ch2 operations strategy
DESCRIPTION
operation management book chapter 2TRANSCRIPT
Alex Hill and Terry Hill
Learning objectives
• Understand LEVELS of strategy within business
• Distinguish between day-to-day and strategic ROLES
• Identify how different levels of strategy INTERFACE with each other
• Appreciate importance of understanding MARKETS
• Understand different strategic APPROACHES
• DEVELOP and IMPLEMENT an operations strategy
Lecture outline
• INTRODUCTION
• What is STRATEGY?
• LEVELS of strategy within a business
• DEVELOPING a strategy
• IMPLEMENTING a strategy
• Critical REFLECTIONS
• SUMMARY
What is strategy?
DIRECTION
WHAT to do
What is strategy?
HOW to do it
IMPLEMENTATION
DIRECTION
WHAT to do
> KEY IDEAOperations strategy concerns developing the CAPABILITIES of an organisation to reflect the NEEDS of its customers and markets
Levels of strategy
CORPORATE
Levels of strategy
CORPORATE
BUSINESS UNIT
FUNCTIONAL
Levels of strategy
CORPORATE
BUSINESS UNIT
•Where to INVEST or DIVEST
•SALES REVENUE priorities
Corporate
DIRECTION OF TOTAL BUSINESS
IMPLEMENTATION
Allocation of investment FUNDS
Levels of strategy
•MARKETS in which it competes•Where to GROW its business•Nature of COMPETITION•Relevant COMPETITIVE
CRITERIA
DIRECTION OF BUSINESS UNIT
IMPLEMENTATION
•WHICH functional tasks to invest in
•HOW to invest in these tasks
Levels of strategyBusiness unit
DIRECTION OF FUNCTION
Support COMPETITIVE DIMENSIONS within a market for
which it is solelyor partly RESPONSIBLE
Levels of strategyFunctional
IMPLEMENTATION•Meeting competitive REQUIREMENTS•Selecting APPROACHES to attain
improvement goals•Implement the PLAN
Levels of strategyFunctional
Levels of strategyFunctional
Developing a strategy
> KEY IDEA
Understanding MARKETS is the FIRST step in strategy development
Developing a strategyUnderstanding customer requirements
QUALIFIERS
ORDER-WINNERS
Get and keep a service or product on
a customer’s SHORTLIST
WIN you the order once
you are on the shortlist
> KEY IDEA
Understanding CUSTOMER requirements:• AVOID general descriptions• IDENTIFY and WEIGHT order-winners and qualifiers
Factory RestaurantPit stop
Le Mans
(1971)
Modern Times
(1936)
Dinner Rush
(2000)
Developing a strategyUnderstanding customer requirements
Operations process Pit stop Factory Restaurant
TRANSFORMED resources
MaterialsInformationCustomers
TRANSFORMING resources
FacilitiesStaff
OUTPUTSGoodsServices
Developing a strategyOperations process
Developing a strategy
Understanding customer requirements
Key market requirements
Pit stop Factory Restaurant
ORDER-WINNERS
QUALIFIERS
Developing a strategy
•What is the OPERATIONS process?•What are the key MARKET
requirements?
Operations process Pit stop Factory Restaurant
TRANSFORMED resources
MaterialsInformationCustomers
TRANSFORMING resources
FacilitiesStaff
OUTPUTSGoodsServices
Developing a strategyOperations process
Operations process Pit stop Factory Restaurant
TRANSFORMED resources
MaterialsInformationCustomers
TRANSFORMING resources
FacilitiesStaff
OUTPUTSGoodsServices
• Car• Rain tyres
• Raw material
• Pit stop • Mechanics• Spanners
• Car with• rain tyres
• Factory• Production line• Operator• Spanner
• Widget
• Raw material• Order details• Customer
• Restaurant• Kitchen• Equipment• Chef• Waiter
• Food• Drink• Service
Developing a strategyOperations process
Developing a strategyUnderstanding customer requirements
Key market requirements
Pit stop Factory Restaurant
ORDER-WINNERS
• Delivery speed • Price • Product design• Service design
QUALIFIERS
• Delivery reliability• Quality conformance• Price
• Quality conformance
• Quality conformance• Delivery reliability• Price
Developing a strategyUnderstanding customer requirements
> KEY IDEA
Understanding CUSTOMER requirements:• AVOID general descriptions• IDENTIFY and WEIGHT order-winners and qualifiers
Developing a strategyThe process of strategy development
Alternative APPROACHES
•TOP-DOWN vs BOTTOM-UP•MARKET-DRIVEN vs MARKET-
DRIVING
Developing a strategyTop-down approach
FUNCTIONAL
CORPORATE
BUSINESS UNIT
Day-to-day EXPERIENCES and LEARNING
Consolidated into formal STRATEGY
Developing a strategyBottom-up approach
EMERGING sense of what strategy should be
Developing a strategyMarket-led orientation
MARKET
MARKET DRIVES OPERATIONS
OPERATIONS
Developing a strategyMarket-driving orientation
MARKET
OPERATIONS DRIVES MARKET
OPERATIONS
Developing a strategyAlternative approaches
Aspect Prison Camp Restaurant
Strategic OBJECTIVES
STRATEGY for meeting these objectives
PROCESS of developing and implementing strategy
Developing a strategyAlternative approaches
•What are their strategic OBJECTIVES?
•What is their STRATEGY to achieve these objectives?
•What APPROACH has been used to develop and implement this strategy?
Developing a strategyAlternative approaches
Aspect Prison Camp Restaurant
Strategic OBJECTIVES
STRATEGY for meeting these objectives
PROCESS of developing and implementing strategy
Aspect Prison Camp Restaurant
Strategic OBJECTIVES
• ESCAPE from the camp• Get 250 men out
• Make MONEY• Produce GOOD FOOD
STRATEGY for meeting these objectives
• Create SMOKE SCREEN• DIG 3 TUNNELS
• PRIMO• Market-driving• Resource-based• CRISTIANO• Market-driven• Market-led
PROCESS of developing and implementing strategy
• TOP-DOWN• PLANNED
• BOTTOM UP• EMERGENT
Developing a strategyAlternative approaches
Critical reflections
• Operations helps gain FIRST sale whilst also securing the SECOND sale
• MARKET or marketing-led?
• Moving to a BUSINESS-LEVEL strategic debate
Summary
• What is STRATEGY?– Direction and Implementation
• LEVELS of strategy– Corporate - Business - Functional
• Strategy DEVELOPMENT– Understand market– Develop capability to support or drive
market
• Market REQUIREMENTS– Order-winners and Qualifiers
• APPROACH to developing strategy– Top down vs Bottom up– Market-led vs Resource-based
CASE FOR TUTORIAL
APPLE