An operating model is how a business is run. This usually focuses on how a business produces and delivers its products and services. Operating models can be described at several levels of detail that typically focus on basic structures, processes and methods. The following are illustrative descriptions of operating models.
Fast Moving Consumer GoodsA large fast moving consumer goods company operates in 30 countries. It has extensive supply chain, manufacturing, product development and marketing capabilities. The firm has a large distribution network and sells to hundreds of different wholesalers and retail chains. It considers technology a key competitive advantage and has dozens of systems that it considers core assets.
Coffee ShopA local coffee shop orders most of its supplies from an ecommerce supply company and schedules deliveries on Monday and Friday mornings. The company hires local part time workers and offers several food dishes that require little skill to prepare. The company has no marketing functions and relies on word of mouth. The owner is friendly and easily establishes rapport with customers.
Software ServicesA software company develops extensions to a popular business platform. The firm's products are sold exclusively through the platform's app exchange. The company has nothing but a software development team and owns no capital beyond a few laptops and some office furnishings. The company is completely dependent on a single partner for its platform and sales.
HotelA hotel management company owns 100 properties and manages 120 additional properties in 18 countries. The firm's core operational capabilities include sales, marketing, customer service and hotel operations. The firm contracts out a large number of functions including security, food services, spa services and building maintenance to local suppliers in each country. The company has a strong brand and depends on its reputation for sales.
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