Operations Strategy Corporate Business Strategy by xvq19903


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									    MD 021 - Management and Operations

            Operations Strategy

    Definitions of strategy and operations strategy

    Levels of strategy: corporate, business, functions

    Evaluating an operations strategy

    Example: McDonald's

                              Definition of Strategy

Strategy is a deliberate search for a plan of action that will develop a business's
distinctive competence and compound it.

                       Definition of Operations Strategy

An operations strategy consists of a sequence of decisions that, over time,
enables a business unit to achieve a desired operations structure, infrastructure,
and set of specific capabilities in support of the competitive priorities.

                    Order-Qualifiers and Order-Winners

Order-qualifiers are those criteria that a company must meet for a customer to
even consider it as a possible supplier. Companies need only be as good as

Order-winners are those criteria that win the order. Companies need to be better
than their competitors.

             Levels of Strategy

                               What business
           Corporate           are we in?

                                   How do we compete?

                                                        Role of each
Fin   HR      Mkt           Prod         Ops            function?

     Components of the Operations Strategy

Structural decision        Capacity
categories:                Facilities
                           Vertical integration
Infrastructural decision   Workforce
categories:                Organization
                           Information/control systems
Capabilities:              Unique to each firm
Competitive priorities:    Cost
                             High-performance design
                             Consistent quality
                             Fast delivery time
                             On-time delivery
                             Development speed
                             Volume flexibility

 Criteria for Evaluating an Operations Strategy

Consistency (internal and external)
 Between the operations strategy and the overall
  business strategy
 Between the operations strategy and the other
  functional strategies within the business
 Among the decision categories that make up the
  operations strategy
 Between the operations strategy and the business
  environment (resources available, competitive
  behavior, governmental restraints, etc.)

Contribution (to competitive advantage)
 Making trade-offs explicit, enabling operations to
  set     priorities that enhance the competitive
 Directing attention to opportunities that
  complement the business strategy
 Promoting clarity regarding the operations strategy
  throughout the business unit so its potential can be
  fully realized
 Providing the operations capabilities that will be
  required by the business in the future

               Statement of
       McDonald’s Operations Strategy

“To provide unmatched consistency in operations in
support of high product quality. This must be
accomplished with adequate speed, low cost, and
process innovation to accommodate changes in
consumer tastes.”

From the statement of McDonald’s operations
strategy, it is clear that both consistent and high-
performance quality are considered order winners,
while speed, cost, and innovation are considered
order qualifiers.

               McDonald’s Operations Strategy

  Dimension                                 Strategy
 Capacity          Growth as needed through additional stores - but
                    capacity added carefully
                   Well-utilized - franchisee's well-being depends on it
                    being used heavily
 Facilities        Distributed facilities, each facility being very similar to
                    the next, all focused around the same menu - although
                    the uniformity is beginning to change
 Process           High degree of process understanding, emphasis on
 Technology         "fool-proof" processes
                   A leader in the technology of fast-food delivery
 Vertical          Partnership arrangement
 Integration       Long-term relationship with suppliers to promote
                    innovation and quality improvement
 Workforce         Franchisees: well-trained, carefully selected,
                   Operators: high-turnover, cheap
 Organization      Guidelines provided by corporation, but franchisees
                    push to locally optimize
 Control           Centralized buying
 Systems           Bulk contracts
                   "Push" system for basic supplies, "pull" system day-to-
                    day in the restaurants

Evaluation of the operations strategy:

 Internal and external consistency - Looking at the operations
  strategy along the seven dimensions, they all support the
  operations mission and the business strategy from the previous

 Contribution to competitive advantage - Systemic strategy
  creates unmatched consistency in operations that has been
  difficult to imitate.


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