Strategy and Operations Management What is Strategy? Business Strategy Operations Strategy (OS) OS & the Environment OS & the Product Life Cycle Compiled by: Alex J. Ruiz-Torres, Ph.D. From information developed by many.

What is Strategy? Corporate Strategy? Strategy = general definition : plan of action designed to achieve a particular goal. Corporate Strategy? “… is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources to meet the needs of markets and to fulfill stakeholder expectations". Modified from Johnson and Scholes (Exploring Corporate Strategy)

Business Strategy Where is the business trying to get to in the long-term? (direction) Which markets should a business compete in? (markets; scope) How can the business perform better than the competition in those markets? (advantage) What resources are required in order to be able to compete? (resources) What external, environmental factors affect the businesses' ability to compete? (environment) http://tutor2u.net/business/strategy/what_is_strategy.htm

Business Strategy Functional strategies Operations: transportation strategy, product strategy, technology strategy, … Financial: profit distribution strategy, investment strategy, financing strategy … Marketing/Sales: distribution strategy, advertising strategy, social media strategy … Research Information Technology Human Resources … Basically, businesses are in constant long term planning for their many activities.

Business Strategy Example – General Electric We are repositioning GE to be the world’s best infrastructure and technology company, with a smaller financial services division. Our focus is on driving infrastructure leadership, investing in innovation and achieving a culture of simplification to better serve our customers around the world. https://www.ge.com/sites/default/files/Strategy_Page_121714.pdf

Business Strategy Example – Amgen Amgen's core strategy will continue to focus on innovation, discovery and development of breakthrough molecules to address significant unmet medical needs, and manufacturing of high-quality biologics. …certain elements of the company's strategy have evolved: Research and Development (R&D): A more selective approach to R&D, embracing a "pick the winners" strategy with greater focus on human genetics to identify and validate targets, and a strong commitment to return on capital; http://www.amgen.com/media/news-releases/2013/02/amgen-outlines-long-term-strategy/

Business Strategy Commercial: Transformation of the commercial model with an emphasis on expanded access and value to payers, increased presence in key new and emerging markets, investment in new growth opportunities, including biosimilars, and greater product differentiation through drug delivery devices; and Manufacturing: Emphasis on new manufacturing processes and technologies, driving  expanded throughput and flexibility and lower capital needs. 

Operations Strategy The functional strategy of an organization focused on the long term planning of the systems that create its products and services. This includes all the elements of the supply chain. Supplier Strategy: where to source from, how to select suppliers, developing long term supplier partnerships Manufacturing Strategy: production methods, automation levels, training and continuous improvement programs, outsourcing,…

Operations Strategy Product research and development strategy: what technologies to invest on, frequency of new designs, where to design. Transportation strategy: what modes of transportation to use, for example shipping by air or by ship. What transportation companies to partner with. Inventory strategy: where to locate inventory, what levels of safety stock, who manages the inventory.

Operations Strategy Distribution strategy (this one linked to marketing): what channels are used to place the product close to the customer and in what amounts. Returns strategy: do they accept customer returns, what to do with those returns.

OS & the Environment Being environmentally friendly has become an important element of business strategy. Some customers select specific products or brands given they are “green”. Operations can have a significant impact Green Manufacturing: Environmentally friendly processes and materials Design for Disassembly/Reuse: design of products taking into consideration their disposal. Recycling components Energy Efficient Processes: how to minimize fuel and energy use

OS & Product Life Cycle Product’s life cycle – describes the relationship between time and a product’s sales/ process maturity/ profitability, …. Important to understand the “status” of a product in the life cycle as to define operations and marketing strategies. http://www.quickmba.com/ marketing/product/lifecycle/

OS & Product Life Cycle Introduction/Birth > product awareness, development of processes and technology, supplier management, distribution systems, … http://money.cnn.com/2017/01/06/technology/ces-2017-tech-highlights/index.html http://gulfnews.com/multimedia/framed/technology/innovative-tech-products-on-show-at-ces-2017-1.1957879

OS & Product Life Cycle Growth > capacity expansion, automation/ production control, expanded distribution systems. https://www.pcmag.com/article/342537/the-best-virtual-reality-vr-headsets

OS & Product Life Cycle Maturity > Focus on increasing the efficiencies of the production processes, quality improvement,… Decline/death > resource reallocation 15