Operations Strategy.docx

7/27/2019 Operations Strategy.docx

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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 Strategy.docx

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