OPERATIONAL MANAGEMENT AND STRATEGIC MANAGEMENT

By :

1. Chaisma Agustin 101711133088

2. Tina Mei Wijayanti 101711133104

3. Milada Muhamad R. 101711133133

4. Salsa Daffania M. 101711133134

5. Nastiti Nuriyah 101711133148

6. Aisyah Putri Rahvy 101711133153

BACHELOR DEGREE OF PUBLIC HEALTH

FACULTY OF PUBLIC HEALTH
AIRLANGGA UNIVERSITY
2018
 PREFACE

First of all, we want to thank and praise Allah SWT, it is because of His

mercy and blessings that we can finish this strategic and operations management

paper assignment. And we would like to thank Dr. Djazuly Chalidyanto, S.KM,

M.ARS as our lecturer who help us in making this paper. We also realize that we

need critics and suggestion in order to improve our knowledge in this lecture.

Hopefully, this paper can help reader to understand more about strategic and

operations management.

Surabaya, 1 April 2018

Authors

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 Content

1. Preface ..................................................................................................... ii

2. Content .................................................................................................... iii

3. Chapter I : Introduction …………………………………………..…......1

1.1 Background ....................................................................................... 1

1.2 Formulation of Problems.....................................................................1

1.3 Objectives ...........................................................................................2

4. Chapter II : Theoretical Basis……………………………………..…......2

2.1 Operations Management Theory………………………………....…..2

2.1.1 Understanding Operation Management …………….….….2

2.1.2 Operation Strategy ………………………………………...4

2.1.3 The Five Ps Of Operation Strategy Formulation…..............7

2.1.4 Input And Output….… ……………………….…….……..8

2.1.5 Input To Process………………………………………..….9

2.1.6 Output Of Process…………………………………………10

2.1.7 The Operation Resources Perspective…………… ……....11

2.1.8 The Role Of Operation Management ………….………….17

2.1.9 Operation Managers ………………………………………18

2.2 Strategic Management ………………………………………………19

2.2.1 Strategic Management Theory ……………………….…...19

2.2.2 Level Of Strategy………………………………………….22

2.2.3 Strategic Management Process………………………….…24

2.2.4 Limitation Of Strategic Management…………………...…33

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3. Chapter III …………………………………………………………………...35

3.1 Conclusion…………………………………………………………...35

3.2 Recommendation…………………………………………………….36

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 CHAPTER I

INTRODUCTION

1.1 Background

In life, we always interact with the science and art of management.

Basically, management helps people to live better because of its function, to

arrange and to manage something. The setting in the management is done through

the process and arearranged by the order of the management function. Human

must be set to be integrated and coordinated in achieving the goals so that they

can get results and benefits.

As time, we can not deny that many people want to join organization.

Organizations are groups of people who have a specific goal to be achieved. An

organization is able to bring a positive influence if it can be managed properly.

Likewise the contrary, the organization was able to bring a negative effect if it is

not being managed well.

To manage the organization well, we need management. Management in

the organization has to be careful and thoughtful planning to achieve the

objectives of the organization. There are two types of management, the strategic

management and operations management. Two types of such management is

essential to the achievement of objectives in an organization. Therefore, strategic

management and operations management needs to be discussed further.

1.2 Formulation of Problem

1. What is the strategic management and operations management?

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 2. How the functions and processes of strategic management and operations

management?

3. How is the difference between strategic management with operations

management?

1.3 Objectives

1. To know the definition of strategic management and operations

management

2. To determine the function and process of strategic management and

operations management

3. To know the difference between strategic management with operations

management.

CHAPTER II

THEORETICAL BASIS

2.1 Operations Management Theory

2.1.1 Understanding Operations Management

Services and goods will not be separated for use and are always

found in everyday life. The treatments were obtained from the hospital,

borrowed books in the library, which is used to communicate with mobile

phones, services in commerce, and lectures on each campus are all

examples of services and goods that were found in everyday life. And

where it came from services and goods?

In any business organization whether small or large, there are 3 basic

functions, namely financial, operational, and marketing. Financial is

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responsible to protect financial resources and to allocate resources to the

organization as budgeting, investment analysis, and provide funds for

operation. Marketing is responsible to measure the wishes and needs of

consumers, as well as sell and promote goods manufactured and services

offered. Operations are part of a business organization that is responsible

to produce goods and provide services. Services and goods is the result of

the operational functions of one or several organizations or institutions or

companies.

If let's say, a business organization is a car, the operation of the

machine that will determine which direction the car or organization

running. In performing the operational functions is certainly needed a

system that arrange how the course of its operational functions. The

system is called operational management.

Operational management is the management of arranging systems or

processes that produce goods or provide services. Operational

management used by companies or organizations to transform existing

resources into goods and services needed by the consumer. Operational

management is the whole process that transforms inputs into outputs.

Operational management is very important for a company because it

determines the success or absence of the business, if there is a failure in

managing a process it definitely will cause a negative impact on the

company.

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2.1.2 Operations strategy

Operations strategy concerns the pattern of strategic decisions and

actions which set the role, objectives and activities of the operation. The

term ‘operations strategy’ sounds at first like a contradiction. How can

‘operations’, a subject that is generally concerned with the dayto- day

creation and delivery of goods and services, be strategic? ‘Strategy’ is

usually regardedas the opposite of those day-to-day routine activities.

Four perspective of operations strategy are :

1. The ‘top-down’ perspective

A large corporation will need a strategy to position itself in its global,

economic, political and social environment. This will consist of decisions

about what types of business the group wants to be in, what parts of the

world it wants to operate in, how to allocate its cash between its various

businesses, and so on. Decisions such as these form the corporate strategy

of the corporation. Business strategy guides the business in relation to its

customers, markets and competitors, and also the strategy of the corporate

group of which it is a part. Similarly, within the business, functional

strategies need to consider what part each function should play in

contributing to the strategic objectives of the business.The operations,

marketing, product/service development and other functions will all need

to consider how best they should organize themselves to support the

business’s objectives. So, one perspective on operations strategy is that it

should take its place in this hierarchy of strategies.

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2. The bottom perspective

Orthodox view of how functional strategies should be put together. But

in fact the relationship between the levels in the strategy hierarchy is more

complex than this.Similarly, businesses, when reviewing their strategies,

will consult the individual functions with in the business about their

constraints and capabilities. They may also incorporate the ideas which

come from each function’s day-today experience. Therefore an alternative

view to the top-down perspective is that manystrategic ideas emerge over

time from operational experience.

3. The market requirements perspective

One of the obvious objectives for any organization is to satisfy the

requirements of its markets. No operation that continually fails to serve its

markets adequately is likely to survive in the long term. And although

understanding markets is usually thought of as the domain of the

marketing function, it is also of importance to operations management.

Without an understanding of what markets require, it is impossible to

ensure that operations is achieving. Operations seek to satisfy customers

through developing their five performance objectives.For example, if

customers particularly value low-priced products or services, the operation

will place emphasis on its cost performance. Alternatively, a customer

emphasis on fast delivery will make speed important to the operation, and

so on. These factors which define the customers’ requirements are called

competitive factors :

 Customer influence on performance objectives

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 Operations seek to satisfy customers through developing their five

performance objectives. For example, if customers particularly value low-

priced products or services, the operationwill place emphasis on its cost

performance.

 Order-winning and qualifying objectives

A particularly useful way of determining the relative importance of

competitive factors is to distinguish between ‘order-winning’ and

‘qualifying’ factors. customers as key reasons for purchasing the product or

service. Raising performance in an order-winning factor will either result in

more business or improve the chances of gaining more business. Qualifying

factors may not be the major competitive determinants of success

 Different customer needs different objectives implied.

Different customers will possibly make an organization or business to

change its objectives, because the different background of the customers

will set up a new objective for the business, in order to adapt with different

customers.

 The product/service life cycle influence on performance objectives.

One way of generalizing the behaviour of both customers and

competitors is to link it to the life cycle of the products or services that the

operation is producing. The exact form of product.service life cycles will

vary, but generally they are shown as the sales volume passing through four

stages-introduction :

1. Introduction stage, to develop the flexibility to cope with any changes

and be able to give the quality to maintain

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 2. Growth stage, as volume grows, competitors may enter the growing

market. Keeping up with demand. Rapid and dependable response

todemand will help to keep demand buoyant, while quality levels must

ensure that the company keeps its share of the market as competition

start to increase.

3. Maturity stage.

4. Decline stage

Implementation

This reflects an acceptance that no matter how sophisticated the

intellectual and analytical underpinnings of a strategy, it remains only a

document until it has been implemented, Ken Platts of Cambridge

University has written about the nature of the operations strategy

formulation process. His generic description of the process is labelled the

five Ps.

2.1.3 The five Ps of operations strategy formulation :

1. Purpose, the more clarity that exists around the ultimate goal, the

more likely it is that the goal will be achieved

2. Point of entry. Linked with the above point, any analysis, formulation

and implementation.

3. Process. Any formulation process must be explicit. It is important that

the managers who are engaged in putting together operations strategies

actively think about the process in which they are participating

4. Project management. There is a cost associated with any strategy

process. Indeed one of the reasonwhy operations have traditionally not

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 had explicit strategies relates to the difficulty of realizing sufficient

managerial time. The basic disciplines of project management such as

resource and time planning, controls, communication mechanisms,

reviews and so on should be in place.

5. Participation. Intimately linked with the above points, the selection of

staff to participate in the implementation process is also critical. So, for

instance, the use of external consultants can provide additional

specialist expertise.

2.1.4 Input and Output

All operational products and services by changing the input to the

output using the input-process-output transformation, where the input

consists of raw materials, manpower and machinery which will be

converted into an output, it is the final result of the production process in

the form of finished goods such as computers, cell phone, car, and others

who will get into the hands of consumers through a process called

transformations that change the original resource. When altered in

schematic form would be like the following :

Transformed
resources:

Materials,
information,
customers

THE
Output:
Input rsc. TRANSFORMATION products and customers
PROCESS services

Transforming
resources:

Facilities, staff

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2.1.5 Input to Process

Changing resources is the core of this process, in which the

resources will be processed and changed in the process. The process will

change them as follows:

1. Material

The process will be a physical change materials or existing resources

such as the shape or composition. Other operational processes could

also not change the shape or composition, can only change the location

or place of these materials such as parcel company (distribution

2. Information

The process here will change the shape, purpose, or the location of such

information as an example of the telecommunications company will

change the location of the information to one place to another so that

later output can transfer the information to improve services to its

customers.

3. Customer

For the customer, the more specific the process of changing the

physical state as an example is a hair cutting salon customers or beauty

clinics that perform surgical operations. Transport companies also

make the process of relocation to its customers such as buses, aircraft,

or other transport.

While the process itself there are two important things that can not

be separated by the input during the transformation process runs, the

facilities and staff. Infrastructure facilities in the operational process such

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as buildings, equipment, and technology for operational processes. While

the staff is man power or the human role during running operation that is

operating the machine, maintain, plan and organize operations. Staff here

is all the people involved in the operational process at various levels

without exception

2.1.6 Output of Process

The output of the operational processes can be goods, services /

service, or it could be a combination of goods and services. But basically,

all operational processes generating services, even though they produce

the goods but they also serve customers by fulfilling their needs which

means all the operational processes produce their services, even though the

actual output of goods.

The output generated from the operational process itself has a period

or expiration diverse as food just a few days, the building of dozens or

even thousands of years, but the service period will be shorter, e.g.

booking a hotel room for the night, meaning that service only valid for this

evening and different when it is done the next day.

The ‘process’ of operations strategy refers to the procedures which

are, or can be, used to formulatethose operations strategies which the

organization should adopt. Most consultancy companies have developed

their own frameworks, as have several academics. Typically, manyof these

formulation processes include the following elements:a process which

formally links the total organization’s strategic objectives (usually a

businessstrategy) to resource-level objectives;the use of competitive

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factors (called various things such as order winners, critical successfactors,

etc.) as the translation device between business strategy and operations

strategy;a step which involves judging the relative importance of the

various competitive factors interms of customers’ preferences;a step which

includes assessing current achieved performance, usually as compared

against competitor performance levels; an emphasis on operations strategy

formulation as an iterative process;the concept of an ‘ideal’ or ‘green-

field’ operation against which to compare current operations.Very often

the question asked is: ‘If you were starting from scratch on a green-field

site, how, ideally, would you design your operation to meet the needs of

the market?’ This can then be used to identify the differences between

current operations and this ideal state;a ‘gap-based’ approach. This is a

well-tried approach in all strategy formulation which involves comparing

what is required of the operation by the marketplace against the levels of

performance the operation is currently achieving.

2.1.7 The operations resources perspective

The fourth and final perspective we shall take on operations strategy is

based on a particularlyinfluential theory of business strategy – the

resource-based view (RBV) of the firm. To put simply, the RBV holds that

firms with an ‘above average’ strategic performance are likely to have

gained their sustainable competitive advantage because of the core

competences (or capabilities) of their resources.

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  Forecasting

Forecasting is an estimate of the future of a variable such as a request

(demand). Forecasting is the basic input of a process at both operational

management because it provides information about future demand. It has an

important role related to determine how much capacity or the supply needed

to meet demand.

 Capacity Planning

Capacity planning aims to achieve a match between the supply of

long-term organizational capabilities and the level of long-term demand is

predicted. The gap between the current capacity and desired will produce

capacity out of balance. Excess capacity will lead to operating costs were

too high, while the lack of capacity would lead to limited resources and the

possibility of loss of customers.

 Locating Facilities

Each company must use planning with a lot of choice for site to

optimize the existing facilities. Companies can choose expand existing

locations, shutting down one location and moved to another location, add a

new location to maintain existing facilities, or do not do anything.

The method used to determine the location or the best alternative for

companies such as identifying the state, common areas, and focus on factors

such as the placement of locations including the location of raw materials,

proximity to markets, climate, and culture, regional factors, consideration of

the community, and a factor related to the location itself. Society factors

consist of quality of life, service, attitude, tax, regulatory environment,

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utilities, and support the development. As for evaluating, the best location is

including the cost-profit analysis for the location, the center of gravity

models, transport models, and ranking factors. Allocating facilities are

essential to achieve the use of personnel and equipment are effective.

 Scheduling

Scheduling is the process of managing, controlling, optimizing the

work and the work load in the production process or the manufacturing

process. Scheduling is used to allocate resources in plant and machinery,

human resource planning, planning the production process, and purchase

materials. Scheduling is an important tool for manufacturing and

engineering, where he can have a major impact on the productivity of a

process. The purpose of scheduling to minimize the time and cost of

production and maximize operating efficiency and reduce costs by letting us

know when to build a production facility, with which the staff, and what

equipment.

Scheduling includes random attributes, such as random processing

time, maturity date at random, weighted random, stochastic and engine

damage.

 Managing Inventories

Inventory management in the context of the industry usually refers to

the act of managing the material resources of an organization that can help

the organization earn revenue in the future. Operational managers are

responsible for managing part.

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 Organizations specialized in the production of goods or products rely

heavily on well-managed inventory for a number of reasons. The point is

that the organization that prioritizes goods and products can not really

survive without a good inventory management systems.

 Assuring Quality

It discusses the various concepts and tools that can be used to achieve

high quality and continuous improvement. Broadly defined, quality refers to

the ability of a product or service to consistently meet or exceed customer

requirements or expectations. Different customers will have different

expectations, so the definition of the quality of work depends on the

customer. When discussing the qualities one must consider the design,

production, and service.

In the peak of the business, it starts with a careful assessment of what

customers want, and then translate this information into the technical

specifications that must be met by goods or services. Specifications guide

the product and service design, process design, production of goods and

services delivery, and service after sale or delivery.

Some of the consequences of poor quality, including loss of business,

liabilities, decreased productivity, and increased costs. However, the quality

is good to have his own expense, including prevention, assessment, and

failure. The new approach and the more effective is to find ways to prevent

the problem, rather than trying to fix it so happens. This will ultimately

lower the cost of good quality in the long term.

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  Training and Motivating Employees

Employee training is a process that focuses on communication,

information and / or instructions of employees. The purpose of employee

training is to improve the performance of the employee or to help

employees get the level of knowledge and skills needed to generate jobs that

are productive, effective, and profitable. The commitment to training and

development of employees by employers is one important factor in the

choice of the employee and the employee's job. Employee training is also a

key factor in employee motivation and retention of employees.

Opportunities for employees to continue to grow and develop job skills

and career advancement is an integral part of the happiness and satisfaction

of employees with their work. Indeed, the opportunity for employees to

grow and develop through training is one of the most important factors in

employee motivation, engagement, and positive spirit.

 Purchasing

Purchasing management is one of the most crucial areas throughout the

organization thus, requires intensive management. Purchasing department

buying raw materials, spare parts, machinery, and services used by the

production system. The goal of management is to get the purchase of

equipment, materials, supplies and the right services in the right quantity,

right quality, from the right supplier, at the right time, at the lowest price.

While the value of purchased goods varies from industry to industry, it adds

up to more than fifty percent of sales in all industries. Purchasing

management is regarded as a significant activity in many organizations

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because of the high costs involved in conducting purchases, increasing the

benchmark of quality, and increasing global competition. Purchasing

activities can be set using two basic approaches: centralized and

decentralized. Many manufacturing organizations use a combination of

these two approaches to manage their purchasing activity.

Purchasing managers, who heads the purchasing department, is

responsible for developing a network of vendors, selecting suppliers,

negotiating contract terms and conditions with suppliers, and ensure timely

delivery of supplies needed. Whenever there is a new item, the purchasing

manager must decide whether to make the items in-house or purchase items

from vendors and external suppliers. Many people argue that the employees

working in the purchasing department was corrupt because routine activities

involving the departments of large sums of money. Organizations therefore

need to develop ethical guidelines for employees in the purchasing

department.

 Distribution

Distribution is an important aspect of operational management and one

of the aspects of marketing. Distribution can also be interpreted as seeking

to facilitate the marketing activities and facilitate the delivery of goods and

services from producers to consumers, so its use as required (type, quantity,

price, place, and when needed).

Distribution can be done just before the input is processed into outputs

or inputs are processed into outputs. So here could be intended for the

distribution of raw materials or finished goods.

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  Maintenance

Maintenance of operations management must be defined as a set of

activities that coordinate, direct, and tracking functions that maintain the

equipment, appliances, and related assets to ensure their availability for the

manufacture and ensure scheduling for reactive maintenance, periodic,

preventive or proactive. Maintenance supports four major categories of

maintenance :

 Providing care in response to the problem of equipment

 Schedule and perform maintenance on a periodic cycle based on

time or cycles

 Providing condition-based maintenance that is derived from

information obtained from the equipment or inferred about

equipment

 Optimizing the performance and efficiency of resource operations

2.1.8 The Role of Operations Management

Given the operational management is crucial for the survival of the

company could be a success or not, operational management has an

important role include:

1. Reduce the cost for producing the goods or services and become more

efficient,

2. Increase revenue by increasing customer satisfaction or customer with

the goods and services of good quality,

3. Reducing the amount of investment that is essential for producing the

required type and quantity of goods and services by increasing the

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 effective operational capacity and be more innovative in the use of

resources,

4. Presenting innovations for the future by building a strong foundation of

skills and knowledge in the operation of running a business.

2.1.9 Operations Manager

Operational manager is someone who is overseeing the operational

management to make strategic and tactical decisions. The decision taken

should be planned with excellent attention to:

1. Strategic operational management

An operations manager must identify the value of a customer, what

could make the product competitive and generate profits. Operational

managers should devise strategies not only at the level of course but

overall production activities within a company.

2. Product design management

Operational managers must take the view the products and services that

will be generated by the design it best to generate output that will

provide benefits for the company and customers as well of course.

3. Supply chain management

The management aims to guarantee whether the input and output

obtained by properly channeled properly to customers. In supply chain

management there are some aspects in which the form of managing,

monitoring and controlling all activities during ongoing operations

4. Quality management

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 In quality management, the operational managers are required to

determine, measure, and adjust the quality of the products and services

produced by not forgetting the quality of inputs which has been

obtained previously. Additionally, operational managers should identify

and solve problems related to the quality of the input and output

products and services owned. Operational managers are also

responsible for checking the quality of products and services whether it

is feasible and appropriate or not.

2.2 Strategic Management

2.2.1 Strategic Management Theory

Basically the strategy is not a science. Everyone can implement the

strategy without truly understand what is the definition of the strategy,

because if it is assumed in life, we can conclude that strategy is actually

something abstract that leads us to position ourselves according to our

personal goal. While the definition of the strategy in the context of the

most widespread is the "plan of action".

Many experts say different things about what is strategy and how

to create a good strategy. Some say that the core capabilities of the

organization is paramount, others said about the innovation that a

company or organization can still run, and others say that the harmony

between the organization and its environment are the main ones.

A strategy is the mediating force or "match" between the

organization and environment (Hofer and Schendel, 1979). This means

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that it is a strategy that mediates between the organization and the existing

environment. The environment can be the internal environment such as

human resources, budget, tools, etc., or also the external environment such

as customers, suppliers, or other organizations as well.

McKeown (2011) argues that "strategy is about shaping the future"

and it is the human attempt to get to "desirable ends with available

means". This means that the strategy is about shaping the future where the

effort of the human or the members of the organization is to achieve the

goal with the resources and means available today.

Johnson and Scholes (2002) define strategy as "strategy is the

direction and scope of an organization over the long-term: which achieves

advantage for the organization through itsconfiguration of resources

within a challenging environment, to meet the needs of markets and to

fulfill stakeholder expectations ". It has been suggested that the strategy is

the direction and scope of an organization over the long term, which

achieved an advantage for the organization through the configuration of

resources within a challenging environment, to meet the needs of the

market and meet the expectations of stakeholders.

Freedman (2013) in his book Strategy: A History, define that a

strategy is about maximizing whatever resources that are available to

achieve the best outcome in situations that are both dynamic and

contested: "It is about getting more out of a situation than the starting

balance of power would suggest. It is the art of creating power. " That

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means the strategy of utilizing any existing resources to the maximum

extent possible clearance can result in a dynamic situation and in

competition;

The strategy can also be defined as "a general direction set for the

organization and its various components to achieve a desired state in the

future. Strategy results from the detailed strategic planning process”

which means that the strategy is a set of general guidelines for a company

that includes components to achieve the expected conditions in the future,

and the results of the strategy come from a detailed strategic planning

process.

All types of organizations would require a strategy, but the manner

understood and applied differently depending on the sector in which the

organization operates stretcher, whether it is private or voluntary.

Williams (2009: 14) explains the differences in the various sectors

of the organization's strategy, which is as follows :

1. Private Sector Strategy

Private sector organizations usually contain a lot of competition, so

the strategy is emphasis more on how to provide the product or service

which is better than the competitor. Another key strategy in the private

sector is the time. It is related to the way how we can improve the product

in the market competition in a relatively short time.

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 2. Public Sector Strategy

Public sector organizations fundamentally more focus on services

alone, and profits also called surplus where such profits will be returned to

the organization, in order to improve service or repair other resources and

not being used by the members of the organization. So, the strategy is

intended to convey the purpose of which will satisfy the political process,

namely the government and service users, so that the organization can be

more effective and produce a surplus of existing taxes.

3. Voluntary Sector Strategy

This sector can be said to be between the public and private

sectors, where the main focus is for the services. But there is an element of

competition as in the private sector. This sector has to compete for funds

from public or private organizations and from individuals. It is not always

clear who the customer of voluntary organizations - whether the funding

recipient, donor, trustee, or volunteers who help to make it run. As a result,

the strategic management of voluntary sector organizations rely heavily on

satisfying all these different groups, through the management of

stakeholders carefully.

2.2.2 Levels Of Strategy

Basically in an organization, there are three levels of strategy :

corporate strategy, business strategy, and operational or functional

strategy.

1. Corporate Strategy

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 In Neil Ritson : Strategic Management, corporate level focuses on

what business are we in, or hope to be in, and what business or businesses

the firm should be in. This level also focuses more on planning related to

what resources the organization or business should allocate. Generally,

corporate strategy involve goals, missions and money investment of the

organization. This strategy also describes how organization develops the

proper strategy for its activities.

2. Business Strategy

Strategic business units (SBUs) are part of an organization for

which there is a distinct external market for goods or services how each

business attempt to achieve its mission its chosen area of activity. Business

strategy is about which products or services should be developed and

offered to which markets. They identify most profitable market segment,

where they can excel, keeping in focus the vision of the company.

3. Operational Strategy

This strategy focuses more on maximizing the resource

productively. Operational strategy is formed by each manager of the

organization’s department. Operational or functional strategies are

concerned with how the various function of the organization contribute to

the achievement of strategy. This strategy examines how the different

function of the business. Functional strategy include IT strategy,

marketing strategy, human resources strategy, and operation. Functional

strategy also concerned with making improvements to business.

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2.2.3 Strategic Management Process

Strategic management is the process in which an organization

develops and implements plans that espouse the goals and objectives of

that organization. Strategic management is a continuous process and

evolves as the organizational goals and objectives change. Organizations

engage in strategic management to ensure that they adapt to trends and

external changes such as globalization. Several key concepts characterize

strategic management and the development of organizational goals

(Wicks, 2014: 02).

According to Igor Ansoff (1984), Strategic Management is a

systematic approach to the major and increasingly important responsibility

of general management to position and relate the firm to its environment in

a way the which will assure its continued success and make it secure from

surprises.

David (2009) define strategic management as the art and science of

formulating, implementing and evaluating cross-functional decisions that

enable an organization to achieve its objectives.

A. Strategy Formulation

Strategy formulation is a concept that entails developing specific

actions that will enable an organization to meet its goals. And through this

step, an organization can seek to find ways of maximizing profitability and

maintaining a competitive advantage. Strategy formulation issues include

deciding what new business should be entered, what business to abandon,

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how to allocate resources, whether to expand operations or diversify,

whether to enter international markets, whether to form or merge joint

ventures, and how to avoid a hostile takeover. The first thing to do in

strategic management process is setting the organization’s goal. In this

step, organization should clearly set or create goals, state missions so that

those goals and mission will be the basis of organization’s plan. Through

goal setting, organization plans how to compete in an increasingly

competitive arena. Then, organization has to analyze the internal and

external factors which can possibly affect the organization’s work. This

step will identify the organization’s external threats and opportunities, and

also determine internal strengths and weaknesses of the organization. It

consists of input stage, matching stage, and decision stage. The input stage

is the process of the internal and external information input. Tools used in

input stage are Internal Factor Evaluation (IFE) and External Factor

Evaluation (EFE) matrix. In the matching stage we use SWOT analysis to

understand the strengths, weaknesses, opportunities, and threats in

organization, and the decision stage is a process to decide the most

appropriate strategy and also define the alternative strategies. So through

the result of analyses, organization can be able to create goals and

objectives that will turn weaknesses into strengths. The analyses also

facilitate in strategizing ways of adapting to changing technology and

emerging markets. Some other experts also add one more process of

strategic management, environmental scanning. This step occurs before

forming the organization’s strategy. Environmental scanning is similar to

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the external analysis process which focusing on the threats and weaknesses

analysis, but it consists some more specific and wider scope of external

analysis. This step evaluates the environmental factors at macro and micro

levels. This step’s models include SLEPT Analysis (Social, Legal,

Political, Technological) and PESTEL Analysis (Political, Economic,

Social, Technological, Environmental, and Legal factors). The use of those

models is to help organization decide and analyze what factors can

possibly affect the organization. After doing environmental scanning,

organization should be able to do SWOT analysis more effectively.

To achieve long-term prosperity, strategic planners commonly establish

the strategy in seven areas:

 Profitability

The ability of any business to operate in the long run depends on

attaining anacceptablelevel of profits. Strategically managed firms

characteristically have a profit objectiveusually expressed in

earning per share or return on equity.

 Productivity

Strategic managers constantly try to improve the productivity of

their systems. Companiesthat can improve the input-output

relationship normally increase profitability. Thus,businesses almost

always state an objective for productivity. Number of items

producedor number of services rendered per unit of input are

commonly used. However,productivity objectives are sometimes

stated in terms of desired decreases in cost. Thisis an equally

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 effective way to increase profitability if unit output is maintained.

Forexample, objectives may be set for reducing defective items,

customer complaints leadingto litigation, or overtime.

 Competitive Position

One measure of corporate success is relative dominance in the

marketplace. Largerfirms often establish an objective in terms of

competitive position to gauge theircomparative ability for growth

and profitability. Total sales or market share are oftenused; and an

objective describing competitive position may indicate a company

prioritiesin the term. The company mission was described as

encompassing the broad aims oforganization. The most specific

statement of wants appeared as the goals of the firm.However,

these goals, which commonly dealt with profitability, growth, and

survival,were stated without specific targets or time frames. They

were always to be pursuedbut could never be fully attained. So,

while they gave a general sense of direction, goalswere not

intended to provide specific benchmarks for evaluating the

company’s progressin achieving its aims. That is the function of

objectives.

 Employee Development

Employee value growth and career opportunities in an

organization. With suchopportunities, productivity is often

increased and expensive turnover decreased.Therefore, strategic

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 decision makers frequently include an employee

developmentobjective in their long-range plans.

 Employee Relations

Companies activity seek good employee relations, whether or not

they are bound byunion contracts. In fact, a characteristic concern

of strategic managers is taking proactivesteps in anticipation of

employee needs and expectations. Strategic managers

believeproductivity is partially tied to employee loyalty and

perceived management interest inworker welfare. Therefore,

strategic managers set objectives to improve employeerelations.

For example, safety programs, worker representation on

managementcommittees, and employee stock option plans are all

normal outgrowths of employeerelations objectives.

 Technological Leadership

Organization must decide whether to lead or follow in the

marketplace. While either canbe a successful approach, each

requires a different strategic posture. Therefore, manybusinesses

state an objective in terms of technological leadership.

 Public Responsibility

Businesses or organizations recognize their responsibilities to

customers and society at large. In fact,many actively seek to

exceed the minimum demands made by government. Not only

dothey work to develop reputations for fairly priced products and

services, but they alsoattempt to establish themselves as

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 responsible corporate citizens. For example, theymay establish

objectives for charitable and educational contributions, minority

training,public or political activity, community welfare, and urban

renewal.

 Qualities of Long-Term Objectives

What distinguishes a good objective from a bad one? What

qualities of an objectiveimprove its chances of being attained?

Perhaps the best answer to these questions is found in relation to

seven criteria thatshould be used in preparing long-term objectives:

acceptable, flexible, measurable overtime, motivating, suitable,

understandable, and achievable.

 Acceptable

Managers are most likely to pursue objectives that are consistent

with perceptions andpreferences. If managers are offended by the

objectives or believe them to be inappropriate or unfair, they may

ignore or even obstructachievement. In addition, certain long-term

corporate objectives are frequently designedto be acceptable to

major interest groups external to the firm.

 Flexible

Objectives should be modifiable in the event of unforeseen or

extraordinary changes inthe firm’s competitive or environmental

forecasts. At the same time, flexibility is usuallyincreased at the

expense of specificity. Likewise, employee confidence may be

temperedbecause adjustment of a flexible objective may affect their

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 job. One recommendationfor providing flexibility while

minimizing associated negative effects is to allow foradjustments

in the level rather than the nature of an objective.

 Measurable

Objectives must clearly and concretely state what will be achieved

and within whattime frame. Numerical specificity minimizes

misunderstandings; thus, objectivesshouldbe measurable over time.

 Motivating

Studies have shown that people are most productive when

objectives are set at amotivating level-one high enough to

challenge but not so high as to frustrate or so lowas to be easily

attained.

 Suitable

Objectives must be suited to the broad aims of the organization,

which are expressed inthe statement of company mission. Each

objective should be a step toward attainmentof overall goals. In

fact, objectives that do not coincide with company or

corporatemissions can subvert the aims of the firm.

 Understandable

Strategic managers at all levels must have a clear understanding of

what is to beachieved. They must also understand the major criteria

by which their performancewill be evaluated. Thus, objectives

must be stated so that they are understandable tothe recipient as

they are to the giver.

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  Achievable

Finally, objectives must be possible to achieve. This is easier said

than done.Turbulencein the remote and operating environments

adds to the dynamic nature of a business’sinternal operations. This

creates uncertainly, limiting strategic management’s accuracyin

setting feasible objectives.

B. Strategy Implementation

After forming the organization’s strategy specifically, an

organization has to implement the actual strategy into practice to reach its

goals. The organization will gather all the available and necessary

resources required to bring the strategic plan to life. Implementation is not

limited to the formulation of plans, programmes, and projects.

Implementation of strategies includes project implementation, procedural

implementation, resource allocation, structural implementation,

behavioural implementation, functional and operational implementation.

Strategy formulation and strategy implementation are always related to

each other. But there are some characteristics to distinguish strategy

formulation and strategy implementation. Strategy formulation is

positioning forces before action and primarily an intellectual process.

Strategy formulation also requires good intuitive and analytical skills.

Meanwhile strategy implementation is managing forces during the action,

and primarily an operational process. Strategy implementation requires

special motivation and leadership skills to direct the process of goals or

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strategy implementation. Both managers and employees have to participate

directly in strategy implementation process. Every person in organization

has job descriptions, so that they will have to work based on their position

in the organization. Too often, strategists are too busy of actively

supporting the strategy implementation process and lack of interest and

coordination to the staff, which will affect the probability of strategy

implementation success rate. In this step, it is important that every

resource needed can run effectively and efficiently so it needs a strong

coordination and communication process running between the managers

and staffs.

C. Strategy Evaluation.

In strategic management, a process of monitoring or evaluating is

important. Therefore, an organization needs strategy monitoring to

evaluate the strategy and determine if it yields the anticipated result as

espoused in the organizational goals. In this step, organization will

measure and compare the anticipated results with the actual ones. Through

monitoring, an organization is able to understand when and how to adjust

the plan to adapt to changing trends. Control may be depicted as a six-step

feedback model as follows :

1. The establishment of standards of performing : Standards are

specific points against which actual performance will be judged.

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 2. The statement of acceptable tolerances : The standard is a single

point on a continuum of possible behavior which has tolerance of

deviation (in certain limits) that can possibly occur.

3. Measurement of actual performance : Involves the identification

of role behavior either for components of individuals.

4. Comparison of standards and performance

5. Action : Whexre performance is satisfactory, congruent with

standards is necessary.

6. Preventive action :Alin action that must be taken to assure these

problems do not occur again.

2.2.4 Limitations Of Strategic Management

As we know, strategic management has some important roles and

benefits to the organization. But it also has some limitations, such as :

 The costs of engaging in it are huge

In implementing every step of strategic management,

organization will have to spend some amount of money and time.

Organization also has to take some time, especially in goal setting,

form and analyze the strategy. Those 3 steps are the foundation of

where the organization will go and what thing should be reached by

organization.

 The process is complex

Strategic management involves some complex steps of process.

Good team work and skills are needed in implementing the process

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 of strategic management. Every person in the organization has to be

aware that all the strategies of the organization need both human and

other resources so that organization can be able to reach its goals.

 Success is not guaranteed

Although the strategic management seems to cover every

element and aspect of the organization, but all those strategies have

some limitations. For instance, in analyzing and forming the

strategy, we cannot ensure that every possibilities has being covered.

There is no guarantee that the organization will be 100% successful

in bringing the plans into life.

Because of those reasons, small and medium enterprises are usually

reluctant to have their own strategic management.

Differences between Strategic Management and Operations Management

Strategic Management Operations Management

Concerned about the organizational Focused more on the production

activities as a whole. function of the organization.

Long term process Short term process
Non routine task, uncertain Day-to-day task, full of certainty
Complex (compared to o. management) Simple (compared to s.management)

According to those differences, we can conclude that strategic

management is a long-term oriented management, which manage all activities in

organization. Strategic management is also not a routine task, and it can be very

ambiguous or uncertain because of its role, to guide or lead an organization to its

goals in a long period. It is also more complex than operations management,

because it is concerned about all process which happens in organization.

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Meanwhile, operations management focuses on the production activity in

organization, which means it is concerned about how an organization can do its

production process daily. Because of its characteristic as day-to-day process,

operations management is a short term process in organization.

CHAPTER III

FINAL

3.1 Conclusion

Based on those explanations about strategic and operations management, we

can conclude that :

 Strategic management is a process which an organization forms,

implements, and evaluates its strategies in order to achieve the

organizational goals.

 Operations management is the management of arranging systems or

processes that produce goods or provide services.

 Strategic management is used by an organization to manage every strategy

to reach fulfill their goals in long period.

 Operations management is used by an organization as a rule to manage its

production process which transforms resources into products and/or

services.

 Strategic management includes strategy formulation, strategy

implementation, and strategy evaluation.

 Operations management includes input, process, and output.

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  There are several differences between strategic and operations

management based on its time, purposes, and implementation.

3.2 Recommendation

This paper needs further improvement in term of its content. Therefore,

suggestions and critics are need. Furthermore, more development in strategy and

operations management are needed so that students will deeply understand the

importance of strategic and operations management, especially in managing the

health care administration and management.

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