Operations Strategy-An Overview
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.