Case Summary
Recently Hazel opened her small business and now offers lawn mowing services for her neighbors. In a short time, Hazel managed to create a good client base, hired two part-time assistants, expanded the service range, and, currently, she continues to seek the ways for growth. However, business expansion entails greater responsibilities and, as an operations manager, Hazel needs to consider multiple aspects of performance, develop a strategic approach, and forecast risks.
A smart operations management is essential to Hazel’s success as an independent entrepreneur because, despite all achievements she has already made, her position remains unstable and more challenges wait for her on the way to greater accomplishments.
Case Analysis
Operations management implies the process of planning, exploitation, and enhancement of a firm’s operational system created for the efficient and effective production and delivery of products or services (Render & Heizer, 2004). Operations systems use organizational resources to convert inputs into outputs and achieve the desired production goals. Being an operations management, Hazel should execute multiple managerial activities, including forecasting and project management, to support the smooth work of her operations system and improve performance outcomes.
Usually, the demand for services is seasonal and is characterized by complex and rapid fluctuations. Although these changes are predictable, it may be difficult to meet customer needs in the peak seasons and avoid operational downtime and inefficient use of resources. Forecasting customer demand and other environmental factors should be an initial stage of the management process. Hazel should identify the required resources including time, materials, workforce, range and scope of service, customer needs and preferences, and potential risks that may inhibit work completion (Render & Heizer, 2004).
Project management activities should aim to meet customer needs. Thus, it is important to monitor service demands daily and keep track of competitors’ offerings. Along with the analysis of customer preferences, other steps included in the strategic project planning may include generation of new ideas, preliminary evaluation and selection of the most appropriate ways for their realization, investigation of consumer characteristics of a new service, identification of the ways for a new service adjustment to the existing services range, trial sales, mass production, and development of a marketing approach (Harrington & McNellis, 2006).
It is important to remember that the completion of each phase of the project plan should be followed by the evaluation of results. This activity will help to achieve greater credibility and accuracy.
To some extent, customers are involved in the process of service production. This fact emphasizes the importance of considering customer interests because, without an accountable service development approach, consumers may develop a negative perception of service quality. If a customer cannot find something he/she wants, he/she usually tends to blame a service or product provider and may share his/her discontent with other potential customers. Since the costs for the attraction of new clients are higher than the costs for customer retention, the importance of meeting consumer interests is apparent.
In the service sector, the major role in consumer satisfaction is given to the personal interactions and internal organizational environment (Kuusisto & Paallysaho, 2008). But Hazel should consider that customer subjective perceptions of service take a leading part in the development of positive experiences and customer loyalty. Customers are regarded as an important variable influencing the quality of service as service production and consumption are simultaneous (Kuusisto & Paallysaho, 2008). Secondly, consumer behavior may be unpredictable. Therefore, to mitigate the potential risks, it may be suggested to determine the measurable and tangible criteria of the quality of the completed works.
Recommendations: Trade-Offs
Business expansion inevitably provokes an increase in costs. To achieve sustainable performance, Hazel will need to consider the expenditures for materials and services, administration, promotion, marketing, and compensation for staff. To minimize financial risks, it is suggested to analyze the structure of expenditures and revenues (Zimmerer, Scarborough, & Wilson, 2008). The evaluation of sources of profit and their significance, costs of new customer attraction, labor and skills, their regularity, etc. should be an intrinsic part of the business model. A detailed view of sources of profits or costs and their categorization according to the principle of priority allows the development of an informational finance model and facilitates the forecast of future financial flows (Zimmerer, Scarborough, & Wilson, 2008).
At the initial stages of business expansion, the need for trade-offs constantly arises due to the scarcity of resources. A start-up company has to compromise in multiple areas of performance: technology, time, human resources. Financial resources become a source of trade-offs most often. Therefore, when developing a business model, Hazel must also take into account the size of investment required for the implementation of her business model – it should be realistic and appropriate for the industry. Additionally, the identification of key success factors regarding commercial ideas, market, organizational abilities, competitive strategy, economy, and personal influences will support organizational growth.
Conclusion
An operation manager analyzes situations, forecasts their development, determines goals, and organizes their achievement. Since Hazel plans to expand business in the service sector, she needs to consider the environmental factors and characteristics associated with it.
It is observed that the consideration of customer preferences is a major prerequisite of forming a positive customer perception of service quality. Thus, customer-orientation should be a core element of Hazel’s strategic planning and business model. Moreover, customer retention may favorably affect the balance between organizational expenditures and revenues. Therefore, by focusing on meeting the consumers’ interests, Hazel will mitigate the potential risks and, in this way, will minimize the needs for compromising diverse resources.
References
Harrington, H. J., & McNellis, T. (2006). Project management excellence: The art of excelling in project management. Chico, CA: Paton Press LLC.
Kuusisto, A., & Paallysaho, S. (2008). Customer role in service production and innovation – looking for directions for future research. Web.
Render, B., & Heizer, J. (2004). Principles of operations management. Upper Saddle River, NJ: Pearson/Prentice Hall.
Zimmerer, T., Scarborough, N. M., & Wilson, D. (2008). Essentials of entrepreneurship and small business management. Upper Saddle River, NJ: Pearson/Prentice Hall.