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Ch 2 - Operations Strategy

1. Definitions   (p33)
   1. Mission - statement of the fundamental purpose of a firm
           Intel - supply building blocks to the Internet economy
   2. Vision - statement of what the firm sees itself becoming
           Delta Airlines - worldwide airline of choice

   3. Strategy - statement of how the firm will commit its resources to accomplish its mission
          Maintain a relatively equal balance between our government and commercial
          businesses by investing equally in each from our $2 billion capital budget.

2. Strategy Formulation
   1. Strategy development process (SWOT p34)
      1. Consider threats and opportunities in the firm’s environment
      2. Consider the firm’s strengths and weaknesses - assess core competencies (what the firm does best)
      3. Then formulate a strategy that matches firm’s strengths with opportunities, while avoiding weaknesses and threats.

         Mgt 509 Analysis

         Mgt 700 Synthesis

                      (Use SWOT to develop your own personal strategy - What Color Is Your Parachute? - 
                              supplement -  Job Hunter's Bible - www.jobhuntersbible.com )

   2. Types of strategies (p34)
      1. Competing on cost - Southwest Airlines - short routes, all direct, only Boeing 737, no baggage transfers, no meals, book direct (no travel agent commissions)
      2. Competing on quality - Japanese cars in 1970s
      3. Competing on flexibility - Custom Foot Shoe Store - scan 12 3D measurements, send to Italy, mail to customer within month, price comparable to off-the-shelf

      4. Competing on speed - Citicorp - 15 minute mortgage approval.

3. Policy Deployment (p46)
   1. Def - Policy - statement that provides guidance in decision making
      Promote on the basis of ability, performance, and experience, not length of service
   2. Policy deployment - translating corporate strategy into measurable objectives thru out the firm

   3. Cascade of action plans - see Fig 2.6 p47.

4. Trends in Operations (p52)
   1. Global markets, global sourcing, global operations
   2. Greater choice, more individualism - mass customization (not mass production of standardized products)
   3. Emphasis on service - 80% of the jobs in the U.S. are in the service sector
   4. Supply chains - virtual integration of outside suppliers, instead of vertical integration of operations within a company.
                         (This page was last edited on August 30, 2006 .)