Page 97 - Operations Strategy

72 CHAPTER 2 • OPERATiOns PERfORmAnCE
Figure 2.10 shows the relative significance of market requirements and operations
resources over time. This gives an indication of the relative degree of strategic activity
within the firm’s operations over time. It also gives us a clue as to the role of operations
strategy over time. At some stages the role of operations strategy is relatively minor, often
confined merely to implementing the company’s market strategy. So, during the period
1959 to 1964 the firm’s strategy was driven largely by a desire to change its market posi-
tion slightly through the introduction of the 1500 model. The firm’s operations strategy
was limited to ensuring that the new model could be manufactured satisfactorily.
Similarly, in the period from 1976 to 1989, the firm’s focus was mainly on how its
markets could be segmented in order to achieve successful differentiation of its various
products. At other times, the strategy of the company not only relies on its operations
capabilities but could be described as being driven by them. So, in the period from 1946 to
1951, the company’s strategy was dictated largely by the ability of its operations resources
to produce the cars in sufficient quantity to satisfy its emerging market. Similarly, in the
period from 1990 to 1996, and again from 2001 to the present, the firm’s profitability, and
even survival, depended on the ability of its operations resources to reduce its cost base
significantly. In both these periods the company’s market activity was, to some extent,
driven by its operations capabilities (or lack of them). At other times the relative roles of
market and operations strategy are more balanced (even if they are balanced only in terms
of their mutual confusion, as they were in the period from 1965 to 1970).
The key point here is not so much that the firm’s operations strategy is at times better
or worse than at other times. Rather it is that, over the long term, any firm can expect
the role of its operations strategy to change as its circumstances change. However, one
should not infer that the role of operations is exclusively driven by environmental
forces. Interwoven with environmental pressures are a whole set of significant choices
that VW has made. The company chose to suppress new designs in the 1950s, it chose
to try out many designs in the late 1960s and it chose to develop its common prod-
ucts platform strategy in the late 1990s. The development of operations strategy over
time is a combination of uncontrollable environmental forces and factors that can be
more readily influenced. Above all, it is determined by choices about how operations
resources are developed and the role we expect of the operations function within the
firm. Notice how the two major crises for VW, in its loss of strategic direction in the late
1960s and its loss of cost control in the early 1990s, were preceded by a period where
operations strategy had a relatively minor role within the company. Note also how
VW’s operations objectives changed as market circumstances changed. In its early his-
tory, the very basic objective of making products available (a combination of speed and
dependability) was pre-eminent in an environment where basic resources were difficult
to obtain. Latterly, the company, by now far larger and more complex, was struggling
with the task of reducing its costs while maintaining its performance in other areas. The
issue here is, because of changing market requirements, not all performance objectives are
equally important. But also, from a resource perspective, operations cannot be exceptionally
good at every single aspect of performance at the same time.

trade-offs – are they inevitable?
Volkswagen emphasised different aspects of performance at different points in time.
And, in order to excel in some particular aspects of performance, they would, to some
extent, sacrifice performance in others. This idea is usually referred to as the ‘trade-off

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