Operations Management: Operation Strategy

Introduction

• Objective: Discuss the meaning of operation strategy.
• Focus: Simplifying the perspectives used in formulating operations strategies for organizations.

Understanding Strategy

• Origin: Derived from Greek "strategos" meaning to lead an army.
• Business Strategy: Involves setting long-term objectives towards a goal and planning how to achieve it.
  • Key Aspect: Emphasis on long-term planning, not day-to-day activities.

What is Operation Strategy?

• Definition: Planning or positioning the organization relative to its environment, moving closer to long-term goals.
• Requirement: Series of strategic decisions for setting objectives in operations.

Perspectives of Operation Strategy

1. Top-Down Perspective
   • Goals from top management inform strategic business units.
   • Influenced by business environment, market, and competitors.
2. Bottom-Up Perspective
   • Requires input from strategic business units.
   • Informs management about constraints and capabilities to develop strategies.
3. Inside-Out Perspective
   • Focuses on utilizing organization's capabilities while considering constraints.
4. Market Perspective
   • Shaped by customer requirements.

Focus on Top-Down and Bottom-Up Perspectives

• Top-Down: Strategic objectives funnel down, guiding positioning in the environment.
• Bottom-Up: Involves consultation with units to inform top management of capabilities and constraints.
• Mutual Reinforcement: Both strategies must align for success.

Example:

• Objective: Increase profitability and market share.
• Strategy: Align strategic objectives with day-to-day operations via consultation.
• Action: Possible expansion, investment in capacity, branches, and labor.

Key Considerations in Defining Operation Strategy

1. Long-term Goal: What is the overall objective?
2. Operations Capability: Can current operations achieve the goal?
3. Resource Needs: What resources are required?

Additional Factors

• Role of the Market: Consider market demands in strategy.
• Resource Constraints and Capabilities: Inside-out perspective importance.

Conclusion

• Next Steps: Further discussion on market role and resource perspectives in the next video.