How does Flextronics’ operations strategy help the company to satisfy its customers?

1. How does Flextronics’ operations strategy help the company to satisfy itscustomers?
2. What specific operations competences must Flextronics’ have in order to make a
success of its strategy?
3. Compare the operations strategies of Flextronics and a full-service airline such as
Ethiopian Airlines.
Practical Study Activities
1. Write down five services that you have ‘consumed’ in the last week. Try to make
these as varied as possible. Examples could include public transport, a bank, any shop
or supermarket, attendance at an education course, a cinema, a restaurant, etc.

Arsi University
MA Program
Operations Management
Case Analysis and Practical Activities-PART-I
Case 1-Oxfam’s Humanitarian Operations
Oxfam is a major international development, relief and campaigning organization dedicated
to finding lasting solutions to poverty and suffering around the world. It works closely with
the communities it helps through a network of local partners and volunteers to provide safety,
dignity and opportunity for many disadvantaged people around the world. Oxfam’s network
of charity shops is run by volunteers and is a key source of income. The shops sell donated
items and handicrafts from around the world, giving small-scale producers fair prices,
training, advice and funding.
However, Oxfam is perhaps best known for its work in emergency situations, providing
humanitarian aid where it is needed. It has articular expertise in providing clean water and
sanitation facilities. Around 80 percent of diseases and over one-third of deaths in the
developing world are caused by contaminated water. Yet much of Oxfam’s work continues
out of the spotlight of disasters and the charity provides continuing help, working with poor
communities through a range of programmes.
Whether the disasters are natural (such as earthquakes and storms) or political (such as riots
and wars), they become emergencies when the people involved can no longer cope. In poor
countries, disasters leave homeless and hungry people who will become ill or die within days
if they do not get aid. In such situations, Oxfam, through its network of staff in local offices
in 70 countries, is able to advice on the resources and help that are needed and where they are
needed. Indeed, local teams are often able to provide warnings of impending disasters, giving
more time to assess need and coordinate a multi-agency response.
The organization’s head quarters in Oxford provides advice, materials and staff, often
deploying emergency support staff on short-term assignments when and where their skills are
required. Shelters, blankets and clothing can be flown out at short notice from the
Emergencies Warehouse. Engineers and sanitation equipment can also be provided, including
water tanks, latrines, hygiene kits and containers. When an emergency is over, Oxfam
continues to work with the affected communities through its local offices to help people
rebuild their lives and livelihoods.
Discussion Question
1 What are the main issues facing Oxfam’s operations managers?
Case Study 2: The role of the CEO in managing operations
The following is adapted from Fortune magazine, 21 June 1999: What got Eckhard Pfeiffer
fired? What fault did in Bob Allen? Or Gil Amelio, Bob Stempel, John Akers, or any of the
dozens of other chief executives who took public pratfalls in this unforgiving decade?
Suppose what brought down all these powerful and undeniably talented executives was just
one common failing? It’s an intriguing question and one of deep importance not just to CEOs
and their boards, but also to investors, customers, suppliers, alliance partners, employees, and
the many others who suffer when the top man stumbles. Consider the Pfeiffer episode. The
pundits opined, as they usually do in these cases, that his problem was with grand-scale
vision and strategy. Compaq’s board removed the CEO for lack of ‘an Internet vision’, said
USA Today. Yep, agreed the New York Times, Pfeiffer had to go because of ‘a strategy that
appeared to pull the company in opposite directions’.
But was flawed strategy really Pfeiffer’s sin? Not according to the man who led the coup,
Compaq Chairman Benjamin Rosen. ‘The change [will not be in] our fundamental strategy –
we think that strategy is sound – but in execution’, Rosen said. ‘Our plans are to speed up
decision-making and make the company more efficient.’ You’d never guess it from reading
the papers or talking to your broker or studying most business books, but what’s true at
Compaq is true at most companies where the CEO fails. In the majority of cases
we estimate 70 percent the real problem isn’t the high-concept boners the boffins love to talk
about. It’s bad execution. As simple as that: not getting things done, being indecisive, not
delivering on commitments. It’s clear, as well, that getting execution right will only become
more crucial. The world wide revolution of free markets, open economies, and lowered trade
barriers and the advent of e-commerce has made virtually every business far more brutally
competitive. Yet you needn’t be ruthless to get things done. Ron Allen’s willingness to swing
the ax so antagonized Delta’s work force that the board asked him to leave.
When Lou Gerstner parachuted in to fix the shambles John Akers had left of IBM, famously
declaring that ‘the last thing IBM needs right now is a vision’, he focused on execution,
decisiveness, simplifying the organization for speed, and breaking the gridlock. Many
expected heads to roll, yet initially Gerstner changed only the CFO, the HR chief,
and three key line executives – and he has multiplied the stock’s value tenfold. GE’s Jack
Welch loves to spot people early, follow them, grow them, and stretch them in jobs of
increasing complexity. ‘We spend all our time on people’, he says. ‘The day we screw up the
people thing, this company is over.’ He receives volumes of information – good and bad,
from multiple sources – and he and his senior team track executives’ progress in detail
through a system of regular reviews. His written feedback to subordinates is legendary:
specific, constructive, to the point. Of course some come up short. When Welch committed
the company to achieving six-sigma quality a few years ago, he evaluated how the beliefs of
high-level executives aligned with six sigma values. He confronted those who weren’t on
board and told them GE was not the place for them.
This continual pruning and nurturing gives GE a powerful competitive advantage few
companies understand and even fewer achieve . . . Decision gridlock can happen to anyone,
but it happens most often to CEOs who’ve spent a career with one company, especially a
successful one. The processes have worked, they’re part of the company’s day-to-day life –
so it takes real courage to blow them up. Listen to Elmer Johnson, a top GM executive,
describe this problem to the executive committee: ‘The meetings of our many committees
and policy groups have become little more than time-consuming formalities. The outcomes
are almost never in doubt . . . There is a dearth of discussion, and almost never anything
amounting to lively consideration . . . It is a system that results in lengthy delays and faulty
decisions by paralyzing the operating people . . .’. That was in 1988, during Roger
Smith’s troubled tenure, and the problem persisted through Stempel’s brief reign. Neither
man could break the process machine, and both must be considered failed CEOs . . . Keeping
track of all critical assignments, following up on them, evaluating them – isn’t that kind of . .
. boring? We may as well say it: Yes. It’s boring. It’s a grind. At least, plenty of really
intelligent, accomplished, failed CEOs have found it so, and you can’t blame them. They just
shouldn’t have been CEOs. The big problem for them is not brains or even ability to identify
the key problems or objectives of the company. When Kodak ousted Kay Whitmore,
conventional wisdom said it was because he hadn’t answered the big strategic questions
about Kodak’s role in a digital world. In fact, Kodak had created, though not publicized, a
remarkably aggressive plan to remake itself as a digital imaging company. Whitmore
reportedly embraced it. But he couldn’t even begin to make it happen. Same story with
William Agee at Morrison Knudsen – plausible strategy, no execution.
The problem for these CEOs is in the psyche. They find no reward in continually improving
operations . . . Any way you look at it, mastering execution turns out to be the odds-on best
way for a CEO to keep his job. So what’s the right way to think about that sexier
obsession, strategy? It’s vitally important – obviously. The problem is that our age’s
fascination with strategy and vision feeds the mistaken belief that developing exactly the
right strategy will enable a company to rocket past competitors. In reality, that’s less than half
the battle.
This shouldn’t be surprising. Strategies quickly become public property. Ask Michael Dell
the source of his competitive advantage, and he replies, ‘Our direct business model’. Okay,
Michael, but that’s not exactly a secret. Everyone has known about it for years. How can it be
a competitive advantage? His answer: ‘We execute it. It’s all about knowledge and
execution’. Toyota offers anyone, including competitors, free, in-depth tours of its main US
operations–including product development and distributor relations. Why? The company
knows visitors will never figure out its real advantage, the way it executes. Southwest
Airlines is the only airline that has made money every year for the past 27 years. Everyone
knows its strategy, yet no company has successfully copied its execution.
Discussion Questions
1. From the above case, why is it so important that the Chief Executive
Officer really understands operations management?
2. Why is it vital for operations and marketing to understand each
other’s roles within the firm?
3. Why is there still conflict between business and operations strategies?
Case Study 3: Flextronics and its Excellent Operational Services
Behind every well-known brand name in consumer electronics, much of the high-tech
manufacturing which forms the heart of the product is probably done by companies few of us
have heard of. Companies such as Ericsson and IBM are increasingly using electronic
manufacturing services (EMS) companies which specialize in providing the outsourced
design, engineering, manufacturing and logistics operations for big brand names. Flextronics
is one of the leading EMS providers of ‘operational services’ to technology companies. With
over 70,000 employees spread throughout its facilities in 28 countries, it has a global
presence which allows it the flexibility to serve customers in all the key markets throughout
the world.
From a market requirements perspective, Flextronics manufacturing locations have to balance
their customers’ need for low costs (electronic goods are often sold in a fiercely competitive
market) with their need for responsive and flexible service (electronics markets can also be
volatile). From an operations resource perspective, Flextronics could have set up
manufacturing plants close to its main customers in North America and Western Europe. This
would certainly facilitate fast response and great service to customers; unfortunately these
markets also tend to have high manufacturing costs. Flextronics’ operations strategy must
therefore achieve a balance between low costs and high levels of service in its strategic
location and supply network decisions.
One way Flextronics achieves this through its operations strategy is by adopting what it calls
its ‘industrial park strategy’. This involves finding locations which have relatively low
manufacturing costs but are close to its major markets. It has established industrial parks in
places such as Hungary, Poland, Brazil and Mexico. Flextronics’ own suppliers also are
encouraged to locate within the park to provide stability and further reduce response times.
Discussion Questions
1. How does Flextronics’ operations strategy help the company to satisfy itscustomers?
2. What specific operations competences must Flextronics’ have in order to make a
success of its strategy?
3. Compare the operations strategies of Flextronics and a full-service airline such as
Ethiopian Airlines.
Practical Study Activities
1. Write down five services that you have ‘consumed’ in the last week. Try to make
these as varied as possible. Examples could include public transport, a bank, any shop
or supermarket, attendance at an education course, a cinema, a restaurant, etc.
For each of these services, ask yourself the following questions:
• Did the service meet your expectations? If so, what did the management of the service
have to do well in order to satisfy your expectations? If not, where did they fail? Why
might they have failed?
• If you were in charge of managing the delivery of these services, what would you do to
improve the service?
• If they wanted to, how could the service be delivered at a lower cost so that the service
could reduce its prices?
• How do you think that the service copes when something goes wrong (such as a piece of
technology breaking down)?
• How do you think the service copes with fluctuation of demand over the day, week,
month or year?
These questions are just some of the issues which the operations
managers in these services have to deal with. Think about the other issues
they will have to manage in order to deliver the service effectively.