© Oxford University Press 2013. All Rights Reserved

© Oxford University Press 2013. All rights reserved.
Defining Operations
Strategy
An operations strategy is a long-term plan for the production/
operations function of a company, which acts as a guide for the
operations functions required to achieve annual business
objectives.

Relationship between Business Grand
Strategy and Operations Strategy
Corporate Mission
Company Strategic Analysis External

Strengths & & Choice Environment –
Weaknesses Threats &
Opportunities
Business
Long-term Grand
Objectives Strategy
Annual
Functional
Objectives
Strategies
Human
Marketing Financial
Operations Resources
Strategy Strategy
Strategy Strategy

Business Grand Strategies
Market Development
Product
Concentration Development
Liquidation
Innovation
Business
Divestiture Grand Horizontal
Strategies Integration
Turnaround Vertical
Integration
Conglomerate Joint
Diversification Concentric Venture
Diversification

Operations Strategies in a
Global Environment

Four Types of Global-Level
Strategies

Centralization vs Decentralization
of Authority and Responsibility
• Centralization and decentralization, just like delegation of authority,
refer to the degree to which authority and responsibility is
concentrated or dispersed. However, there is an important difference
between the two concepts.
• Decentralization is a much broader concept and refers to the extent

to which upper management delegates authority downward to
divisions, branches, or lower-level organizational units, whereas
delegation usually refers to the extent to which individual managers
delegate authority and responsibility to the people reporting directly
to them.

Centralization vs Decentralization
of Authority and Responsibility

Dimensions of Operations for Competitive
Advantage
• Product/service quality
• Cost of production
• Delivery speed and reliability
• Speed in introduction of new products/ features/models
• After-sales service

Innovation Management
• Basic research or fundamental research is concerned with the
discovery of new scientific ideas, concepts, facts, and theories that
may or may not have immediate practical application and relevance.
• Applied research is finding the practical applications of the new

scientific knowledge as a result of basic research in different spheres
of business and society.
• Developmental research means utilization of completed research

toward new or improved products, machines, equipments and
processes. It consists of drawings of design, manufacturing
specifications, construction and testing of prototypes, up scaling,
extension, and production engineering.

Innovation Management
• Offensive R&D strategy is followed by companies which are leaders
in technology and strive to retain their leadership position. These are
companies which perform breakthrough research of innovative
products to render the existing products in the market redundant.
The R&D approach here is to be ‘first to market’.
• Defensive R&D strategy is followed by companies which prefer to

be followers rather than leaders by using the basic research done by
others to perform product modifications. It is important to mention
here that it is common for companies initially following the
defensive R&D strategy to eventually get into the offensive R&D
mode. A typical example here is that of Samsung, which followed a
defensive R&D strategy for decades before following an offensive
strategy in recent times.

Allocating Resources to Strategic Alternatives
Linear Programming
1. Linear programming is a technique, which may be applied in the following decisions

regarding allocation of resources
2. Product mix (deciding about the combination of products/services leading to
maximum profit)
3. Ingredient mix (deciding about the quantity of ingredients to be used in the product
leading to minimum cost)
4. Transportation problems (deciding about the distribution plan of goods/services
leading to minimum transportation cost)
5. Aggregate production planning (deciding the quantity of products /services to be
produced so that the overall cost is the minimum)
6. Assignment problems (to assign man or machine resources to various activities to
minimize the total cost or to maximize the profit)

Characteristic of LP Problems
1. There should be a well-defined objective function
(usually to minimize the cost or maximize the
profits).
2. There should be alternative courses of action.
3. There should be resources constraints in achieving
4. the objective function.
5. The objective function as well as the constraints
must be expressed as linear functions (of the form
y = a + b. x, which is the equation of a straight line).

© Oxford University Press 2013. All Rights Reserved

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

© Oxford University Press 2013. All Rights Reserved

Uploaded by

Copyright:

Available Formats

© Oxford University Press 2013. All rights reserved.