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Operations Strategy

Operations Strategy

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Published by: Chao_Cheng on May 09, 2011
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doc MD 021 - Management and Operations Operations Strategy
• • • •

Definitions of strategy and operations strategy Levels of strategy: corporate, business, functions Evaluating an operations strategy Example: McDonald's


2 . Definition of Operations Strategy An operations strategy consists of a sequence of decisions that. enables a business unit to achieve a desired operations structure. and set of specific capabilities in support of the competitive priorities. over time.Definition of Strategy Strategy is a deliberate search for a plan of action that will develop a business's distinctive competence and compound it. infrastructure.

Order-winners are those criteria that win the order. 3 .Order-Qualifiers and Order-Winners Order-qualifiers are those criteria that a company must meet for a customer to even consider it as a possible supplier. Companies need only be as good as competitors. Companies need to be better than their competitors.

Levels of Strategy What business are we in? Corporate Divisional (Business) How do we compete? Fin HR Mkt Prod Dev Ops Role of each function? 4 .

Components of the Operations Strategy Structural decision categories: Infrastructural decision categories: Capabilities: Competitive priorities: Capacity Facilities Vertical integration Technology Workforce Organization Information/control systems Unique to each firm Cost Quality High-performance design Consistent quality Time Fast delivery time On-time delivery Development speed Flexibility Customization Volume flexibility 5 .

etc.Criteria for Evaluating an Operations Strategy Consistency (internal and external) Between the operations strategy and the overall business strategy Between the operations strategy and the other functional strategies within the business Among the decision categories that make up the operations strategy Between the operations strategy and the business environment (resources available. competitive behavior. governmental restraints.) Contribution (to competitive advantage) Making trade-offs explicit. enabling operations to set priorities that enhance the competitive advantage Directing attention to opportunities that complement the business strategy Promoting clarity regarding the operations strategy throughout the business unit so its potential can be fully realized Providing the operations capabilities that will be required by the business in the future 6 .

cost. and innovation are considered order qualifiers. low cost. it is clear that both consistent and highperformance quality are considered order winners. while speed. This must be accomplished with adequate speed. and process innovation to accommodate changes in consumer tastes.” From the statement of McDonald’s operations strategy. 7 .Statement of McDonald’s Operations Strategy “To provide unmatched consistency in operations in support of high product quality.

"pull" system day-today in the restaurants • Organization • Control Systems • • • Evaluation of the operations strategy: • Internal and external consistency . carefully selected.McDonald’s Operations Strategy Dimension Capacity • • Facilities Process Technology Vertical Integration Workforce • • • • • • Strategy Growth as needed through additional stores . • Contribution to competitive advantage . but franchisees push to locally optimize Centralized buying Bulk contracts "Push" system for basic supplies. cheap Guidelines provided by corporation. all focused around the same menu . entrepreneurs Operators: high-turnover.Systemic strategy 8 .Looking at the operations strategy along the seven dimensions. they all support the operations mission and the business strategy from the previous page.but capacity added carefully Well-utilized .although the uniformity is beginning to change High degree of process understanding.franchisee's well-being depends on it being used heavily Distributed facilities. creates unmatched consistency in operations that has been difficult to imitate. each facility being very similar to the next. emphasis on "fool-proof" processes A leader in the technology of fast-food delivery Partnership arrangement Long-term relationship with suppliers to promote innovation and quality improvement Franchisees: well-trained.

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