MB0044-Production and Operations Management

Unit-3 Operations Strategy

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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MB0044-Production and Operations Management

Unit-3 Operations Strategy

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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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
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MB0044-Production and Operations Management

Unit-3 Operations Strategy

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 organisations 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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Unit-3 Operations Strategy

Operations Strategy(OS)
Operations strategy is a long-range business plan for the companys
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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Unit-3 Operations Strategy

OS as a Competitive Weapon
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:

Product expertise

Quality
Quick delivery

Competitive
weapons
Product variety
and product mix

Flexibility in
production

Low cost production and

process

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Unit-3 Operations Strategy

Developing OS
Operations strategy
strategy. The below
strategy and shows
competitive priorities

is developed under the umbrella of the corporate

figure shows the factors that go into the operations
the link between the corporate, business, and the
under the operations strategy.

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Unit-3 Operations Strategy

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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Unit-3 Operations Strategy

Product Life Cycle

Any product designed and introduced into the market has its own life
cycle. The various stages of life cycle are:

Introduction stage
Growth stage
Maturity stage
Decline stage

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Unit-3 Operations Strategy

Competitive Priorities
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

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Unit-3 Operations Strategy

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.

The production systems practised are

Batch
production

Mass
production

Customised
production

Assemble
products,
test them,
and supply

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Unit-3 Operations Strategy

Manufacturing Strategies
Manufacturing strategies adopted are decided by the operations manager. The
manufacturing strategies differ from industry to industry and the applicable
situations demand and supply. The following are the three dominant
manufacturing strategies:

Make-to-stock

Assemble-to-order

Make-toorder

Ensures immediate delivery of the

products, thereby minimising the
delivery times

Involves assembly processes,

fabrication processes, painting,
cleaning, etc

Gives a higher degree of customisation,

one of the major competitive priority

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Unit-3 Operations Strategy

Global Strategies
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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Unit-3 Operations Strategy

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

assemble-to-order and make-to-order.

Strategic alliance is an agreement between the two parties as joint

partners to promote the products.

strategies

are:

Make-to-stock,

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Unit-3 Operations Strategy

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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Unit-3 Operations Strategy

Activity
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?

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