Introduction to the Company
The company chosen for this strategic operations performance objective report is Aston Martin.
Aston Martin
Aston Martin Lagonda Limited, commonly referred to as Aston Martin, is a British private limited company specializing in the manufacturing of luxury sports cars and grand tourers (Aston Martin 2016). Established in 1914 by Lionel Martin and Robert Bamford, the company currently has about 140 locations around the world supported with more than 1,250 employees.
Its founders believed that a sports car ought to possess strong distinctive and specific characters, which reflect the highest standards to enthral owners. These values have guided Aston Martin throughout its history of growth, and they explain why the company has built some of the most iconic, innovative, and prestigious sports cars globally.
By 1950s, Aston Martin acquired its reputation of a luxurious car manufacturer after its use with James Bond, a fictional character in movies.
Main Products and/or Services
Aston Martin is known for its luxurious sports cars and grand tourers. Some of its current models include Aston Martin DB11, Aston Martin Rapide S, Aston Martin Vanquish & Vanquish Volante, Aston Martin V8 & V12 Vantage, and Aston Martin Vulcan. In addition, the company also owns Aston Martin Racing and Lagonda.
Aston Martin has expanded its operations to more than 140 locations globally. These dealer networks are intended to provide excellent services and expertise for customers who buy both new and pre-owned cars from the company.
The Main Target Customers and Competitors
The company prides itself of unique distinct features. That is highly skilled engineers at the company hand-assemble every car to meet the precise requirements and standards of its customers. The company has combined a strong heritage of luxury, distinct practices, and excellent quality alongside the latest technologies to deliver its products and services to the main target customers. This implies that Aston Martin targets an elite class of affluent customers who can afford its premium cars.
In the recent past, however, competition has increased significantly from other brands or companies, such as Mercedes Benz, Porsche, Bentley, Lexus, Audi, Maserati, Lamborghini, Ferrari, Jaguar, Alfa Romeo, Tesla, Rolls-Royce, Bugatti, among others. In fact, these companies have continued to overtake Aston Martin. For instance, between 2007 and 2014, the company sales declined from 7,300 to about 4,000 cars (Sharman 2015).
As such, Aston Martin now wants to focus on other target customers beyond its traditional customers. It is considered the biggest shake-up in decades, which strives to enhance the appeal of luxury sports cars. The approach will focus on rich younger customers and women other than rich car aficionados and men experiencing mid-life crises (Sharman 2015).
It also observed that Aston Martin wants to make its luxury cars more affordable and focus on a new strategy that would widen its target market base as competition becomes fierce and sales dwindle.
Literature Review on Operations Performance
Organisational functional processes are concerned with getting activities executed. That is, they focus on the production of goods and services to meet the diverse needs of customers. In essence, it is all about survival and prosperity for business organisations (Barnes 2008). Business strategies reflect a series of intentions that offer long-term directions required to guarantee the future success of a firm. However, irrespective of how great the strategy is, it can only become a useful reality, in practice, if it is operationally implemented and realised.
Organisations tend to define their operations based on their strategies (Najdawi, Chung, & Salaheldin 2008). Thus, operations become strategically vital for daily activities within a firm. These daily activities of operations, when aggregated, provide a long-term strategy for an organisation. Hence, long-term success and/or survival become vital for organisational strategy and operations.
Successful organisations have aligned their short-term operations activities with their long-term strategic plans to create a competitive advantage for growth and profitability. In addition, impacts of operations affect various stakeholders, both within and without an organisation. They include employees, customers, suppliers, shareholders, and the community.
Organisational decisions and actions are affected by the extent to which a firm acquires, allocates, and use its resources, which ultimately influence the outcome of the pursued objectives (Rutledge & Simpson 2010).
Quality reflects organisational abilities to offer products and services based on desired specifications and standards without flaws. Scholars consider quality as a critical component in strategic operations performance objectives because it reflects conformance (Barnes 2008). That is, products and services should simply conform to their preferred standards and specifications.
With regard to external factors, quality products and services are meant to meet and satisfy customers’ diverse expectations. As such, it creates positive experiences while lessening possible customer complaints and creating satisfied customers who are more likely to buy again or become loyal. Consequently, businesses are most likely to realise more revenues and profits. Internally, quality is used to ensure conformance, reduce production errors, and ultimately save costs (Jaeger & Matyas 2016).
Flexibility reflects the ability to transform operations. In most instances, aspects of flexibility entail changes in the volume of production, time is taken to produce products and services, production of various products and services, and innovative new products and services (Jia 2013). While flexibility may refer to different functional aspects, the most vital aspect is that flexibility allows organisations to change their operations to meet desired needs. These changes generally influence aspects of operations.
Externally, flexible operations allow companies to meet the diverse needs of their customers in different ways. For instance, an organisation can change the time or increase production capacities to meet time and volume demands while producing a mix of products and services for a wide range of choices. Flexible processes that allow organisations to innovate, introduce new ideas, and incorporate customer feedback in their design processes drive innovative ideas and products (Santa, Hyland, & Mario 2014).
As such, flexible firms can adjust day-to-day activities to cope with unexpected changes in their business environments to create competitive advantage. That is, these changes or inactions should not turn into competitive disadvantages that derail operations and relationships with various stakeholders. Flexibility in operations allows organisations to achieve a high speed of response and save costs and time.
Dependability demonstrates how organisations can provide products and services based on agreements with customers. It entails both product or service specifications and time. That is, customers get the right product or service on time. In practice, dependability could be difficult to achieve and measure. For instance, delivery dependability “means keeping delivery promises” (Slack 2015, p. 1), but it is usually characterised by delays or wrong deliveries in some instances. For external stakeholders, such as customers, dependability is extremely important because it reflects the ability of an organisation to keep its promises.
One must note that late deliveries, for instance, affect customers’ dependability on an organisation and lead to dissatisfaction. In fact, for suppliers, dependability is critical because it would influence the renewal of business contracts and future relations. Dependability, therefore, is an important performance objective that is aimed at creating better business relations with the intended goal of customer and supplier retention and attraction.
For internal operations, operational dependability influence costs. Saved time, costs, and efficiency achieved because of processes that encourage dependability are vital for the organisational realisation of both short-term and long-term goals. Moreover, dependable operations are leveraged to enhance the speed of performance and realise fast accurate responses to customers.
Speed shows how organisations execute their day-to-day activities fast in response to demands of customers, thereby providing a short duration between when a client orders a product or service and when the product is actually delivered to a customer. Organisations can track the speed of response by measuring the period between when a product or service is ordered and when the customer receives it. External aspects of speed are vital for product or service delivery because they show how to shift organisations respond to their customers.
Customers who receive their orders with speed are most likely to be satisfied with services. In fact, organisations have often used speed to dictate premium prices. At the same time, speed is used internally to create a competitive edge in a highly competitive industry (Hemmatfar, Salehi, & Bayat 2010). FedEx, for instance, can rely on its speed to charge premium prices for same day transportation and delivery services. Internally, organisations use speed to control costs. Speed is used to reduce inventories and avert risks.
Costs associated with product storage are significantly reduced when products are delivered to customers as scheduled. Further, fast delivery of services to consumers also reduces costs. For instance, airline firms that have abilities to process passenger at their terminals swiftly have significantly realised cost reduction while enhancing turnaround time, thereby facilitating the use of fleets. Moreover, speed and dependability are aspects of operations performance that rely greatly on each other. An organisation cannot realise improved processes when their suppliers are not dependable. That is, slow throughputs that hamper internal processes ultimately affect dependability and costs.
Cost reflects the ability of organisations to control costs during product or service delivery. Most organisations strive for low-costs of operations, but it is imperative to recognise that cost structures of firms generally differ even if they are in the same industry. Internally, Toyota, for instance, has achieved low costs of production because of its approach of lean operations, which strives to deliver quality cars at low costs.
It is expected that external stakeholders should also realise the effect of low costs of production in pricing strategy of the company. In this case, costs ultimately affect revenues and profitability of the company. It is therefore a center of focus for the company. In fact, most performance objectives are aimed at reducing costs for profits. That is, high quality services and products produced at low costs and using flexible operational processes and delivered with speed using highly dependable processes will offer both internal and external competitive edge to an organisation while helping in cost saving.
(Barnes 2008)
Superior outcomes demonstrated at one or more of these aspects of operations performance objectives are most likely to allow a firm to focus on a business strategy depending on related competitive edge. Nevertheless, it is imperative to recognise that the success of a given firm business strategy generally relies on not only on the ability of operations to attain efficiency in a suitable performance objectives, but significantly on external stakeholders, such as customers, accepting the preferred competitive element on which the business strategy is derived. Therefore, aligning operations efficiency with customer needs is the center of nay operations driven strategy.
Five factors that relate to strategic operations performance objectives have been presented. However, it is usually difficult of a firm to excel in all these aspects (Slack, Chambers, & Johnston 2010). As such, trade-off is often noted. That is, it could be impossible for any organisation to realise positive outcomes in all these elements of operations simultaneously.
Hence, an operations strategy should be driven by one clear objective identified based on priorities aimed at achieving operations excellence. They must be selected from cost, flexibility, speed, quality, and dependability. While it could be difficult to realise all these aspects of operations performance objectives, it is claimed that Toyota has been able to attain operational excellence and now uses it as a strategic weapon (Shehadeh et al. 2016; Barnes 2008).
Application of Theoretical Concepts to Aston Martin Operations Performance
Quality
Aston Martin derives its status of uniqueness from its sports cars and services. The company asserts that every car is hand assembled by extremely skilled personnel to meet the exact specifications and standards of customers (Aston Martin 2016). That is, the products are almost customised for customers. The company boasts of rich heritage, distinct culture, customary artisanship, and modern technologies, which makes the company’s products and services exceptionally special.
In addition, the association of Aston Martin with the fictional character, James Bond, led the company to establish iconic, luxurious brand not seen among many competitors. Today, Aston Martin has been able to fetch premium prices on its sports cars because of quality. The company has established more than 140 locations globally to help in sales and service delivery for new and pre-owned models.
Quality sports cars have given Aston Martin competitive advantage over other manufacturers, such as Toyota, which focus on mass market driven by relatively cheap cars.
For some critics, this year (2016), Aston Martin delivered the most beautiful car of the year – the Vanquish Zagato Concept, which integrated some design elements of the DB11, the One-77, the Vulcan, and the Vantage GTS (Elliott 2016). These features reflect quality in design and performance.
Cost
Cost is important for any company. While it is difficult to determine the exact costs of production, one must observe that Aston Martin could be spending relatively high to produce its supercars. Consequently, costs of these sports cars have always been premium. As such, customers rarely realise any cost advantage when it comes to Aston Martin brand, which reflects performance, luxury, style, and uniqueness not found in other brands.
The company has focused on premium prices to increase revenues and profitability. On the other hand, it has also managed to block many would-be customers who yearn for such beautiful, expensive cars, but cannot just pay for them.
Flexibility
In every organisation, the design department always strives for new ways of improving in-house process. On this note, Aston Martin now boasts of the state-of-the-art design house equipped with pioneering design and 3D printing machines, which extremely enhance designs and save time and costs.
Highly flexible technicians who collaborate deliver luxurious cars on time with design specifications required by customers. Moreover, the flexible approach adopted by Aston Martin has allowed it to work with other companies, such as Daimler AG, to deliver Mercedes-AMG for new models. At the same time, the company designs some of the engines and cars used in the motorsports – Aston Martin Racing.
The team is highly collaborative to deliver new models and engines on time, produce a variety of sports cars and engines, and meet order demands after the product launch.
Speed
In terms of speed, Aston Martin has not been effective to adapt to needs of external stakeholders, specifically customers. For instance, the company was slow to realise that its traditional market could no longer offer a reliable source of revenues and that it required new markets focusing on young car enthusiasts and women as new niches. Moreover, it was slow to enter new emerging markets, such as China. It now struggles after its major rivals have dominated these markets.
Aston Martin now intends to develop models for new markets and target consumers with more affordable prices (Sharman 2015).
Dependability
Sports cars from Aston Martin are highly dependable. There are no cases of scandals or failed systems as witnessed with its major rivals, especially VW. As such, customers want cars from the company because they guarantee user satisfaction and value for money.
From this analysis, one can observe that Aston Martin has not been able to realise some elements of strategic operations performance objectives because there is always a trade-off. Thus, when quality is attained, for instance, consumers do not realise low costs because of premium prices, which limit the ability of the company to compete on cost advantage.
Reference List
Aston Martin 2016, The Company.
Barnes, D 2008, Operations Management: An International Perspective, Cengage Learning, London.
Elliott, H 2016, ‘The Most Beautiful Car of 2016 Is Already Here‘, Bloomberg.
Hemmatfar, M, Salehi, M & Bayat, M 2010, ‘Competitive Advantages and Strategic Information Systems’, International Journal of Business and Management, vol. 5, no. 7, pp. 158-169.
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Najdawi, M, Chung, Q & Salaheldin, S 2008, ‘Expert Systems for Strategic Planning in Operations Management: A Framework for Executive Decisions’, International Journal of Management and Decision Making, vol. 9, no. 3, pp. 310-327.
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Santa, R, Hyland, P & Mario, F 2014, ‘Technological Innovation and Operational Effectiveness: Their Role in Achieving Performance Improvements‘, Production Planning & Control, vol. 25, no. 12, pp. 969-979.
Sharman, A 2015, ‘Aston Martin set for shake-up and targets new buyers’, Financial Times.
Shehadeh, R, Al-Zu’bi, Z, Abdallah, AB & Maqableh, M 2016, ‘Investigating Critical Factors Affecting the Operational Excellence of Service Firms in Jordan’, Journal of Management Research, vol. 8, no. 1, pp. 18-49. doi: 10.5296/jmr.v8i1.8680.
Slack, N 2015, ‘Delivery Dependability’, Wiley Encyclopedia of Management, vol. 10, pp. 1-2. doi: 10.1002/9781118785317.weom10014.
Slack, N, Chambers, S & Johnston, R 2010, Operations Management, 6th edn, Finanical Times Prentice Hall, London.