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Lec 2 - Team 2 Kevin Leung Michelle Papilla Lei Xu Lecture...

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Unformatted text preview: Team 2: Kevin Leung, Michelle Papilla, Lei Xu 9/1/2010 Lecture 2 Notes IBM: Manufacturing Firm switching to service‐manufacturing companies i.e. Cars: new cars don’t make money, warranties make money Warranty: $25 Billion industry in U.S. Topics I. Services Strategy II. Challenges III. Management I. Services Strategy 1) Cost advantage i.e. Walmart ‐ buy larger quantities from supplier = cheaper ‐> Problem? Inventory Cross Stocking ‐ need an IT system to coordinate drivers ‐> Purchased satellites Result: low price from suppliers, deliver to retail on time 2) Better Service 3) New Ideas i.e. Airlines: United v.s. Southwest United: mileage programs, differentiate class Southwest: free baggage, choose your seats, serve frequent commuters, serve families II. Challenges 1) Starting capital (cash) 2) Right set of people 3) Customer identification and management i.e. WebVan – online grocery shopping ‐ as demand got bigger, truck constraints 4) Complexity (dynamics of system) Webvan had but didn’t do well 5) Competition III. Management 1) Economies of scale Webvan didn’t have these 2) Economies of scope 3) Boundary crossing i.e. loans, gift wrapping ...
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