Engineering management science Chapter # 5 Engineering management science Najeeb Saif

REFERENCE CHAPTER 5 : Engineering Management by Fraidoon Mazda Najeeb Saif

World of Manager Stockholders Owners/ Local Community Associations Trade Suppliers Managers Customers The Public at Large Governments Employees Najeeb Saif

Strategy is a common vision that unites an organization, provides consistency in decisions, and keeps the organization moving in the right direction Visioning is big in corporate America. Everyone from IBM to the Little League team has mission statements, visions, philosophies, and core values. Mission statements are the “constitution” for an organization, the corporate directive. But they aren’t any good unless they can be converted into action. And that’s what this chapter is all about -- converting strategy into results. Gather mission or vision statements from several companies with which you are familiar. Is their mission or vision evident in the way they do business? Najeeb Saif

Strategy Action plan to achieve mission Shows how mission will be achieved Company has a business strategy Functional areas have strategies Najeeb Saif

Strategy Concept of strategy - different meanings to different people. “A strategy is a pattern or plan that integrates an organization’s major goals, policies, & action sequences into a cohesive whole” Najeeb Saif

How It Works Company Mission Business Strategy Functional Area Strategies Marketing Decisions Operations Fin./Acct. This slide can be used to tie coverage of Chapter 2 together. Najeeb Saif

Strategy Formulation Managers analyze current situation to develop strategies achieving mission. SWOT analysis: a planning to identify: Organizational Strengths and Weaknesses. Strengths: manufacturing ability, marketing skills. Weaknesses: high labor turnover, weak financials. Environmental Opportunities and Threats. Opportunities: new markets. Threats: economic recession, competitors Najeeb Saif

Planning & Strategy Formulation Corporate-level strategy develop a plan of action maximizing long-run value SWOT analysis identifies strengths & weaknesses inside the firm and opportunities & threats in the environment. Business-level strategy a plan of action to take advantage of opportunities and minimize threats Functional-level strategy a plan of action improving department’s ability to create value Najeeb Saif

Strategy Formulation Define the primary task Assess core competencies Determine order winners & order qualifiers Position the firm Define the primary task -- What are you in the business of doing? Assess core competencies -- What do you do better than anyone else? Determine order winners and order qualifiers -- What wins orders in the marketplace? What qualifies a product or service to be considered for purchase? Position the firm -- For what do you wish to be known? On what do you wish to compete? Najeeb Saif

Activities that Lead to Core Competencies Shared problem solving Importing knowledge Rapid Integration of new technologies & methodologies Core competencies Although Chaparral Steel is known for its low costs and sophisticated technology, its core competency is not technology, but the ability to transform technology rapidly into new products and processes. Chaparral is a good example of a company the is continually developing its core competencies. See page 35 for further discussion. Experimentation Najeeb Saif

Activities that Reinforce Core Rigidities Limited problem solving Screened knowledge Inability to innovate Core rigidities Core competencies that are not being updated or enhanced can easily become core rigidities. Core rigidities paralyze a company and prevent it from changing to meet emerging needs and environments. Activities that lead to core rigidities are the mirror images of those that encourage core competencies. Think of companies that at one time seemed unbeatable but are now struggling. What happened? Biased experimentation Najeeb Saif

What’s the most difficult part about strategy? Doing it! Staying the course. Making the pieces fit. Najeeb Saif

Focuses employees on common goals & priorities Translates strategy into measurable objectives Aligns day-to-day decisions with the strategic plan Policy deployment tries to focus everyone in an organization on common goals and priorities by translating corporate strategy into measurable objectives throughout the various functions and levels of the organization. As a result, managers and workers alike are able to align their day-to-day decisions with the strategic plan. Najeeb Saif

Organization Life Cycle Reflects changes take place in industry over time. Birth stage: firms seek to develop a winning technology. VHS vs. Betamax in video, or 8-track vs. cassette in audio. Expansion stage: Product gains customer acceptance & grows rapidly. New firms enter industry, production improves, distributors emerge. Najeeb Saif

Diversification stage: Competitor rivalry increases, prices fall. Grow in other related areas Decline and Renewal stage: falling demand for product. Prices fall, weaker firms leave industry. Najeeb Saif

Assignment # Write down the lessons from Beer Game Length of assignment should be no more than 3 pages Submission Date: 22 Dec. 2014 Najeeb Saif