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Operations Strategy

Adapted from Operations management 6E (Heizer


and Render) & Operations Management 11E
(Willian Stevenson) and websites
14 August,2013

Mission/Strategy/Tactics

Mission

Strategy

Tactics

How does mission, strategies and tactics relate to


decision making and distinctive competencies?

Strategy
Mission
The reason for existence for an organization

Mission Statement
A clear statement of purpose

Strategy
A plan for achieving organizational goals

Tactics
The actions taken to accomplish strategies

Strategy Example
Stephenie is a college student. She would like to have a
career in business, have a good job, and earn enough
income to live comfortably!

Mission:
Goal:
Strategy:
Tactics:
Operations:

Live a good life


Successful career, good income
Obtain a college education (IAU)
Select a college and a major

Register, buy books, take


courses, study, graduate, get job

Planning and Decision Making


Mission
Goals
Organizational strategy

Functional strategies
Finance

Tactics
Finance
operations

Marketing Operations

Tactics

Tactics

Marketing
operations

Operations
operations

Strategy Formulation
Distinctive Competencies
The special attributes or abilities that
give an organization a competitive edge.

Environmental Scanning
The considering of events and trends
that present threats or opportunities for a
company.

Examples of Distinctive Competencies


Price

Low Cost

Quality

High-performance design Sony TV


or high quality Consistent Lexus, Kia
quality
Pepsi, Kodak, Motorola

Time

Rapid delivery
On-time delivery

Express Mail
Flexnet

Flexibility

Variety
Volume

Burger King
Supermarkets

Service

Superior customer
service

Disneyland
Nordstroms

Location

Convenience

Internet, ATMs

U.S. first-class postage


Motel-6, Red Roof Inns

Komatsu Strategies

1960s - licensed design and technology from


others; improved quality
1970s - became global enterprise and built export
markets aided by increasing value of yen
1980s - joint ventures with Dresser, and
manufacturing outside Japan
1990s - used the latest technology to improve
quality and drive down costs; focused on
electronic engine controls
2000s - increased European presence through
ownership and joint ventures

Komatsu Strategies
Each strategy established in light of:
threats and opportunities in the environment

strengths and weaknesses of the organization


(related to environment)

Mission
Mission - where are you
going?

Organizations purpose for


being
Provides boundaries & focus
Answers How can we satisfy
peoples needs?
Expressed in published
statement
1995 Corel Corp.

Factors Affecting Mission


Philosophy &
Values
Profitability
& Growth

Environment
Mission
Customers

Public Image

Benefit to
Society

Mission/Strategy
Mission - where you are going
Strategy - how you are going to get there

Strategy
Action plan to achieve
mission
Shows how mission will
be achieved
Company has a business
strategy
Functional areas have
strategies

1995 Corel Corp.

Strategy Process
Company
Mission
Business
Strategy
FunctionalArea
Area
Functional
Strategies
Marketing
Decisions

Operations
Decisions

Fin./Acct.
Decisions

SWOT Analysis to Strategy Formulation

Mission
Internal
Strengths

External
Opportunities
Strategy

Internal
Weaknesses

Competitive
Advantage

External
Threats

OMs Contribution to Strategy


Operations
Decisions

Examples

Specific
Strategy Used

Quality
Product

FLEXIBILITY

Sonys constant innovation of new products


Design
Compaq Computers ability to follow the PC market
Volume

Process

Southwest Airlines No-frills service

LOW COST

Location

DELIVERY

Pizza Huts five-minute guarantee at lunchtime


Federal Expresss absolutely, positively on time

Layout

Human Resource
Supply Chain

Speed
Dependability

Maintenance

Differentiation
(Better)

QUALITY

Conformance
Motorolas automotive products ignition systems
Motorolas pagers
Performance

Inventory
Scheduling

Competitive
Advantage

IBMs after-sale service on mainframe computers AFTER-SALE SERVICE


Fidelity Securitys broad line of mutual funds

BROAD PRODUCT LINE

Cost
leadership
(Cheaper)

Response
(Faster)

Strategic Options Managers Use to


Gain Competitive Advantage

28% - Operations Management


18% - Marketing/distribution
17% - Momentum/name recognition
16% - Quality/service
14% - Good management
4% - Financial resources
3% - Other

Operations Strategy
Customer Needs

Corporate Strategy
Alignment

Operations Strategy

Decisions
Processes, Infrastructure, and Capabilities

Core
Competencies

Corporate Strategy
Focus: Survival

Business Strategy
Focus: Distinctive Competence
Cost Leadership
Product Differentiation
Focus (cost or differentiation)

Operations Strategy
Focus: Competitive Priorities
Cost Flexibility Quality Delivery
Capability Building

Implementation

Resources
Process
Structure

Product
Infrastructure

Other Functional
Strategies
Marketing
Finance
Human Resources
Engineering
Information Systems

Policy
Service-enhanced
Product or
Delivered Service

Satisfied Customer