Chapter 2 Operation

Strategy
By:
C.M. Dhakal
 1. Introduction to Operation Strategy.
Operation Strategy can be defined as
developments of long term plans that develops
high degree of compatibility between
organization’s resources and it’s long term
corporate strategy.
It is long range plan that specifies the design and
use of organizational resources.
The goal of setting operation strategy is to take
competitive advantages by providing quality
goods and services through optimum utilization
of resources.
 Cont..
The operation strategy addresses the following factors:

1. Facilities of organization

2. Process used.
3. Supply chain management
4. Nature of work force.

5. Quality
 2. Operation Strategy as a Competitive Weapon.
The main goal of operation strategy is to make the
strong competitive position of organization in the
market.
It helps for increasing competitive position of the
organization by focusing on:
1. Cost of product
2. Quality
 Design quality
 Process quality

3. Speed
4. Dependability
5. Flexibility
 3. Linkage Between Corporate,
Business and Functional Strategy
Generally strategies are formed at three levels i.e.
corporate, business and function.
There is deep linkage between these strategies. These
three strategies are:
A. Corporate Strategy
 Corporate strategy are higher level strategies formulate
by top level management.
 It sets and describes the long term direction and scope
of whole organization.
 Cont..
 It is concerned with:
 Business of company
 Allocation of resources
 Relationship between various business unit
B. Business Strategy
 It is long term planning about one product or services.
 It is concerned with how a particular business should
compete with in its industry.
 It is formulated based on corporate strategy.
 It can be based on cost leadership or product
differentiation.
 Cont..
C. Functional Strategy
 It is bottom level strategy and concerned with
individual function of organization.
 Operation strategy is functional strategy and it is
prepared under the guideline of business strategy
 It focuses on performance objectives that is cost,
quality, flexibility, dependability or speed.
4. Components of Operation Strategy
The various components of operation strategy are:
1. Designing of production system
2. Facilities of production or services.
3. Product or service design and development.
4. Technology
5. Allocation of resources.
6. Facilities planning
 5. Manufacturing Strategy
A manufacturing strategy refers to set of well coordinated
objectives and action program that are designed at securing a
long term sustainable advantages over the firm’s competitors.
These strategies are set by considering inside and outside
factors.
It should be consistent with firm’s corporate and business
strategy.
The primary objectives of developing manufacturing
strategies are:
 Introduce competitive dimension in performance requirements.
 Enhance operation capabilities
 Cont..
The various steps for developing manufacturing
strategies are:
1. Develop a framework for strategic decision making in
manufacturing.
2. Proper linkage between corporate, business and
manufacturing strategies.
3. Conduct manufacturing strategic audit.
4. Address the issue of product grouping.
5. Examine the degree of focus existing at each
manufacturing unit.
6. Develop manufacturing strategy.
 6. Service Strategy
Service organization also formulate various strategies
by addressing overall service delivery system.
In case of formulating service strategy, following
factors are to be considered:
a. Customers.

b. Employees

c. Support strategy