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Chapter Two

This document provides an outline and overview of key concepts relating to operations strategy and competitiveness. It discusses developing missions and strategies, achieving competitive advantage through operations by competing on differentiation, cost, or response. It also covers the 10 strategic operations management decisions, strategy development and implementation, and four global operations strategy options. The learning objectives are defined and cover missions, competitive approaches, the 10 OM decisions, insights from research, and global strategy options.

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Bahredin Abdella
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8 views

Chapter Two

This document provides an outline and overview of key concepts relating to operations strategy and competitiveness. It discusses developing missions and strategies, achieving competitive advantage through operations by competing on differentiation, cost, or response. It also covers the 10 strategic operations management decisions, strategy development and implementation, and four global operations strategy options. The learning objectives are defined and cover missions, competitive approaches, the 10 OM decisions, insights from research, and global strategy options.

Uploaded by

Bahredin Abdella
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Production Planning and

Control

Chapter Two:
Operations Strategy and Competitiveness
Outline
A Global View of Operations
 Cultural and Ethical Issues
Developing Missions and Strategies
 Mission
 Strategy
Achieving Competitive Advantage Through
Operations
 Competing On Differentiation
 Competing On Cost
 Competing On Response
Outline
Ten Strategic OM Decisions
 Issues In Operations Strategy
 Research
 Preconditions
 Dynamics
Strategy Development and Implementation
 Critical Success Factors and Core
Competencies
 Build and Staff the Organization
 Integrate OM with Other Activities
Outline
Global Operations Strategy Options
 International Strategy
 Multi-domestic Strategy
 Global Strategy
 Transnational Strategy
Learning Objectives
1. Define mission and strategy
2. Identify and explain three strategic
approaches to competitive advantage
3. Identify and define the 10 decisions of
operations management
4. Identify five OM strategy insights provided
by PIMS research
5. Identify and explain four global operations
strategy options
A Global View of Operations
 Today’s successful operations manager has a
global view of operations strategy.
 Since the early 1990s, nearly 3 billion people in
developing countries have overcome the
cultural, religious, ethnic, and political barriers
that constrain productivity.
 As these barriers disappear, simultaneous
advances are being made in technology, reliable
shipping, and inexpensive communication.
Cont.
 The unsurprising result is the growth of world trade
global capital markets, and the international
movement of people.
 This means increasing economic integration and
interdependence of countries.
 In this regard, organizations are hastily extending
their distribution channels and supply chains
globally.
 The result is innovative strategies where firms
compete not just with their own expertise but with
the talent in their entire global supply chain.
Cont.
Six reasons were identified why domestic
business operations decide to change to some
form of international operation. They are:
 Improve the supply chain
 Reduce costs and exchange rate risk
 Improve operations
 Understand markets
 Improve products
 Attract and retain global talent
Cultural and Ethical Issues
Challenges
 One of these challenges is reconciling
differences in social and cultural behavior.
 Managers sometimes do not know how to
respond when operating in a different culture.
 What one country’s culture deems acceptable
may be considered unacceptable or illegal in
another.
 It is not by chance that there are fewer female
managers in the Middle East than in India.
Developing Missions and Strategies
 An effective operations management effort
must have a mission so it knows where it is
going and a strategy so it knows how to get
there.
 Mission statements tell an organization
where it is going
 The Strategy tells the organization how to get
there
Mission
Example on Mission: Merck
The mission of Merck is to provide society with
superior products and services - innovations and
solutions that improve the quality of life and
satisfy customer needs - to provide employees
with meaningful work and advancement
opportunities and investors with a superior rate
of return
Example on Mission: Hard Rock Cafe
Our Mission: To spread the spirit of Rock ‘n’ Roll
by delivering an exceptional entertainment and
dining experience. We are committed to being
an important, contributing member of our
community and offering the Hard Rock family a
fun, healthy, and nurturing work environment
while ensuring our long-term success.
Factors Affecting Mission
Cont.
 Developing a good strategy is difficult, but it is
much easier if the mission has been well
defined.
 Once an organization’s mission has been
decided, each functional area within the firm
determines its supporting mission.
 Missions for each function are developed to
support the firm’s overall mission.
Strategy
 With the mission established, strategy and its
implementation can begin.
 Strategy is an organization’s action plan to
achieve the mission
 Each functional area has a strategy for achieving
its mission and for helping the organization
reach the overall mission.
 These strategies exploit opportunities and
strengths, neutralize threats, and avoid
weaknesses.
Cont.
Firms achieve missions in three conceptual ways:
1. Differentiation
2. Cost leadership
3. Response
 Operations managers translate these strategic
concepts into tangible tasks to be
accomplished.
 Any one or combination of these three
strategic concepts can generate a system that
has a unique advantage over competitors.
Strategies for Competitive Advantage

 Competitive advantage implies the creation of


a system that has a unique advantage over
competitors.
 The idea is to create customer value in an
efficient and sustainable way.
 Pure forms of these strategies may exist, but
operations managers will more likely be called
on to implement some combination of them.
Competing on Differentiation
• Differentiation is concerned with providing
uniqueness.
• A firm’s opportunities for creating uniqueness
are not located within a particular function or
activity but can arise in virtually everything the
firm does.
• Uniqueness can go beyond both the physical
characteristics and service attributes to
encompass everything that impacts customer’s
perception of value
Competing on Cost
 Low-cost leadership entails achieving maximum
value as defined by your customer.
 It requires examining each of the 10 OM
decisions in a relentless effort to drive down
costs while meeting customer expectations of
value.
 Provide the maximum value as perceived by
customer. Does not imply low quality.
Competing on Response
 Response is often thought of as flexible response, but
it also refers to reliable and quick response.
 Indeed, we define response as including the entire
range of values related to timely product
development and delivery, as well as reliable
scheduling and flexible performance
 Flexible response may be thought of as the ability to
match changes in a marketplace where design
innovations and volumes fluctuate substantially.
 Reliability is meeting schedules
 Timeliness is quickness in design, production, and
delivery
OM’s Contribution to Strategy
OM’s Contribution to Strategy
10 Strategic OM Decisions
Goods and Services and
the 10 OM Decisions
Cont.
Cont.
Managing Global Service Operations
Requires a different perspective on:
 Capacity planning
 Location planning
 Facilities design and layout
 Scheduling
Issues in Operations Strategy
 Whether the OM strategy is differentiation, cost,
or response, OM is a critical player.
 Prior to establishing and attempting to
implement a strategy, some alternate
perspectives may be helpful
 Resources view:- in terms of the financial,
physical, human, and technological resources
available.
Issues in Operations Strategy
 Value-chain analysis view:-is used to identify
activities that represent potential strengths,
and may be opportunities for developing
competitive advantage.
 Where the firm adds its unique value through
product research, design, human resources,
supply-chain management, process innovation,
or quality management.
Issues in Operations Strategy
 Five forces model (Analysis of competitors):-
These potential competing forces are
immediate rivals, potential entrants,
customers, suppliers, and substitute products.
 In addition to the competitive environment,
other factors range from economic, to legal, to
cultural. They influence strategy development
and execution and require constant scanning
of the environment.
Characteristics of High ROI Firms
 High product quality
 High capacity utilization
 High operating efficiency
 Low investment intensity
 Low direct cost per unit
Elements of Operations Management Strategy
 Low-cost product
 Product-line breadth
 Technical superiority
 Product characteristics/differentiation
 Continuing product innovation
 Low-price/high-value offerings
 Efficient, flexible operations adaptable to
consumers
 Engineering research development
 Location
 Scheduling
Preconditions
 Strengths and weaknesses of competitors and
possible new entrants into the market
 Current and prospective environmental,
technological, legal, and economic issues
 The product life cycle
 Resources available within the firm and within
the OM function
 Integration of OM strategy with company’s
strategy and with other functional areas
Dynamics of Strategic Change
Changes within the organization
 Personnel
 Finance
 Technology
 Product life
 Changes in the environment
Product Life Cycle
Cont.
SWOT Analysis
Strategy Development Process
Strategy Development and Implementation

 Identify critical success factors


 Build and staff the organization
 Integrate OM with other activities
Four International Operations Strategies
Four International Operations Strategies
Four International Operations Strategies
Four International Operations Strategies
THE END

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