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Chapter 3
Operations strategy
Photodisc. Cartesia
Slack, Chambers and Johnston, Operations Management, 6th Edition,

3.1
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
Slack et al.’s model of operations management
3.2
Operation’s
performance
Operations Operations
strategy strategy
Operations
management
Design Improvement
Planning and
control

3.2
Key operations questions
3.3
In Chapter 3 – Operations strategy – Slack et

al. identify the following key questions:
• What is strategy and what is operations

strategy?
• What is the difference between a ‘top-down’ and a
‘bottom-up’ view of operations strategy?
• What is the difference between a ‘market
requirements’ and an ‘operations resources’ view
of operations strategy?
• How can an operations strategy be put together?
3.3
Operations strategy at Flextronics and Ryanair
3.4
For each of these companies:
• What do they have to be good at to compete in their

markets?
• How do their operations help them to achieve this?

3.4
Operations strategy at Flextronics
3.5
Operations strategic Flextronics Market

decisions requirements
• Industrial parks, with • Low costs

– low cost but close • Responsiveness
locations
– and co-located • Flexibility
suppliers

3.5
Operations strategy at Ryanair
3.6
Operations strategic Ryanair Market

decisions requirements
• Stripped down service • Low prices

• One technology • Reliability
• Cheap airport
locations • Basic service
• Fast
turnround

3.6
What is strategy?
3.7
• Setting broad objectives that direct an enterprise

towards its overall goal.
• Planning the path (in general rather than specific

terms) that will achieve these goals.
• Stressing long-term rather than short-term

objectives.
• Dealing with the total picture rather than stressing

individual activities.
• Being detached from, and above, the confusion and

distractions of day-to-day activities.
Slack, Chambers and Johnston, Operations Management, 6 Edition,
th
3.7
Strategic decisions
3.8
Strategic decisions are those decisions which: are

widespread in their effect on the organization to
which the strategy refers, define the position of the
organization relative to its environment and move
the organization closer to its long-term goals.

3.8
‘Operations’ is not the same as ‘operational’
3.9
‘Operations’ are the resources that create products and

services.
‘Operational’ is the opposite of strategic, meaning day-to-

day and detailed.
So, one can examine both the operational and the

strategic aspects of operations.

3.9
3.10
How is operations strategy different to operations management?
Operations management Operations strategy
Short-term Long-term
for example, for example,
capacity decisions capacity
The time decisions
Demand
Demand
scale is
longer
1–12 months 1–10 years

3.10
3.11 How is operations strategy different to operations management?
(Continued)
Micro-level Macro-level
of the process of the total operation
The level of
analysis is
higher

3.11
(Continued)
Detailed Aggregated
For example: For example:

The level of ‘What is our overall
aggregation ‘Can we give tax business advice
is higher services to the small capability compared with
business market in other capabilities?’
Antwerp?’

3.12
(Continued)
Concrete Philosophical
For example: For example:

The level of
abstraction ‘How do we improve out ‘Should we develop
is higher purchasing procedures?’ strategic alliances with
suppliers?’

3.13
What is the role of the operations function?
3.14
Operations as Operations as
supporter of Operations as
implementer of
strategy driver of strategy
strategy
Operations Operations Operations

implements strategy supports strategy drives strategy
3.14
The strategic role of the operations function
3.15
The 3 key attributes

Operations contribution
of operations strategy
Implementing be Dependable
Operationalize strategy
explain Practicalities
Supporting be Appropriate
Understand strategy
Contribute to decisions
Driving be Innovative
provide Foundation of strategy
Develop long-term Capabilities

3.15
The 4 stage model of operations contribution
3.16
Redefining STAGE 4
industry Give an
operations
expectations advantage
Increasing strategic impact
Clearly the STAGE 3

Driving
best in the Link strategy
with strategy
industry operations
STAGE 2
As good as Supporting
Adopt best
competitors practice strategy
Holding the STAGE 1

Correct the Implementing
organization worst strategy
back problems
Internally Externally Internally Externally

neutral neutral supportive supportive
After Hayes and Increasing operations capabilities
Wheelwright
3.16
The four perspectives on operations strategy
3.17
Top-down
perspective
What the
business wants
operations to do
Operations Market
resources requirement
perspective perspective
Operations
What strategy What the market
operations position requires
resources can operations to do
do What day-to-day
experience
suggests operations
should do
Bottom-up
perspective

3.17
Top-down and bottom-up perspectives of strategy
3.18
Corporate strategy
Business strategy
Operations strategy
Emergent sense of what the

strategy should be
Operational experience

3.18
The strategy hierarchy
3.19
Key strategic Influences on

decisions decision-making
What business to be in? Economic environment
Corporate What to acquire? Social environment
strategy What to divest? Political environment
How to allocate cash? Company values and
ethics
What is the mission?

Business What are the strategic Customer/market dynamics
objectives of the firm? Competitor activity
strategy
How to compete? Core technology dynamics
Financial constraints
How to contribute to the

Functional strategic objectives? Skills of function’s staff
How to manage the Current technology
strategy
function’s resources? Recent performance of the
function

3.19
The effects of the product / service life cycle
3.20
Sales
volum
e
Time
Introduction Growth Maturity Decline
Volume Slow growth Rapid growth in Sales slow and Market needs
in sales sales volume level off largely met
Customers Innovators Early adopters Bulk of market Laggards
Competitors Few/none Increasing Stable number Declining

numbers numbers
Variety of Customization Increasingly Emerging Possible move

product/ or frequent standardized dominant types to commodity
service design standardization
design changes

3.20
The effects of the product / service life cycle (Continued)
3.21
Sales
volum
e
Time
Introduction Growth Maturity Decline
Likely order Product/ Availability Low price Low price

winners service quality dependable
characteristics supply
Likely Quality Price Quality Dependable

qualifiers range range range supply
Dominant Flexibility Speed Cost Cost

performance quality dependability dependability
objectives quality

3.21
3.22 Different competitive factors imply different performance
objectives
Competitive factors Performance objectives

If the customers value these … Then, the operations will need to
excel at these …
Low price Cost
High quality Quality
Fast delivery Speed
Reliable delivery Dependability
Innovative products and services Flexibility (products/services)

Wide range of
products and services Flexibility (mix)
The ability to change

the timing or quantity of Flexibility (volume and/or
products and services delivery)
3.22
3.23 Order-winning, qualifying and less important
competitive factors
Order-winning factors
+ve
Competitive Neutral
benefit
–ve
Performance

3.23
competitive factors (Continued)
Qualifying factors
+ve
Competitive Neutral
benefit
–ve
Performance

3.24
competitive factors (Continued)
Less important factors
+ve
Competitive Neutral
benefit
–ve
Performance

3.25
Mintzberg’s concept of emergent strategy
3.26
Intended Deliberative Realized

strategy strategy strategy
Unrealized Emergent
strategy strategy

3.26
Reconciling market requirements and operations
3.27
resources
Operations Market
resources requirements
What you What you What you What you

HAVE DO WANT NEED
to maintain from your
in terms of your operations to to ‘compete’
operations capabilities help you in the
capabilities and satisfy ‘compete’ market
markets
Strategic
reconciliation
3.27
The challenge of operations strategy formulation
3.28
An operations strategy should be:
Appropriate…
Comprehensive…
Coherent…
Consistent over
time…

3.28
An implementation agenda is needed
3.29
When to start?
Where to start?
How fast to proceed?
How to co-ordinate the implementation

programme?

3.29
The five P’s of operations strategy implementation
3.30
Purpose — a shared understanding of the motivation,

boundaries and context for developing the operations
strategy.
Point of Entry — the point in the organization where
the process of implementation starts.
Process — How the operations strategy formulation
process is made explicit.
Project Management — The management of the
implementation.
Participation — Who is involved in the

implementation.
3.30

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3.

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Slack, Chambers and Johnston, Operations Management, 6th Edition,

In Chapter 3 – Operations strategy – Slack et

• What is strategy and what is operations

For each of these companies:

• What do they have to be good at to compete in their

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Operations strategic Flextronics Market

• Industrial parks, with • Low costs

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Operations strategic Ryanair Market

• Stripped down service • Low prices

Slack, Chambers and Johnston, Operations Management, 6th Edition,

• Setting broad objectives that direct an enterprise

• Planning the path (in general rather than specific

• Stressing long-term rather than short-term

• Dealing with the total picture rather than stressing

• Being detached from, and above, the confusion and

Strategic decisions are those decisions which: are

Slack, Chambers and Johnston, Operations Management, 6th Edition,

‘Operations’ are the resources that create products and

‘Operational’ is the opposite of strategic, meaning day-to-

So, one can examine both the operational and the

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Operations management Operations strategy

1–12 months 1–10 years

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Operations management Operations strategy

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Operations management Operations strategy

For example: For example:

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Operations management Operations strategy

For example: For example:

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Operations Operations Operations

The 3 key attributes

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Clearly the STAGE 3

Holding the STAGE 1

Internally Externally Internally Externally

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Emergent sense of what the

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Key strategic Influences on

What is the mission?

How to contribute to the

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Customers Innovators Early adopters Bulk of market Laggards

Competitors Few/none Increasing Stable number Declining

Variety of Customization Increasingly Emerging Possible move

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Likely order Product/ Availability Low price Low price

Likely Quality Price Quality Dependable

Dominant Flexibility Speed Cost Cost

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Competitive factors Performance objectives

High quality Quality

Fast delivery Speed

Reliable delivery Dependability

Innovative products and services Flexibility (products/services)

The ability to change

Slack, Chambers and Johnston, Operations Management, 6th Edition,