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PRODUCTIONAND

OPERATIONS
MANAGEMENT
Chapter 2
STRATEGIC OPERATIONS
MANAGEMENET

Chapter 2
Strategic Operations
Management

Nature of Strategic Management


Strategic management is the process of
formulating, implementing and evaluating
strategies to achieve organisational goals

Himalaya Publishing House

Production and Operations Management


By K. Aswathappa & K. Shridhara Bhat

Chapter 2
Strategic Operations
Management

Strategic Management Involves Five


Steps
Step 1
Step 2

Step 3
Step 4
Step 5

: Select the corporate mission and major corporate


goals.
:Analyse the opportunities and threats or
constraints that exist in the external environment.
Also analyse the strengths and weaknesses that
exist in internal environment.
: Formulate strategies that will match the
organisation's strengths and weaknesses with the
environment's threats and opportunities.
: Implement the strategies.
: Evaluate and control activities to ensure that the
organisation's objectives are achieved.

Himalaya Publishing House

Production and Operations Management


By K. Aswathappa & K. Shridhara Bhat

Chapter 2
Strategic Operations
Management

Steps in Strategic Management

Himalaya Publishing House

Production and Operations Management


By K. Aswathappa & K. Shridhara Bhat

Chapter 2
Strategic Operations
Management

Strategic Management Process


Step 1 - The first step in strategic management process is
selecting or crafting corporate mission and corporate
goal.
Step2 - Environmental Scanning : The environment of an
organisation comprises both external and internal
factors. Environment needs to be scanned in order to
determine trends and projections of factors that will
affect fortunes of the organisation.

Himalaya Publishing House

Production and Operations Management


By K. Aswathappa & K. Shridhara Bhat

Chapter 2
Strategic Operations
Management

Step 3 -

Strategy Formulation : Strategies are formulated at four levels:


i. Corporate level
ii. Global level
iii. Business unit level and
iv. Functional level.
Step 4 - Strategy Implementation : Strategies formulated need to be
implemented. Implementation of strategies is often, more difficult
than their formulation.
Implementing strategies requires such actions as altering sales
territories, adding new departments, closing facilities, hiring new
employees, changing an organisation's pricing strategy,
developing financial budgets, formulating new employee
benefits, establishing cost-control procedures, changing
advertising strategies, building new facilities, training new
employees, transferring managers among divisions and building
better computer information system etc.
Himalaya Publishing House

Production and Operations Management


By K. Aswathappa & K. Shridhara Bhat

Chapter 2
Strategic Operations
Management

Step 5 - Strategy Evaluation: Strategy evaluation helps


determine the extent to which the companys
strategies are successful in attaining its
objectives.

Himalaya Publishing House

Production and Operations Management


By K. Aswathappa & K. Shridhara Bhat

Chapter 2
Strategic Operations
Management

Elements of Production\Operations
Strategy
Operations strategy comprises six components :
1. Positioning the production system,
2. Focus of factories and service facilities,
3. Product/Service design and development,
4. Technology selection and process development,
5. Allocation of resources to strategic alternatives,
and
6. Facility planning.
Himalaya Publishing House

Production and Operations Management


By K. Aswathappa & K. Shridhara Bhat