Alex Hill and Terry Hill

Learning objectives

• Understand LEVELS of strategy within business

• Distinguish between day-to-day and strategic ROLES

• Identify how different levels of strategy INTERFACE with each other

• Appreciate importance of understanding MARKETS

• Understand different strategic APPROACHES

• DEVELOP and IMPLEMENT an operations strategy

Lecture outline

• INTRODUCTION

• What is STRATEGY?

• LEVELS of strategy within a business

• DEVELOPING a strategy

• IMPLEMENTING a strategy

• Critical REFLECTIONS

• SUMMARY

What is strategy?

DIRECTION

WHAT to do

What is strategy?

HOW to do it

IMPLEMENTATION

DIRECTION

WHAT to do

> KEY IDEAOperations strategy concerns developing the CAPABILITIES of an organisation to reflect the NEEDS of its customers and markets

Levels of strategy

CORPORATE

Levels of strategy

CORPORATE

BUSINESS UNIT

FUNCTIONAL

Levels of strategy

CORPORATE

BUSINESS UNIT

•Where to INVEST or DIVEST

•SALES REVENUE priorities

Corporate

DIRECTION OF TOTAL BUSINESS

IMPLEMENTATION

Allocation of investment FUNDS

Levels of strategy

•MARKETS in which it competes•Where to GROW its business•Nature of COMPETITION•Relevant COMPETITIVE

CRITERIA

DIRECTION OF BUSINESS UNIT

IMPLEMENTATION

•WHICH functional tasks to invest in

•HOW to invest in these tasks

Levels of strategyBusiness unit

DIRECTION OF FUNCTION

Support COMPETITIVE DIMENSIONS within a market for

which it is solelyor partly RESPONSIBLE

Levels of strategyFunctional

IMPLEMENTATION•Meeting competitive REQUIREMENTS•Selecting APPROACHES to attain

improvement goals•Implement the PLAN

Levels of strategyFunctional

Levels of strategyFunctional

Developing a strategy

> KEY IDEA

Understanding MARKETS is the FIRST step in strategy development

Developing a strategyUnderstanding customer requirements

QUALIFIERS

ORDER-WINNERS

Get and keep a service or product on

a customer’s SHORTLIST

WIN you the order once

you are on the shortlist

> KEY IDEA

Understanding CUSTOMER requirements:• AVOID general descriptions• IDENTIFY and WEIGHT order-winners and qualifiers

Factory RestaurantPit stop

Le Mans

(1971)

Modern Times

(1936)

Dinner Rush

(2000)

Developing a strategyUnderstanding customer requirements

Operations process Pit stop Factory Restaurant

TRANSFORMED resources

MaterialsInformationCustomers

TRANSFORMING resources

FacilitiesStaff

OUTPUTSGoodsServices

Developing a strategyOperations process

Developing a strategy

Understanding customer requirements

Key market requirements

Pit stop Factory Restaurant

ORDER-WINNERS

QUALIFIERS

Developing a strategy

•What is the OPERATIONS process?•What are the key MARKET

requirements?

Operations process Pit stop Factory Restaurant

TRANSFORMED resources

MaterialsInformationCustomers

TRANSFORMING resources

FacilitiesStaff

OUTPUTSGoodsServices

Developing a strategyOperations process

Operations process Pit stop Factory Restaurant

TRANSFORMED resources

MaterialsInformationCustomers

TRANSFORMING resources

FacilitiesStaff

OUTPUTSGoodsServices

• Car• Rain tyres

• Raw material

• Pit stop • Mechanics• Spanners

• Car with• rain tyres

• Factory• Production line• Operator• Spanner

• Widget

• Raw material• Order details• Customer

• Restaurant• Kitchen• Equipment• Chef• Waiter

• Food• Drink• Service

Developing a strategyOperations process

Developing a strategyUnderstanding customer requirements

Key market requirements

Pit stop Factory Restaurant

ORDER-WINNERS

• Delivery speed • Price • Product design• Service design

QUALIFIERS

• Delivery reliability• Quality conformance• Price

• Quality conformance

• Quality conformance• Delivery reliability• Price

Developing a strategyUnderstanding customer requirements

> KEY IDEA

Understanding CUSTOMER requirements:• AVOID general descriptions• IDENTIFY and WEIGHT order-winners and qualifiers

Developing a strategyThe process of strategy development

Alternative APPROACHES

•TOP-DOWN vs BOTTOM-UP•MARKET-DRIVEN vs MARKET-

DRIVING

Developing a strategyTop-down approach

FUNCTIONAL

CORPORATE

BUSINESS UNIT

Day-to-day EXPERIENCES and LEARNING

Consolidated into formal STRATEGY

Developing a strategyBottom-up approach

EMERGING sense of what strategy should be

Developing a strategyMarket-led orientation

MARKET

MARKET DRIVES OPERATIONS

OPERATIONS

Developing a strategyMarket-driving orientation

MARKET

OPERATIONS DRIVES MARKET

OPERATIONS

Developing a strategyAlternative approaches

Aspect Prison Camp Restaurant

Strategic OBJECTIVES

STRATEGY for meeting these objectives

PROCESS of developing and implementing strategy

Developing a strategyAlternative approaches

•What are their strategic OBJECTIVES?

•What is their STRATEGY to achieve these objectives?

•What APPROACH has been used to develop and implement this strategy?

Developing a strategyAlternative approaches

Aspect Prison Camp Restaurant

Strategic OBJECTIVES

STRATEGY for meeting these objectives

PROCESS of developing and implementing strategy

Aspect Prison Camp Restaurant

Strategic OBJECTIVES

• ESCAPE from the camp• Get 250 men out

• Make MONEY• Produce GOOD FOOD

STRATEGY for meeting these objectives

• Create SMOKE SCREEN• DIG 3 TUNNELS

• PRIMO• Market-driving• Resource-based• CRISTIANO• Market-driven• Market-led

PROCESS of developing and implementing strategy

• TOP-DOWN• PLANNED

• BOTTOM UP• EMERGENT

Developing a strategyAlternative approaches

Critical reflections

• Operations helps gain FIRST sale whilst also securing the SECOND sale

• MARKET or marketing-led?

• Moving to a BUSINESS-LEVEL strategic debate

Summary

• What is STRATEGY?– Direction and Implementation

• LEVELS of strategy– Corporate - Business - Functional

• Strategy DEVELOPMENT– Understand market– Develop capability to support or drive

market

• Market REQUIREMENTS– Order-winners and Qualifiers

• APPROACH to developing strategy– Top down vs Bottom up– Market-led vs Resource-based

CASE FOR TUTORIAL

APPLE