Strategy is a long term master plan, how the company will pursue its mission

1. STRATEGY FORMULATION
BY JAMES B. DIL WORTH

2. Operations Strategy
 Companies spend a great percentage of their
income and employee hours carrying out
activities that stem from various parts in the
company; these activities shape the destiny of
the entire company
 The accomplishments of the company can be
outstanding if all its parts work together toward
carefully established appropriate goals
 The decision that have long range impact are
called strategic decisions
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3. Mission Statement
 Broadest expression in which a company apply
its efforts is called its mission; a long range
purpose that changed infrequently
 The company’s intended mission will identify
the parts of the environment that are most
relevant to the company’s decisions; strategic
decisions
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4. Strategy a Master plan
 Top managers formulate strategy to provide
more definitive direction and guidance to the
organization
 Strategy is a long term master plan, how the
company will pursue its mission
 Product line company will choose to offer
 Geographical scope try to serve
 Amount of resources that will be committed
 Competitive action it will employ
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5. Strategic decisions
translated into Policy
 Policies are official statement, that guide decisions
and action of the company in consistent and
general direction
 Some time written policy circulated to lower level
managers for unified direction
 Each sub unit such as operations develop its own
strategies to accomplish the objectives assigned to
them
 Each part of the organization translate these
objectives into actions, and develop its tactics
(short term plan)
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6. Strategy Formulation
 As strategy deals with long range plans,
strategy formulation is multifaceted activity
 Managers must evaluate information about
many diverse elements of the company;
external and internal environment
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7. External condition
1. Economic Conditions
1. Capital spending
2. GNP
3. Business cycle
4. Interest rate
2. Political conditions
1. War/peace
2. Tariff
3. Political stability
4. Budget
5. Labor policy
6. Environment policy
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8. External condition
3. Social Conditions
1. Lifestyle
2. Changes in status of women and minorities
4. Technological conditions
1. New formulation
2. New product
3. New process
5. Market Conditions
1. Needs of customer
2. Competitors
3. Cost structure
4. Product life cycle
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9. Internal condition
 There must an adequate match between the
key requirements of the company in which a
company competes and the capabilities of the
company
 The purpose of internal review ids to assess the
capability to move forward, especially when
there are external threat
 identify internal weaknesses and threats
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10. Internal condition
 Marketing understanding
 Existing products and services
 Existing distributions
 Existing Suppliers
 Human resources
 Ownership of natural resources
 Current facilities equipment process and
location
 Financial strength
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11. Mission
Corporate
strategy
Social
Conditions
Political
Conditions
Economic
Conditions
Market
Conditions
Internal
strengths and
weaknesses
Policies & SB Objectives
Functional strategies
&Operating Plans
Day to day activities

12. Operations in strategy
 A company’s overall strategy addresses many
broad issues and even include plans for social
involvement, stock holder relations and
employee relations
 One important aspect of overall direction of a
firm is its competitive strategy
 Operation function has great value as a
competitive weapon, as it’s the operations
that will determine quality, variability,
availability, durability of a goods and services
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13. Marketing strategy and various
types of operations
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Type of
operation
Job Shop
Mass Prouct/
service
Type of
product
Make to order
Make to stock
Market
strategy
Selling diversity of
product/service
@ customer
desire
Selling desirability
of product/service

14. Operations must do to compete
 Critical success factors to deliver completive best
1. Cost efficiency; keep costs low than competitors
2. Quality; a company that emphasis quality will
consistently strive to provide a level of quality
superior to its competitors
3. Dependability; make its goods available to
deliver its goods and services on schedule
4. Flexibility ; quick response to changes in product
design, product mix and production volume
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15.  For example, if we reduce costs by reducing product
quality inspections, we
 Example II, if we improve customer service problem
solving by cross-training personnel to deal with a
wider-range of problems, they may become less
efficient at dealing with commonly occurring
problems. might reduce product quality.
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Dealing with Trade-offs
Quality
Cost
DependabilityFlexibility

16. Fine tuning the objective
 Once you have determined your target position ,
it will establish guidelines to improve business
competitive success.
 Detailing in four major performance
characteristics
 Quality has several dimensions to customers such as
durability of a product, and number of features it has
 Flexibility can be breadth of types of products, or it
may scale up or scale down the volume of products,
ability to change the product mix easily
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17. Strategy in service sector
 Strategy factor considerations in non
manufacturing companies are similar to
manufacturing i.e. cost efficiency, quality,
dependability and flexibility
 General differences between the two are
 Fewer barriers prevent the competitors from
entering into market as no Patents and lower
initial investment, cost difficult to measure,
location of operations is more important in
service than in manufacturing
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