Production & Operations Management
Chapter 2 Strategic Operations Management
Strategic Operations Management Nature of Strategic Management
The ultimate purpose of strategic management is to help organization increase performance through 1) Improved effectiveness. 2) Efficiency. 3) Flexibility. A strategy is a way of doing something.It usually includes ,formulation & setting up of goals and set action plans for accomplishing the goals
Strategic Operations Management
Strategic Operations Management
Strategic Operations Management
Strategic Operations Management
In the past companies could succeed by focusing all Management efforts on running their day to day affairs as efficiently as possible. The Strategic management highlights the significance of devoting more attention to analyzing environments and formulating strategies that relate direct to environmental changes.
Strategic Management Process Strategic Management process involves four steps 1.Environmental Scanning: Environment of an organization comprises both external and internal factors. In Strategic management, process begins with the scanning of external and internal environments and ends with monitoring the Activities of the organization. 2. Strategy formulation Strategies are formulated at three levels Corporate level Business Unit level Functional level Chapter2
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Strategic Management Process Corporate level: This is formulated by top management to oversee the interest and operations of an organization made up of more than one line business. In formulating Corporate strategy, the company should decide where it want to be in 10 to 15 years, in at least eight areas: Market standing, Innovation, Productivity, Physical and financial resources, profitability, managerial performance and development, worker performance and attitude, social responsibility. Chapter2
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Strategic Management Process Typical Corporate level Strategies: 1.Growth Strategies. Internal growth Horizontal Integration Vertical Integration Mergers Strategic alliance 2. Stability Strategies 3.Retrenchment Strategies Turnaround Divestment Liquidation Chapter2
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Strategic Management Process Business Unit level Strategies: The appropriate question at business level is “How should we compete in the chosen industry or business” A business unit is organizational subsystem that has a market ,a set of competitors and a goal distinct from other subsystems in group The concept of Strategic Business Unit (SBU) was pioneered by GEC at there 200 business units A single unit that operate within one industry is also considered a business unit Chapter2
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Strategic Management Process Functional level Strategies: Each business unit will consists several departments such as Manufacturing, Quality Control , H.R, Finance etc Functional Strategies identify the basic course of action that each of department pursue in order to help business unit to attain its goals In formulating functional strategies managers must be aware that different functions are interrelated
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Strategic Management Process 3 Strategic Implementation Strategies Formulated need to be implemented. Implementation of Strategies is more difficult than their formation , they two differ in the following ways. Strategy Formulation is positioning forces before action Strategy Implementation is managing forces during the action Strategy Formulation focus on effectiveness Strategy Implementation focus on Efficiency Strategy Formulation is primarily Intellectual process Strategies Implementation is primarily operational process Chapter2
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Strategic Management Process Strategy Formulation requires good intuitions and operating skills Strategy Implementation requires motivation & leadership skills. Strategy Formulation requires co ordination among few individuals. Strategy Implementation requires co ordination among many persons. Strategies Formulation and tools do not differ vastly for small , large or non profit organization. Strategy Implementation varies among different type& size of industries Chapter2
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Strategic Management Process 4.Evaluation & control Basic Activities involved are: Establishing performance targets , Standards , and tolerance limits for the objectives Measuring the performance in relation to the target at a given time , if outcomes are outside the limits, inform managers to take action Analyze deviation from accepted limits. Execute modifications where necessary
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Importance of Strategic Management
Strategic Management offers both financial & non financial benefit to an organization as listed below 1.It allows identification, Prioritization,& exploitation of opportunities. 2.Provides objective view of management problems. 3.Framework for Improved co-ordination 4.It minimizes the effect of adverse conditions 5.It allows major decisions to better support established objectives 6.It allows more efficient allocation of time Cont…. Chapter2
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Importance of Strategic Management
7. It allows fewer resources and less time to be devoted 8. It creates a framework for internal communication 9. It helps to integrate the behavior of individuals 10.It provides basis for the clarification of individual responsibilities. 11.It encourages to forward thinking 12.It provides a co-operative ,integrated approach to tackling problems 13.It encourages a favorable attitude 14.It gives a degree of discipline Chapter2
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Role of Operations Management in Strategic Management The role of operations management in formulating & implementing business strategies is crucial The traditional role of production or operations was to design the product /services based on the marketing information provided by marketing department and to convert the design into products within financial constraints ,stipulated by finance department. Marketing & finance functions could exert more influence on top management in formulation of business strategies. Chapter2
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Elements of Operations Strategy Operations strategy comprises six components Positioning the production System Focus on factories and service facilities Product /Service design and development Technology Selection & Process development Allocation of resources to strategic alternatives Facility planning
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Production & Operations Management
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Chapter 2
