1. KR: Chapter 2
Operations Strategy

2. Chapter Outline
Corporate strategy

3. Corporate strategy Three levels of strategies SWOT analysis
Functional strategy
Operations strategy
Competitive priorities and core competencies

4. ORGANIZATIONAL LEVELS OF STRATEGIES
TM 7-3
ORGANIZATIONAL LEVELS OF STRATEGIES
CORPORATE STRATEGIES
Type of
business
Competitive position
Resource development
BUSINESS STRATEGIES
How to compete in a particular market
How to achieve competitive advantage
FUNCTIONAL STRATEGIES
Action plans for each functional area
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998 2 2 2 3

5. STRATEGY FORMULATION STRATEGY IMPLEMENTATION assess environmental
TM 7-2
STRATEGY
FORMULATION
STRATEGY
IMPLEMENTATION
assess
environmental
factors
Conduct
Competitive
Analysis:
* Strengths
* Weaknesses
* Opportunities
* Threats
Identify
Current
Mission
and
Strategic
Goals
Develop
Specific
Strategies:
* Corporate
* Business
* Functional
Carry
Out
Strategic
Plans
Maintain
Strategic
Control
assess
organizational
factors
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998

6. COMPETITIVE ADVANTAGE
TM 7-4
SWOT ANALYSIS
Strengths
Opportunities
Weaknesses
Threats
COMPETITIVE
ADVANTAGE
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998 3 3 3 4

7. Chapter Outline
Corporate strategy
Competitive priorities

8. Competitive Priorities
Cost
Quality
High-performance design
Consistent quality
Flexibility
Customization
Volume flexibility
Time
Fast delivery
On-time delivery
Development speed

9. Speedster Innovators and Producers
Product
Development
Time
Old
New
Honda
Cars
5 yrs
3 yrs
AT&T
Phones
2 yrs
1 yr
Navistar
Trucks
2.5 yrs
Hewlett-Packard
Computer printers
4.5 yrs
22 months
Speedster Producers
Order-to-finished goods GE
Circuit breaker boxes
3 wks
3 days
Motorola
Pagers
2 hrs
Electronic testing equipment
4 wks
5 days
Brunswick
Fishing reels
1 wk
Matsushita
Washing machines
360 hrs
Harley-Davidson
Motorcycles
360 days
< 3 days

10. As Time is Compressed, Prices Can Be Increased
Advantage
Price Premium (%)
Electrical Components
2:1 59
Locks
3:1 25
Writing papers
5:1 20
Commercial doors
9:1
100

11. Chapter Outline
Competitive priorities
Positioning strategies

12. Positioning Strategy Product-focused Line flow Flow shop
Process-focused
Flexible flow
Job shop

13. Flow Strategies None Flow pattern Jumbled flows
Flexible flows
Intermediate flows
Line flows
None
Jumbled flows
Jumbled, but with some dominant flows
Linear flows
Low volumes Moderate High volumes
or one-of-a-kind volumes
products or
services Volume
Flow pattern
This series of slides builds the classic Hayes and Wheelwright model of how basic strategies are related to volume and flexibility issues.

14. Flow Strategies None Flow pattern Jumbled flows
Flexible flows
Tool and die shop
Health center
General medical practice
Intermediate flows
Branch offices
Print shop
Health clinic
Line flows
Oil refinery
Cafeteria
Assembly plant
None
Jumbled flows
Jumbled, but with some dominant flows
Linear flows
Low volumes Moderate High volumes
or one-of-a-kind volumes
products or
services Volume
Flow pattern
Not shown in this Figure is the portion of the original model that shows how these strategies and issues play out over the life cycle of a product.

15. Chapter Outline Competitive priorities Positioning strategy
Manufacturing strategies
Service strategies

16. Manufacturing Strategies
Make-to-stock
made in anticipation of demand
Assemble-to-order
add options according to customer specification
Make-to-order
made to customer specifications after order received

17. Service Strategies Standardized-service strategy
Assemble-to-order strategy
Customized-service strategy

18. Chapter Outline Competitive priorities Positioning strategy
Manufacturing strategies
Service strategies
Mass customization

19. Mass Customization What is it? Product/service implications
Process implications
Internet implications

20. Focusing on Mass Customization
Dell
Mattel
Levi Straus
Morpheus Tech.
Cductive.com
Artuframe.com
Acumines.com
NewEdge.com