Page 48 - Operations Strategy

WHAT is OPERATiOns sTRATEgy And HOW is iT diffEREnT fROm OPERATiOns mAnAgEmEnT? 23

A private Dutch-registered company is IKEA’s parent, which, in turn, belongs entirely to
a tax-exempt Dutch-registered entity – Foundation. A five-person executive committee runs
Foundation. Separately, another private Dutch company, whose parent company is registered
in Luxembourg, owns the IKEA trademark and concept. And, although the owners of this com-
pany remain hidden from view and IKEA refuses to identify them, they have been traced to a
Liechtenstein foundation controlled by the Kamprad family, which earns its money from fran-
chise agreements with IKEA stores. Mr. Kamprad has been reported as saying that, ‘tax efficiency
was a natural part of the company’s low-cost culture’.

so, what is operations strategy?

The four perspectives on operations strategy that we have outlined are not ‘alternative’
views of what is operations strategy. Operations managers can (and should) hold all
four views simultaneously. They simply represent alternative starting points for under-
standing the nature, scope and rationale of operations strategy. Bringing all four views
together can even expose the dilemmas inherent within an operations strategy. In fact,
operations strategy can be seen as the attempt to reconcile all four perspectives: the
top-down with the bottom-up view, and the market requirements with the operations
resource view. But there can be tensions between the perspectives.
The tension between the market requirements perspective and the operations
resource perspective is central to the decisions that make up an operations strategy.
Operations managers must obviously satisfy the requirements of the market if their
enterprise is to survive in the long term. Yet, simply following a market is unlikely to
provide long-term competitive advantage. After all, competitors will themselves be
attempting to do the same thing. To escape from being permanently ‘jerked around’
by the dynamics of the market, operations should also be attempting to develop the
long-term capabilities that competitors will find difficult to imitate. This is why our
definition of operations strategy, and the main theme throughout this book, encom-
passes the reconciliation of market requirements with operations resources.
This is actually a very complex interaction. Sometimes the complexity lies in the dif-
ficulty most organisations have in clarifying either the nature of market requirements or
the characteristics of their operations resources. Sometimes this is simply because not
enough effort is put into clarifying their intended markets. Some operations strategies
are formulated without the context of a well-understood market and/or business strat-
egy. But, even in better-managed companies, market requirements may be unclear. For
example, a company may compete in many different markets that exhibit sometimes
subtle, but nevertheless important, differences in their requirements. Furthermore, mar-
kets are dynamic. Neither customers nor competitors are totally predictable. Customer
behaviour may change for reasons that become clear only after the event. Competitor
reaction, likewise, can be unpredictable and sometimes irrational. The links between cus-
tomers, competitors and market positioning are not always obvious. Market positioning
is not an exact science, and the strategic reconciliation process of operations strategy may
have to take place under conditions of both uncertainty and ambiguity. The operations
resources side of the equation may be equally unclear. Businesses do not always know the
value, abilities or performance of their own resources and processes. Notwithstanding the
popularity of the ‘core competence’ concept, organisations frequently find difficulty in
identifying what are, could be, or should be their core competences. More significantly,

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