Operations strategy (perspectives on formulating a strategy) session 3

• None of the four perspectives alone gives the full picture of what operations strategy is, but together they provide some idea of the pressures which form the content of operations strategy
• The top-down perspective considers what the overall organization wants to do, including corporate or business unit strategy and objectives
• No operation that continually fails to serve its markets adequately is likely to survive in the long term
• Bottom-up perspective


  1. Shape the operation's objectives and action by the knowledge gained from day-to-day activities

  2. Key virtues required are ability to learn from experience and philosophy of continual and incremental improvement
• Top-down of business view

  1. Corporate strategy sets objectives for different businesses

  2. Business strategy sets objectives for each individual business

  3. Functional strategies set objectives for each function's contribution to its business strategy
• Operations strategy perspectives


  • Top-down reflection of what the whole group or business wants to do
  • Bottom-up activity where operations improvements cumulatively build strategy
  • Translating market requirements into operations decisions
  • Exploiting the capabilities of operations resources in chosen markets
• Developed operations strategy must address how it will satisfy the overall top-down organizational requirements
• Market requirements perspective

  1. Operations strategy involves satisfying markets by primarily considering customers' needs and competitors' actions

  2. Understanding markets is crucial for operations management to ensure the right priority between performance objectives
• Understanding what markets require is essential to ensure operations achieve the right balance between performance objectives
• Resource constraints and capabilities

  1. No organization can merely choose which part of the market it wants to be in without considering its ability to produce products and services in a way that will satisfy that market

  2. The constraints imposed by its operations must be taken into account
• Without an understanding of what markets require, it is impossible to ensure that operations is achieving the right priority between its performance objectives (quality, speed, dependability, flexibility and cost)
• Order-winning factors

  • Directly and significantly contribute to winning business
  • Regarded by customers as key reasons for purchasing the product or service
  • Raising performance in an order-winning factor will either result in more business or improve the chances of gaining more business
• Determining competitive factors


  Determine the order-winning, qualifying and less important competitive factors for each customer group
• Operations resources capabilities

  • The inherent ability of operations processes and resources
  • A perspective on operations strategy
  • The impact of its ‘operations resource’ capabilities will be at least as great as, if not greater than, that which it gets from its market position
• Operations resource perspective may identify constraints to satisfying some markets but can also identify capabilities which can be exploited in other markets
• Qualifying factors


  • Not major competitive determinants of success, but important in another way
  • Operation’s performance has to be above a particular level just to be considered by the customer
  • Performance below this ‘qualifying’ level of performance will possibly disqualify the company from being considered by many customers