BUS810: VALUE STRATEGY AND OPERATIONS: PLANNING AND CONTROL

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BUS810 VALUE STRATEGY AND OPERATIONS PLANNING
AND CONTROL
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Lecture One Outline

• Introduction
• Value Strategy
• Operations
• Business Models
• Management Models
• Planing and Control

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Introduction

• Walters (2002) points out that Strategic
  operations are an approach that identifies the
  activities of all organisations in the value
  chain. It seeks to identify where and who can
  perform activities to greatest effect to create
  competitive advantage.

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Introduction (cont)

• operations can be defined as production,
  logistics and service

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Introduction (cont)

• operations management often preoccupies
  management, often at the expense of strategic
  planning.

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Value Strategy

• Mintzbergs Five Ps for Strategy include

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Value Strategy (contd)

• (1) Strategy is a plan or a guideline to deal
  with a situation. Implicit in this definition is
  that strategy is developed purposefully, and in
  advance of any situation

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Value Strategy (contd)

• (2) Strategy is a Ploy or a specific manoeuvre
  intended to outwit the competitor.

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Value Strategy (contd)

• (3) Strategy is a Position or a means of locating
  on organisation in an environment. Strategy
  then becomes the mediating force or match between
  the firm and its environment.

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Value Strategy (contd)

• (4) Strategy is a Perspective or a concept, or a
  Weltanschauung (a way to view the world), or a
  culture or a driving force. Strategy is to the
  organisation what personality is to the individual

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Value Strategy (contd)

• (5) Strategy is a Pattern, or specifically a
  pattern in a stream of actions

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Value Strategy (contd)

• Day defines strategies as directional
  statements, the direction is set by four
  choices

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Value Strategy (contd)

• Arena the markets to serve and customer segments
  to target.

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Value Strategy (contd)

• Advantage the positioning theme that
  differentiates the business from competitors

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Value Strategy (contd)

• Access the communication and distribution
  channels used to reach the market

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Value Strategy (contd)

• Activities the appropriate scale and scope of
  activities to be performed

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Operations
Source Walters (2002)
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Operations (contd)

• Walters suggests operations strategy has five key
  features

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Operations (contd)

• a visionary

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Operations (contd)

• inter-organisational core processes

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Operations (contd)

• supporting infrastructure

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Operations (contd)

• the customer as a major stakeholder

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Operations (contd)

• inter-organisational planning

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Business Models

• The business enterprise model links strategic and
  operational areas of the company

Source Walters et al (1997)
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Business Models (contd)

• The Du Pont Model

Source Walters et al 1997
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Business Models (contd)

• Economic Value Added
• Stern Stewart Co maintained that economic value
  added was equivalent to the operating profit
  minus taxes minus (capital employed multiplied by
  the cost of capital).

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Business Models (contd)
Rappaports theory was that the VROI was created
by dividing the post-strategy value minus the
pre-strategy value by the present value of the
projected investments.
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Business Models (contd).

• Net present value

Future amount
Present value

Interest rate x time in years
Source Walters et al (1997)
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Management Models
Source Walters (2002)
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Management Models (contd)

• Walters (2002) shows Relationship management
• identifies, establishes, maintains and reinforces
  economic relationships with partners so that
  objectives may be met by agreeing and
  implementing mutually acceptable strategies

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Management Models (contd)

• Technology management
• the integration process and product technology to
  address the planning, development and
  implementation of technological capabilities and
  capacities to meet the strategic and operational
  objectives of an organisation

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Management Models (contd)

• Knowledge management
• the organisational capability which identifies,
  locates (creates or acquires), transfers,
  converts and distributes knowledge into
  competitive advantage

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Planning and Control

• Walters et al (1997) argue that planning concerns
  the quantitative and qualitative objectives of
  the organisation, while control processes ensure
  that the activities and resources committed by
  the organisation, to achieving its objectives
  are used efficiently.

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Discussion Questions

• Outline three reasons why managers should attempt
  to integrate strategic and operational decisions.
  In your opinion, why has this been such a
  difficult task for most managers?

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Discussion Questions (contd)

• How can strategic and operational decisions be
  integrated to maximise shareholder value?

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Discussion Questions (contd)

• Outline three business models that attempt to
  integrate strategic and operational decisions.
  For each model, provide a critique as to whether
  each model achieves this end