Contrast organization strategy and operations strategy. NOTE: please base the answer on the given lesson below.

Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
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Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
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Contrast organization strategy and operations strategy. NOTE: please base the answer on the given lesson below.
If you think of goals as destinations, then strategies are the roadmaps for reaching the
destinations. Strategies provide focus for decision making. Generally speaking, organiza-
tions have overall strategies called organization strategies, which relate to the entire or-
ganization, and they also have functional strategies, which relate to each of the functional
areas of the organization. The functional strategies should support the overall strategies of
the organization, just as the organizational strategies should support the goals and mission
of the organization.
Tactics are the methods and actions used to accomplish strategies. They are more spe-
cific in nature than strategies, and they provide guidance and direction for carrying out ac-
tual operations, which need the most specific and detailed plans and decision making in
an organization. You might think of tactics as the "how to" part of the process (e.g., how
to reach the destination, following the strategy roadmap) and operations as the actual "do-
ing" part of the process.
It should be apparent that the overall relationship that exists from the mission down to
actual operations is hierarchical in nature. This is illustrated in Figure 2-1.
A simple example may help to put this hierarchy into perspective.
Transcribed Image Text:If you think of goals as destinations, then strategies are the roadmaps for reaching the destinations. Strategies provide focus for decision making. Generally speaking, organiza- tions have overall strategies called organization strategies, which relate to the entire or- ganization, and they also have functional strategies, which relate to each of the functional areas of the organization. The functional strategies should support the overall strategies of the organization, just as the organizational strategies should support the goals and mission of the organization. Tactics are the methods and actions used to accomplish strategies. They are more spe- cific in nature than strategies, and they provide guidance and direction for carrying out ac- tual operations, which need the most specific and detailed plans and decision making in an organization. You might think of tactics as the "how to" part of the process (e.g., how to reach the destination, following the strategy roadmap) and operations as the actual "do- ing" part of the process. It should be apparent that the overall relationship that exists from the mission down to actual operations is hierarchical in nature. This is illustrated in Figure 2-1. A simple example may help to put this hierarchy into perspective.
OPERATIONS STRATEGY
The organization strategy provides the overall direction for the organization. It is broad in
scope, covering the entire organization. Operations strategy is narrower in scope, deal-
ing primarily with the operations aspect of the organization. Operations strategy relates to
products, processes, methods, operating resources, quality, costs, lead times, and sched-
uling. Table 2-2 provides a comparison of an organization's mission, its overall strategy,
and its operations strategy, tactics, and operations.
In order for operations strategy to be truly etlective, it is important to link it to organi-
zation strategy; that is, the two should not be formulated independently. Rather, formula-
tion of organization strategy should take into account the realities of operations' strengths
and weaknesses, capitalizing on strengths and dealing with weaknesses. Similarly, oper-
ations strategy must be consistent with the overall strategy of the organization, and for-
mulated to support the goals of the organization. This requires that senior managers work
with functional units to forrpulate strategies that will support, rather than conflict with,
each other and the overall strategy of the organization. As obvious as this may seem, it
doesn't always happen in practice. Instead, we may find power struggles between various
functional units. These struggles are detrimental to the organization because they pit func-
tional units against each other rather than focusing their energy on making the organiza-
tion more competitive and better able to serve the customer. Some of the latest approaches
in organizations, involving teams of managers and workers, may reflect a growing aware-
ness of the synergistic effects of working together rather than competing internally.
Operations strategy can have a major influence on the competitiveness of an organiza-
tion. If it is well designed and well executed, there is a good chance that the organization
will be successful; if it is not well designed or executed, the chances are much less that
the organization will be successful.
In the 1970s and early 80s, operations strategy was often neglected in favor of mar-
keting and financial strategies. That may have occurred because many chief executive of-
ficers did not come from operations backgrounds and perhaps did not fully appreciate the
importance of the operations function. Mergers and acquisitions were common; leveraged
buyouts were used, and conglomerates were formed that joined dissimilar operations.
These did little to add value to the organization; they were purely financial in nature. De-
cisions were often made by individuals who were unfamiliar with the business, frequently
to the detriment of that business. Meanwhile, foreign competitors began to fill the result-
ing vacuum with a careful focus on operations strategy.
In the late 1980s and early 90s, many companies began to realize this approach was not
working. They recognized that they were less competitive than other companies. This
caused them to focus attention on operations strategy. Toward that end, many firms are
developing strategies that have quality or time as their central concern.
This correlates with a survey of manufacturing executives and managers who were
asked to identify strategic and tactical issues that U.S. manufacturers must focus on to be
TABLE 2-2
Comparison of mission,
organization strategy, and
operations strategy
operations strategy The ap-
proach, consistent with the or-
ganization strategy, that is used
to guide the operations
function.
Transcribed Image Text:OPERATIONS STRATEGY The organization strategy provides the overall direction for the organization. It is broad in scope, covering the entire organization. Operations strategy is narrower in scope, deal- ing primarily with the operations aspect of the organization. Operations strategy relates to products, processes, methods, operating resources, quality, costs, lead times, and sched- uling. Table 2-2 provides a comparison of an organization's mission, its overall strategy, and its operations strategy, tactics, and operations. In order for operations strategy to be truly etlective, it is important to link it to organi- zation strategy; that is, the two should not be formulated independently. Rather, formula- tion of organization strategy should take into account the realities of operations' strengths and weaknesses, capitalizing on strengths and dealing with weaknesses. Similarly, oper- ations strategy must be consistent with the overall strategy of the organization, and for- mulated to support the goals of the organization. This requires that senior managers work with functional units to forrpulate strategies that will support, rather than conflict with, each other and the overall strategy of the organization. As obvious as this may seem, it doesn't always happen in practice. Instead, we may find power struggles between various functional units. These struggles are detrimental to the organization because they pit func- tional units against each other rather than focusing their energy on making the organiza- tion more competitive and better able to serve the customer. Some of the latest approaches in organizations, involving teams of managers and workers, may reflect a growing aware- ness of the synergistic effects of working together rather than competing internally. Operations strategy can have a major influence on the competitiveness of an organiza- tion. If it is well designed and well executed, there is a good chance that the organization will be successful; if it is not well designed or executed, the chances are much less that the organization will be successful. In the 1970s and early 80s, operations strategy was often neglected in favor of mar- keting and financial strategies. That may have occurred because many chief executive of- ficers did not come from operations backgrounds and perhaps did not fully appreciate the importance of the operations function. Mergers and acquisitions were common; leveraged buyouts were used, and conglomerates were formed that joined dissimilar operations. These did little to add value to the organization; they were purely financial in nature. De- cisions were often made by individuals who were unfamiliar with the business, frequently to the detriment of that business. Meanwhile, foreign competitors began to fill the result- ing vacuum with a careful focus on operations strategy. In the late 1980s and early 90s, many companies began to realize this approach was not working. They recognized that they were less competitive than other companies. This caused them to focus attention on operations strategy. Toward that end, many firms are developing strategies that have quality or time as their central concern. This correlates with a survey of manufacturing executives and managers who were asked to identify strategic and tactical issues that U.S. manufacturers must focus on to be TABLE 2-2 Comparison of mission, organization strategy, and operations strategy operations strategy The ap- proach, consistent with the or- ganization strategy, that is used to guide the operations function.
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