gave up hope and became reconciled to a frozen death on the mountains. Then, to their delight, one of the soldiers discovered a map in his pocket. Much cheered by this discovery, the soldiers were able to escape from the mountains. When they were safe back at their headquarters, they discovered that the map was not of the Alps at all, but of the Pyrenees. The moral of the story? A plan (or a map) may not be perfect but it gives a sense of purpose and a sense of direction. If the soldiers had waited for the right map they would have frozen to death. Yet their renewed confidence motivated them to get up and create opportunities.
Implementation
A large number of authors, writing about all forms of strategy, have discussed the importance of effective implementation. This reflects an acceptance that no matter how sophisticated the intellectual and analytical underpinnings of a strategy, it remains only a document until it has been implemented. Ken Platts of Cambridge University has written about the nature of the operations strategy formulation process. His generic description of the processis referred to as the five Ps.
1 Purpose. As with any form of project management, the more clarity that exists around the ultimate goal, the more likely it is that the goal will be achieved. In this context, a shared understanding of the motivation, boundaries and context for developing the operations strategy is crucial.
2 Point of entry. Linked with the above point, any analysis, formulation and implementation process is potentially politically sensitive and the support that the process has from within the hierarchy of the organization is central to the implementation success.
3 Process. Any formulation process must be explicit. It is important that the managers who are engaged in putting operations strategies together actively think about the process in which they are participating.
4 Project management. There is a cost associated with any strategy process. Indeed one of the reasons why operations have traditionally not had explicit strategies relates to the diffi- culty of releasing sufficient managerial time. The basic disciplines of project management such as resource and time planning, controls, communication mechanisms, reviews and so on, should be in place.
5 Participation. Intimately linked with the above points, the selection of staff to participate in the implementation process is also critical. So, for instance, the use of external con- sultants can provide additional specialist expertise, the use of line managers (and indeed staff ) can provide ‘real-world’ experience and the inclusion of cross-functional managers (and suppliers etc.) can help to integrate the finished strategy.
The five Ps of operations strategy formulation
The argument has been put forward that strategy does not lend itself to a simple
‘stage model’ analysis that guides managers in a step-by-step manner through to the eventual ‘answer’ that is a final strategy. Therefore, the models put forward by consultants and academics are of very limited value. In reality, strategies (even those that are made deliberately, as opposed to those that simply ‘emerge’) are the result of very complex organizational forces. Even descriptive models such as the five Ps described above can do little more than sensitize managers to some of the key issues that they should be taking into account when devising strategies. In fact, it is argued that articulating the
‘content’ of operation strategy that is more useful than adhering to some over-simplistic description of a strategy process.
Critical commentary
Summary answers to key questions
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➤ What is strategy and what is operations strategy?
■ Strategy is the total pattern of decisions and actions that position the organization in its environment and that are intended to achieve its long-term goals.
■ Operations strategy concerns the pattern of strategic decisions and actions which set the role, objectives and activities of the operation.
■ Operations strategy has content and process. The content concerns the specific decisions which are taken to achieve specific objectives. The process is the procedure which is used within a business to formulate its strategy.
➤ What is the difference between a ‘top-down’ and a ‘bottom-up’ view of operations strategy?
■ The ‘top-down’ perspective views strategic decisions at a number of levels. Corporate strategy sets the objectives for the different businesses which make up a group of businesses.
Business strategy sets the objectives for each individual business and how it positions itself in its marketplace. Functional strategies set the objectives for each function’s contribution to its business strategy.
■ The ‘bottom-up’ view of operations strategy sees overall strategy as emerging from day-to-day operational experience.
➤ What is the difference between a ‘market requirements’ and an ‘operations resource’ view of operations strategy?
■ A ‘market requirements’ perspective of operations strategy sees the main role of operations as satisfying markets. Operations performance objectives and operations decisions should be primarily influenced by a combination of customers’ needs and competitors’ actions. Both of these may be summarized in terms of the product /service life cycle.
■ The ‘operations resource’ perspective of operations strategy is based on the resource-based view (RBV) of the firm and sees the operation’s core competences (or capabilities) as being the main influence on operations strategy. Operations capabilities are developed partly through the strategic decisions taken by the operation. Strategic decision areas in operations are usually divided into structural and infrastructural decisions. Structural decisions are those which define an operation’s shape and form. Infrastructural decisions are those which influence the systems and procedures that determine how the operation will work in practice.
➤ How can an operations strategy be put together?
■ There are many different procedures which are used by companies, consultancies and academics to formulate operations strategies. Although differing in the stages that they recommend, many of these models have similarities.
■ Any operations strategy process should result in strategies that are comprehensive and coherent, provide correspondence, and prioritize the most critical activities or decisions.
Long Ridge Gliding Club is a not-for-profit organization run by its members. The large grass airfield is located on the crest of a ridge about 400 metres above sea level. It is an ideal place to practise ridge soaring and cross-country flying. The gliders are launched using a winch machine which can propel them from a standing start to around 110 kilometres per hour (70 mph), 300 metres above the airfield, in just five seconds. The club is housed in a set of old farm buildings with simple but comfortable facili- ties for members. A bar and basic catering services are provided by the club steward and inexpensive bunk- rooms are available for club members wishing to stay overnight.
The club has a current membership of nearly 150 pilots who range in ability from novice to expert. While some mem- bers have their own gliders, the club has a fleet of three single-seater and three twin-seater gliders available to its members. The club also offers trial flights to members of the public. (In order to provide insurance cover they actually sell a three-month membership with a ‘free’ flight at the start.) These ‘casual flyers’ can book flights in advance or just turn up and fly on a first-come, first-served basis. The club sells trial-flight gift vouchers which are popular as birthday and Christmas presents. The club’s brochure and web site encourage people to:
‘Experience the friendly atmosphere and excellent facil- ities and enjoy the thrill of soaring above Long Ridge’s dramatic scenery. For just £70 you could soon be in the air. Phone now or just turn up and our knowledgeable staff will be happy to advise you. We have a team of professional instructors dedicated to make this a really memorable experience.’
The average flight for a trial lesson is around 10 minutes. If the conditions are right the customer may be lucky and get a longer flight although at busy times the instructors may feel under pressure to return to the ground to give another lesson. Sometimes when the weather is poor, low cloud and
Case study
Long Ridge Gliding Club
10wind in the wrong direction, almost not fit for flying at all, the instructors still do their best to get people airborne but they are restricted to a ‘circuit’: a takeoff, immediate circle and land. This only takes two minutes. Circuits are also used to help novice pilots practise landings and takeoffs. At the other end of the scale many of the club’s experienced pilots can travel long distances and fly back to the airfield.
The club’s record for the longest flight is 755 kilometres, taking off from the club’s airfield and landing back on the same airfield eight hours later, never having touched the ground. (They take sandwiches and drinks and a bottle they can use to relieve themselves!)
The club has three part-time employees: a club steward, an office administrator and a mechanic. In the summer months the club also employs a winch driver (for launching the gliders) and two qualified flying instructors. Throughout the whole year essential tasks such as maintaining the gliders, getting them out of the hangar and towing them to the launch point, staffing the winches, keeping the flying log, bringing back gliders, and providing look-out cover is undertaken on a voluntary basis by club members. It takes a minimum of five experienced people (club mem- bers) to be able to launch one glider. The club’s member- ship includes ten qualified instructors who, together with the two paid summer instructors, provide instruction in two-seater gliders for the club’s members and the casual flyers.
When club members come to fly they are expected to arrive by 9.30 am and be prepared to stay all day to help each other and any casual flyers get airborne while they wait their turn to fly. On a typical summer’s day there might be ten club members requiring instruction plus four casual flyers and also six members with their own gliders who have to queue up with the others for a launch hoping for a single long-distance flight. In the winter months there would typically be six members, one casual flyer and six experienced pilots. Club members would hope to have three flights on a good day, with durations of between two and forty (average ten) minutes per flight depending on conditions. However, if the weather conditions change they may not get a flight. Last year there were 180 days when flying took place, 140 in the ‘summer’ season and 40 in the
‘winter’. Club members are charged an £8.00 winch fee each time they take to the air. In addition, if they are using one of the club’s gliders, they are charged 50p per minute that they are in the air.
Bookings for trial flights and general administration are dealt with by the club’s administrator who is based in a cabin close to the car park and works most weekday mornings from 9.00 am to 1.00 pm. An answerphone takes
messages at other times. The launch point is out of sight and 1.5 km from the cabin but a safe walking route is signposted. Club members can let themselves onto the airfield and drive to the launch point. At the launch point the casual flyers might have to stand and wait for some time until a club member has time to find out what they want.
Even when a flight has been pre-booked casual flyers may then be kept waiting, on the exposed and often windy air- field, for up to two hours before their flight, depending on how many club members are present. Occasionally they will turn up for a pre-booked trial flight and will be turned away because either the weather is unsuitable or there are not enough club members to get a glider into the air. The casual flyers are encouraged to help out with the routine tasks but often seem reluctant to do so. After their flight they are left to find their own way back to their cars.
Income from the casual flyers is seen to be small com- pared to membership income and launch fees but the club’s management committee views casual flying as a ‘loss leader’
to generate club memberships which are £350 per annum.
The club used to generate a regular surplus of around
£10,000 per year which is used to upgrade the gliders and other facilities. However, insurance costs have risen
dramatically due to their crashing and severely damaging four gliders during the last two years. Two of the accidents resulted in the deaths of one member and one casual flyer and serious injuries to three other members.
The club’s committee is under some pressure from members to end trial flights because they reduce the num- ber of flights members can have in a day. Some members have complained that they sometimes spend most of their day working to get casual flyers into the air and miss out on flying themselves. Although they provide a useful source of income for the hard-pressed club (around 700 were sold in the previous year), only a handful have been converted into club memberships.
Questions
1 Evaluate the service to club members and casual flyers by completing a table similar to Table 3.1.
2 Chart the five performance objectives to show the differing expectations of club members and casual flyers and compare these with the actual service delivered.
3 What advice would you give to the chairman?
These problems and applications will help to improve your analysis of operations. You can find more practice problems as well as worked examples and guided solutions on MyOMLab at www.myomlab.com.
Explain how the four perspectives of operations strategy would apply to Ryanair and Flextronics.
Compare the operations strategies of Ryanair and a full-service airline such as British Airways or KLM.
What do you think are the qualifying and order-winning factors for (a) a top of the range Ferrari, and (b) a Renault Clio?
What do you think are the qualifying or order-winning factors for IKEA described in Chapter 1?
Search the Internet site of Intel, the best-known microchip manufacturer, and identify what appear to be its main structural and infrastructural decisions in its operations strategy.
(Advanced)McDonald’s has come to epitomize the ‘fast-food’ industry. When the company started in the 1950s it was the first to establish itself in the market. Now there are hundreds of ‘fast-food’ brands in the market competing in different ways. Some of the differences between these fast-food chains are obvious.
For example, some specialize in chicken products, others in pizza, and so on. However, some differences are less obvious. Originally, McDonald’s competed on low price, fast service and a totally standardized service offering. They also offered a very narrow range of items on their menu. Visit a McDonald’s restaurant and deduce what you believe to be its most important performance objectives. Then try and identify two other chains which appear to compete in a slightly different way. Then try to identify how these differences in the relative importance of competitive objectives must influence the structural and infrastructural decisions of each chain’s operations strategy.
6 5 4 3 2 1
Problems and applications
Boyer, K.K., Swink, M. and Rosenzweig, E.D. (2006) Operations strategy research in the POMS Journal, Production and Operations Management, vol. 14, issue 4.
A survey of recent research in the area.
Hayes, R.H., Pisano, G.P., Upton, D.M. and Wheelwright, S.C.(2005) Operations, Strategy, and Technology: Pursuing
the Competitive Edge, Wiley. The gospel according to the Harvard school of operations strategy. Articulate, interest- ing and informative.
Slack, N. and Lewis, M.(2008) Operations Strategy, 2nd edn, Financial Times Prentice Hall, Harlow. What can we say – just brilliant!
Selected further reading
www.aom.pac.edu/bps/ General strategy site of the American Academy of Management.
www.cranfield,ac.uk/som Look for the ‘Best factory awards’
link. Manufacturing, but interesting.
www.opsman.org Lots of useful stuff.
www.worldbank.org Global issues. Useful for international operations strategy research.
www.weforum.org Global issues, including some operations strategy ones.
www.ft.com Great for industry and company examples.
Useful web sites
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Chapter 4 Process design
➤What is process design?
➤What objectives should process design have?
➤How do volume and variety affect process design?
➤How are processes designed in detail?
Chapter 5 The design of products and services
➤Why is good product and service design important?
➤What are the stages in product and service design?
➤Why should product and service design and process design be considered interactively?
Chapter 6 Supply network design
➤Why should an organization take a total supply network perspective?
➤What is involved in configuring a supply network?
➤Where should an operation be located?
➤How much capacity should an operation plan to have?
Chapter 7 Layout and flow
➤What is layout?
➤What are the basic layout types used in operations?
➤What type of layout should an operation choose?
➤What is layout design trying to achieve?
➤How should each basic layout type be designed in detail?
Chapter 8 Process technology
➤What is process technology?
➤How does one gain an understanding of process technologies?
➤How are process technologies evaluated?
➤How are process technologies implemented?
Chapter 9 People, jobs and organization
➤Why are people issues so important in operations management?
➤How do operations managers contribute to human resource strategy?
➤What forms can organization designs take?
➤What is the role of recruitment and development?
➤How do we go about designing jobs?
➤How are work times allocated?