Operation Strategy

Topics: Strategic management, Management, Process management Pages: 14 (4707 words) Published: November 30, 2012
Strategy: The Concept of Strategy The word strategy is derived from the Greek term “strategos” (plural strategoi; Greek: [στρατηγός, στρατηγοί], literally meaning "army leader") is used in Greek to mean "general". However, the term is also used to describe a military governor which command, plan and conduct of a war. When strategy applied to business wars, the strategy refers to the establishment of objectives, the setting of direction, and the development and implementation of plans, with the goal (in place of military “victory”) of achieving ascendancy over one’s adversaries according to Andrews (1971), Ghemawat (2002) and Porter (1980). In order to have the desired competitive impact, a strategy has to operate over an extended time horizon and embrace a broad spectrum of activities, ranging from resource allocation processes to day-to-day operations. It must integrate decisions affecting these different sets of activities into a coherent pattern, both over time and across groups that often compete for the same resources. An effective strategy also usually involves concentrating a company’s efforts and resources on a limited range of directions. Focusing resources on certain directions reduces available for others, nonetheless, so a coherent strategy usually required that a company make trade-offs among various “expected outcomes”. TYPE OF STRATEGY The word strategy is used in many contexts that is useful to identify and contrast three different types of management-related strategies. At the highest level, corporate strategy identifies the industries and markets in which a company will operate. Corporate strategists make decisions that implement these choices, including investment in and divestment of businesses together with allocation of resources among existing businesses. Business strategy, the second level of company strategy, is focused at the level of the individual business or business unit within the company, and is concerned with where the business positions itself within a particular industry or market as well as with how and with what capabilities the business will win customers, cooperatively and in competition with other parties in its industries. In other word, the business strategy is also concerned with strategic business units (SBUs) as each SBU might have its own business strategy, which specifies (1) the scope of that business and its relation to the corporation as a whole, and (2) how it proposes to position itself within its particular industry to achieve competitive advantage in various ways according to Hayes et al (1988). To be effective, elaborated further from Porter (1980), this advantage must meet important customer needs, take into account competitors’ strengths and weaknesses, and be sustainable given the SBU’s capabilities. Empirical evidence from a study over 100 companies by Sterman (2000) found that those companies that engaged in system level thinking about their business strategies significantly outperformed those that focused at the product level. To be more specific, Hax and Wilde 2001 differentiated three views a company might consider in developing a strategy. For IBM4710 Inter OM Chayakrit Asvathitanont, Ph.D.

1. Best Product- this view emerges from the classic competitive strategy. It focuses on competing by positioning the company’s products or services as low cost, having a unique set of features, or targeting a focused or niche segment in the market. 2. Total Customer Solution- the customer is at the center and the earliest to satisfy. It argues that very good understanding of customer and developing close relationships with those customers to support them in creating their own economic value. Company competing with this view will focus on supply chains to response to provide family of products or services that closely match customer requirement. 3. System Lock-In- this view comprehends the enterprise, the customers, the suppliers, and the most...
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