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Assignme
I
Chapter
Summary
OPERATIONSSTRATEGY
Submitted by:
Jagadeesh Putta
Section B
2012PGP141
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The chapter tries to explain the relationship between operations and
strategy, importance of operations in achieving the objectives of business
strategy, establish the strategic significance of operations and generalize the
same for all kinds of organizations and finally list the key strategic decision areas
of operations management that constitute the operations strategy.
Strategyis defined as a vector which has both magnitude (Scope) as well
as direction to gain competitive advantage over the competitors and sustain it
over a long term. Strategy can exist at three levels in an organization: corporate,
business and functional. Strategy involves influencing the three elements:
organizations environment, resources available, and objectives. Operations
management manages the resources available with the organization and thus is a
part of operations strategy. The identification and excellence at one or more
operation performance objectives can enable the organization to obtain
competitive advantage. The five operation performance objectives are:
1. Cost
2. Quality
3. Speed
4. Dependability
5. Flexibility
Trade offtheory states that all the 5 performance objectives cannot be met at
the same time and sacrifices have to be made according to the long term strategy
of the organization (i.e. If cost the most important criteria for competitive
advantage of the company, the flexibility objective cannot be obtained)
Four stage model of strategic role of operations states that competitive advantage
can be obtained through managing the operations
Stage Description Reactive/Proac
tive
Competit
ve
Advantag
e
Stage1
Difficult to manage operations strategically
Operations managers dont have time to focus on
objective
Reactive
Operations StrategyJagadeesh Putta
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Stage
2
Copy best practices from across the industry
Emulate the methods of competitors
Effort towards achieving the business strategy
objectives but never achieved as synergies arenot created between operations and business
strategy
Reactive
Stage
3
Operations performance objectives are aligned
with the business strategy
Possibility to achieve competitive advantage over
competitors
Reactive/Proac
tive
Stage
4
Operations strategy is the basis for the business
strategy
Best practices to surprise and delight customers
Enables the organization to scale up as well as
sustain the competitive advantage
Proactive
Operations Strategy
Setting broad strategies and actions for using the resources of a firm to best
support the firm's long-term competitive strategy
Process- It is the path taken by the organization to develop an appropriate
operations strategy
Operations strategy has a vertical relationship when compared to the corporate
strategies which has a horizontal strategy. The various perspectives through which
operations strategy can be obtained are:
Top down
Bottom up
Operation led
Market led
Content-The key decision areas which need to be looked at to arrive at operations
strategy
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The major areas are divided in to the following categories:
Structure- The physical attributes of operations
o Facilities
o Capacity
o Process Technology
o Supply network
Infrastructure- The people and systems of operations
o Planning and control
o Quality
o Work Organization
o Human Resources
o New Product development
o Performance measurement
Infrastructure can be easily changed when compared to the structural aspects of
operations.
Operations StrategyJagadeesh Putta