Operations Strategy

Session 1
Dr. Partha Priya Datta
IIM Calcutta
Session Topic Readings/Preparations
PART I: Basic Concepts of Operations Strategy
1. Introduction to the course: Operations, strategy and innovation Chapter 1
2. Linking strategy to operations Waste Wizard
3. Focus and trade-offs Chapter 2, Sugar & Spice Desserts
4. Developing an operations strategy -Diversification JetBlue’s E190 Dilemma
5. Case Discussion summing up the module BYD
PART II: Capacity Strategy
6. Capacity Strategy: Size, Timing Chapter 3, Acer
7. Decisions on optimal capacity configuration for multiple Sweet and Sour Tea
products
8. Flexible capacity decisions AutoCo
9. Capacity location decisions Fuyao Glass America
PART III: Supply Chain Strategy
10. Vertical Integration & Outsourcing Chapter 4
MID TERM
11. Strategic Sourcing Wickham Skiwear
12. Supply Chain Relations HTC Example
13. Sourcing Contracts Sattva e-Tech
PART IV: Operations Improvement & Innovation
14. Process Technology Chapter 5
15. Successful implementation of Process Technology ITT Automotive
16. Process Improvement & Innovation Chapters 6,7, Ritz Carlton
PART V: Operations Strategy Alignment to Business Environment
17. Operations strategy fit Chapters 8, 9, 10
18. Operations strategy risk assessment Trouble at Tessei
19. Operations Strategy & Business Model Global Bicycle Relief
20. Operations Strategy in a new business world Future of Operations
END TERM
 Housekeeping - Evaluation
Sr. No. Component Weightage (%) Duration Of Open Book /Closed
Exam
a) Mid Term Examination 35 2 hours Open

b) End Term Examination 35 2 hours Open

c) Class Participation 10

d) Group Project 20
 Housekeeping – CP (10%)
• A part will be on your overall performance in the course (in terms of discipline,
curiosity to learn, attendance and the class tests (if held), exam and project
performance). There will be also portions allocated to your class response
(solicited or not) and preparation.
 Housekeeping – GP (20%)
Groups
Reports in groups analysing a real life organization’s operations strategy to be submitted at the
end of the term. A sample example of companies or topics will be uploaded. The groups can
identify one company and do thorough original research on it using secondary research.
Primary research is also welcome but permission from the instructor is must considering the
time and accessibility. The groups for the project must contain 6 members each. The groups
need to discuss and freeze their project idea before the Mid Term week. However changes
may be allowed but permission needs to be sought. A draft report will be due at least two
weeks before end term. Not following the above steps will result in disqualification and/or
heavy penalty (even from the original marks!).

Objectives
To gain a deeper appreciation of the course subjects through researching a given
topic/company operations strategy
 What is competitive strategy?
• Competitive strategy: “the search for a favorable competitive
position in an industry, the fundamental arena in which
competition occurs. Competitive strategy aims to establish a
profitable and sustainable position against the forces that
determine industry competition…. The essence of formulating
competitive strategy is relating a company to its
environment.” (Porter)
• What are the concerns with this positioning view of strategy?
Competitive Strategy: The Resource-Based View

• Competitive advantage is derived from the

firm’s development of unique bundles of
resources and capabilities that are:
– Inimitable: are difficult or costly to imitate or
replicate
– Valuable: allow the firm to improve its market
position relative to competitors
– Rare: in relatively short supply
Competitive Strategy: The Resource-Based View

• Resources: an observable, but not necessarily

tangible, asset that can be valued and traded
– e.g., brand, patent, parcel of land, license
– Asset or input to production than an organization owns,
controls or has access to on a semi-permanent basis
• Capability: not observable, and hence necessarily
intangible, cannot be valued and changes hands only
as part of an entire unit
– Activities or functions performed within a system
– Processes to utilize the organization's resources
Competitive Strategy: The Resource-Based View

• Types of capabilities
– Process-based
• e.g., McDonald’s

– Systems- or coordination-based
• e.g., Ritz-Carlton

– Organization-based
• e.g., General Electric

– Network-based
• e.g., Boeing
 Competencies

• Cost
• Quality
• Speed
• Dependability
• Variety
Metals Industry
Metals Industry Innovation Drivers
• Metals, particularly steel, are the backbone of country’s
economic development
• Falling prices, weakness in customer demand, regulations
and greater competition from cheap producers (death of
former giant Bethlehem Steel, struggling US Steel)
• Industry players are compelled to transform their
operations – requiring flexibility and responsiveness
• What would be the natural response to such drivers?
Cost Reduction
Or something else?

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 POSCO The Great
EBITDA per ton of capacity
installed

Source: The Nikkei published on July 25, 2018 (p.15)

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 When cost cutting is not the only option!
• Expanding the business scope
• Going global
• Futuristic Management
– Industry Firsts (Finex)
– Strip Casting
– POSCO’s proprietary solid state joining
– Surface coating for higher quality
– IoT and Big Data
• From Steel Producer to Solution Provider

But How did they achieve all these? In 4 steps….. YES in just 4 steps!
– Internal Innovation through QSS+
– Customer led innovation
– Supply Chain Innovation
– Strategic Partnership with world leading innovators1414

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