INSTITUTE OF ACCOUNTANCY ARUSHA

NAME; JACKSON E MOSHI

REGISTRATION NUMBER; MBA-01-002-2022

COURSE; MBA-GENERAL

MODULE NAME; OPERATION MANAGEMENT

FACILITATORS NAME; MR GERMANUS. S. CHOLE

INDIVIDUAL ASSIGNMENT

ACADEMIC YEAR; 2022/2023

In terms of competitive criteria, different customers have different values about a food product. In order to
better satisfy a target group of customers, a food company must align its production processes and
operations to the needs and requirements of customers in a competitive and profitable manner. Below are
competitive criteria and how a company in the food sector can align production processes and operations
to be more competitive

Cost

An organization can choose from this point of view, gain competitive advantages by reducing production
costs, either by finding cheaper alternative sources of raw materials of the same quality as used by
competitors in the food industry, or by using more efficient and modern machinery that reduces costs.
Labor costs, maintenance costs and energy costs while increasing productivity.

Generated value.

For a target customer group whose main competitive criterion is the value generated by the food company,
the company must adapt its processes to meet the functional, cost, social and psychological value
perceived by the customer through product differentiation and corresponding product pricing.

Innovation-based customers. A food company whose goal is to appeal to customers who are intrigued by
the innovative features of its product must invest in research and development processes to develop both
intrinsic and external innovative features that meet the needs and satisfaction of customers.

Customer performance based on delivery. The food company adopting such competitive criteria should aim
to increase efficiency through the use of modern production and distribution methods increase to meet the
needs of its customers timely and with precision.

b) Discuss Four (4) traditional competitive criteria used in this case study and explain implication of each
criteria in business operations.

According to the case study, the four traditional competitive criteria that can be used in the food industry to
ensure market performance are

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Value generated can be defined as how much customers are willing to pay for a product and/or a service
taking into account the performance of its attributes and the perceived benefits. It entails higher initial cost
for product and service design, and process design, and more emphasis on assuring supplier quality.

Innovation, is defined as the company's ability to launch new products and/or services in a short time. Its
implication is the time-to-market, how quickly new products can be implemented.

Performance of delivery refers to the company's ability to deliver its products and/or services to customers
according to what was planned, also contributing to a greater level of trust in the customer-supplier
relationship. Its implication is it requires flexibility, extra capacity, and higher levels of some inventory
items.

Food safety. It is defined as the guarantee that the food will not sicken the consumer when prepared and/or
consumed according to its intended use. Its implication is the making sure that the product and its process
performance and comply with standard specification so as to meet customer demands while maintaining
their health statutes.

c) Describe the term used to state the simultaneously impossibility of meeting all criteria in ( b) above and
explain how buyers can affect this industry

Trade-offs are defined by the conflict between objectives: a better performance of a competitive criterion
impairs the performance of another competitive criterion (Moori et al., 2009). According to this concept, it is
practically impossible for a company to perform well on all competitive criteria.

How buyers affect this industry

The buyer limits the quantities procured resulting in a lower price for suppliers and, in a single stage setting,
a higher price for consumers.

But there are other ways in which buyer power may occur, as expressed in specific contractual terms
between participants at each stage of the food supply chain. Examples include de-listing (or threat of
delisting) of suppliers, slotting fees, forced discounts, retrospective payments, late payment, retrospective
changes to contracts.

They are all means via which buyers may influence the relations with suppliers. Concerns here relate not
just to prices upstream suppliers receive but to the risk for suppliers arising from unforeseen changes in the
contract or the terms via which suppliers engage with retailers.

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d) Assuming that, trade-offs related to the adoption of competitive criteria in (b) above exist, it is necessary
to understand them from the customer's point of view. Explain Why?

it is necessary to understand trade-offs related to the adoption of competitive criteria from the customer's
point of view as it helps to better align the production system to the value to be delivered to customers. For
example, for food safety as a competitive criterion, the food processing and packaging plant should ensure
their processes and activities are done in a hygienic environment and should involve outside partners to
verify the quality and safety of their products such as TBS Tanzania bureau of standards and TMDA
Tanzania medical and drugs association.

e) Describe two (2) views that can be used to analyze the concept of operations strategy in the food
industry.

With reference from the case study given, their mainly two views that can be used to analyze the concept of
operations strategy in the food industry which are the market-oriented view, and the resource-based view.

Market oriented view is an approach to business that prioritizes identifying the needs and desires of
consumers and creating products and services that satisfy them.

Resource Based View is an approach that starts from the concept that a firm’s performance is determined
by the resources it has at its disposal. The way these resources are used and configured enable the firm to
perform and can provide a distinct competitive advantage.

f) Studies show that firms may be involved in Strategic alliance in food industry and can have 11% higher
revenue and 20% higher growth rate than those that did not. Giving examples, explain three (3) important
reasons for firms in food industry to be in strategic alliance.

strategic alliances are increasingly becoming the pattern for adding and sharing competences. The need
for speed, and for bringing in diverse knowledge about new technologies and markets, makes partnerships
between companies often a flexible and effective way to exploit market opportunities as economy
globalization has led companies to seek alternatives in processes and operations in order to become
competitive in the market. Such alternatives involve strategic alliance with other companies within the food
industry. The following are the three important reasons for firms in food industry to be in strategic alliance.

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Market entry. A strategic alliance can ease entry into a foreign market. First, the local firm can provide
knowledge of markets, customer preferences, distribution networks, and suppliers. This is especially true in
Eastern Europe. Bestfoods is a food-processing firm that sells products such as Mazola corn oil. Bestfoods
has formed strategic alliances with firms in several Eastern European countries that, in turn, market its
products. (Griffin, 1999)

Synergistic effects of shared knowledge and expertise. A strategic alliance can help a firm gain knowledge
and expertise. Further, when partners contribute skills, brands, market knowledge, and assets, there is a
synergistic effect. The result is a set of resources that is more valuable than if the firms had kept them
separate. (Griffin, 1999)

Gaining competitive advantage. Similarly, a strategic alliance can help a firm gain a competitive advantage.
For example, a strategic alliance can be used to take advantage of a favorable brand image that has been
established by one of the partners. (Establishing a brand image is a lengthy, expensive process.) It can
also be used to gain shelf space for products. For example, PepsiCo formed a joint venture with the
Thomas J. Lipton Co. to market ready to-drink teas throughout the United States. Lipton contributed brand
recognition in teas and manufacturing expertise. PepsiCo, as the world's second-largest soft-drink
manufacturer, shared its extensive distribution network. (Griffin, 1999)

g) What is the role of the government in the food industry in recognizing competitive criteria as central to
the formulation of operations strategy?

The government under the agricultural policy act has set the following policies to be enacted in recognizing
competitive criteria as central to the formulation of operations strategy

(i) Farmers and agricultural marketing actors will be supported to negotiate and compete effectively in
regional and international markets;

(ii) The Government will protect agricultural marketing stakeholders against unfair trade practices; (iii)
Transparent application and predictability of tariffs on agricultural products will be promoted; (iv) The
Government, in collaboration with other stakeholders, will ensure that trade policies, rules and regulations
in regional markets are harmonized.

(v) The Government, in collaboration with other stakeholders, will raise awareness on the opportunities
inherent in bilateral, regional and multilateral trading systems; and,

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(vi) The Government will encourage producers to directly enter the markets instead of using middlemen.
(Agricultural marketing policy, 2008)

h) Firms in the food industry may reorganize their value chain so as to bypass some cost producing
activities. What can be the intention of this operation strategy?

The operational strategy used in this case study is the low cost strategy which involves making the
achievement of low cost a theme and by finding ways to drive costs out of business by either promoting
efficiency and controlling costs along the value chain or reorganizing a firm’s value chain so as to bypass
some cost producing activities. The intention of this operational strategy is to lower price of products so as
to gain market share and to earn higher profit margins by selling at market price.

i) Is it possible to imitate a core competency of a strong manufacturing firm in this industry? Explain by
giving example(s)

yes, it Is possible to imitate a core competency of a strong manufacturing firm in the food industry if the
underlying resources and capabilities of such a firm have the following characteristics

transparent. the speed with which other firms can understand the relationship of resources and capabilities
supporting a firm’s strategies. For example, the chicken made by Kentucky fried chicken restaurants would
be imitable to every other restaurant if the competition understood the recipe and formula for making such a
dish which has been kept as a trade secret.

transferability. the ability of a competitor to gather the resources and capabilities necessary to support a
competitive challenge. For example, it may be difficult for a wine maker to duplicate a South african
winery’s key resources of land & climate especially if the imitator is located in Tanzania.

Replicability. the ability of competitors to use duplicated resources and capabilities to imitate another firms
success. For example, the hiring of chefs and managers from competitor restaurants.

j) Generally, 80% of problems are caused by 20% of the activities in the food value chain. To minimize
these problems a check is made to ensure that the value chain process produce output which meet
specification in terms of quantity needed. Describe three points at which this can be done in food value
chain and mention the rule which governs this scenario.

The rule that governs this scenario is known as the Pareto principle.

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To minimize problems a check is made to ensure that the value chain process produce output which meet
specification. The three points that are used are the use of appropriate hygienic practices, production
methods and biotechnology procedures to minimize the problems.

k) What are the current specific challenge(s) in the food value chain and its implication to firm’s
competitiveness in the industry?

The food value chain refers to the process of preparing a food product from start to finish: sourcing the raw
materials and taking the food through a manufacturing process, through to the packaging of the product,
the sale to the customer and the delivery so as create an output with much greater value than input. the
current specific challenges in the food value chain differs from one country to the other.

Fast-changing consumer habits.

Convenience is no longer the main driving force behind purchasing decisions. Today’s consumers are not
bound to purchasing options as dictated by retailers. Thanks to the internet, they are able to access more
choice and variety. This resulted in more diversity from global online retailing to locally sourced, organic
products.

Government regulation

Government has an important role in ensuring work practices and products meet certain minimum health
and safety requirements. Government may also specify measures that an industry has to comply with for
environmental reasons. Government, in fact, can require firms to do a large number of things for various
reasons. If those requirements become very burdensome and if there are no comparable benefits to weigh
against the costs imposed on firms, the government itself may be contributing to a lack of competitiveness.

Low market efficiency

An efficient market is one where prices effectively transmit information (about supply costs and consumer
preferences) from one end of the marketing system (farmers) to the other end (consumers), and vice versa.
An efficient market will also ensure that these prices are as low as possible. This ideal state of affairs is
usually attained by ensuring the market is competitive. That is, there are a number of players competing in
the market to drive the price down to its lowest possible level. The implication of an inefficient market is the
lack of price differentiation for different products. Consumer preferences will never be transmitted to
farmers (and farmers will stop supplying the goods that consumers prefer) if the prices for the preferred

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goods are similar to prices for non-preferred goods. Preferences can cover variety, appearance, size, even
method of production (organic), and prices at different stages of the marketing system should reflect supply
and demand. If a market pays one price for a product, good or bad, large or small, the right incentive
cannot be provided to farmers to produce what consumers prefer.

REFERENCES

Boyer, K. K., & Lewis, M. W. (2002). Competitive priorities: investigating the need for tradeoffs in
operations strategy. Production and Operations Management, 11(1), 9-20.

Braunscheidel, M., & Suresh, N. (2009). The organizational antecedents of a firm’s supply chain agility for
risk mitigation and response. Journal of Operations Management, 27(2), 119140.

Griffin, Ricky W., and Michael W. Pustay. (1999)Chapter 12 of International Business: A Managerial
Perspective. 2nd ed. Reading, PA: Addison-Wesley, 1999, 448-71.

Krajewski, L. J. Ritzman, L. P., & Malhotra, M. K. (2013). Operations management: processes and supply
chains, 10th edition, Pearson, New Jersey.

MarketingSherpa (2016), MarketingSherpa Customer Satisfaction Research Survey,

The United Republic Of Tanzania, Agricultural Marketing Policy Dar Es Salaam December 2008