Mercedes Benz Operation

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Operation05341_02_ch02_p021-044.qxd

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CHAPTER 2

OPERATIONS, STRATEGY AND OPERATIONS STRATEGY
INTRODUCTION
An organization’s operations function is concerned with getting things done; producing goods and/or services for customers. Chapter 1 pointed out that operations management is important because it is responsible for managing most of the organization’s resources. However, many people think that operations management is only concerned with short-term, day-to-day, tactical issues. This chapter will seek to correct that view by considering the strategic importance of operations. All business organizations are concerned with how they will survive and prosper in the future. A business strategy is often thought of as a plan or set of intentions that will set the long-term direction of the actions that are needed to ensure future organizational success. However, no matter how grand the plan, or how noble the intention, an organization’s strategy can only become a meaningful reality, in practice, if it is operationally enacted. An organization’s operations are strategically important precisely because most organizational activity comprises the day-to-day activities within the operations function. It is the myriad of daily actions of operations, when considered in their totality that constitute the organization’s long-term strategic direction. The relationship between an organization’s strategy and its operations is a key determinant of its ability to achieve long-term success or even survival. Organizational success is only likely to result if short-term operations activities are consistent with long-term strategic intentions and make a contribution to competitive advantage. The relationship between operations and the other business functions is similarly important. The objective of the operations function is to produce the goods and services required by customers whilst managing resources as efficiently as possible. This can lead to conflicts within an organization. Conflicts between the operations and the

LEARNING OBJECTIVES
On completion of this chapter, you should be able to: Understand the relationship between operations and strategy. Explain the roles that operations can play within organizational strategy. Understand the strategic significance of operations management to organizations of all kinds. List the key strategic decision areas of operations management that constitute an operations strategy.

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PART ONE INTRODUCTION TO OPERATIONS MANAGEMENT

marketing functions are likely to centre on the desire of marketing to ensure that operations concentrate on satisfying customers. Whilst this may seem desirable, marketing will usually want operations to be able to meet customer needs under any circumstances. This is likely to lead to demands to produce greater volumes, more variety, higher quality, a faster response, and so on, all of which are likely to lead to less efficient operations. Conflicts between the operations and the accounting and finance functions, on the other hand, are likely to centre on the desire of accounting and finance to want operations to manage resources as efficiently as possible. This will tend to pull operations in exactly the opposite direction of that desired by marketing. Conflicts between operations and the human resource management function are likely to centre on issues of recruitment, selection, training, management and the reward of those employed within operations. For example, operations managers may want to vary organization-wide policies in order to meet local needs; a move likely to be resisted by human resource managers. The operations function lies at the heart of any organization and interacts with all the other functions. As such, achieving agreement about what decision areas lie within the remit of operations, and what should be the basis of decision-making...
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