Professional Documents
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Corporate strategy
Meaning and purpose
Corporate strategy provides an overall direction that serves as the framework for carrying
out all the organization's functions. It specifies the business or businesses the company
will pursue, isolates new opportunities and threats in the environment, and identifies
growth objectives.
Factors to consider while developing the strategy
Developing corporate strategy involves considering environment, industry, corporate
resources, core competencies, core processes and global strategies.
Level of strategy
It is a corporate level strategy, which is at a higher level than operations strategy
Formulation
Corporate level strategy is formulated by top management to oversee the interests and
operations of an organization made up of more than one line of business
Constituents
Corporate and business strategies are holistic / overall strategies and include growth,
stability and retrenchment strategies
Example
Spice airways has business strategy of competing on price. Its operations strategy is to
run a no frill low cost flights easily affordable for the middle class
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Operations strategy
Meaning and purpose
Operations strategy specifies the means by which operations implements corporate
strategy and helps to build customer driven firm. It links long terms and short term
operations decisions to corporate strategy and develops the capabilities the firm needs to
be competitive.
Factors to consider while developing the strategy
Developing customer driven operations strategy begins with corporate strategy, which
coordinates the firm's overall goals with its core processes. Developing a firm's
operations strategy is a continuous process because the firms capabilities to meet the
competitive priorities must be periodically checked and any gaps in performance must be
addressed in the operations strategy.
Level of strategy
It is a functional level strategy, which is at a lower level than operations strategy. A
functional level strategy identifies the basic course of action that each of the department
must pursue in order to help the business unit to attain its goals.
Formulation
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Production Management:
Definition:
Production management refers to the application of management principles to the
production function in a productive system such as a factory or a manufacturing plant
Type of system:
It involves application of planning, organising, directing and controlling the production
processes employed for the conversion of inputs into outputs in a productive system
Type of output:
Production management is more used for a system where tangible goods are produced
Viewed from this perspective production management will cover manufacturing
enterprises like cement plant, steel plant etc
Historical precedence:
Precedes operations management and is much older concept than operations
management
Characteristics
Tends to inherit the characteristics of a manufacturing system or process as given below:
Capital intensive
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Operations Management:
Definition:
Operations management refers to a set of activities that creates value in the form of
goods and/or services by transforming inputs into outputs.
Type of system:
Operations management designs and operates operating system
Type of output:
operations management is more frequently used where various inputs are transformed
into intangible services.
Viewed from this perspective, operations management will cover such service
organizations like banks, airlines, utilities, pollution control etc in addition to
manufacturing enterprises.
Historical precedence:
Operations Management is of recent origin and is preceded and influenced by Production
Management
Characteristics
Tends to inherit the characteristics of a service system or process as given below:
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A forecast is usually classified by the future time horizon it covers. Accordingly the three
categories of forecasts are:
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1.
Short range forecast: This forecast has a time span of upto one year, but is
generally less than three months. It can be even for monthly or weekly forecasts. It is
used for planning purchasing, job scheduling, workforce levels, job assignments and
production levels.
2.
Medium range forecast or intermediate range: A medium range or
intermediate range forecast generally spans from 3 months to 3 years. It is used in sales
planning, production planning and budgeting, cash budgeting and analysing various
operating plans.
3.
Long range forecast: Generally 3 years or more in time span, long range
forecasts are used in new product planning and development, capital expenditure
planning and planning for facility location or expansion and research and development.
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Operations strategy is a long range game plan for the production of a company's
products/services and provides a road map for what the production or operations
function must do if business strategies are to be achieved. Operations strategies include
decisions on such issues as what new products or services must be developed and when
they must be introduced into production, what new facilities are required and when they
are needed, what new technologies and processes must be developed and when they are
needed, and what production schemes will be followed to produce products/services.
The elements of operations strategy are:
1)Positioning the production system
2)Product/service plans
3)Outsourcing plans
4)Process and technology plans
5)Strategic allocation of resources and
6)Facility plans: capacity, location and layout
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2.
Selection of the region: The second step is the selection of particular region out
of the many natural regions of a country . The following factors influence such selection
a.
Availability of raw materials
b.
Nearness to the market
c.
Availability of power
d.
Transport facilities
e.
Suitability of climate
f.
Government policy
g.
Competition between states
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3.
Selection of the locality or community: selecting a particular locality or
community in a region is the third step in plant location. The selection of a locality in a
particular region is influenced by the following factors:
a.
Availability of labour
b.
Civic amenities for workers
c.
Existence of complementary and competing industries
d.
Finance and research facilities
e.
Availability of water and fire fighting facilities
f.
Local taxes and restrictions
g.
Momentum of an early start
h.
Personal factors
4.
Selection of the exact site: The selection of an exact site in a chosen locality is
the fourth step. The following considerations influence the same:
a.
Soil, size and topography
b.
Disposal of waste
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Based on the subject of forecast, the following are different types of forecast
1.
Technological forecasts are concerned with rates of technological progress.
Technological changes will provide many companies with new products and materials to
offer for sale. Even if the products remain unchanged, a new process using new or
improved technology can improve the efficiencies
2.
Economic forecasts: These are statements of expected future business
conditions published by governmental agencies. These forecasts address business cycle by
predicting inflation rates, money supplies, level of employment, gnp etc. These forecasts
give ideas about long range and intermediate range business growth to business
organisations.
3.
Demand forecasts are projections of demand for a company's products or
services. These forecasts are also called as sales forecasts give the expected level of
demand for a company's goods or services through out some future period and usually
provide the basis for the company's planning and control decisions.
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Once a forecast has been completed, it needs to be monitored and corrected periodically
by determining why actual demand differed from the projected. One way to monitor
forecasts to ensure that they are performing well is to use a tracking signal. A tracking
signal is a measurement of how well the forecast is predicting actual values.
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Where RSFE is the sum of the difference between the actual demand in period I and
forecast demand in period I
and mean absolute deviation is given by dividing forecast errors by n