Strategic Operations Management


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In this presentation, we will discuss elaborately on strategic operations management, concept of strategy, five tasks of strategic management, strategic management process and importance of strategic management. We will also talk about role of operations in strategic management and elements of operations strategy,.
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Strategic Operations Management

  1. 1. Production & Operations ManagementChapter 2Strategic Operations Management
  2. 2. Strategic Operations Management Nature of Strategic Management The ultimate purpose of strategic management isto help organization increase performance through1) Improved effectiveness.2) Efficiency.3) Flexibility. A strategy is a way of doing something.It usuallyincludes ,formulation & setting up of goals and setaction plans for accomplishing the goals
  3. 3. Strategic Operations Management
  4. 4. Strategic Operations Management
  5. 5. Strategic Operations Management
  6. 6. Strategic Operations Management In the past companies could succeed by focusingall Management efforts on running their day to dayaffairs as efficiently as possible. The Strategic management highlights thesignificance of devoting more attention toanalyzing environments and formulatingstrategies that relate direct to environmentalchanges.
  7. 7. Strategic Management ProcessStrategic Management process involves four steps1.Environmental Scanning: Environment of an organization comprises both externaland internal factors. In Strategic management, processbegins with the scanning of external and internalenvironments and ends with monitoring the Activities ofthe organization.2. Strategy formulation Strategies are formulated at three levels Corporate level Business Unit level Functional level Chapter2 7
  8. 8. Strategic Management ProcessCorporate level: This is formulated by top management to oversee theinterest and operations of an organization made up of morethan one line business. In formulating Corporate strategy, the company shoulddecide where it want to be in 10 to 15 years, in at leasteight areas: Market standing, Innovation, Productivity,Physical and financial resources, profitability, managerialperformance and development, worker performance andattitude, social responsibility. Chapter2 8
  9. 9. Strategic Management Process Typical Corporate level Strategies:1.Growth Strategies. Internal growth Horizontal Integration Vertical Integration Mergers Strategic alliance2. Stability Strategies3.Retrenchment Strategies Turnaround Divestment Liquidation Chapter2 9
  10. 10. Strategic Management ProcessBusiness Unit level Strategies: The appropriate question at business level is “Howshould we compete in the chosen industry or business” A business unit is organizational subsystem that has amarket ,a set of competitors and a goal distinct from othersubsystems in group The concept of Strategic Business Unit (SBU) waspioneered by GEC at there 200 business units A single unit that operate within one industry is alsoconsidered a business unit Chapter2 10
  11. 11. Strategic Management ProcessFunctional level Strategies: Each business unit will consists several departments suchas Manufacturing, Quality Control , H.R, Finance etc Functional Strategies identify the basic course of actionthat each of department pursue in order to help businessunit to attain its goals In formulating functional strategies managers must beaware that different functions are interrelated Chapter2 11
  12. 12. Strategic Management Process3 Strategic Implementation Strategies Formulated need to be implemented.Implementation of Strategies is more difficult than theirformation , they two differ in the following ways. Strategy Formulation is positioning forces before action Strategy Implementation is managing forces during theaction Strategy Formulation focus on effectiveness Strategy Implementation focus on Efficiency Strategy Formulation is primarily Intellectual process Strategies Implementation is primarily operationalprocess Chapter2 12
  13. 13. Strategic Management Process Strategy Formulation requires good intuitions andoperating skills Strategy Implementation requires motivation &leadership skills. Strategy Formulation requires co ordination among fewindividuals. Strategy Implementation requires co ordination amongmany persons. Strategies Formulation and tools do not differ vastly forsmall , large or non profit organization. Strategy Implementation varies among different type&size of industries Chapter2 13
  14. 14. Strategic Management Process4.Evaluation & controlBasic Activities involved are: Establishing performance targets , Standards , andtolerance limits for the objectives Measuring the performance in relation to the target at agiven time , if outcomes are outside the limits, informmanagers to take action Analyze deviation from accepted limits. Execute modifications where necessary Chapter2 14
  15. 15. Importance of Strategic ManagementStrategic Management offers both financial & nonfinancial benefit to an organization as listed below1.It allows identification, Prioritization,& exploitation ofopportunities.2.Provides objective view of management problems.3.Framework for Improved co-ordination4.It minimizes the effect of adverse conditions5.It allows major decisions to better support establishedobjectives6.It allows more efficient allocation of time Cont…. Chapter2 15
  16. 16. Importance of Strategic Management7. It allows fewer resources and less time to be devoted8. It creates a framework for internal communication9. It helps to integrate the behavior of individuals10.It provides basis for the clarification of individual responsibilities.11.It encourages to forward thinking12.It provides a co-operative ,integrated approach to tackling problems13.It encourages a favorable attitude14.It gives a degree of discipline Chapter2 16
  17. 17. Role of Operations Management in Strategic ManagementThe 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 17
  18. 18. Elements of Operations StrategyOperations 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 Chapter2 18
  19. 19. Production &Operations ManagementEnd OfChapter 2
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