Unit 2: Operations Strategy
The most significant aspect of operations management is the process itself. How does Apple take a pile of chips, glass, and plastic and turn it into an iPhone? Their manufacturer in China is responsible for this process, but Apple is involved every step of the way to ensure quality, reliability, and consistency. Process flow structures are the different methods of production deemed appropriate for various manufacturing contexts. Does it make sense for Apple to wait for 1 million orders, then make and ship them? Or should they produce iPhones based on current demand and try to balance inventory? These are decisions that the COO must make as each process flow has various costs associated with it.
Additionally, not every operations department produces a good we can consume. Wall Street traders receive orders from clients and must execute trades on open markets. The order itself may pass through dozens of people before confirmation of the trade is sent back to the client. If you consider that "actual trade" to be the product, you can design an operations process around the goal of executing the trade. The result is a process remarkably similar to production. In this unit, you will learn how operations managers use long-term strategic planning to manage internal and external influences on the organization's resource base.
Completing this unit should take you approximately 5 hours.
Upon successful completion of this unit, you will be able to:
- identify the importance of operations strategy for creating corporate, business, and functional level strategies;
- explain the role of the value chain for operations strategy formulation; and
- discuss how operational competencies contribute to the development of a competitive advantage for an organization.
- identify the importance of operations strategy for creating corporate, business, and functional level strategies;
2.1: Role of Strategy in Operations Management
Read this article, and pay particular attention to the section on the strategy hierarchy.
The strategy pursued by an organization has a distinct impact on the way that the organization chooses to operate. The five steps of strategy are crucial in the design of the operations.
There are many discussions surrounding the importance of the Board of Directors taking a guiding role in strategy development. Consider the challenges boards face in carving out a significant role in the strategy process.
This chapter explains the connection between operations and strategy. There is, or should be, a direct connection between this functional area and the organizational plan. The strategy provides the foundation for the operational decisions made daily. In other words, as an operations manager, you choose tactics based on the developed organization's corporate, business, and functional level strategy. Take time to complete the action checklist activity at the end of the chapter.
This chapter explains the nature of planning and the importance of analysis in creating differentiated products or services or higher levels of efficiency. Understanding the nature of strategic planning and the types of analysis used during the strategic planning process are important for operation managers.
2.2: Operations Competitive Priorities
This section defines Porter's Five Forces and the importance of defining an industry's competitive advantage. This step is important in deciding what drives the competitiveness of an industry. When this is understood, an organization can choose how to make appropriate trade-offs in the operations based on competitive priorities. Be sure to complete the exercises.
This section helps explore the importance of the value chain in creating operational competitive advantage. Competitive advantage can be created in a variety of ways within an organization. The value chain provides key areas where this advantage can be created. Be sure to complete the exercises.
Unit 2 Activity and Assessment
- Make forum posts: 1
After you've spent some time reviewing what you have learned so far in this unit, post about this topic on the discussion forum. Respond to your classmates' posts, as well.
Use the company you chose for the discussion board activity in Unit 1 to complete this question. Use Porter's Five Forces to explore this company's competitive advantage in the industry. How does the current Five Forces analysis help explain the current competitive advantage in the industry? How is the value chain used to increase competitive advantage? If it is not used effectively, what adjustments to the current value chain would you suggest to increase the company's competitiveness?
Click on the Unit 2 Discussion and then on 'reply' to post your response.
For this activity, you will write a 2–3 page paper on developing an operation management plan that focuses on the business concept you developed for the Unit 1 Activity.
- Receive a grade
Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
- You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
- You can take this assessment as many times as you want, whenever you want.