Bus810 value strategy and operations planning and control
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BUS810: VALUE STRATEGY AND OPERATIONS: PLANNING AND CONTROL. Lecture One: Outline. Introduction Value Strategy Operations Business Models Management Models Planing and Control. Introduction.

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BUS810: VALUE STRATEGY AND OPERATIONS: PLANNING AND CONTROL

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Bus810 value strategy and operations planning and control

BUS810: VALUE STRATEGY AND OPERATIONS: PLANNING AND CONTROL


Lecture one outline

Lecture One: Outline

  • Introduction

  • Value Strategy

  • Operations

  • Business Models

  • Management Models

  • Planing and Control


Introduction

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”.


Introduction con t

Introduction (con’t)

  • operations can be defined as ‘production, logistics and service’


Introduction con t1

Introduction (con’t)

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


Value strategy

Value Strategy

  • Mintzberg’s Five Ps for Strategy include:


Value strategy cont d

Value Strategy (cont’d)

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


Value strategy cont d1

Value Strategy (cont’d)

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


Value strategy cont d2

Value Strategy (cont’d)

  • (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.


Value strategy cont d3

Value Strategy (cont’d)

  • (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


Value strategy cont d4

Value Strategy (cont’d)

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


Value strategy cont d5

Value Strategy (cont’d)

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


Value strategy cont d6

Value Strategy (cont’d)

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


Value strategy cont d7

Value Strategy (cont’d)

  • Advantage: the positioning theme that differentiates the business from competitors


Value strategy cont d8

Value Strategy (cont’d)

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


Value strategy cont d9

Value Strategy (cont’d)

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


Operations

Operations

Source: Walters (2002)


Operations cont d

Operations (cont’d)

  • Walters suggests operations strategy has five key features:


Operations cont d1

Operations (cont’d)

  • a visionary


Operations cont d2

Operations (cont’d)

  • inter-organisational core processes


Operations cont d3

Operations (cont’d)

  • supporting infrastructure


Operations cont d4

Operations (cont’d)

  • the customer as a major stakeholder


Operations cont d5

Operations (cont’d)

  • inter-organisational planning


Business models

Business Models

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

Source: Walters et al (1997)


Business models cont d

Business Models (cont’d)

The Du Pont Model

Source: Walters et al 1997


Business models cont d1

Business Models (cont’d)

  • 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).


Business models cont d2

Business Models (cont’d)

Rappaport’s 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.


Business models cont d3

Business Models (cont’d).

Net present value

Future amount

Present value

=

Interest rate x time in years

Source: Walters et al (1997)


Management models

Management Models

Source: Walters (2002)


Management models cont d

Management Models (cont’d)

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


Management models cont d1

Management Models (cont’d)

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


Management models cont d2

Management Models (cont’d)

Knowledge management

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


Planning and control

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.


Discussion questions

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?


Discussion questions cont d

Discussion Questions (cont’d)

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


Discussion questions cont d1

Discussion Questions (cont’d)

  • 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


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