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Competitive factors and performance objectives for the legal firm

Table 3.2 has used the information supplied above to identify the order winners, qualifiers and
less important competitive factors for the two categories of service. As the managing partner
suspects, the two types of service are very different. Routine services must be relatively
inexpensive and fast, whereas the clients for specialist services must trust the quality of advice
and range of legal skills available in the firm. The customers for routine services do not expect
errors and those for specialist services assume a basic level of dependability and speed. These
are the qualifiers for the two categories of service.
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One way of generalizing the behavior of both customers and competitors is to link it to the life
cycle of the products or services that the operation is producing. The important implication of
this for operations management is that products and services will require operations strategies
in each stage of their life cycle.
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Introduction stage
When a product or service is introduced, it is likely to be offering something new in terms of its
design or performance, with few competitors offering the same product or service. The needs
of customers are unlikely to be well understood, so the operations management needs to
develop the flexibility to cope with any changes and be able to give the quality to maintain
product/service performance.
Growth stage
As volume grows, competitors may enter the growing market. Keeping up with demand could
prove to be the main operations preoccupation. Rapid and dependable response to demand
will help to keep demand buoyant, while quality levels must ensure that the company keeps its
share of the market as competition starts to increase.
Maturity stage
Demand starts to level off. Some early competitors may have left the market and the industry
will probably be dominated by a few larger companies. So operations will be expected to get
the costs down in order to maintain profits or to allow price cutting, or both. Because of this,
cost and productivity issues, together with dependable supply, are likely to be the operation’s
main concerns.
Decline stage
After time, sales will decline, with more competitors dropping out of the market. There might
be a residual market, but unless a shortage of capacity develops the market will continue to be
dominated by price competition. Operations objectives continue to be dominated by cost.
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This means that the way an organization inherits, or acquires, or develops its operations
resources will, over the long term, have a significant impact on its strategic success. .
Furthermore, the impact of its ‘operations resource’ capabilities will be at least as great, if not
greater, than that which it gets from its market position. So understanding and developing the
capabilities of operations resources, although often neglected, is a particularly important
perspective on operations strategy.
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It is these intangible resources, as well as its tangible resources, that an operation needs to
deploy in order to satisfy its markets. The central issue for operations management, therefore,
is to ensure that its pattern of strategic decisions really does develop appropriate capabilities
within its resources and processes.
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A distinction is often drawn between the strategic decisions which determine an operation’s
structure and those which determine its infrastructure. An operation’s structural decisions are
those which we have classed as primarily influencing design activities, while infrastructural
decisions are those which influence the workforce organization and the planning and control,
and improvement activities. This distinction in operations strategy has been compared to that
between ‘hardware’ and ‘software’ in computer systems.
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The ‘process’ of operations strategy refers to the procedures which are, or can be, used to
formulate those operations strategies which the organization should adopt. Most consultancy
companies have developed their own frameworks, as have several academics. Typically, many
of these formulation processes include the following elements:
● a process which formally links the total organization’s strategic objectives (usually a business
strategy) to resource-level objectives;
● the use of competitive factors (called various things such as order winners, critical success
factors, etc.) as the translation device between business strategy and operations strategy;
● a step which involves judging the relative importance of the various competitive factors in
terms of customers’ preferences;
● a step which includes assessing current achieved performance, usually as compared against
competitor performance levels; ● an emphasis on operations strategy formulation as an
iterative process;
● the concept of an ‘ideal’ or ‘green-field’ operation against which to compare current
operations. Very often the question asked is: ‘If you were starting from scratch on a green-field
site, how, ideally, would you design your operation to meet the needs of the market?’ This can
then be used to identify the differences between current operations and this ideal state;
● a ‘gap-based’ approach. This is a well-tried approach in all strategy formulation which
involves comparing what is required of the operation by the marketplace against the levels of
performance the operation is currently achieving.
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The five Ps of Ken Platt are Purpose, Point of Entry, Process, Project Management, Participation.
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Purpose refers to the goals for which operational strategies are implemented.
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Point of entry refers to the support from within the organization for the implementation of the
strategies.
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The processes which are used for the implementation of strategies should be very clear.
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A project management strategy should exist within the organization.
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Finally, participation of all personnel concerned should be ensured for successful
implementation.
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Efficient frontier is a concept in operations that states that a company is ‘efficient’ if it has the
highest perceived value for a given cost to deliver value of the company. Thus it indicates the
operational efficiency of the company considering whether the company is a low-cost provider
or a high-cost provider and how should it position itself as per their strategy.
The curve represents the efficient frontier. Companies 1 and 2 are on the efficient
frontier even though company 1’s price is a lot higher than company 2. But both are
operationally efficient. Company 3 is operationally inefficient as it lies below the curve.
This indicates that the company 3 has higher price than its low-cost competitors, and its
perceived value is less than the higher prices competitors.
Thus company 3 will have to work for moving towards the efficient frontier and become
operationally efficient.
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Operation Focus - shows how to do much more with existing resources in terms of throughput,
response time and quality. It provides a system view and will touch upon performance measures,
operations management, quality, cost-accounting, pricing, and above all, value creation and value
enhancement.

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