Page 112 - Operations Strategy

summARy AnsWERs TO KEy quEsTiOns 87
for a whole corporation, may achieve economies of scale in the use of its resources
and in its purchasing power. Splitting up such a department between businesses
may allow them to enhance their capabilities in the type of purchasing necessary
for each individual business but this may be gained at the expense of buying power
and efficiency.

● Structural vulnerability – Combine the two risks above and any focused set of resources
may be structurally vulnerable. Relatively minor changes in market requirements
may destroy the benefits of being close to a market while, at the same time, there are
few economies of scale to protect their viability.

Drifting out of focus
Even when operations are set up to focus on one clearly specified set of objectives, they
can, over time, drift out of focus. In fact, some authorities would argue that unfocused
operations are often a result of a gradual, but insidious drift away from a clear strategy.
There can be several reasons for this. 16
● New products and services – Many companies, after developing new products or ser-
vices, look to their existing operations to produce/deliver them. There is clearly a
temptation to do this without examining the specific requirements of that particu-
lar product/service and evaluating the merits (and costs) of developing a new opera-
tion. Problematically, it is the firm’s most successful operations that are perceived
as being most able to cope with new products/services – even if their success is built
upon focus.
● Strategy drift – In the absence of a clear competitive direction, managers often attempt
to perform equally well against all of the many operations performance measures
that exist. This (as discussed earlier) can lead to the dilution of the overall strategic
impact of the firm.
● Control by specialist – Specialists in areas such as process technology, computer sys-
tems, inventory control etc. will tend, in the absence of a more explicit operations
strategy, to develop their own ‘systems’, which protect their own organisational posi-
tion or optimise their local objectives, at the expense of greater strategic objectives.
● Company-wide solutions – This involves looking for panaceas in the belief that one
solution can cure all the problems of every operation, without sufficient regard for
the need to tailor solutions to suit particular circumstances.
● Business growth – When operations have to stretch or be reconfigured to deal with
larger volumes, this often leads to a loss of focus.

summARy AnsWERs TO KEy quEsTiOns

how can operations performance ‘make or break’ an organisation?
The way that an organisation’s operations strategy is fashioned and implemented
determines how its resources are used and, because the operations function is large
and, in most businesses, represents the bulk of its assets and the majority of its peo-
ple, this has a profound impact on the organisation’s performance. But it is not only
the size of the operations function that determines operations strategy’s centrality to

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