1. Module 01: Operations Strategy Operations Strategy
Operations Management as a Competitive Weapon
Module 1:
Operations Strategy

2. Module 01: Operations Strategy
OM Course Framework
Manufacturing
Design &
Selection
Process
Analysis
Operations
Strategy
Strategic Issues
Aggregate
Planning
Inventory
Location
Capacity
Tactical Issues
TOC
JIT
MRP
Operational Issues
This course deals with the
management of ‘processes.’
Applies to:
For-profit and non-profit organizations
Service and manufacturing organizations
Module 01: Operations Strategy

3. Module 01: Operations Strategy
Learning Objectives
At the end of this module, each student will be able to:
Evaluate the strategic process of any org.
Explain competitive dimensions
Understand marketing-operations link
Identify some basic business strategies
Module 01: Operations Strategy

4. Module 01: Operations Strategy
1. Strategic Process
Mission
Business Strategy:
Action plan to achieve mission
How are we going to get there
Note: Functional areas have their own strategies which supports overall business strategy
Module 01: Operations Strategy

5. Module 01: Operations Strategy
Mission Examples
1. Levi Strauss
2. Motorola
3. Intel
4. Ritz Carlton
5. Binney & Smith (Crayola)
a. Colorful visual expression
b. Ladies & gentlemen serving Ladies & gentlemen
c. Branded casual apparel
d. Building blocks to computer industry
e. Total customer satisfaction
1 – c Clarify what business a company is in
2 – f
3 – d Reflect character of the company
4 – e Clarify what business a company is in
5 – b Reflect character of the company
6 – a Clarify what business a company is in
Module 01: Operations Strategy

6. Module 01: Operations Strategy
Strategic Process
Mission
Business Strategy
Business Strategy:
Action plan to achieve mission
How are we going to get there
Note: Functional areas have their own strategies which supports overall business strategy
Marketing Strategy
Operations Strategy
Fin/Acct Strategy
Module 01: Operations Strategy

7. Module 01: Operations Strategy
Core Competencies
Collective knowledge and skills an organization has that distinguish it from the competition.
Typically centers on an organization’s ability to integrate a variety of specific technologies and skills in the development of new products and services.
Core competencies:
Distinctive competencies
Core capabilities
Module 01: Operations Strategy

8. Core Competencies (cont.)
Module 01: Operations Strategy
Core Competencies (cont.)
Are basis on which new products are developed.
Better to think of organization in terms of its portfolio of core competencies than as a portfolio of products.
Identifying and developing core competencies is one of top management’s most important roles.
Module 01: Operations Strategy

9. Examples of Core Competencies
Module 01: Operations Strategy
Examples of Core Competencies
Sony - miniaturization
3M - knowledge of substrates, coatings and adhesives
Black and Decker - small electrical motors and industrial design
Honda - engines and power trains
Module 01: Operations Strategy

10. Typical Use of Core Competencies
Module 01: Operations Strategy
Typical Use of Core Competencies
Cannon
Core competencies in optics, imaging, and electronic controls
Products include copiers, laser printers, cameras, and image scanners.
Boeing
Integrating large scale systems
Commercial jetliners, space stations, missiles
Module 01: Operations Strategy

11. Core Competencies Characteristics
Module 01: Operations Strategy
Core Competencies Characteristics
Used to gain access to a variety of markets
Should be strongly related to key benefits provides by products or services
Should be difficult to imitate
Module 01: Operations Strategy

12. Total Strategic Process
Module 01: Operations Strategy
Total Strategic Process
Core competencies affect
achieve
competitive
advantage
Company
Mission
Business
Strategy
Marketing
Operations
Fin./Acct.
Module 01: Operations Strategy

13. 2. Competitive Dimensions
Module 01: Operations Strategy
2. Competitive Dimensions
Cost
Quality
High performance design (Lexus)
Consistency (Coke)
Dependability
Rapid (Domino’s Pizza)
On-time (Federal Express)
Flexibility
Variety (Emergency room)
Volume (Supermarkets)
Module 01: Operations Strategy

14. 3. Marketing-Operations Link
Module 01: Operations Strategy
3. Marketing-Operations Link
OM Marketing
Produce goods and services
Investigate demand; establish dist. chain
Costs Price
Schedule Delivery promise
Flexibility Number of models
High quality Repeat sales
Module 01: Operations Strategy

15. Marketing-Operations Link (cont.)
Module 01: Operations Strategy
Marketing-Operations Link (cont.)
Order qualifier
Order winner
Order Qualifiers
Screening criteria that permits a firm’s products/services to be considered as a possible candidates for purchase
1970s – Japanese (price)
Order Winners
Criterion that differentiates the products/services of one firm from another
1970s – Japanese (quality)
Module 01: Operations Strategy

16. 4. First-to-Market Strategy
Products available before competition
Strong applied research capability needed
Can set high price to skim market or set lower price to gain market share
Module 01: Operations Strategy

17. Second-to-Market Strategy
Quick imitation of first-to-market companies
Less emphasis on applied research and more emphasis on development
Learn from first-to-market’s mistakes
Module 01: Operations Strategy

18. Late-to-Market Strategy
Wait until market becomes standardized and large volumes demanded
Compete on basis of costs instead of product features
Research efforts focus on process development versus product development
Module 01: Operations Strategy