Business Operations and Systems - Coursework Example

Business Operations and Systems Table of Contents Part 3 Business Operations Management 3 Nurburgring’s Essential Components for Business Operations Management 3 Soft Systems Methodology 5 Operation Strategy Priorities Model 6 Customer Value Model 6 Service Gap Model 6 Providing Digital Experience to the Audiences 7 Recommended Appropriate Solution 7 Costing Model for the Users 8 Part 2 9 Root Definition 9 CATWOE: 9 Environmental Constraints 10 Business Process Map- Nurburgring “AS IS” 11 Business Process Map- Nurburgring “TO BE” 12 ‘As Is’ Map 13 ‘To Be’ Map 13 Part 3 14 Resources That Would Be Necessary For Effective Implementation of the New Process 14 Balanced Scorecard Measurement of Performance 15 References 17 Part 1 Business Operations Management An effective operations management is considered very essential for the success of any business organization. It is generally the process of conversion of various inputs, such as proprietary information, labor and materials into various outputs including products and services. Properly structured operations management can thus help an organization to run smoothly along with cost efficiency and maximizing the overall profit earned (Fort Lewis College, 2015). A business strategy is therefore created through the long term plan of a business and the operations strategy, wherein both these measures help developing and configuring the business processes that allows an organization to deliver the best possible products and services being formulated through business strategy. Operations management therefore refers to the activities that help an organization to produce as well as deliver products and services along with earning maximum profits. An effective operations strategy also allows a company to gain competitive advantages through various components including facilities layout, facilities location, capacity planning, product selection, production planning, cost and quality control, inventory control and material handling among others (Kumar & Suresh, 2009). In the current era, dealing with operations management challenges has become a common and continuous phenomenon, which is also apparent in the case of Nurburgring, which is a race track located in Germany. It is a Formula 1 racing circuit, which has been encountering dwindling audiences lately. Thus, in the discussion henceforth, it has become one of the concerning issues, correlating with the reasons behind the declining of audiences in the particular racetrack of Germany. Nurburgring’s Essential Components for Business Operations Management The Nurburgring racing circuit is one of most famous racing tracks in Germany that is mainly renowned for the Formula 1 racing and Grand Pix challenges held there. The motorsport complex is located around Nurburg village, which is situated 120 km north-west of Frankfurt and 70 km to the south of Cologne. The race track is 5.148 km long and it facilitates conducting various national and international racing events along with all the amenities being provided by modern race tracks. Nurburgring provides a high quality and tech facilitated environment that further enables the race participants to perform effectively and with comfort. Till date, 40 Grand Prix championship have been held in the Nurburgring racing circuit of Germany and notably, all were successful without any accident or fatal incident reported until date, which are quite prone in other racing tracks, principally caused due to the infrastructural limitations of the track or other constructional faults. The construction of the racing track started in the year 1925 and it took two years to complete the whole track that was finally ready for car racing in the year 1927. The first race in the track took place in the same year in the month of June for motorcycles with side cars. This was followed by car race the next day, which embarked beginning of success of the racing circuit. There are all total 174 bends in the racing circuit and the track is about 9 meters wide. The track was constructed with proper planning by experienced engineers with the aim of providing the best possible racing track especially for conducting Grand Prix championship (Capricorn NÜRBURGRING GmbH, 2014). However, one of the major issues that the track authorities are facing is the dwindling of the audiences, which has become a significant challenge for the authorities of the racing track. For conducting a racing event, whether it is Grand Prix championship or other racing events, huge costs are incurred by the race track authority. The funds required to meet the costs are obtained from the sponsors and from the sale of tickets to the audiences or spectators (Telegraph Media Group Limited, 2015). Therefore, it seems to be a huge loss for the track authorities if the required numbers of live audiences are not present at the event, which might lead to the lower volume of selling of tickets. Thus, during the past few years, it has been noticed that the number of live audiences at the Nurburgring track is declining day by day and thus, the race circuit authority is suffering losses. From a critical perspective, it can further be noted that this challenge would hamper the long term sustainability of Nurburgring, if required measures are not taken to overcome the issue (Digital Trends, 2013). Soft Systems Methodology Soft System Methodology (SSM) is considered as one of the most effective means being implemented by the organizations and business establishments in order to solve the real life problems through a systematic approach. The SSM was developed in the year 1991 by Peter Checkland. The tool is very effective in solving complex problems effectively for which, it is highly preferred by the analysts and the researchers in determining the solution of a given problem. SSM helps in overcoming various complex problems in human situations by formulating as well as structuring solutions. However, the core of SSM lies in the formulation of constructional models and thereafter, emphasizes comparing them with the real life situation. Among various stages of SSM, the “Problem situation” serves as the most essential as it helps in exploring and determining the situation in a real world context. In relation to this concern it is noteworthy that it has been a growing issue of concern for the racing track authorities all over the world including Germany, the declining rate of live audiences in the racing track stadium. Among all other racing tracks of Germany, Nurburgring is one of the largest and renowned racing tracks. It provides all facilities and amenities necessary for a modern racing circuit that attracts global events as well. However, there are two larger racing tracks in Germany, which are the close competitors of Nurburgring. Its closest competitor is Hockenheimring, which is 4.57 km long and till date there are 34 Grand Prix championship held in the circuit. Therefore, in order to compete among other racing circuits, it is very essential for Nurburgring to implement effective strategies that would help it to overcome the situation of dwindling audiences that has been highly affecting its profit earning capacity. The principle problem that is being faced by Nurburgring track is the declining rate of live audiences that has become a high concern for the circuit authorities. The reasons behind this are considered to be the inclination of the audiences to watch live race events in television relaxing at their home (ESPN, 2012). The rate of tickets of Grand Prix and other racing championship are also increasing day by day that is often termed as unaffordable by the targeted audiences. Moreover, the advancement of technology has made it possible to watch sports events online through any personal handheld device, such as tablets, mobile phones and laptops among others. All these alternative means of watching the live events are therefore, gradually restricting the number of live audiences to be present physically in the stadiums to watch the race event (Capricorn NÜRBURGRING GmbH, 2014). Operation Strategy Priorities Model It is very essential for a business to develop an effective operations strategy that would help the business to sustain for a long run along with earning a significant amount of revenue. By using the operations strategy priority model, Nurburgring racing circuit authorities would be able to attract live audiences to the stadium by providing demanded services and facilities required by them (Cengage Learning, 2005). Customer Value Model The customer value model may also serve beneficial for the racing track authorities in creating values for the live audiences that would attract them to be physically present in the stadium and watch racing live rather than enjoying those in television. One of the major reasons behind the declining rate of live audiences in the racing track is the higher rate of tickets being charged. Suggestively, to attract a larger volume of audiences, the racing circuit authorities can lower the prices of the tickets and at the same time, provide some value added services to the audiences that may attract them. Similarly, it is also very essential for the racing track authorities to focus on the satisfaction level of the audiences that would create value to them (Hudadoff, 2009). Service Gap Model Using the service gap model by the racing circuit authorities may serve beneficial in attracting live audiences for watching the racing event. Moreover, the racing communities will also be attracted in purchasing the track if they are provided with satisfactory incentives from the track authorities. For the upcoming year, there are about 20 Formula 1 race events planned to be organized in which, an expected number of 500-600 audiences are to be present in the live event. However, the main problem that might arise indicates to the selling of tickets upto the estimated volume in some of these tracks, which includes Nurburgring circuit of Germany as well. The service gap model is considered as one of the most beneficial customer satisfaction framework that would help the track authorities to provide value to the customers by focusing the needs and satisfaction levels of the customers. Customers generally try to compare their experiences with their expectations and thus, when their expectations do not match with their practical experiences, a huge gap arises. Thus, through the service gap model, the racing circuit authorities can identify the gap of audience satisfaction, based on which, relevant measures may be taken that would help in providing customer value, such as enhancing the live viewing experience of the audiences (The University of Auckland, 2015). Providing Digital Experience to the Audiences One of the most essential features of Nurburgring is the most advanced and modern technologies being used in the racing track, which are highly focused on the satisfaction level of the racers. Various digital technologies are being used that allows the racers to carry out their racing events successfully with easy access to important information as and when necessary. Moreover, digital technology also provides security to the racing participants that have minimized the rate of accidents in the track. In addition to focusing on the racers, it is very essential for the track authorities to focus on the live audiences’ satisfaction. In this age of digital era, the live audiences would always prefer to experience the racing event more lively and with better experience. It is thus necessary for the track authorities to upgrade their technology that would provide the viewers with enhanced live experience (Capricorn NÜRBURGRING GmbH, 2014). Recommended Appropriate Solution In order to overcome the adverse situation of dwindling of live audiences, it would serve beneficial for the track authorities to focus on enhancing the viewing experience of the live audiences that would attract them to watch the race events live, rather than watching through other means. Certain services, such as live tracking the atmosphere along with the opportunity of following the racers with the help of digital technology, would serve as the most beneficial for audiences to gain a better viewing experience. This would serve most beneficial for the fans of certain teams as well that would help them in tracking their preferred racer (Capricorn NÜRBURGRING GmbH, 2014). Costing Model for the Users In order to implement advanced digital technology it is very essential for the track authorities to estimate cost of implementing various equipments and technologies. Moreover, it is also very essential to consider the modes of delivery of certain services, as selecting proper medium is very important for the ultimate satisfaction of the audiences. However, the costs incurred for the implementation of digital services should not be too high, which might become difficult for the racing circuit authorities to recover. The costs should however be mitigated through sponsorships and selling the tracks for racing events as well as tickets to the audiences (Mielonen, 2003). Part 2 Root Definition Nurburgring is a Formula 1 racing track located in Germany that is generally renowned for the Grand Prix championships. Analyzing Part I of the given case scenario, the following root definition has been derived: “The Nurburgring racing track has been providing all the modern amenities and technologies to the racers that facilitate them to conduct their racing events in a satisfactory manner. However, there has been a problem with the declining rate of audiences since the past few years, which the track authorities are trying to overcome through the implementation of digital technologies for enhancing the viewing experiences of the live audiences”. CATWOE: Clients: The clients of Nurburgring racing track are generally the audiences or the viewers who would be physically present at the event for viewing the racing events. It is therefore very essential to consider how the implementation of the digital technologies by the track authorities would benefit the audiences. Proper feedback from the audiences would serve effective in understanding whether the new technology is a success or a failure. Actors: The technical management team of Nurburgring racing track will be establishing the new digital technology and will later be operated by specialized individuals experienced in the similar field. However, proper training will be provided by the management to the individuals who will be responsible to operate digital technology. Transformation Process: The transformational process would involve the implementation of various digital technologies in the gallery that would further facilitate the live audiences to obtain the best possible experience of viewing the race events being physically present at the spot. Through the application of the new technology, the audiences would be able to track the progress of the race with live atmosphere experiences. World View: The new digital technology will help in enhancing the viewing experience of the life viewers and the audiences in the gallery. It is in this context that the short term problems would be mitigated with the effective implementation of new technologies and the long term problem is to establish successfully the new technology that would attract more live audiences in the event. Owner: The partners and the stakeholders of Nurburgring will be the owners of the new digital technology. They will have an overall control on the system and will be responsible for any modifications or alterations of the system. Source: Changing Minds, 2015 Environmental Constraints Various constraints, including the legislative policies of the government, local TV channels and other technical challenges may create hindrances for the implementation and success of the digital technology. Business Process Map- Nurburgring “AS IS” Business Process Map- Nurburgring “TO BE” ‘As Is’ Map The ‘As Is’ process map of Nurburgring racing circuit demonstrates the present system of its operations occurring from the purchasing of tickets for the race events. However, it is only that the audiences, after being aware of the type of race events, decides to visit the stadium for purchasing the ticket. Subsequently, they enter the racing circuit stadium with the aim of getting entertained when watching the particular race event. According to the seats allocated in the ticket, the audiences take their respective seats with the expectation that they would be able to experience the racing event as they have wished. It is noteworthy in this context that the present technology being used by Nurburgring does not allow the audiences to experience the race events in a live track atmosphere and thus, they are often dissatisfied or insignificantly satisfied from the current methods of experiencing the race. The dissatisfaction of the audiences negatively influences the value of the racing circuit, as they prefer not to come in the particular stadium for watching the race events. This leads to the dwindling of audiences in the racing circuit that further leads to huge losses for the track authorities. Moreover, the declining rate of audiences also creates difficulties in selling the tracks for race events. ‘To Be’ Map As per the ‘To Be’ map, it is demonstrated that the implementation of the digital technologies in the gallery would enhance the viewing experiences of the audiences and thus, they would prefer viewing the racing events live, rather than through television. Nurburgring has been suffering from dwindling of audiences since past few years, which is because of the fact that the viewing experiences of the audiences are not as par with their expectations. Thus, they prefer to watch the race events through online or through television. Thus, the implementation of the new digital technology in the gallery will enhance the viewing experience of the audiences, and thus, will serve beneficial for Nurburgring to attract more live audiences. The digital technology will also provide live track atmosphere through which, they will have a better viewing experience and moreover, the technology will allow the audiences to follow the progress of the team or racer. Part 3 The major performance objectives for Nurburgring’s proposed digital technology is to overcome the current situation of dwindling live audiences and attract them to come physically at the race events and experience the race in a real life manner. Moreover, it is also one of the major objectives of Nurburgring to provide satisfaction to the customers that would enhance audience loyalty and thus, would be beneficial for it in sustaining in the long run and gain competitive advantages. However, for the fulfillment of these objectives it is necessary for Nurburgring to implement an effective digital technology that will enhance the live viewing experience of the audiences. Resources That Would Be Necessary For Effective Implementation of the New Process In this section, discussion has been focused concerning the important aspects those would help the management team of Nurburgring in implementing the new technology that would help in attaining the performance objectives. However, the operations strategy priority model would be applied for supporting the implementation of the new technology by Nurburgring. Notably, Nurburgring has an effective team of management that helps in managing various activities in an efficient manner. The top and the middle level managers can thus made in charge for the implementation of the new digital technology in the gallery. There are certain resources those are very essential to be considered for the effective implementation of the new technologies those include quality, costs, dependability and flexibility. Costs would be incurred for purchasing various machineries and equipments those are required for setting up a digital technology. Moreover, for the operations and maintenance of the equipments, various costs will be incurred. Similarly, it is also very essential to maintain the quality of the new technology that will be implemented. The quality of the equipments should also be maintained that would help in providing the best possible viewer experience to the audiences. Flexibility for the new technology would also be applicable in providing services to the audiences. There would be a facility of customization for the customers that would help them acquire a better viewing experience of their preference. However, it is also very essential for the management to gather continuous feedback from the live audiences that would help in understanding their preferences and choices and on that basis modify the technology to compete with the growing trends. For the effectiveness of the new technology it is also very essential for the management to make the employees and other members of Nurburgring cope with the new digital technology and thus, an effective change management framework has to be adopted in the business process. They should be trained properly regarding the digital technology and how to operate them effectively. It is also very essential for the management to promote their new technology to the audiences so that they can be well acquainted with the technology and realize that their values are being considered efficiently. Balanced Scorecard Measurement of Performance The balance scorecard is considered as one of the most effective performance management tools that is generally used by managers of various levels of an organization. It is a strategic management system that helps in measuring the performance in four different perspectives including ‘customer’s perspective’, ‘financial perspective’, ‘learning and growth perspective’ and ‘internal business process perspective’ (Balanced Scorecard Institute, 2014). OBJECTIVES MEASURES TARGETS INITIATIVES Financial Perspective To increase the total turnover through attracting more audiences Profit 48% By implementing new digital technology that would provide better live viewing experience Customer’s Perspective To satisfy the audiences Customer Ratings 75% Launch user friendly technology and provide training to the employees Internal Business Process Maintain the overall quality of technology and equipment along with reduced operating cost Operating costs 15% Providing effective training to the employees and maintain quality standards Learning And Growth Provide appraisal to the employees who serve better performance and focus on future scope for development Promotion 20% Introduce new schemes of rewarding and performance appraisal References Balanced Scorecard Institute, 2014. Balanced Scorecard Basics. Strategy Management Group. [Online] Available at: http://balancedscorecard.org/Resources/About-the-Balanced-Scorecard [Accessed April 16, 2015]. Capricorn NÜRBURGRING GmbH, 2014. The New Millennium Continues The Full Speed Course. The New Millennium. [Online] Available at: http://www.nuerburgring.de/en/fans-info/history/milestones-since-1927/the-new-millenium.html [Accessed April 16, 2015]. Cengage Learning, 2005. Operations, Strategy and Operations Strategy. Journal, pp. 21-44. Changing Minds, 2015. CATWOE. Article. [Online] Available at: http://creatingminds.org/tools/catwoe.htm [Accessed April 16, 2015]. Digital Trends, 2013. How A Legendary German Track Is Ruining Sports Cars For You And Me. Article. [Online] Available at: http://www.digitaltrends.com/cars/nurburgring-might-best-track-world-also-bad-car/ [Accessed April 16, 2015]. ESPN, 2012. Is TV killing Formula One? F1 Audiences. [Online] Available at: http://en.espn.co.uk/f1/motorsport/story/86509.html [Accessed April 16, 2015]. Fort Lewis College, 2015. Introduction to Operations Management. Journal, pp. 1-1-38. Hudadoff, P., 2009. What is a customer value proposition? Journal. [Online] Available at: http://www.engr.colostate.edu/~marchese/stese/reading2.pdf [Accessed April 16, 2015]. Kumar, S. A. & Suresh, N., 2009. Operations Management. Journal, pp. 1-277. Mielonen, H., 2003. Attracting new audiences: Attitudes And Experiences In Attending Classical Music Concert Of Students In Their Twenties. Journal, pp. 1-85. Telegraph Media Group Limited, 2015. Dwindling Spectators Prompt Formula One Managers To Discuss High Ticket Prices With Bernie Ecclestone. Article. [Online] Available at: http://www.telegraph.co.uk/sport/motorsport/formulaone/11098605/Dwindling-spectators-prompt-Formula-One-managers-to-discuss-high-ticket-prices-with-Bernie-Ecclestone.html [Accessed April 16, 2015]. The University of Auckland, 2015. Service Quality A Model. Journal. [Online] Available at: https://www.stat.auckland.ac.nz/~mullins/servicequality/ServQualModel.pdf [Accessed April 16, 2015]. Read More