Operational and Organizational, Comparison of Mission and Organization Strategy, Quality and Time Strategies, Agile Operation Strategy

2. COMPETITIVENESS, STRATEGY AND PRODUCTIVITY
(Chapter 02 SECOND HALF)
To: Ms. Asia Bibi
By: M. Arslan Khalid
M. Ehsaan Khalil
M. Adnan

3. OPERATION STRATEGY v/s ORGANIZATIONAL STRATEGY
While “Organizational” refers to your business structure.
And
“Operational” refers to how you get things done.
Knowing these definitions isn’t critical to successfully running your
business, but creating separate organizational and operational
strategies.

4. OPERATION STRATEGY v/s ORGANIZATIONAL STRATEGY
▪ Organization Strategy:
When you start a business, you might begin with no
employees or only a few employees. As you grow, you assign different tasks to different
staff members, all of whom report to you. To prepare for long-term growth, it’s
important to think about how you want your staff organized. Create an organization
chart with job descriptions for each position for your current situation, and a second
chart for where you want to be in one or two years.
▪ Operational Strategy:
Maintaining a steady workflow, whether for producing your
product or administration, requires operational procedures. This is best achieved by
writing an operations manual with guidelines for each activity of your employees. For
example, your operational procedures for making your product cover ordering materials
and supplies, scheduling labor, and maintaining your equipment.

5. OPERATION STRATEGY v/s ORGANIZATIONAL STRATEGY
▪ Organization Strategy:
The organization strategy provides the overall direction for the
organization. It is broad in scope, covering the entire organization.
▪ Operational Strategy:
Operations strategy is narrower in scope, dealing primarily with
the operations aspect of the organization. Operations strategy relates to products,
processes, methods, operating resources, quality, costs, lead times, and scheduling.

6. OPERATION STRATEGY v/s ORGANIZATIONAL STRATEGY
The two concepts are related but distinct:
▪ Organizational issues focus on "who“ assigning employees to handle specific
functions, setting up a chain of command, assigning supervisory roles and duties and
creating interdepartmental communications.
▪ Operational issues, on the other hand, focus on how employees get their jobs done.
Your HR manager and executive management team oversee the organizational
aspects of your business, while department managers handle operational tasks for
their staff.

7. OPERATION STRATEGY v/s ORGANIZATIONAL STRATEGY
▪ In order for operations strategy to be truly effective, it is important to link it to
Organization Strategy; that is, the two should not be formulated independently.
Rather, formulation of organization strategy should take into account the realities of
operations’ strengths and weaknesses, capitalizing on strengths and dealing with
weaknesses.
▪ Similarly, Operations Strategy must be consistent with the overall strategy of the
organization, and with the other functional units of the organization. This requires
that senior managers work with functional units to formulate strategies that will
support, rather than conflict with, each other and the overall strategy of the
organization.

8. COMPARISON OF MISSION, ORGANIZATION STRATEGY
AND OPERATION STRATEGY

9. OPERATION STRATEGY
“Operations strategy can have a major influence on the
competitiveness of an organization. If it is well designed and well
executed, there is a good chance that the organization will be
successful; if it is not well designed or executed, the chances are much
less that the organization will be successful.”

10. STRATEGIC OPERATION MANAGEMENT
DECISION AREAS
Operations management people play a strategic role in many strategic decisions in a
business organization.

11. QUALITY AND TIME STRATEGIES
Traditional strategies of business organizations have tended to emphasize cost
minimization or product differentiation. many organizations have embraced strategies
based on quality and time.
Quality Strategies:
▪ Focuses on maintaining or improving the quality of an organizations products
or services.
▪ Quality at the source.

12. QUALITY AND TIME STRATEGIES
Time Strategies:
▪ Strategy that focuses on reduction of time needed to accomplish tasks.
Organizations have achieved time reduction in some of the following:

13. QUALITY AND TIME STRATEGIES
Agile Operation Strategy:
▪ Agility is the ability of an organization to respond quickly to demand and
opportunities.
▪ Agility involves a blending of several distinct competencies such as cost, quality, and
reliability along with flexibility.
▪ Successful agile operations requires careful planning to achieve a system that
includes people, flexible equipment, and information technology.

14. IMPLICATIONS OF ORGANIZATION STRATEGY
FOR OPERATION MANAGEMENT
▪ Organization strategy has a major impact on operations and supply chain
management strategies.
▪ For example, organizations that use a low-cost, high-volume strategy limit
the amount of variety offered to customers.
▪ A strategy to offer a wide variety of products or services, or to perform
customized work, creates substantial operational and supply chain variations
and, hence, more challenges in achieving a smooth flow of goods and
services.

15. IMPLICATIONS OF ORGANIZATION STRATEGY
FOR OPERATION MANAGEMENT

16. TRANSFORMING STRATEGY INTO ACTION
THE BALANCED SCORECARD
The Balanced Scorecard (BSC) is a top-down management system that organizations
can use to clarify their vision and strategy and transform them into action.
OR
The Balanced Scorecard is a strategic planning and management system used to align
business activities to the vision and strategy of the organization by monitoring
performance against strategic goals.
It was introduced in the early 1990s by Robert Kaplan and David Norton.

17. WHY USE A BALANCED SCORECARD
▪ Improve organizational performance by measuring what matters.
▪ Increase focus on strategy and results.
▪ Align organization strategy with workers on a day- to- day basis.
▪ Focus on the drivers key to future performance.
▪ Improve communication of the organization’sVision and Strategy.

18. FOUR ORIGINAL BUSINESS PERSPECTIVE
▪ The balanced scorecard model
Suggest that we view the orga-
nization from 4 perspective.
▪ Then develop metrics, collect
data and analyze it relative to
each of these perspective.

19. THE BALANCE SCORECARD FOCUSES ON
FACTORS THAT CREATE LONG TERM VALUE
▪ Financial Perspective: Long term shareholder value by improve productivity and
grow revenue.
▪ Customer Perspective: Satisfy, retain and acquire customers in targeted segments.
Offer product and services that are consistent, timely and low cost.
▪ Internal Perspective: Ensure operational excellence with innovation, high-quality,
flexible, and responsive operating processes as well as being socially responsible.
▪ Learning & Growth Perspective: Develop skilled, motivated employees provide
access to strategic information align individuals and teams to business unit
objectives.

20. WHY ARE COMPANIES ADOPTING A BSC
▪ The idea was to move away from a purely financial perspective of the organization
and integrate other perspectives such as customers, internal business processes, and
learning and growth.
▪ The four perspectives are intended to balance not only financial and nonfinancial
performance, but also internal and external performance as well as past and future
performance.
▪ This approach can also help organizations focus on how they differ from the
competition in each of the four areas if their vision is realized.

21. WHY ARE COMPANIES ADOPTING A BSC
▪ Change:
Formulate and communicate a new strategy for a more competitive
environment.
▪ Growth:
Increase revenues, not just cut costs and enhance productivity.
▪ Implement:
From the 10 to the 10,000. Every employee implements the new growth
strategy in their day-to-day operations.

22. BALANCED SCORECARD FACTORS

23. WHY DO WE NEED A BSC
To implement Business Strategy:
“Business Strategy is now the single most important issue and will
remain so for the next five years”
“Less than 10% of strategies effectively formulated are effectively
executed”

24. THE FOUR PERSPECTIVES APPLY TO MISSION DRIVEN AS
WELLAS PROFIT DRIVEN ORGANIZATION
Answering these questions is the first step to develop a Balanced
Scorecard.

25. FOUR BARRIERS TO STRATEGIC
IMPLEMANTATION

26. PRODUCTIVITY
Productivity is a measure of how efficiently inputs (labor, materials, energy, and other
resources) are converted to outputs (Goods & Services).
Productivity = Output Input
OR
Productivity = Goods & Services Produced All Resources Used

27. PRODUCTIVITY
▪ Productivity is important for all business organizations, it is particularly
important for organizations that use a strategy of low cost.
▪ Productivity ratio can be computed for a single operation, a department, an
organization, or an entire country.
▪ In business organizations, productivity ratios are used for planning
workforce requirements, scheduling equipment, financial analysis, and other
important tasks.

28. PRODUCTIVITY
▪ Productivity measures are useful on a number of levels. For an individual department
or organization, productivity measures can be used to track performance over time.
▪ This allows managers to judge performance and to decide where improvements are
needed. For example, if productivity has slipped in a certain area, operations staff can
examine the factors used to compute productivity to determine what has changed.
▪ Advantages of domestic-based operations for domestic markets often include higher
worker productivity, better control of quality, lower shipping costs, political stability,
low inflation, and faster delivery.

29. PRODUCTIVITY
▪ For nonprofit organizations, higher productivity means lower costs.
▪ For profit-based organizations, productivity is an important factor in determining
how competitive a company is.
▪ For a nation, the rate of productivity growth is of great importance.
Productivity Growth =
Current Productivity – Previous Productivity
Previous Productivity
X 100

30. COMPUTING PRODUCTIVITY
▪ Partial Productivity: Productivity measures can be based on a single input.
= Output / Labor Output / Machine Output / Capital Output / Energy
▪ Multifactor Productivity: Productivity measures can be based on more than
one input.
=
▪ Total Productivity: Productivity measures can be based on or on all inputs.
Output
Labor + Machine
Output
Labor + Capital + Energy
=
Goods or services produced
All in puts used to produce them
=

31. COMPUTING PRODUCTIVITY
Partial measures are often of greatest use in operations management. some examples of
partial productivity measures:

32. PRODUCTIVITY IN SERVICE SECTOR
▪ Service productivity is more problematic than manufacturing productivity.
▪ In many situations, it is more difficult to measure, and thus to manage, because it
involves intellectual activities and a high degree of variability. Like medical
diagnoses, surgery, consulting, legal services, customer service, and computer repair
work.
▪ A useful measure closely related to productivity is process yield. Where products
are involved, process yield is defined as the ratio of output of good product
(defective product is not included) to the quantity of raw material input.

33. PRODUCTIVITY IN SERVICE SECTOR
▪ Where services are involved, process yield measurement is often dependent on the
particular process.
▪ For example, In education, a measure for college and university admission yield is
the ratio of student acceptances to the total number of students approved for
admission.
▪ In a car rental agency, a measure of yield is the ratio of cars rented to cars available
for a given day.

34. FACTORS THAT AFFECT PRODUCTIVITY
▪ Factors that affect the productivity generally, they are methods, capital, quality,
technology, and management.
▪ the fact is that many productivity gains in the past have come from technological
improvements. Some examples include:
Computer Software GPS Devices
Calculator Smart Phone Apps
▪ Without careful planning, technology can actually reduce productivity, especially if
it leads to inflexibility, high costs, or mismatched operations.

35. FACTORS THAT AFFECT PRODUCTIVITY
▪ Another current productivity pitfall results from employees’ use of computers or
smart phones for non-work-related activities (playing games or checking stock prices
or sports scores on the Internet or smart phones, and texting friends and relatives).
▪ Factors that affect productivity, such as equipment breakdowns and shortages of
parts or materials. The education level and training of workers and their health can
greatly affect productivity.

36. FACTORS THAT AFFECT PRODUCTIVITY
Other factors that affect productivity include the following:
Standardizing Quality Differences
Use of Internet Computer Viruses
Scrap Rates New Workers
A shortage of technology-savvy workers
Safety Layoff
Labor Turnover Design of the workspace

37. IMPROVING PRODUCTIVITY
A company or a department can take a number of key steps toward improving
productivity:
▪ Develop productivity measures for all operations.
▪ Look at the system as a whole in deciding which operations are most critical. It is
overall productivity that is important.
▪ Develop methods for achieving productivity improvements, such as soliciting ideas
from workers , studying how other firms have increased productivity, and
reexamining the way work is done.

38. IMPROVING PRODUCTIVITY
▪ Establish reasonable goals for improvement.
▪ Make it clear that management supports and encourages productivity improvement.
Consider incentives to reward workers for contributions.
▪ Measure improvements and publicize them.
Don’t confuse productivity with efficiency. Efficiency is a narrower concept that
pertains to getting the most out of a fixed set of resources; productivity is a broader
concept that pertains to effective use of overall resources.