Strategies are Plans for achieving organizational goals Mission is the reason for existence for an organization Mission

Statement answers the question What business are we in? Goals provide detail and scope of mission Tactics are the methods and actions taken to accomplish strategies

Planning and decision making concepts make use of setting a mission, goal, strategy and achieving the end result through some effective and practical tactic. In hierarchical order the organization first makes or develops a mission and employ tactics by developing operational procedures.

Mission: Live a good life Goal: Successful career, good income Strategy: Obtain a Business Degree from UOP. Tactics: Select a business field of your interest and high market value Operations: Register, buy books, take courses study, graduate, apply & get job

1. 2. 3. 4.

Low cost ( Cost Leadership/Economical ) Scale-based strategies ( Critical Value) Specialization ( Specific characteristics) Flexible operations ( To change production design of products on the same infrastructure) 5. High quality ( exceeds customer requirements and satisfactions) 6. Service ( meets minimum standard specifications)

The special attributes or abilities that give an organization a competitive edge 1. Price 2. Quality 3. Time 4. Flexibility 5. Service 6. Location

Operations strategy The approach, consistent with organization strategy that is used to guide the operations function. We first study strategy design process with example for manufacturing and Services. Operations strategy is the collective concrete actions chosen, mandated, or stimulated by corporate strategy

Organizational strategy is an over all big picture for the whole organization. Longer in time horizon Less detailed and broader in scope

Operational Strategy is narrower in scope and in more detail Prepared by middle management. Should be in line with the Organization strategy

Operational Strategy if Designed and implemented successfully can make an organization more successful. Organizations started focusing on operational strategies in early 1990s before that organizations focused on financial and marketing strategies. Operational strategies mostly function on two dimensions of quality management and service/manufacturing strategy.

As operations manager of a service based organization, one should be able to understand the importance of both Order qualifiers and Order winners. Order qualifiers

1. Segment the market according to the product/Service group ( A person interested in buying a sedan car would rarely show interest in buying an SUV car, the market segmentation should be just and judicious) 2. Identify product/Service requirements, demand patterns, and profit margins of each group ( Your Market research department should be able to capture these with the help of MIS systems) 3. Determine order qualifiers and winners for each group ( Order Qualifiers would meet customer requirements and Order Winners would satisfy customers) 4. Convert order winners into specific performance requirements ( Continuous improvement always helps and it is what the Japanese has perfected through KAIZEN)

1. Economic conditions should include both Micro and Macro Economics. 2. Political conditions require the organization to carryout PEST analysis. 3. Legal environment relates to government regulations for investor protection. 4. Technology .Gap Analysis focusing market leaders in the respective field. 5. Competition so as to expect no free lunches or no monopolies. 6. Markets are always free markets till proven otherwise

1. Human Resources include Trained, skilled and qualified employees. 2. Facilities and equipment are a good source for motivation, and obtaining competitive advantage over your competitors. 3. Financial resources. A higher Free cash flow makes a company outperform its competitors. 4. Customers include repeat customers, as well as customer relationship Management. 5. Products and services relates to how does the organization values itself whether it provides products or services that add value) 6. Technology .Legacy Systems or Technology that is competitive and has the potential to gain competitive advantage. 7. Suppliers .Companies have taken care of the supplier issue by making use of effective Supply Chain Management Strategies or use vertical or horizontal integration techniques.

Service Concept includes Service Levels refer to the important elements of the service to be provided, usually stated in terms of results produced for customers. Perception corresponds to the elements perceived by the target market segment, by the market in general, by employees, & by others. How do customers perceive the service concept. Delivery focuses on the efforts in terms of the manner in which the service is designed, delivered, marketed. Strategic Service Vision

Operating Strategy Focus Area includes important elements of the strategy: operations, financing, marketing, organization, human resources, control. Also the central service area along with the location of investments ( human resource or Technology). Central Operations to control quality and costs, improve measures, incentives, rewards. The expected results should be evaluated in terms of, quality of service, cost profile, productivity, morale/loyalty of servers.

Services Products Human Resources

Process and Technology

Capacity

Quality

Facilities

Sourcing

Operating Systems

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Make-to-Order

products and services are made to customer specifications after an order has been received
products and services are made in anticipation of demand products and services add options according to customer specifications

Make-to-Stock

Assemble-to-Order

Project

one-at-a-time production of a product to customer order

systems process many different jobs at the same time in groups (or batches) large volumes of a standard product for a mass market used for very high volume commodity products

Batch Production

Mass Production

Continuous Production

Source: Adapted from Robert Hayes and Steven Wheelwright, Restoring the Competitive Edge: Competing Through Manufacturing (New York: John Wiley & Sons, 1984), p. 209

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Continuous Production
A paper manufacturer produces a continuous sheet paper from wood pulp slurry, which is mixed, pressed, dried, and wound onto reels.

Mass Production
Here in a clean room a worker performs quality checks on a computer assembly line.

Batch Production
At Martin Guitars bindings on the guitar frame are installed by hand and are wrapped with a cloth webbing until glue is dried.

Project
Construction of the aircraft carrier USS Nimitz was a huge project that took almost 10 years to complete.

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Professional Service

highly customized and very labor intensive

customized and labor intensive less customized and less labor intensive least customized and least labor intensive

Service Shop

Mass Service

Service Factory

Service Factory
Electricity is a commodity available continuously to customers.

Mass Service
A retail store provides a standard array of products from which customers may choose.

Service Shop
Although a lecture may be prepared in advance, its delivery is affected by students in each class.

Professional Service
A doctor provides personal service to each patient based on extensive training in medicine.

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Capacity strategic decisions include:

When, how much, and in what form to alter capacity

Facility strategic decisions include:

Whether demand should be met with a few large facilities or with several smaller ones Whether facilities should focus on serving certain geographic regions, product lines, or customers Facility location can also be a strategic decision

What are the skill levels and degree of autonomy required to operate production system? What are the training requirements and selection criteria? What are the policies on performance evaluations, compensation, and incentives? Will workers be salaried, paid an hourly rate, or paid a piece rate? Will profit sharing be allowed, and if so, on what criteria?

What is the target level of quality for our products and services? How will it be measured? How will employees be involved with quality? What will the responsibilities of the quality department be? What types of systems will be set up to ensure quality?

How will quality awareness be maintained? How will quality efforts be evaluated? How will customer perceptions of quality be determined? How will decisions in other functional areas affect quality?

Vertical Integration

degree to which a firm produces parts that go into its products

Strategic Decisions

How much work should be done outside the firm? On what basis should particular items be made inhouse? When should items be outsourced? How should suppliers be selected?

What type of relationship should be maintained with suppliers? What is expected from suppliers? How many suppliers should be used? How can quality and dependability of suppliers be ensured? How can suppliers be encouraged to collaborate?

How will operating systems execute strategic decisions? How does one align information technology and operations strategic goals? How does information technology support both customer and worker demands for rapid access, storage, and retrieval of information? How does information technology support decisions making process related to inventory levels, scheduling priorities, and reward systems?