STRATEGY FORMULATIONBY JAMES B. DIL WORTH

Operations Strategy

Companies spend a great percentage of their income and employee hours carrying out activities that stem from various parts in the company; these activities shape the destiny of the entire company

The accomplishments of the company can be outstanding if all its parts work together toward carefully established appropriate goals

The decision that have long range impact are called strategic decisions

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Mission Statement

Broadest expression in which a company apply its efforts is called its mission; a long range purpose that changed infrequently

The company’s intended mission will identify the parts of the environment that are most relevant to the company’s decisions; strategic decisions

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Strategy a Master plan

Top managers formulate strategy to provide more definitive direction and guidance to the organization

Strategy is a long term master plan, how the company will pursue its mission

Product line company will choose to offer

Geographical scope try to serve

Amount of resources that will be committed

Competitive action it will employ

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Strategic decisionstranslated into Policy Policies are official statement, that guide decisions

and action of the company in consistent and general direction

Some time written policy circulated to lower level managers for unified direction

Each sub unit such as operations develop its own strategies to accomplish the objectives assigned to them

Each part of the organization translate these objectives into actions, and develop its tactics (short term plan)

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Strategy Formulation

As strategy deals with long range plans, strategy formulation is multifaceted activity

Managers must evaluate information about many diverse elements of the company; external and internal environment

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External condition

1. Economic Conditions1. Capital spending

2. GNP

3. Business cycle

4. Interest rate

2. Political conditions1. War/peace

2. Tariff

3. Political stability

4. Budget

5. Labor policy

6. Environment policy

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External condition3. Social Conditions

1. Lifestyle2. Changes in status of women and minorities

4. Technological conditions1. New formulation2. New product3. New process

5. Market Conditions1. Needs of customer2. Competitors3. Cost structure4. Product life cycle

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Internal condition

There must an adequate match between the key requirements of the company in which a company competes and the capabilities of the company

The purpose of internal review ids to assess the capability to move forward, especially when there are external threat

identify internal weaknesses and threats

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Internal condition

Marketing understanding

Existing products and services

Existing distributions

Existing Suppliers

Human resources

Ownership of natural resources

Current facilities equipment process and location

Financial strength

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Mission

Corporate strategy

Social Conditions

Political Conditions

Economic Conditions

Market Conditions

Internal strengths and weaknesses

Policies & SB Objectives

Functional strategies &Operating Plans

Day to day activities

Operations in strategy

A company’s overall strategy addresses many broad issues and even include plans for social involvement, stock holder relations and employee relations

One important aspect of overall direction of a firm is its competitive strategy

Operation function has great value as a competitive weapon, as it’s the operations that will determine quality, variability, availability, durability of a goods and services

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Marketing strategy and various types of operations

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Type of operation

Job Shop

Mass Prouct/ service

Type of product

Make to order

Make to stock

Market strategy

Selling diversity of product/service

@ customer desire

Selling desirability of product/service

Operations must do to compete

Critical success factors to deliver completive best

1. Cost efficiency; keep costs low than competitors

2. Quality; a company that emphasis quality will consistently strive to provide a level of quality superior to its competitors

3. Dependability; make its goods available to deliver its goods and services on schedule

4. Flexibility ; quick response to changes in product design, product mix and production volume

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For example, if we reduce costs by reducing product quality inspections, we

Example II, if we improve customer service problem solving by cross-training personnel to deal with a wider-range of problems, they may become less efficient at dealing with commonly occurring

problems. might reduce product quality.

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Dealing with Trade-offs

Quality

Cost

DependabilityFlexibility

Fine tuning the objective

Once you have determined your target position , it will establish guidelines to improve business competitive success.

Detailing in four major performance characteristics

Quality has several dimensions to customers such as durability of a product, and number of features it has

Flexibility can be breadth of types of products, or it may scale up or scale down the volume of products, ability to change the product mix easily

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Strategy in service sector

Strategy factor considerations in non manufacturing companies are similar to manufacturing i.e. cost efficiency, quality, dependability and flexibility

General differences between the two are

Fewer barriers prevent the competitors from entering into market as no Patents and lower initial investment, cost difficult to measure, location of operations is more important in service than in manufacturing

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