Small Business Operations Strategy – It has broad implications for the organization to which the strategy refers. Determine the location of the organization in relation to the surrounding environment. Move the organization closer to its long-term goals.
“Activities” are resources that create products and services. “Operational” is the opposite of strategic. This means day-to-day and detailed, so we can examine both the operational and strategic aspects of an operation.
Small Business Operations Strategy
Example: Capacity Decisions Operations Management Operations Strategy Short Term Capacity Decisions 1-12 Months Demand Long Term Capacity Decisions 1–10 Years Demand Timeline
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The level of aggregation of details, such as: “Can we provide tax services to the small business market in Antwerp?” For example, conclude: “How is our overall business consulting capability? Compared to other options.”
Level of abstraction, concrete, eg “How can we improve our procurement process?” Philosophical, eg “should we form strategic alliances with suppliers?”
A top-down view of what the company wants to do with its operations Resource view of operations What operations can be performed by resources market demand perspective what the market position requires from operations operational strategy Everyday experiences that suggest how operations should be done bottom-up view 1
Important strategic decisions influencing decisions company strategy What business do you do? what to get What to take back? How to allocate money? economic environment social environment political environment Company values and ethics Business strategy What is the mission? What is the company’s strategic goal? How to compete? Customer/market dynamics Competitor activity Basic technology change Financial constraints Work strategy How to contribute to the achievement of strategic goals? How to manage feature resources? Skills of employees performing duties current technology Latest performance of duties
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Sales Volume Introduction Growth Deadline Decline Volume Slow Sales Growth Sales volume is growing rapidly. Sales are slower and declining. Majority of market demand is customer demand Innovators Early adopters Majority of laggards Competitors Little or no increasing number Fixed quantity, reduced quantity, various product/service designs, highly customizable or frequent design changes. more standardized Tekkimas is a new genre. Can be transferred to commodity standards 6
Sales Volume Introduction Growth Declining Maturity Popular Order Winner Product/Service Features, Performance or Novelty Availability of quality products/services, low prices, reliable delivery. trend criterion, quality range, price range, reliable delivery Prominent operational objectives: performance, flexibility, quality, speed, reliability, cost.
Different competitive factors require different performance objectives. competitive factor If the customer prioritizes these … performance goals, fulfillment must be their … low price, price, high quality, quality, fast delivery, speed, reliable delivery. reliability Product and service innovation Flexibility (products and services) Selection of products and services Flexibility (mix) Ability to change the timing or quantity of products and services Flexibility (quantity and/or delivery) 3
Market demand and operational resources operational strategy perspective Strategic alignment operational strategy operational resources market demand operational strategy Relate market demand to operational resource capabilities.
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“…Decisions that determine the long-term viability of the company’s operations and their contribution to the overall strategy through the continuous reconciliation of market demand and operational resources.
Operational resources market demand Strategic reconciliation what do you have in terms of work capacity What are you doing to grow your talent and satisfy the market? What you need from your business to help you “compete” What it takes to “compete” in the market
Objectives – A shared understanding of the motivations, scope and context for the development of the operational strategy Starting point – The point in the organization where the operational strategy process begins Process – How the operational strategy process is defined. Project management – managing the implementation Involvement – who is involved in the implementation?
“A free lunch is nothing else,” “You can’t fly an airplane at the speed of sound. Carry 400 passengers and land on an aircraft carrier. It works the same.” (Skinner). “Performance trade-off is how we sacrifice one performance goal to achieve excellence in another.”
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A X C D Cost Effectiveness Variety B New “Effective Frontier” B1 “Effective Frontier” Variety A C D B X Cost Effectiveness
Decisions that have far-reaching consequences determine the organization’s position in relation to the environment and bring the organization closer to long-term goals Top-down The influence of a company or business strategy on operational decisions. from bottom to top The influence of operational experience on operational decision-making
Performance objectives that reflect the market position of the operation’s product or service. as well as operational strategies perspectives. Operational resource capabilities inherent capabilities of processes and operational resources as well as perspectives on operational strategies. Business strategy The strategic positioning of the company in relation to customers, markets and competitors. A subset of the company’s strategy.
Functional direction and overall role in the company. A subsection of business strategy contingency strategy Strategies that evolve over time and are based on experience rather than theoretical positioning. Competitive factors Factors such as delivery times Product or service specifications, prices, etc. that determine customer requirements.
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Provision of resources for the production and delivery of products and services; Qualifying Factors Competitiveness where operational efficiency must be above a certain level to be considered by customers. Less important factors Competitive factors that are not ranked or qualified Work efficiency does not significantly affect the competitive position of the activity.
General behavior patterns of customers and competitors during the life of the product or service. There are typically four stages: initiation, growth, maturity, and decline Resource-Based View (RBV) Competency-focused strategy perspective. (sometimes called a core competency) in determining sustainable competitive advantage intangible resources Operational resources that are not immediately visible or tangible, such as supplier and customer relationships. process knowledge Development of new products and services
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Chapter 3 Operations Strategy Source: Courtesy Of Justin Waskovich.
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Business management is a broad term. It describes everything that happens in a business to keep it running and making money. Business plans often have sections dedicated to operations so that the business founder understands the systems, equipment, people, and processes needed to keep the organization running.
Business activities depend on the type of business, industry, size, etc. For example, the operations of a brick-and-mortar store look different than those of an online retailer. The first example requires a POS terminal to make a purchase. while the latter requires e-commerce software that provides an electronic shopping cart.
Processes are important because they affect productivity and efficiency. Manual processes that can be done faster with software or duplicating tasks from other departments can cost a company time and money.
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Business processes should be documented by department. So that operations managers can examine these processes to identify areas for improvement, consolidation or cost savings. Documentation also helps companies train new employees.
The number of employees is determined by the process. Who needs to perform the tasks assigned in the workflow and how many people are needed? A small business may need a handful of people who are generalists. Although large companies may require large numbers of skilled workers,
Location is more important to some businesses than others. And the reason for the location is different. Sole proprietorship consultants may only need desk space at home. Pet sitters need a place with parking. And developers need to be located in areas with access to the right talent.
Equipment or technology necessary for proper business operations often affects the premises. A pet sitter with multiple staff and care locations requires more space and different equipment than a mobile sitter that serves pets at home. A carpet cleaning company does not need a store. But you need a garage to store the truck. including office space for business management
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When establishing a company and especially after its rapid growth, it is important to periodically evaluate and analyze business activities to identify inefficiencies and improve communication. Benchmarking against industry standards and best practices can help companies ensure optimal business performance.
Business activity refers to the activities and tasks that an organization uses to produce goods and services. which includes planning Organising, directing, coordinating and controlling the various aspects of production such as sourcing, production, distribution and marketing to run the business efficiently and successfully. The activity requires good planning, management and organization.
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