Page 111 - Operations Strategy

86 CHAPTER 2 • OPERATiOns PERfORmAnCE

An example of this is the action taken by the Spanish Conquistador Hernán Cortés. In 1518
he landed his 12 ships on the coast of Mexico and was soon determined to strike inland to the
Aztec capital to defeat the Emperor Montezuma. However, Montezuma’s troops had such a fear-
some reputation that Cortés’ men were somewhat reluctant to face the far larger Aztec army,
especially since they knew that capture would mean a horrible death. Discontent reached such
a pitch that one group of men planned to steal a ship and sail back to their homes. Cortés’ solu-
tion to this was to execute the chief conspirators and beach nine of his twelve ships. In the face
of such focused commitment, his men had little option but to follow him.

Benefits and risks in focus
Different kinds of focus criteria carry different kinds of benefits and risk. However, usu-
ally the benefits and risks of focus can be summarised as follows.
Benefits include the following:
● Clarity of performance objectives – Clearly targeted markets imply at least some degree
of discrimination between market segments. This, in turn, makes easier the task of
prioritising those few performance objectives that are important for that market.
This allows operations managers to be set relatively unambiguous and non-conflict-
ing objectives to pursue in their day-to-day management of resources.
● Developing appropriate resources – A narrow set of focused resources allows those
resources to be developed specifically to meet the relatively narrow set of perfor-
mance objectives required by the market. Process technologies, skills and infra-
structural resources can all be organised so as to trade off unimportant aspects of
performance for those valued by the target market.
● Enhanced learning and improvement – A combination of clear objectives, together with
resources organised to meet those objectives, can enhance an operation’s ability to
manage its learning and improvement of its processes. Certainly the opposite holds
true. Broad and/or confused objectives, together with complex resource structures,
make it difficult to build process knowledge, learn how to extend the capabilities of
processes or thereby improve their performance.
The risks involved in focus include the following:

● Significant shifts in the marketplace – Although less common than ‘scare stories’ often
suggest, it is clear that a dramatic shift in the overall competitive environment
can undermine the effectiveness of a focus strategy. For example, in turn-of-the-
twentieth-century New England, one firm dominated the market for domestic and
commercial ice throughout North America. They had established an immensely suc-
cessful and highly focused production and distribution system but they were power-
less when a technical innovation – the domestic refrigerator – effectively removed
their market.

● Few economies of scale – Within an operation, focusing often involves separating out
resources that were once bundled together. This allows these resources to be devel-
oped appropriately for the market they serve but, because they no longer form part
of a larger whole, they may not be able to achieve the same economies of scale as
before. For example, a corporate purchasing department, buying goods and services

M02 Operations Strategy 62492.indd 86 02/03/2017 13:01