Operation Strategy

PRESENTED BY
MANOJ KUMAR ROUT
ASST. PROFESSOR
 OPERATION STRATEGY EVALUATION AND
CONTROL
• There are a number of different criteria for
evaluating operation strategic. It would be very
difficult to use all these criteria to get a
satisfactory result simultaneously.

• It can be classified into three groups;

1) criteria of suitability,
2) criteria of feasibility
3) criteria of acceptability.
 Criteria of Suitability
• These criteria attempt to measure the extent
to which the proposed strategies fit the
situation identified in the strategic analysis.

• The situation should indicate the list of the

important opportunities and the threats that
the firm faces and the particular strengths and
weaknesses of the firm.
 Criteria of Feasibility
• These criteria, assess the practical
implementation and working of the strategy.

• For example, will the strategy of price-cut

result in hike in profits under the competitive
environment?
 Criteria of Acceptability
• The firm should assess the strategy to decide whether
the consequences of proceeding with a strategy are
acceptable.

• The strategy should be acceptable to the strategy

decision maker in the company.

• Therefore, acceptability involves not only the

consequences of the strategy, but also the personal
considerations like values of the strategy decision maker.
 Criteria of Acceptability
1) What will be the financial performance of the firm in terms of profitability?

2) How will the financial problems (like liquidity) be solved?

3) What will be the effect on capital structure?

4) Will any proposed changes be acceptable to the general cultural expectations within
the organisation?

5) Will the function of any department, group or individual change significantly?

6) Will the company’s relationship with outside stakeholders (like suppliers, bankers,
customers) need to change?

7) Will the strategy be acceptable to the company’s environment (like local community)?

8) Will the proposed strategy fit existing systems or will it require major changes?
Framework for Evaluating Operation
Strategic
Framework for Evaluating Operation
Strategic
 OPERATION STRATEGIC CONTROL
• Operation Strategic control focuses on monitoring and
evaluating the strategic management process to ensure that it
functions in the right direction.

• The operation strategic control aims at achieving the results

planned at the time of strategy formulation.

9.15 kms (5.69 mi) in length,
it is the longest bridge in
India over water.
Rapid movement of India's defense assets in
mind following incursions by the Chinese Army,
the Bridge has been designed to handle the
weight of 60-tonne (130,000-pound) tanks
such as the Indian Army's Arjun and T-72 main
battle tanks. Since the Sino-Indian War, China
has disputed India's claim to Arunachal
Pradesh, politically and militarily, along the
Line of Actual Control.
PURPOSES OF STRATEGIC CONTROL
• The basic purpose of strategic control is to
help top management to achieve strategic
goals as planned.

• strategic control provides feedback about

various steps of strategic management to
know, whether the strategic management
processes are appropriate, compatible and
functioning in the desirable direction.
 Strategic control process consists of six
steps
• Step 1: Key Areas to be Monitored
• Step 2: Establishing Standards
• Step 3: Measuring Performance
• Step 4: Compare Performance with Standards
• Step 5: Take No Action if Performance is in
Harmony with Standards
• Step 6: Take Corrective Action, if necessary
Renault Sherpa Armoured Vechile
 IMPLEMENTING STRATEGIC CONTROL
• Role of the Strategy Planning Staff

 Normally, the role of strategy planning, formulation,

implementation and control go hand-in-hand. But, in
some companies the roles of planning and control of
strategy are separated.

 The best results of strategic control are achieved

when the planning and control staff works as a team.
 IMPLEMENTING STRATEGIC CONTROL
Role of Top Management:

 Top level managers are primarily responsible for

strategy formulation, analysis and implementation.
Therefore, they should understand strategic control
and take actions implies in the control process.

 Top managers are in leadership position and as such

they should influence the organisational members in
strategic control process.
 Operation Strategy Competitiveness
Operations Competitive Dimensions:

Cost or Price: Productivity improvement and management of the high order is required.

Quality

Delivery reliability

Coping with changes in demand

Flexibility and New Product introduction speed

Product Support Services

1, Technical liasion and support

2. Coordinating ability and striking to launch dates in project business.
3. Product maintenance for a long-period of time.
4. Other product related dimensions: colors available, sizes available, product mix available
 Understanding competitiveness and its
importance in operations strategies
• Competition and market conditions in the industry guide
the general thrust of the operations process, which provide
the basis for determining the organization’s strategy.

• Competitiveness or competitive advantage denotes a firm’s

ability to achieve market superiority over its competitors

• A careful analysis of market segments and the ability of the

competitors to meet the needs of these segments will
determine the best direction for focusing an organization’s
efforts.
 Distinctive Competencies
• One way to compare manufacturing among
industrial centers is to examine the varying
competitive priorities, such as, quality,
performance, price, adaptation, after sales
service, etc.
 Distinctive Competencies
• A distinctive competency should have six (6) characteristics:

1) It is driven by customer wants and needs.

2) It makes a significant contribution to the success of the
business.
3) It matches the organization’s unique resources with the
opportunities in the environment.
4) It is durable and lasting and difficult for competitors to copy.
5) It provides a basis for further development.
6) It provides direction and motivation to the entire organization.
 Traditional View of Competitiveness
• A firm can possess two basic types of
competitive advantages:
• i. Cost leadership
• ii. Product differentiation
 Cost leadership
• Cost leadership : Low cost leadership can be
achieve through producing high volumes of
product with low price.

• Thus a strategy of continuous improvement is

essential to achieve a low-cost competitive
advantage.
 Product Differentiation
• Product differentiation refers to any special
features (e.g. design, cost, quality, ease of use,
convenient location, warranty, etc.) that cause a
product to be perceived by the buyer as more
suitable than a competitors product or service.

• To achieve product differentiation a firm therefore

must be unique in its industry along some
dimensions that are widely valued by customers.
Modern View of Competitiveness
• More recently, the modern view towards competitive advantage has
been focused on adopting more Quality-based and Time-based
competitiveness.

• Quality: This focuses on satisfying the customer by integrating

quality into all phases of the organization. This includes the related
processes such as product, services,production, design, and after-
sales service.

• Time: It focuses on reducing the time required to accomplish

various activities. By doing so, organizations seek to improve
services to the customer, and to gain a competitive advantage over
rivals who take more time to accomplish the same tasks.
 VERTICAL INTEGRATION AND
OUTSOURCING
• Vertical integration is a strategy where a firm
acquires different business operations within
the same production vertical. It can be
forward or backward in nature.
 VERTICAL INTEGRATION
• A car manufacturer may acquire tyre and
electrical-component factories (backward
integration) or open its own showrooms to sell its
vehicle models or provide after-sales service
(forward integration).
•
• Vertical integration can help companies reduce
costs and improve efficiencies by decreasing
transport expenses and reducing turnaround time,
among other advantages.
VERTICAL INTEGRATION
 STRATEGY STRUCTURE OF OUTSOURCING

 Goal and objective define(which type of

industry, why)
 A strategic vision and plan(futuristic aspects)
 Selecting right vendor(3rd party selection)
 Relationship and communication
 A structure contract formation
 Strategic group support
BUSINESS PROCESSING WITH SUBSTITUTE
 APPLICATIONS

• Total quality management

• Lean operations
• Business process reengineering
• Six Sigma