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Block 1, Session 9
Operations Strategy (Linking strategy and performance…
Block 1, Session 9
Operations Strategy
Define
‘the pattern of strategic decisions and actions that set the role, objectives and activities of the operation’ (Slack et al., 2010)
Four key areas
Capacity and facilities (big impact on cost structure and performance - involves greatest amount of capital investment, difficult to reverse once implemented)
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Workforce and organisation (often made outside of the operations management domain - however has direct impact on the way an operation performs and how it can be managed)
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Not all organisations derive their operations strategy in a set way; some strategies simply happen, or emerge, as a series of decisions
Market influence model
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Ops requirements
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Operations performance objectives are used to translate market requirements into operations requirements
For each market segment you will find that, typically, one or two aspects of operations performance are far more important than the others - Often choose to compete through operations using one of these performance objectives as their ‘unique selling point’
Derive ops strategy
• understand the role of the competitive strategy in defining operations performance (e.g. does the company try to compete on low cost?)
• understand what requirements marketing strategy generally places on the operations function (e.g. a retailer that is deliberately changing its marketing strategy away from physical stores towards online selling)
• understanding the range of market segments the strategy includes (or deliberately excludes) and defining operations performance for those being served
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Summary
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• Operations strategy decisions must create a degree of fit between market requirements and operations performance.
• The concept of operations performance objectives allows market requirements to be translated into operations terms.
• Not all operations can be good at everything. There is the concept of trade-offs where performance in one area needs to be sacrificed to achieve the performance needed in another.
• Operations sometimes need to focus on doing one thing well, rather than try to serve too many types of customers simultaneously.
Reflect - how a new, big idea needs to incorporate the stages of development of an operations strategy so that the idea can be implemented effectively, meeting customer needs and other objectives.