Category Archives: Operations Strategy

Functional strategies

Functional strategies

Functional strategies (for example operations marketing human resources) are developed to support or align with the established business strategy A company or Sbjct  competitiveness refers to it relative position in the marketplace in terms of how it competes with the other firms in it industry Operations strategy refers to how the operations management function contribute to a firm ability to achieve its competitive advantage in that marketplace Operation strategy can be divided into two major categories structural elements  of facility location capacity vertical integration and choice of process (all of which are con derided to be long term or strategic in nature) and infrastructural elements  of the workforce in terms of size and skill equalizes planning and control and organizational structure (all of which are often viewed as tactical because they can be changed in a relatively short time) Operations strategies are developed from the competitive priorities of an organization which include (a) low cost (b) high quality (e) fast delivery (d) flexibility and (e) service Core capabilities are the means by which competitive priorities.

Operations Strategy-An Overview

Operations Strategy-An Overview

Definitions

There often develops within an industry or company a unique set of tunes that are familiar only to those associated with that industry or company. This is also true for the functional areas within an organization. Since operations strategy is a relatively new and evolving concept several of the terms more commonly used are defined here Today many corporations especially the larger conglomerates such as General Electric and Hewlett-Packard consist of several stand-alone businesses that focus on different industries. Within this context corporate strategy defines the specific businesses in which the firm will compete and the way in which resources are acquired and allocated among these various businesses. For example. one of GE’s corporate strategies under Jack Welch was to shift from being a traditional manufacturing company and expand into services such as broadcasting and financial services. These stand-alone businesses within these conglomerates often are referred to as strategic business units (8 Bus). The individual strategy adopted by each SUB which is referred to as business strategy defines the scope and boundaries of the SB U. in terms of how it addresses the specific markets that it serves and the products that it provides. In order to not only survive but also prosper in today fiercely competitive marketplace an SUB needs to differentiate itself from its competition. In such a highly competitive environment customers will buy solely on the basis of price thereby driving price down and shrinking profit margins. In this type of situation. only the low-cost producer in
an industry can be successful and Michael Porter a professor at the Harvard Busing School and perhaps today’s leading authority on competitive strategy. has suggested that even this isn’t guaranteed Porter recommends therefore. that beyond a low-cost strategy there are two other bu Ines strategies that a firm can adopt market segmentation and product differentiation.

Managerial Issues

Managerial Issues

An organization’s operations strategy provides an overarching framework for determining hew it prioritizes and utilizes its resources to gain a competitive advantage in the marketplace Today’s operations-managers face many new challenges with respect to strategy issues from developing effective strategies to properly implementing them throughout tile organization.
k5 we shall see there are several external factors that affect-operations strategy declensions including an increase in competition that has resulted from the globalization of business and advances in technology Consequently operations managers in many instances are now being asked to do more with less more in terms of faster delivery times more variety and higher quality less in terms of lower material costs lower labor costs and less available time. At the same time managers know all too well that competitors can copy successful strategies and can usually implement them quickly thereby neutralizing to some degree their advantage. As a result these same managers from a strategic perspective must keep a watchful eye to the future constantly looking for the next strategy that will separate their firms from those of competitors.

DELL COMPUTER UNDERSTANDS OPERATIONS STRATEGY

DELL COMPUTER  UNDERSTANDS OPERATIONS STRATEGY

No one will argue that the market for personal computers (PCs) is highly competitive  Consequently pea are typically viewed commodity in which there is little or no difference Arno the major competitors  Nevertheless  Dell Computer continues to gain market share while simultaneously generating significant profits and is now the leader in both categories Between
and 2001 Dell’s share of the PC market grew from 4.2% to 24.9%  with Compaq a distant second with 13.3% market share and Hewlett-Packard in third place with 9.7%. How has Dell been able to accomplish this First its Dell Direct Model links the firm directly to its customers eliminating costly distributors and retailers. Originally a mail order firm  Dell now also uses the Internet to take customer orders. In addition by applying information age technology  it can build individually customized computers most of which are shipped within 3-5 days after the order has been received. (Because each computer is built to order Dell does not have any finished goods inventory And it does all this at a reasonable price.  Dell Computer provides a good example of a firth that understands the concept of operations strategy and has designed and installed processes which allow it to do an excellent job of executing that strategy. In addition to competing on speed customization quality and price Dell also provides various services to its customers. (Services which are very profitable represent about $3 billion of Dell’s $7.5 total annual revenues.)

Sources:
Alldy Serwer Dell Does Domination  Fortune January 212002. pp. 71-75.  Das Narayandas and V Kasturi Ranga Dell Computer Corporation  Harvard Business School case No. 9-596- 058 revised September 1996. Jennifer Baljko Shah Dell Writes The Book On Efficiency-Processes Focus On Understanding Where Supply Demand Diverge ?In December 17 2001 p. 32.

Operations Strategy

Operations Strategy

Defining how firms compete

  • Introduce the concept of operations strategy and its various components and show ho I it relates to the overall business strategy of the firm.
  • Illustrate how operations strategic pertains to adding value for the customer.
  • Identify the different ways in which operations strategy can provide an organization with a controvert advantage.
  • Introduce the concept of trade-off between different strategies and the need for a firm to align its  operations strategy to meet the needs of the particular markets is serving.
  • Explain the difference between order-qualifiers and order-winners as they pertain to operations strategy
  • Describe how firms are integrating manufacturing and services to provide an overall bundle of benefits to their customers.