welcome to another video on operations management we will discuss what is meant by operation strategy in this video we will try to keep it as simple as possible by discussing the perspectives used in formulating strategies for the operations of organizations without further ado let's get into it before going into this it is important that we understand the meaning of strategy interestingly the term strategy is not that easy to define the word itself originates from the greek metaphor strategos meaning to lead an army although strategy has its origins in warfare strategy in business is defined in a similar way which requires leading or directing a business setting business strategy involves setting long-term broad objectives towards an overall goal and planning the path to achieve this the emphasis here is on the word long-term many confuse day-to-day activities of running the business for strategy which is wrong day-to-day business activities are referred to as operational activities as they are short-term as for strategy this is long-term and are more concerned with operations now let's define operation strategy operation strategy is defined as the planning or the positioning of the organization relative to its environment and moving the organization closer to its long-term goals this requires series of strategic decisions for setting the role and objectives for the activities within the operations of the organization how operation strategy is viewed depends on the perspectives according to operations management scholars the perspective of operation strategy could be from a top-down perspective that is the goal of the entire business organization or what the organization aims to achieve with its operations it could also be from a bottom-up perspective which requires building operation strategy cumulatively from the operational activities in other words what is the operations expected to achieve there is also the inside out or the resource perspective this is where the capabilities of the organization's operations are exploited while taking into consideration possible constraints and the market perspective where the market our customer requirements shapes the organization's operations strategy and its operational activities these are the four main perspectives to consider when developing an operation strategy to make it easier to understand operation strategy we will only consider the top-down and bottom-up perspectives in this video it is worth noting that the identified four perspectives do not independently give the complete picture on operation strategy the top-down perspective this is the orthodox view of operation strategy the organization's strategic objectives funnels down from the top management team to the strategic business units or managers who are responsible for the business operations this perspective is largely influenced by the business environment the top-down strategy guides the organization on how to position itself in the business environment in relation to its customers the market and its competitors the bottom-up perspective this perspective requires consultation with the strategic business units within the organization and managers working within these units this consultation will inform the top management team the constraints and capabilities of the organization's day-to-day operations and enable them develop strategies by taking into consideration the organization's strengths and weaknesses [Music] where the top-down and bottom-up perspectives may be seen as opposites as illustrated in the diagram it is worth noting that this is not the case both perspectives of operations management can be seen as mutually reinforcing this is because the strategies developed at the top level must align with the day-to-day operations of the organization for it to succeed let's take an example the top management team in a business organization has designed a strategy to substantially build its profitability so as to increase market share or dominance in the long run this is a top-down perspective to its operation strategy the top management team needs to align the strategic objectives with the operations of the organization that is the day-to-day running of the business they need to consult with the lower level management responsible with the operational activities on how to achieve this overall objective following the consultation this might require that the business expand and invest in extra capacity such as establishing branches equipment and labor in all parts of its market to offer relatively fast delivery in order to achieve this overall long-term objective this is how the top-down and bottom-up perspectives mutually reinforce the overall operation strategy of the organization there is no point in setting long-term objectives beyond the capabilities of the operations to be aware of the organization's capabilities and constraints consultations must happen from the bottom to the top this then may lead to the review of the long-term objectives or increasing of operations capacity to accommodate these objectives in sum when defining an organization's operation strategy the organization needs to consider the following questions one what is the long-term goal two is the operations capability able to achieve this and three what resources are needed to achieve these long-term objectives [Music] there are other things that needs to be considered when formulating strategy do you remember our diagram we also need to consider the role of the market when developing operation strategy and from the inside out that is the resource constraints and capabilities these we will discuss in the next video thank you for watching and see you in the second part of this video