Operations

Strategy in a
Global
Environment
 What is strategy and what is
operations strategy?
● Strategy derives from the Greek word
‘strategos’ meaning ‘leading an army’.

● Strategy is an organization’s action plan to achieve

the mission. These strategies exploit opportunities
and strengths, neutralize threats, and avoid
weaknesses.

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Both military and business strategy can be described in
similar ways;
• Setting broad objectives that direct an enterprise
towards its overall goal.
• Planning the path (in general rather than specific
terms) that will achieve these goals.
• Stressing long-term rather than short-term objectives.
• Dealing with the total picture rather than stressing
individual activities.
• Being detached from, and above, the confusion and
distractions of day-to-day activities.
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‘Strategic decisions’ - those decisions which
are widespread in their effect on the organization to
which the strategy refers, define the position of the
organization relative to its environment, and move
the organization closer to its long-term goals.

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 ‘strategy’ is more than
a single decision; it is
the total pattern of
the decisions and
actions that influence
the long- term direction
of the business

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Operations strategy is concerns in the
pattern of strategic decisions and actions which
set the role, objectives and activities of the
operation.

• Its role is to provide a plan for the operations

function so that it can make the best use of
its resources.

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✔ The content of operations strategy is the
specific decisions and actions which set the
operations role, objectives and activities.

✔ The process of operations strategy is the

method that is used to make the specific
‘content’ decisions.
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Business Strategy includes:
1. developing an understanding of what
business the company is in (the company’s
mission),
2. analyzing and developing an understanding of
the market (environmental scanning), and
3. identifying the company’s strengths (core
competencies).
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Mission - A statement defining
what business an organization is
in, who its customers are, and how
its core beliefs shape its business.

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Example of mission statements:

• Dell Computer Corporation: “to be the most successful

computer company in the world”
• Delta Air Lines: “worldwide airlines choice”
• IBM: “translate advanced technologies into values for our
customers as the world’s largest information service
company”
• Lowe’s: “helping customers build, improve and enjoy
their homes”
• Ryder: “offers a wide array of logistics services, such as
distribution management, domestically and globally”
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 Firms achieve missions in three
conceptual ways:
(1) differentiation,
(2) cost leadership, and
(3) response.

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Environmentalscanning - is the
process of monitoringthe external
environment.

- allows a company to identify opportunities

and threats.

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Trends in the Environment

Marketplace trends
Economic trends
Political trends
Social trends

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Core competencies – (third factor) The
unique strengths of a business.

• This may include special skills of

workers, such as expertise in providing
customized services or knowledge of
information technology.

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Three inputs in developing a business strategy

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DEVELOPING AN
OPERATIONS
STRATEGY
Competitive priorities - Capabilities that the
operations function can develop in order to give a
company a competitive advantage in its market.
four broad categories:
• Cost
• Quality
• Time
• Flexibilit 17
 The Process of Operations Strategy
formulation processes include the following elements:
1. Link to business strategy
2. Used competitive factors as the translation device between
business strategy and operations strategy.
3. customers’ preferences
4. Comparison of competitive advantage to others.
5. An emphasis on operations strategy formulation as an
iterative process.
6. The concept of an ‘ideal’ or ‘greenfield’ operation against
which to compare current operations.
7. A ‘gap-based’ approach.
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The five Ps ofoperations strategy
formulation

1. Purpose
2. Point of entry
3. Process
4. Project Management
5. Participation
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Issues in Operations Strategy

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✔ Resources view - A method managers use to evaluate the
resources at their disposal and manage or alter them to achieve
competitive advantage.

✔ Porter’s value-chain analysis or Value-chain analysis

is used to identify activities that represent strengths, or
potential strengths, and may be opportunities for developing
competitive advantage

✔ A SWOT analysis is a formal review of internal strengths

and weaknesses and external opportunities and threats.
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Building and Staffing the Organization
Organizational chart showing the three major business
functions:

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Global Operations Strategy
Options
• An international business is any firm that
engages in international trade or investment.
• A multinational corporation (MNC) is a firm
with extensive international business involvement.
MNCs buy resources, create goods or services, and
sell goods or services in a variety of countries.

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Four Strategies
used by firms
approach for
global
opportunities
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Five developments urged the need for sound global
strategies:
1. improved transportation and communications
technologies,
2. loosened regulations on financial institutions,
3. increased demand for imported services and goods,
4. reduced import quotas and other international trade barriers
due to the formation of regional trading blocks, such as the
European Union (EU) and the North American Free Trade
Agreement (NAFTA), and
5. comparative cost advantages.
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International market
entry option

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Disadvantages of
Globalization
1. acquiring new technology or adjusting some
activities to cope up on the capacity of the area;
2. political risks;
3. employee skills may be lower in foreign
countries, requiring additional training time;
4. designing effective supply chains;
5. environmental events; and more
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Ethical, Workforce Diversity, and Environmental
Issues

Some countries are more sensitive than others about;

1. conflicts of interest,
2. bribery,
3. discrimination against minorities and women,
4. minimum-wage levels, and
5. unsafe workplaces.

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 End of the
Slide
Thank you and
God Bless
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