CHAPTER THREE: OPERATIONS MANAGEMENT

Operations Management and Strategy Planning

 Strategy- the result of hierarchical decisions about goals, directions, and resources
o Corporate strategy- necessary to define the businesses in which the corporation will participate and develop plans for the
acquisition and allocation of resources among
 Strategic business units- families of goods or services having similar characteristics or methods of creation
o Business strategy- defines the focus for SBUs; involves major decisions like which markets to pursue and how best to
compete in those markets
o Functional strategy- set of decisions that each functional area develops to support its particular business strategy
o Operations strategy- how an organization’s processes are designed and organized to produce the type of goods and
services to support the corporate and business strategies

 Operations strategy- set of decisions across the value chain that supports the implementation of higher-level business strategies

 Sustainability-

 Multinational enterprise- an organization that sources, markets, and produces it and services in several countries to minimize
costs, and to maximize profit, customer satisfaction, and social welfare
o Multinational firms must answer “What is our supply chain strategy to meet slower growth in industrialized countries
and more rapid growth in emerging economies?”

Framework for Operations Strategy

 Hill’s Strategy Development Framework was developed by Professor Terry Hill at Templeton College, Oxford University. It was
originally designed for goods-producing organizations but is now applicable for service-providing organizations. This framework
defines the essential elements of an effective operations strategy:
o Operations design choices- decisions as to what type of process structure is best suited to produce goods or create
services; typically addresses the type of processes, value chain integration, and outsourcing, technology, capacity and
facilities, inventory and service capacity, and trade-offs
o Infrastructure- focuses on non-process features and capabilities of the organization and includes the workforce,
operating plans, and control systems, quality control, organizational structure, compensation systems, learning and
innovation systems, and support services