Operations Strategy & Management

1) Distinguishing between Operations Management & Operations Strategy

One of the biggest mistakes that a business could make is to confuse ‘operations’ with ‘operational.’ Operational is the opposite of strategic; operational is detailed, localized, short-term, day-to-day, etc. Operations or operations strategy, on the other hand, is concerned less with individual processes and more with long-term business developments and needs (competition, resources, innovation, etc.). Consider several types of operations-related decisions that airlines (choose any airline – Singapore, Lufthansa, American, etc.) make and classify them as either operational or strategic; i.e. what operations management decisions does the airline take, and what operations strategy issues does the airline deal with. There are four types of differences commonly used to distinguish a strategic perspective of operations from an operational perspective of operations: time scale, level of analysis, level of aggregation, level of abstraction (see chapter 1, Slack & Lewis). Use these four types of differences to distinguish between operations management and operations strategy decisions in your answer.

2) Read the case “Hagen Style” (the case mainly pertains to chapter 1, Slack & Lewis). In many ways this case study encapsulates the whole dilemma of operations strategy for many companies. ‘Should we simply follow the market and make sure that our operations resources are capable of meeting market requirements? Alternatively, should we recognize the possibly unique strengths which we have and try to find parts of the market where we can exploit those strengths?’ Here is a company whose market is changing. Not dramatically perhaps, but in a clear enough way for the company to realize that their existing way of selling is probably not viable in the long term.

Question

This company faces the dilemma of moving with its markets and therefore changing its operations resources to fit its new markets, or alternatively, seeking out new markets which will allow it to exploit its operations-based superiority. Which is more important to it, its markets or its operations capability? This question is linked to the more fundamental one of, ‘what does the company think it is really good at?’ Are its key skills in understanding the needs of those parts of the market who buy its products? Alternatively, is its key skill the ‘order fulfillment’ business of translating customer orders into fast, high-quality and low-cost delivery?

Hints

This may be a simple case but it reflects the two pressures always present when considering operations strategy. That is, “Should we move with the market and change our operations, or should we stick to what we are good at and find ways of making money with our existing expertise in other markets?”

As is often the case, there is no clear answer to this case but it is important to marshal the arguments for the options that the company faces. This is best done by clarifying what is likely to happen in the marketplace in terms of how it affects the requirements placed on operations. Similarly, it will be necessary to understand exactly what the current operations resources can do (in terms of constraints) and what they can do particularly well.

Analyze the case, try to identify the options that you believe the company could adopt, and then assess the advantages and disadvantages of each.

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