Scribd
Upload
4 views

lecture sustainable strategy

The document discusses sustainable business strategies, emphasizing the importance of integrating operations and supply chain management with sustainability goals, which include economic prosperity, social responsibility, and environmental stewardship. It outlines the strategy process, competitive dimensions, trade-offs, and the implementation of strategies through activity-system maps, using IKEA as an example. Additionally, it covers productivity measurement, highlighting the need for relative comparisons to assess operational efficiency.

Uploaded by

asilbek.xamidov.1997
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
4 views

lecture sustainable strategy

The document discusses sustainable business strategies, emphasizing the importance of integrating operations and supply chain management with sustainability goals, which include economic prosperity, social responsibility, and environmental stewardship. It outlines the strategy process, competitive dimensions, trade-offs, and the implementation of strategies through activity-system maps, using IKEA as an example. Additionally, it covers productivity measurement, highlighting the need for relative comparisons to assess operational efficiency.

Uploaded by

asilbek.xamidov.1997
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 15

PRODUCTION AND

OPERATION MANAGEMENT
Chapter 2 Sustainable Strategy

Prof. Eunhee Kim


College of Business Administration, Chonnam National University
Learning Objectives

1. Know what a sustainable business strategy is and


how it relates to operations and supply chain
management
2. Define operations and supply chain strategy
3. Explain how operations and supply chain
strategies are implemented
4. Understand why strategies have implications
relative to business risk
5. Evaluate productivity in operations and supply
chain management

2- 2
Sustainable Strategy

 The firm’s strategy describes how it will create and sustain value for its
current shareholders
 Shareholders – individuals or companies that legally own one or more shares of
stock in the company
 Many companies have expanded the scope or their strategy to include
stakeholders
 Stakeholders – individuals or organizations who are directly or indirectly
influenced by the actions of the firm
 Adding a sustainability requirement means meeting value goals without
compromising the ability of future generations
to meet their own needs
 The goal of sustainability means that the scope of the firm’s strategy must
focus on three areas (so called triple bottom line)
 Economic Prosperity, Social Responsibility, Environmental Stewardship
 Cf. Hyundai Sustainable Report (2019) link 2- 3
Triple Bottom Line

 Economic Prosperity
◼ shareholders must be compensated
via a competitive return
 Social Responsibility
◼ business practices should be fair
to labor, the community,
and the region
where the firm conducts business
◼ Cf. CSR Video clip link
 Environmental Stewardship
◼ the company should protect
the environment as much as possible

2- 4
Strategy Process
5

 Activity 1 is performed at least


yearly and is where the overall
strategy is developed
(strategic analysis, forecasting)

 Activity 2 is where the overall


strategy is refined and updated as
often as four times a year
(performance measurement)

 Activity 3 is where operational


plans that relate to functional areas
such as marketing, manufacturing,
and so on, are coordinated
(capacity & resource availability)
2- 5
Operations Strategy

 Corporate strategy
 provides overall direction and
 coordinates operational goals
 Operation strategy
 Setting broad policies and plans for using the resources of a firm
– must be integrated with corporate strategy
 Operations effectiveness and efficiency
 Performing activities in a manner that best implements strategic
priorities at a minimum cost

2- 6
Competitive Dimensions

 Price
 Make the product or deliver the service cheap

 Quality
 Make a great product or delivery a great service

 Delivery Speed
 Make the product or deliver the service quickly

 Delivery Reliability
 Deliver it when promised
 Coping with Changes in Demand
 Change its volume
 Flexibility and New-Product Introduction Speed
 Change it (offer a wide variety of existing products and introduce new products quickly)
 Other Product-Specific Criteria
 Support it (technical assistance, meeting launch dates, after-sale support, environmental impact)
2- 7
Trade-Offs

 Management must decide


which parameters of performance
are critical and concentrate resources
on those characteristics
 An operation cannot simultaneously excel
on all competitive dimensions
 For example, a firm that is focused on low-cost production may not be
capable of quickly introducing new products

 A strategic position is not sustainable unless there are


compromises with other positions.
 Trade-off occur when activities are incompatible so that more of
one thing necessitates less of another
2- 8
Straddling

 Straddling occurs
 when a firm seeks to match what a competitor is doing by
adding new features, services, or tech. to existing activities
→ often a risky strategy
 often a risky strategy
◼ This often creates problems if certain trade-offs need to be made
 ex. Continental (full service) vs. Southwest (point-to-point routes)
→ Continental lite ?

2- 9
Order Qualifiers & Order Winners:
Marketing-Operation Link

 Order qualifiers
 The basic criteria that permit the firms products to be considered as
candidates for purchase by customers
 Features customers will not forego
 Order winners
 The criteria that differentiates the products and services of one firm from
another
 Features that customers use to determine which product to ultimately purchase
 Order qualifiers and order winners criteria change over time
 Ex. Automobile producers’ order winners
‘Quality’: order winners of Japanese companies in 1970s
→ Most companies are qualified today
→ ‘Quality’ was an order winner in 1970s and is an order qualifier today in Automobile industry
→ set of features (reliability, design, gas mileage), various combination
2- 10
How strategies are implemented

 All the activities that make up a firm’s operation


relate to one another
 To be efficient, must minimize total cost without
compromising on customer needs
 Activity-system maps
 show how a company’s strategy is delivered through a
set of tailored and supporting activities

2- 11
Ex) IKEA

11 March 2021
Ex) Mapping Activity Systems
at IKEA Stylish Low-Cost Furniture
Productivity Measurement

 Productivity is a measure of how well resources are used


Outputs
Productivity =
Inputs
 Productivity is a relative measure
 Must be compared to something else to be meaningful
◼ Operations can be compared to each other
◼ Firms can be compared to other firms
 Can be compared with similar operations within its industry
 Can be compared over time
 Productivity may be expressed as
 Partial productivity measures compare output to a single input
 Multifactor productivity measures compare output to a group of inputs
 Total productivity measures compare output to all inputs
2- 14
Ex) Productivity Measurement

2- 15

You might also like