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Operation management is an academic field of study that focuses on the effective planning, scheduling, control and use of service firm and their operations as show by the case study of the Hard Rock Caf‚. The operational management synthesizes concepts that have been produced from all other departments such as quality management, accounting, information systems and inventory among others.
To ensure that the company has sustenance in the business, it is always paramount to have operational management strategy. This will ensure that the management of the resources that they have will always be used as required and towards development of the business. There are different strategic levels that are involved in the operation management. Various managers to ensure that the final goals and objectives are met spearhead these levels. Therefore, these levels will be evaluated in the Hard Rock Caf‚ to see how well they have met them in conjunction to the way they operate their business.
During layout of the operations, strategic managers are supposed to ensure that long time level management strategy is put in 0place to ensure that the business is able to pass the test of time thus expanding to bigger heights.
Operational managers in the hotel are supposed to ensure that decisions on their food production service as well as delivery is well planned to ensure that the hotel have consistent service delivery. Process and layout decision of the business, site location as well as the capacity that the business can hold at any given time is part of the strategic management that will be evaluated. In evaluating Hard Rock Caf‚, various elements will be looked at and how best the business has satisfied them. Therefore, to ensure that it there is exhaustive evaluation, these components will be categorized in the following ways.
Increase of hotel Capacity
Technology used in the business.
Recruitment and employees maintenance
Increase in Capacity
According to the history that the Hard Rock Caf‚ has demonstrated over the years, it vividly shows that it has bigger capacity currently. With its 30 years of existence, it has made it possible to have 100 caf‚s, three hotels, casinos, live music venues, a huge annual Rock fest concert as wells a rock museum. Due to the capacity that the caf‚ enjoys, it is regarded to be among service industry that in US has employed 75% of its population. Its operational management strategy of ensuring that it increases its capacity has made it expand spontaneously throughout the country with 40 locations in different places in US by 1998. This has ensured that it is serving a meal capacity of 100,000 meals on daily basis.
Its capacity expansion has seen the then caf‚ expand growing to over 106 locations in 38 countries in the world. Through their good capacity growth, the hotel has been named among the top ten-restaurant worldwide enjoying 92% name recognition.
According to microeconomics and management this a style that a business sector that adopt. It is especially where by different companies in supply chain is united through a common owner to produce market-specific service to ensure that customer's needs are satisfied. Through upholding this operational management strategy, the business avoids hold up problem.
In the Hard Rock Caf‚, there are different customers especially tourist who come from different countries. According to their case study, 70% of their customers are tourist from different countries. Therefore taking note of this, they have ensured that different food to ensure that they satisfy their customers.
The Caf‚ has grown to global arena where they have applied vertical integration strategy through making sure that they have integrated the traditional food of those places to ensure that at the end, they satisfy their customers. According to the statistics, the caf‚ has gone to 40 different countries globally therefore; they had to ensure that they have that vertical integration strategy. Their variety menus that they offer depending with the country they are situated in are like pork, beef and chicken. Other foods are like hamburger, cheeseburger, French fries among many others depending with the demand of their customers. All the sales of the above named food are managed from a central position in t headquarter to ensure diversification of the menu and appropriate change according to the prospected customers. This ensures the business have a very intensive growth now rated among the top ten restaurant in the world.
Use of Technology in the business
For every business that has a future projection, technology is paramount in their operational management. Failure to uphold technology in the business, their services will eventually turn obsolete. Therefore, to ensure that they increase the speed of the services that they offer to their customers, Hard Rock Caf‚ has upheld technology especially the computer technology that is so rampant in the business sector. This is to ensure that they increase the efficiency of their business, reducing procurement cost as they operate globally as well as multitasking. This makes them to ensure that they have increased the productivity of the company.
According to the business case study, it shows that the heart of the sale forecasting of the business is the point-of-sale system (POS). This system helps the business to capture data of the transaction that have been done in the caf‚. The system give the business the ability to estimate the number of the customers who visit their business as every entry represent one customer. This is very helpful in putting production and expansion strategy. The method is quick and efficient with low cost involved.
The data that is capture is transferred to the main offices in Orlando corporate database. This is where the process f0orecast is done through evaluation o the data capture on daily basis. This ensures the business is capable of maintaining sustainable services to the customers thus satisfying their customers' needs. Due to the appropriate use of the technology, the financial team that is lead by Lindsey is able to forecast guest count, retail sales, concert sales and banquet sales of each caf‚ per month. This lead to appropriate operational management.
In the act of holding the technology, the business has done well in this service sector. They have introduced a sophisticated application of statistics in the menu planning. They have used multiple regression method through the appropriate usage of computer that helps in computing the impact of demand of one meal to other menu whenever the price has been changed. Therefore, this help them to plan well incase of price change especially to the supplementary menus. This helps the business to capitalize in this strategy to increase their sales.
Workforce of the business
Any business idea can be driven to accomplish bigger things in the business arena or be guided to a terrible failure by the kind of the employees that are employed. Through deployment of competent employees and ensuring that their morale is kept high through incentives, the goals of the business are easily achieved. This is because they know what to do and how to it better.
According to most of the human resource managers, they regard employees as the most important resource in the business. Therefore, they needed to be appreciated and be held with utmost respect. They need to be reward through monetary and non-monetary programs to ensure that they deliver according to the required level.
Hard Rock Caf‚ is not an exceptional. According to their operational management strategy, recruitment and maintenance of the employees in the company has been their core value. They are out to create a good working environment for their employees to ensure that the culture that they have created is sustained. According to them, they accept and nurture creativity, diversity and individuality of each employee to ensure that they employees are given freedom to explore their diversity. This environment according to corporate training manager, it creates a working environment of the company beyond paycheck creating new challenge on daily basis. This is helpful to the employees as it increases their production.
The business ensures that it gets the best employee in the initial stage that ensures that he/she is easily integrated to their culture. A new applicant is screened in different aspects that will make them be easily integrated in the business operation. They look for a highly motivated, bright, positive altitude individual who have an employee bill of rights and substantial employment empowerment. Through a proper recruitment process, they have ensured that they are able to maintain a low labor turnover.
Employees are subjected to training to ensure that they are competent in their functioning. Everyone who go to work in the Caf‚, they get Rock 101 which is a two day training class. This enables them to be integrated in the working team much faster.
The work force of the Hard Rock Caf‚ is offered a good package of reward among other incentives. There are offered overtime allowances and benefits for those who work for overtime. They offer internal training to individuals as well as high-level internal promotion that make the employees production to be always high. According to the company, 60% of the managers in the caf‚, they are promoted from hour working ranks.
The main aim of al the business is to make profit. Otherwise, this can be well demonstrated through their idea of expansion. This means that, they are capable of meeting other basics needs of the company as well as getting more resources to compete with others in different arenas. Expansion of a business is of different nature. This ranges from the variety of the products that they offer on daily basis, opening of new branches as well as recruitment of more employees in the business capacity.
According to Hard Rock Caf‚, the business has embraced this operational management strategy through carefully choosing a new location whenever the expansion is to be upheld. They ensure that they make a good and a careful decision making process to ensure that the investment that has to be placed in it meet a long time investment strategy.
To ensure that their expansion strategy does not go in vain, they ensure that they are sensitive on those factors that may be a setback to their investments. Such factors are political risk, social norms of that location, social cost, currency risk, brand fit and business practices. The business uses global operation strategy, which is a multi domestic strategy. They tat time engage in the franchise as way of acquiring business firm ground in the new location. This also ensure that they are capable of local ownership of the business bring about unique capability therefore decreasing difficulties in the implementation of their goals.
Operations management challenges of Hard Rock Caf‚ in considering an expansion of its business into Hanoi
All the business that has an objec5tive of doing their business across the boundaries of their country encounters several challenges. Hard Rock Caf‚ is not an exceptional as it has been hit by different challenges across the globe. In considering its expansion in Hanoi Vietnam, it should be well prepared because according to different market survey done in that country shows that, though the town is developing at an alarming rate, it poses different challenges to especially foreign business. Some of the challenges that are likely to be encountered by the business are discussed below.
Despite of the town being the capital city of Vietnam, it is far from establishing good infrastructure to cater for the business that is done in the town. Poor transport facilities are conspicuous making transportation of goods as well as services to be expensive and difficult. Hard Hotel especially will experience this challenge, as its customers are mostly tourist who may require good transport facilities. The communication facilities have not grown better as compared to most of other towns like Hong Kong in Japan. This makes the business that requires intensive communication to ensure that they operate their business like Hard Rock Caf‚ to be threatened to use more of its resources in communication facilities making their initial cost of starting the business in Hanoi be very high.
Vietnam is a country that is prone to such calamities as earthquake of high magnitude. Such calamities cannot be predicted making most of the business in towns like Hanoi to always be at risk. Therefore, if the Hard Rock Caf‚ is ready to open a business in this place, they should have to anticipate the cause of loss that might be severally caused by this calamity. They may have to do lots of investment in insuring their business against such calamities that means higher operation cost.
The cost of doing business in Hanoi poses great challenge that come about with the policies that the business has to encounter from the government of Vietnam. The tax imposition is high especially to foreigners making them to operate at high prices thus low turn over. There is a lot of problem regarding the laws governing the start of the business making it take a lot of time to start it. This may put off the business at the initial stage thus loss incurred. Therefore, the Caf‚ require having a long focus in the start of the business, which is still expensive in terms of time, resources and money. To get finance from the government is tedious and regulated so much. This will make the business to come prepared to virtually finance solely from their own cash. This may be a little bit disadvantageous to the business as it may require some more financing from the government in the end.
According to the research that was done in the town, most of the business from the foreign countries succumb discrimination from the residence. This through the language barrier as well as not preferring to buy from their business. Though this has been declining with time, it has been in limelight for a while making the business loss considerably compared to the homegrown businesses. Therefore, the Hard Rock Caf‚ should be prepared to form a strategic plan to counter that.
Due to the globalization, most of the business is taking the advantage of getting to the developing countries. According to PriceWaterHouse Coopers, Hanoi has been rated among the towns that are growing very fast in terms of population t0owards 2015. There is also projection of building of another airport in the town before 2015 to add to the one that is in the town. This will make the town to be very accessible from all over the country. Therefore, this has made much business including Hotel services business to flock in the town. This makes such business as Hard Rock Caf‚ to be prepared for stiff competition that may pose danger to the expansion of the business in the town. This will require them to get good strategy to cope up with the competition.
Cultural practices and ethics
The services that Hard Rock Caf‚ offers are surrounded by culture and ethics of each community. Therefore, this is an anticipated challenge that the hotel will have to face in the country. With most of the population being Buddhist in religion taking a share of 92%, the hotel should ensure that they do good analysis of the service that they require in terms of food, music and other services. They have to ensure that they are able to integrate these cultures with other to create acceptance.
Opportunities for Hard Rock when considering an expansion of its business into Hanoi.
Due to the position that the business has, it is capable of overcoming the disadvantage that most of the competitor are experiencing due to finance. It has been operating for a long time therefore, having the advantage of strong finance hold that can be able to sustain it until the business that it will open in Hanoi gets a good ground. This will make it more competitive in such a fast developing place and taking that advantage to propel to greater height.
As the Hard Rock has been in other international markets, most of these problems has been solved else where by its personnel. Therefore, by the personnel, that it recruits who are diverse and very flexible in their way of working, they are capable of solving different issues concerning the business and strategizing for further growth in all the countries including Vietnam.
The business offers integrated services that most of its competitors do not offer. A part from food and services, they offer entertainment such as music. Due to cultural diversification of the town, there are always parties and celebrations at different times over the years. The town has a good number of Christians, Islam, and Buddhist among other religions who have different celebrations according to their culture in different time of the year. This makes the market a favorable place for the Hard Rock Caf‚ to use its integrated services to especially make their business be accepted in this place by the residence. This is through involving all the cultural and religion values through music and interrelation events in their caf‚.
Growth of the town
The population of this town in 2004 was rated to be about 4 million people. However, after six years, the population has grown past six million with anticipation with more. This means cheap labor will be available for the business as well as great market for their products. The building of another airport in the town will increase the ease of transport and hence reduce cost. It will also offer an additional terminal for the tourist to the town. This will be a great boost to Hard Rock Caf.
Hard Rock Caf‚ has established itself as a competing business in the international arena. This has made it to go all over the world at be chosen among the top ten restaurant worldwide. Therefore, through its objective human resource and good organizations structure as well as highly rated personnel, it is likely to be one business to watch in the service providing industry in the near future.