2.1, Steering the ship
Without a set of long-term goals and a plan of achieving them, an organization is like a crew on a rudderless ship without a map or compass. Without a strategy, even good employees are unable to find the ways to achieve the company's goals. Operational decisions should be consistent with and promote the company's overall goals.
2.2, Organization's Strategy
It is important to recognize that there is no one best strategy for all firms. Companies within the same industry often have very different startegies, yet each may perform very well (or poorly). Sony and Hewlett-Packard have followed the strategy to being leaders in product innovation, while Matsushita and Texas Instruments have focused on process innovation, becoming low-cost, high-quality producers of large market products. It is important to have a clear strategy that utilizes the orgnizations' strenths and to execute it as planned. Steps in developing an organization strategy are 1, Establish organizational goals, 2, Analyze market characteristics, competition, competitive strenths and weakness, 3, Identify and select products, geographic markets, order-winning dimensions, 4, Specify policy constraints and guidelines.
A good strategy begins with an explicit statement of the organization's goals (called a mission statement) and the criteria to be used to evaluate their achievement. May have several goals but usually with one or two are dominant. For profit companies strive to maximize shareholder value. A closely related goal is to achieve a high (and growing) profit level over the long term to ensure survival. This might be measured by average annual growth in earnings over the last 5 years or by average return on equity over a similar period. A secondary goal might be to achieve security and stability. Nonprofit unit need explicit statements of goals even more than for-profit companies because their goals are often less apparent and may be more difficult to measure. For example, one university may establish its goal to be top3 universities in the world. It can be measured according to research patents or colleges rankings in related periodicals.
2.3, Operations as a competitive weapon
Historically, the organization strategies of most companies foucused on the marketing function. It is now recognized that operations or production function plays an essential role in achieving the organization's goals and should be integral part of the organization's strategy which should be proactive instead of reactive. The characteristics and competitive advantages of the operations function should influence which new products to make, which markets to serve, and especially along which dimensions the company can compete most effectively. Much of the success of Wal_Mart can be attributed to the fact that its founder, Sam Walton, was called "obsessed with operations."
The following examples show how operational strenths can be used effectively as competitive weapons.
a, Product/Process Expertise. For attracting more Chinese buying in Europe, more and more shops supply Chinese speaking waiters employees. One company may have experts carring on the R & D work.
b, Quick delivery. The competitiveness is decided by time. 360 Buy in China supply more quick delivery than amazon who earns more and more market share recently.
c, Short product cycle. The first product supplier gets the market first with huge margin. Hewlett-Packard has dominated the laser printer industry because it was the first in the market, and it has continued to bring out new products quickly before its competitors can catch up.
d, production flexibility. Build to order production system is modern chase with the successful example being DELL computer.
e, Low-cost process.
f, Convenience and location. Service to door is the ultimate competitiveness of modern service including manufacturing industry.
g, Product variety and facility size. Stores with enough varieties and easily payment systems attract customers more.
h, Quality. A company that can produce a product of higher quality can increase its sales volume. Toyota Motors and McDonald's are two examples of companies that have used quality as a competitive weapon. Low cost and high quality are their service goals.