 29(5), pp.494-519.
Chao, G.H., Iravani, S.M. and Savaskan, R.C., 2009. Quality improvement incentives and product recall cost sharing contracts. Management Science, 55(7), pp.1122-1138.
Govindan, K., Kannan, D. and Noorul Haq, A., 2010. Analyzing supplier development criteria for an automobile industry. Industrial Management & Data Systems, 110(1), pp.43-62.
Jahanshani, A.A., Hajizadeh, G.M.A., Mirdhamadi, S.A., Nawaser, K. and Khaksar, S.M.S., 2014. Study the effects of customer service and product quality on customer satisfaction and loyalty.
Novak, S. and Stern, S., 2009. Complementarity among vertical integration decisions: personal professional development. Management Science, 55(2), pp.311-332.
Rothaermel, F.T., 2015. Strategy management. McGraw-Hill.
Wirtz, B.W., 2010. Business model management. Gabler, Wiesbaden.
Zettner, S.D., United Services Automobile Association (Usaa), 2012. Member-initiated outbound call. U.S. Patent 8,233,611.