Operation strategy involves planning and positioning an organization to achieve its long-term goals by aligning its operational activities with its overall business objectives.
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welcome to another video on operations management
management
we will discuss what is meant by
operation strategy
in this video we will try to keep it as
simple as possible by discussing the
perspectives used in formulating
strategies for the operations of organizations
organizations
before going into this it is important
that we understand the meaning of strategy
strategy
interestingly the term strategy is not
that easy to define
the word itself originates from the
greek metaphor
strategos meaning to lead an army
although strategy has its origins in warfare
warfare
strategy in business is defined in a
similar way which requires leading or
directing a business
setting business strategy involves
setting long-term broad objectives
towards an overall goal and planning the
path to achieve this
the emphasis here is on the word long-term
long-term
many confuse day-to-day activities of
running the business for strategy which
is wrong
day-to-day business activities are
referred to as operational activities as
they are short-term
as for strategy this is long-term and
are more concerned with operations
now let's define operation strategy
operation strategy is defined as the
planning or the positioning of the
organization relative to its environment
and moving the organization closer to
its long-term goals
this requires series of strategic
decisions for setting the role and
objectives for the activities within the
operations of the organization
how operation strategy is viewed depends
on the perspectives
according to operations management
scholars the perspective of operation
strategy could be from a top-down
perspective that is
the goal of the entire business
organization or what the organization
aims to achieve with its operations
it could also be from a bottom-up
perspective which requires building
operation strategy
cumulatively from the operational activities
activities
in other words what is the operations
expected to achieve there is also the
inside out or the resource perspective
this is where the capabilities of the
organization's operations are exploited
while taking into consideration possible constraints
constraints
and the market perspective where the
market our customer requirements shapes
the organization's operations strategy
these are the four main perspectives to
consider when developing an operation strategy
strategy
to make it easier to understand
operation strategy
we will only consider the top-down and
bottom-up perspectives in this video
it is worth noting that the identified
four perspectives do not independently
give the complete picture on operation
strategy the top-down perspective
this is the orthodox view of operation strategy
strategy
the organization's strategic objectives
funnels down from the top management
team to the strategic business units or
managers who are responsible for the
business operations
this perspective is largely influenced
by the business environment
the top-down strategy guides the
organization on how to position itself
in the business environment in relation
to its customers
the market and its competitors
the bottom-up perspective this
perspective requires consultation with
the strategic business units within the organization
organization
and managers working within these units
this consultation will inform the top
management team the constraints and
capabilities of the organization's
day-to-day operations and enable them
develop strategies by taking into
consideration the organization's
strengths and weaknesses [Music]
[Music]
where the top-down and bottom-up
perspectives may be seen as opposites as
illustrated in the diagram
it is worth noting that this is not the case
case
both perspectives of operations
management can be seen as
mutually reinforcing this is because the
strategies developed at the top
level must align with the day-to-day
operations of the organization for it to succeed
succeed
let's take an example the top management
team in a business organization has
designed a strategy to substantially
build its profitability so as to
increase market share or dominance in
the long run
this is a top-down perspective to its
operation strategy
the top management team needs to align
the strategic objectives with the
operations of the organization that is
the day-to-day running of the business
they need to consult with the lower
level management responsible with the
operational activities on how to achieve
this overall objective
following the consultation this might
require that the business expand and
invest in extra capacity such as
establishing branches
equipment and labor in all parts of its
market to offer relatively fast delivery
in order to achieve this overall
long-term objective this is how the
top-down and bottom-up perspectives
mutually reinforce the overall operation
strategy of the organization
there is no point in setting long-term
objectives beyond the capabilities of
the operations
to be aware of the organization's
capabilities and constraints
consultations must happen from the
bottom to the top
this then may lead to the review of the
long-term objectives or increasing of
operations capacity to accommodate these objectives
in sum when defining an organization's
operation strategy
the organization needs to consider the
following questions
one what is the long-term goal two
is the operations capability able to
achieve this
and three what resources are needed to
achieve these long-term objectives [Music]
[Music]
there are other things that needs to be
considered when formulating strategy
do you remember our diagram we also need
to consider the role of the market when
developing operation strategy and from
the inside out
that is the resource constraints and capabilities
capabilities
these we will discuss in the next video
thank you for watching and see you in
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