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C o n f i d e n t i a l
MB0044-Production and Operations Management
Unit-3 Operations Strategy
1
Program : MBA
Semester : II
Subject Code : MB0044
Subject Name : Production and Operations Management
Unit number : 3
Unit Title : Operations Strategy
Lecture Number : 3
Lecture Title : Operations Strategy
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C o n f i d e n t i a l
MB0044-Production and Operations Management
Unit-3 Operations Strategy
2
Production & Operations Management
Objectives:
After studying this unit, you should be able to:
• Define operations strategy
• Outline the role of operations strategy as a competitive weapon
• Explain the development of operations strategy
• List the elements of operations strategy
• Explain competitive priorities and manufacturing strategies
• Describe global strategies
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C o n f i d e n t i a l
MB0044-Production and Operations Management
Unit-3 Operations Strategy
Lecture Outline
• Introduction
• Operations Strategy(OS)
• OS as a Competitive Weapon
• Developing OS
• Elements of OS
• Product Life Cycle
• Competitive Priorities
• Production Systems
• Manufacturing Strategies
• Global Strategies
• Summary
• Check Your Learning
• Activity
3
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C o n f i d e n t i a l
MB0044-Production and Operations Management
Unit-3 Operations Strategy
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Introduction
Operations strategy (OS) is a set of decisions taken across the organisation that help the organisation in the implementation of its competitive business strategies. OS links an organisation’s long-term and short-term operational decisions to its corporate strategy. OS are normally developed at three levels of operations namely: • Corporate level • Business level • Functional level
In this session, you will learn the importance of OS, how OS acts as a
competitive weapon, the development and elements of OS and the stages of
a product life cycle. You will also become familiar with the basic competitive
priorities, the different production systems and strategies adopted by
manufacturing companies, and the global strategies of organisations.
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MB0044-Production and Operations Management
Unit-3 Operations Strategy
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Operations Strategy(OS)
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Operations strategy is a long-range business plan for the company’s
products and will provide a road map for the operational functions to be
pursued.
The strategic decisions include:
The capacity to be built into the production system
The type of processes and manufacturing technology to be adopted
The nature of products to be produced
The type of material flow
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MB0044-Production and Operations Management
Unit-3 Operations Strategy
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Competitiveness is how effectively an organisation meets the needs of its consumers as compared to its immediate competitors. The competitive weapons used by an organisation are:
OS as a Competitive Weapon
Competitive weapons
Product expertise
Quick delivery
Flexibility in production
Low cost production and process
Product variety and product mix
Quality
C o n f i d e n t i a l
MB0044-Production and Operations Management
Unit-3 Operations Strategy
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Operations strategy is developed under the umbrella of the corporate strategy. The below figure shows the factors that go into the operations strategy and shows the link between the corporate, business, and the competitive priorities under the operations strategy.
Developing OS
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MB0044-Production and Operations Management
Unit-3 Operations Strategy
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Elements of OS
The six elements of operations strategy are:
Designing of the production system
Facilities for production and services
Product or service design and development
Technology selection, development, and process development
Allocation of resources
Focus on facilities planning
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MB0044-Production and Operations Management
Unit-3 Operations Strategy
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Any product designed and introduced into the market has its own life
cycle. The various stages of life cycle are:
Product Life Cycle
Decline stage
Maturity stage
Growth stage
Introduction stage
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MB0044-Production and Operations Management
Unit-3 Operations Strategy
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Competitive Priorities
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Operations strategy reflects the long-term goals of an organisation in its corporate strategy. To achieve good results, a clear understanding of the operating advantages and a good cross functional coordination between functional areas of marketing, production, finance, and human resources departments are required. Operating advantages depend on its processes and competitive priorities considered while establishing the capabilities. The basic competitive priorities are:
Cost
Quality
Time
Flexibility
C o n f i d e n t i a l
MB0044-Production and Operations Management
Unit-3 Operations Strategy
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Production Systems
There are many types of competitive priorities for processes used in
the manufacturing of products. The manufacturing industry adopts
systems based on demand.
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The production systems practised are
Batch production
Mass production
Customised production
Assemble products, test them, and supply
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MB0044-Production and Operations Management
Unit-3 Operations Strategy
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Manufacturing Strategies
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Manufacturing strategies adopted are decided by the operations manager. The manufacturing strategies differ from industry to industry and the applicable situation’s demand and supply. The following are the three dominant manufacturing strategies:
• Ensures immediate delivery of the products, thereby minimising the delivery times
Make-to-stock
• Involves assembly processes, fabrication processes, painting, cleaning, etc
Assemble-to-order
• Gives a higher degree of customisation, one of the major competitive priority Make-to–order
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MB0044-Production and Operations Management
Unit-3 Operations Strategy
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Global Strategies
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A global strategy pursued by organisations at the corporate level may
include buying foreign parts or services and combat traditional
domestic competitions.
Strategic alliance is an agreement between the two parties as joint
partners to promote the products. This alliance may be in any form,
but the widely accepted are:
Collaboration
Joint venture
Technology transfer and Licensing
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MB0044-Production and Operations Management
Unit-3 Operations Strategy
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Summary
• Operations strategy (OS) is a set of decisions taken across the organisation that help the organisation in the implementation of its competitive business strategies.
• Operations strategy is developed under the umbrella of the corporate strategy.
• The six elements of operations strategy are: Designing of the production system, Facilities for production and services, Product or service design and development, Technology selection, development, and process development, Allocation of resources and Focus on facilities planning.
• The basic competitive priorities are: cost, quality, time and flexibility.
• The three dominant manufacturing strategies are: Make-to-stock, assemble-to-order and make-to-order.
• Strategic alliance is an agreement between the two parties as joint partners to promote the products.
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MB0044-Production and Operations Management
Unit-3 Operations Strategy
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Check Your Learning
1. What are the three levels of operations to develop organisational strategies?
Ans: The three levels of operations to develop organisational strategies are:
a. Corporate level
b. Business level
c. Functional level
2. List the various competitive weapons.
Ans: The various competitive weapons are:
a. Product/services expertise
b. Quick delivery
c. Flexibility in production
d. Low cost production and processes
e. Product variety and product mix
f. Quality
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C o n f i d e n t i a l
MB0044-Production and Operations Management
Unit-3 Operations Strategy
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Assume that you own a chair production company which produces certain number of chairs every month. The demand for chairs increases and the company needs to produce more number of chairs. Which strategic alliance would you follow to fulfil the needs of the customer?
Activity
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