Week 5 (Semester 1) – Introduction to Strategic Management II
Chapter 3
Outline of the Lecture
Week 5 covers the second part of Chapter 3. This lecture seeks to:
·
Establish the basic grounds for competition and positioning in a competitive
environment.
·
Appreciate the nature of an operations strategy, its links with other strategic
approaches, and its deployment.
Topics involved
1. The grounds for competition.
1.1 Conceptual strategic positions (variety, needs and access).
1.2 Core competencies, capabilities and processes.
1.3 Strategic positioning in practice (cost, quality, flexibility and response).
2 The role of an operations strategy.
2.1 Nature of an operations strategy and the decisions involved.
2.2 Strategic genealogy (using table 3.2).
2.3 Definitions of strategic operations management.
2.4 Working definitions (both narrow and broad).
2.5 Building blocks of an operations strategy
2.6 The role of the operations strategy
Suggested Visual Aids & Handouts
A number of slides can be used offering a bullet-point summary of the text. In
addition:
Table 3.2 – Strategic Genealogy
Discussion Questions
1. What do we mean by positioning?
What are the different grounds for
competition? Offer examples of firms or industries that might utilize different
types of positioning.
Building upon the above debate, positioning reflects the grounds of competition.
Choices made regarding certain activities and their performance. Positioning as a
function should be viewed as conceptual (variety-based, needs-based and accessbased) following Porter’s (1996) seminal contribution. Further, positioning can
also be appreciated as a process.
Here, we are dealing with the core
competencies, capabilities and process of the firm and how they can be combined
to provide value and ultimately competitive advantage.
We now think about positioning in practice, and whether firms seek to compete on
the grounds of cost, quality flexibility, response, etc (remembering there will be
others and these are not mutually exclusive). As an exercise, it is important for
students to think about examples strategic positioning and how they are achieved
in practice using operational management and of course an operations strategy.
2. What is the role of an operations strategy? What are its generic elements?
Chapter 3 ended with the introduction of strategic operations management.
Basically, like any strategy, role of an operations strategy will involve a pattern of
decisions and examples are provided in the text. .These decisions are very much
contingent upon the circumstances (there may not be ‘one best way’ to manage)
but will be medium- to long-term, involve analysis of current and future
operations, require conceptualization of the future situation and be strategic rather
than tactical. The case vignettes in chapter three should serve as examples. In
addition, we should be aware that there is current interest this subject area. With
this comes a certain degree of confusion as to the exact nature of an operations
strategy and other popular approaches such as supply network strategies, supply
chain strategies and management, logistics strategies, et al. In order to clarify the
situation, we offer a strategic genealogy that traces the lines of decent and seeks to
classify some of these terms.
Finally, the nature of an operations strategy can be considered using the
definitions provided, those from the literature and the author. Here, it is important
to stress that the definitions can be narrow (the operations strategy for a distinct
function) or broad (the value delivery system in any organization that also
depends on a wider supply network). These definitions ‘map’ those of operational
management provided earlier. In considering the definitions, we can also begin to
see how the operations strategy contains certain building blocks and reflects both
the resource-based and market-driven views of strategy (this is dealt with further
in later chapters)
3. How does an operations strategy form a link with other elements of strategic
management?
The last question reflects the role operations strategy as a method by which to
deploy the business or corporate strategy.
It acts as a method to ‘translate’
business strategy into the tactical, every-day activities of operational management.
This deployment role forms part of a hierarchy: generic strategies, strategic
positioning, operations strategies and operational management. It also allows the
activities of the firm to reflect both the resource-based and market-driven views of
strategic management.
Case Exercise – FlexLink Systems
The aim of this exercise is to underpin the learning objectives concerning the nature
of strategy. It is hoped that sufficient material is available from the case to underline:
·
the nature of strategy;
·
the need to recognize the importance of internal resources as well as the business
environment;
·
the differences between the design and process views of strategy;
·
the market-driven as opposed to resource-based views;
·
the grounds for competition in terms of positioning; and,
·
the nature and role of strategic operations management
1. Here, we are seeking to differentiate between the FlexLink business unit strategy
and the wider corporate strategies of EQT Scandinavia and the Swedish SFK
Group. As an autonomous business unit, the FlexLink product is customer
solutions for production process automation. There stated strategic aim being to
‘make customer’s lives easier. This involves products and services that automate
complex production problems using standard solutions provided quickly, easily,
and available anywhere in the world. Their strategy would seem to embody
providing solutions using unique experience and high levels of customer service,
but at the same time, not unnecessarily complicating a customer’s operations.
2. As will be the case with many firms, it seems clear that the answer to this question
is both. Their resources, particularly knowledge and skills (core competencies)
are vital in this market. However, their customers are in diverse industries and
any strategy developed by FlexLink must be cognizant of the factors in these
sectors (competition, power of suppliers and customers, substitute products etc).
Further, broader, macro factors will also vary from one market to another (see the
EFA12 in chapter 7).
3. Conceptually, we suggest that FlexLink adopt a ‘needs-based positioning’. They
will tailor their activities to respond to the different needs of each customer (and
these vary from one industrial sector to another). Thus, in a modular approach,
FlexLink have to configure different sets of activities to cater for the various
needs; they cannot rely upon one value system. At a more practical level,
flexibility and responsiveness are important, closely followed by quality. But, we
should also remember the important role of knowledge. FlexLink also position
themselves on the basis of using unique industry knowledge to satisfy diverse and
complex customer automation problems. This, they hope, is a ground for
competition that a competitor will struggle to emulate.
Finally, their operations strategy. Here, they must make decisions about the use of
their most important core competency (knowledge) capabilities and processes in
providing these unique solutions. As such certain resources, technologies and
activities will be vital to deliver solutions at a tactical level. A list of possible
decisions that might be involved (section 4 –The Role of an Operations Strategy) can
be used to discuss the likely FlexLink operations strategy