OPERATIONS MANAGEMENT

THE STRATEGIC
PROCESS
OPERATIONS MANAGEMENT AS
STRATEGIC

 Operations management is best thought of in strategic terms.

 Strategic operational planning determines in large measure

whether companies fail or succeed.

 Ordinary operations management focuses inward upon internal

processes.

 Inward focus can lead to error.

 Such inward focus takes us away from the external

environment in which we succeed or fail.
NECESSITY FOR BOTH INWARD AND
OUTWARD FOCUS

 In this course we emphasized the combined focus.

 Outward, strategic focus keeps us tuned to the

changing environment.

 Inward operations focus allows us to tune our

operations to meet the changing environment.

 Without the ongoing, integrated and combined focus,

we set ourselves upon for failure.
RECENT FAILURES
 In the age of rapidly changing information technology this dual
focus is crucially important.

 The dot.com bubble is an outstanding example of failure to

maintain dual focus.

 Most dot.com’ ers were focused inward upon their pet ideas of
what they wished to present to the market.

 In the meantime the environment changed. The failures

became overextended in a market that was changing as well as
becoming saturated.
ALERTNESS, FLEXIBILITY

1. Alertness to the changing environment is crucial.

2. Flexibility, the ability to respond rapidly to environmental

change, is key to survival and success.

3. Internal operational management keyed and linked to

external strategic focus combines the essentials of
alertness and flexibility.

4. The new Hi Tech company must be alert to change and

fast on its feet in responding.
WHAT IS A STRATEGY?

 A strategy is a planned action or set of

actions designed to achieve a major goal.

 A strategy can be broken down into

components called tactics.

 Tactics are the details of a strategy.

COMPETITIVE ADVANTAGE
 An overarching goal is to achieve superior
performance over competitors.

 When this is done, a company has competitive

advantage.

 Competitive advantage is never once and for all.

 It depends on maintaining the dual focus (inward &

outward), alertness, and flexibility.
PROFITABILITY & COMPETITIVE
ADVANTAGE

 In the business world competitive advantage

is measured by profitability.

 Profitability is the return on invested capital.

 Sustained profitability equates to sustained

competitive advantage.
STRATEGIES FOR SUSTAINED
PROFITABILITY OR COMPETITIVE
ADVANTAGE

MOST BASICALLY, STRATEGY MUST BE

CONCERNED WITH THE RELATIONSHIP
BETWEEN:

1. Prices

2. Customer demand

3. Cost structure
BUSINESS MODEL

 Created by management

– Shows how strategies lead to

– Sustained superior performance

– Sustained competitive advantage

– Sustained profitability
BUSINESS MODEL, cont’d
 Expressed in terms of financial projections

– Pricing structure

– Sales volume

– Revenues

– Cost structure

– Profit level

– Profitability goals
TYPES OF MANAGERS

 General Managers

– Bear responsibility for overall performance of company or

major division

 Functional Managers

– Responsible for a particular function, like marketing,

accounting, etc.
CORPORATE-LEVEL MANAGERS

 1. CEO

 2. Other senior executives

 3. Board of Directors

 4. Corporate Staff