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Business
StrategyContext for
OperationsStrategy
Chapter 1
McGraw-Hill/IrwinOperations Strategy Copyright 2008 The
McGraw-Hill Companies, Inc. All rights reserved.
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What is strategy?
Strategic thinking has its roots in militarystrategy The branch
of military science dealing withmilitary command and the planning
and conductof a war.
And has evolved to focus on business An elaborate and systematic
plan of action.
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Competitive Strategy: The Positioning View
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Competitive Strategy: The PositioningView
Options for firm positioning:Cost leadershipDifferentiation
Focus
And, within each of the three:
Variety-basedNeeds-based
Access-based
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Competitive Strategy: The PositioningView
SWOT AnalysisStrengthsWeaknesses
OpportunitiesThreats
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Concerns with the Positioning View
Too narrowly focused on industry andproduct economics rather
than customereconomics
Allows too few options for positioning.Looking at conflicts
among positions mightlead to new options.
Relies too much on analytical toolsDoes not acknowledge the need
for learningand adaptation over time
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Competitive Strategy: The Resource-Based View
Resource: an observable, but not necessarilytangible, asset that
can be valued and tradede.g., brand, patent, parcel of land,
license
Asset or input to production than an organization owns,
controls or has access to on a semi-permanent basisCapability:
not observable, and hence necessarilyintangible, cannot be valued
and changes handsonly as part of an entire unit
Processes, activities or functions performed within
asystemUtilize the organization's resources
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Competitive Strategy: The Resource-Based View
Types of capabilitiesProcess-based
e.g., McDonalds
Systems- or coordination-basede.g., Ritz-Carltone.g., Southwest
Airlines
Organization-based
e.g., Nucor SteelNetwork-based
e.g., Zarae.g., Dell
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Competitive Strategy: Integrating thePositioning and
Resource-Based Views
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How Strategy Is Made
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Levels of Strategy-Making
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Business Strategy: Views the FirmMight Take
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Business Strategy: Focus on theCustomer
Types of customer needsMust havesLinear satisfiers
DelightersNeutral
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Business Strategy: Dimensions alongwhich Customers Assess
Performance
CostQuality
Availability
Features/InnovativenessEnvironmental performance
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Business Strategy: Dimensions alongwhich Customers Assess
Performance
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Business Strategy: Making Tradeoffs inPositioning
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Strategy-Making: Cross-FunctionalParticipation
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Operations Strategy: Connecting OperationsGoals to Customer
Concerns
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Operations Strategy: DecisionCategories
Structural decisions Vertical integrationProcess
technologyCapacity
Facilities
Infrastructural decisionsSourcingInformation technologySupply
chain
coordinationBusiness processes andpoliciesCapabilities
development
Lean operationQualityFlexibility
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Strategy-Making: Step 1Understand what position the firm wants
to or cantake in the marketplace by learning about:
CompetitorsSuppliersComplementary product or service offerings
and firmsoffering themSpaces outside the industry into which the
firm mightexpandCustomer needs in terms of:
CostQuality
AvailabilityFeatures/innovativenessEnvironmental performance
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Strategy-Making: Step 2
Understand what capabilities the firm has tooffer, can or should
develop both within andacross the key functional areas of the
firm:
OperationsMarketingResearch and developmentHuman
resourcesFinance and accounting
As well as outside the firm with supply chainpartners
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Strategy-Making: Step 3
Integrate or synthesize the activities andcapabilities of the
functions to achieve:Coherent strategic fit in support of a
desiredstrategic directionDevelopment of a set of capabilities to
pursue anew strategic direction
I d S M ki
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Integrated Strategy-MakingFramework
