Example Answers to Questions on Operation Strategy

Strategy:

“Plan or strategy is a way of tactics in concert with decision on the requirement and increasing resources necessary to achieve a settled goal.”

Kinds of Plans or Strategies:

Corporate Strategy- corporate strategy focuses on fulfilling the organization long term goals and

Business Strategy- This relates to how an organization intends to compete in the market place

Operational or Functional Strategies- These are concerned with the individual business functions such as personnel, marketing and production can contribute to the achievement of a firm’s both strategies discussed above.

Operation approach or strategy:

Operation approach is the sample of decision making and the ways of acts either by the departments functions inside an organization, or by the entire business, for the purpose of creating products and services that will achieve the organization’s strategy.

Operation Systems:

“Operating systems are designed as a number of interrelated functions to produce or provide a pre- determined range of products or services”.

Types of Operation systems:

Macro operating system.

Micro operating system.

Macro operating system:

They can be considered as part of large operating System. It includes: Firm’s internal organizational works and external environment.

Micro operating system:

They are small operating system at departmental Level such marketing department, finance department, HR department, stock management department etc.

Internal influence on the operation function:

Design

Human Resource

Sales

Marketing

Finance

Purchasing

Design:

The main purpose of the product and service design is to satisfy customer needs. There must be interaction between the operations and design functions it means operation management must be in contact with sales who knows customers demands so that to facilitate the design function.

Human Resource:

The human resource is in charge of recruiting and developing the labour force needed by various internal functions of the organization. HR should perform: Right recruitment strategy, Selection, and Training of employees. Untrained and inappropriate labours can affect the business performance.

Sales:

The association among sales and operations department is vital one. People from sales department dominate the production function. They go out filling the order book without checking with production people whether they have the internal skills and capacity to satisfy the customer’s specification and delivery requirement. Sales persons need to be aware of production capacity otherwise they will not be able to satisfy customers which will affect the business.

Marketing:

Marketing department has turn out to be a key driving force in numerous forms of businesses. To be successful all departments in a firm should be market-led or customer oriented. All should focus on how to satisfy customers.

Finance:

People from finance department are accountable for making budgets, labour costs, inventory levels, purchase decision for raw materials and capital equipments so they have influence on the operations.

Purchasing:

The responsibility of the purchase department is to formulate stuff and parts required for making the correct features and amount available for operations at the accurate point. If they don’t do it they can not satisfy customer demands.

External influence on the operation function:

Political and Legal impact

Economic Conditions

Competitors

Labour market

Customers

Suppliers

Technological development

Capital and money markets

Political and Legal impact:

Political insecurity and the government policies for business and trade affect the business performance. These are not under the control of organizations.

Economic Conditions:

A change in the economic conditions such inflation and recession both at national and international levels can affect business activities. If there is growth in world economy then the demand for goods and services increases.

Competitors:

If organization rival can create goods of alike or improved designs, cheaper, faster, and of better quality, it will soon make the company out of date and capture its present market.

Labour market:

Inconsistency in skills and show of the labour force can persuade the actions of the operation department functions. Today in the word either labours are expensive or there is shortage of labours so that affects the operation for which companies now are shifting toward Asian countries.

Customers:

An organization should alter or develop its method of manufacturing, type of technology, and other related practices for the purpose of accommodating the alteration forecasted in customers demands year on year.

Suppliers:

Lack of communication and partnership with suppliers can show the way to disruptions and mistakes to the organization, which can disturb business activities.

Technological development:

A company that hesitate to invest in new technology will not be able to compete with those who welcome technological development and are committed to fully exploit it.

Capital and money markets:

The level where organizations are capable to lift up cash from banks and stock markets for funding investment in its individuals, resources, processes and new technology will also affect the performance of its operations functions.

P5: How operation strategy influence other strategies of given organization. Explain its role and importance

Operations strategy:

Operation plan is the sample of decision making and the ways of acts either by the departments functions inside an organization, or by the entire business, for the purpose of creating products and services that will achieve the organization’s strategy

It is quite clear from the definition above that operation management make strategies and take decision either for the improvement of departmental functions (Micro operations) or for the success of the whole organizations (Macro operations). There can be internal problems for Pizza Hut such as shortage of skilled labors, in appropriate meal packages (Design), misunderstanding between marketing department and sales. There can be problems from outside for Pizza hut which they are still facing such as Political and law and order instabilities, economic downfall in Pakistan; new competitors are entering into Pizza market in Pakistan and in especially in Peshawar which is affecting the performance of Pizza Hut. Keeping in view competitors now the customers of Pizza Hut want new innovation in their products for which Pizza Hut will have to invest more on improving their technology and as well as they will have to reduce their prices in order to attract customers but by doing this will be compromising on their extra profits. All internal and external problems discussed above affects the normal operations of Pizza Hut which they were doing from the start and because of all the factors their business performance is affected. In this bad scenario the Operation management department of Pizza Hut can play an important role. Because in situation they can change their strategies and methods of doing work in order to improve performance. Because the operation manager is the person who produce principles and work procedures for Pizza Hut and monitor both internal performance as well as external environment condition in order to change their work according to the situation.

P6: Discuss the importance of operations management in achieving strategic objectives. What are the critical decision areas that the operation manager should take care about

Generally “Strategic objective can be defined as targets that an organization needs to achieve to make its strategy successful”. According to the management Expert “Peter Drucker” Strategic objectives consists of eight main classifications:

Market standing: most wanted share of the current and fresh markets.

Innovation: development of new products and services, and developing the skills and methods required to supply new products and services.

Human resources: selection of appropriate labors and development of current employees.

Financial resources: finding the sources of finance and their appropriate use of the finance.

Physical resources: Providing equipment for labors and facilities for customers

Productivity: Making efficient use of the resources (labors, machines etc) in order to produce the desired outputs.

Social responsibility: awareness and reaction to the affects on the overall society of the in the interest group (customers, partners etc) of the business operations.

Profit requirements: achieving the desired financial well being and growth.

In order to achieve the strategic objective the performance of Operation management department is very vital because operations department set standards and principles and then monitor each activities within organization in order to achieve corporate objective. Generally the operation manager tries to achieve his operation objectives in the following ways:

He doesn’t compromise on time he tries to deliver well and services to his customers according to the promise made to them.

He doesn’t compromise on the quality of the products he tries to deliver top quality products according to the demands of the customers consistently.

He focuses on flexibility through customization, variety. This means that he tries to satisfy the unique needs of the customers by varieties of new products and special services.

He makes the following new products development strategies:

Innovation: For this purpose operation manager sit with an IT expert and they do research for new designs of products.

Service: He tries to produce value added service in order to complement the product such as in Pizza Hut, waiters serving Pizzas in a professional ways that can influence Pizza Hut customers in a positive way.

All these contribute to the achievement of Operation and corporate objectives for the achievement of those objectives operation management play an important role. If the operation manager wants improve the business activities and to maintain it the operations manager needs to take care of the following main decision areas:

Structural Decisions- This decision determine the operation environment.

Infrastructure Decisions – This decision is for daily planning and controlling of activities in order to improve operations

In structural decisions the operation manager takes decisions on the following:

Facilities strategy- Decisions on what activities should be allocated to the operations, and where the operation’s facilities should be located.

Technology strategy – It involve verdicts on the variety of equipments, kind of expertise and system that need to be use to meet quality, speed, cost, delivery requirements

Integration strategy- It relates to verdicts on how much of activities should the staff of the organization undertake

Process strategy- This include verdicts on the delivery system design of the production or services

Organization strategy- It includes verdict on the roles and responsibilities of the employees in the organization and the arrangement of the activities.

In infrastructure decision area the operation manager takes decisions on the following:

Capacity Strategy- It includes decision on how the ability of the functions can be fixed according to changes in the demands for their goods and services in the market.

Supplier Strategy- It includes decisions on how should the organization select their suppliers and improve their relationship with them for their business operation

Inventory Strategy- It includes decision on the management of stock like how much should they keep for use and where to store it

Human Resource Strategy- It includes decisions on the selection of staff and how the organization should train them to develop them and how they can play their role in the success of the organization

Planning and Control Strategy- It includes decisions on how to forecast activities for the future and how to manage and use their resources in order to achieve the future results

Performance Measurement and Improvement Strategy- It includes decisions on how to measure the operations performance, and how it should be improve an by whom.

Above are the decision areas where an operation manager of any company especially of Pizza Hut need focus because these are the main requirements for achieving Operational and corporate objectives

M-3 Discuss which operation strategy has been adopted by the firm and how well is it serving the organizational objectives.

Strategy Adopted by Pizza Hut

A business’s strategy is the outline of decisions as well as actions that are in use by the business to get its goals. A business has a range of goals as well as objectives. All businesses require putting in order their business actions in order to get their business outcomes (objectives). Running a business involves scheduling the recent as well as upcoming actions. Hence, in order to get the business objectives, all business organizations agree to different strategies. Similarly, Pizza Hut has adopted various strategies which help attain the target set by the main office to the local stockpile opened at Peshawar. Changes are the external along with internal environment has lead Pizza Hut juggle around with their past strategies and as a result designed fresh strategy after noticing the change in the atmosphere. These environmental changes are seen in the course of the Macro and Micro operation systems. After taking into consideration all the factors Pizza Hut has determined upon the strategy and this is their current strategy.

Functional Strategies

This strategy is planned to recover the efficiency of a business’s operations. They often focus on a part, such as marketing, human resource etc. All business organizations adopt approaches at functional level because once the functional objectives are achieved, corporate objectives turn out to be simple. In order to make the functional strategy resourceful, Pizza Hut has made all the functional departments collaborate with each other and the most important for a food series like Pizza Hut. All the employees’ back-of-the-house i.e. the kitchen assistants are trained so they are given extra classes in order to meet up the quality standards put by Pizza Hut around the world. This approach is essential in order to make happy the customers. This strategy is severely implemented in Pizza Hut in order to execute the quality standards.

D-2 Recommend an operation strategy for the given organization which is appropriate to a given situation. (With the help of action plan)

Business level strategies are procedure made to achieve a competitive advantage over its competitors in a market. Therefore, all the businesses need to implement business point strategies in order to fight in a competitive situation. If we take a glance at the Pakistani market, there are no big competitors of Pizza Hut but indefinite small competitors stay alive in the market. The risk of competitors is very short as there is no international food series offering pizza in Pakistan at present. Therefore, current strategies adopted by Pizza Hut are charge in concern the present competition while, in future this competition will enlarge and Pizza Hut will have to modify all its business point strategies in order to fight with its competitors. Keeping in view the above scenario, Pizza Hut should try to follow the following steps:

Pizza Hut is delivering their raw materials from Lahore warehouses which can affect their operations so in order to cope with the shortage and delays of raw materials, they need to have a warehouse in Peshawar as well.

If any uncertainty happens then they will face a problem like recently when a flood occurred in Pakistan then they wouldn’t get their raw materials and their customers were really dishearten by switching to Chief Burger and etc.

They can get a place by rent for their warehouse, it will be a bit costly for them but they won’t face delays or shortage of their raw materials.

Moreover they should increase their product line because Chief Burger is offering Pakistani dishes along with Pizza so for competing Chief Burger they should try to offer different Pakistani dishes as well due to which they will be able to attract those customers who like to eat Pakistani dishes together with pizzas.

In a near future Dominos will open their branch at Peshawar which is a treat for Pizza Hut so they need to decrease their pricing strategy in order to retain their customers before they switch to Dominos if it opens.