INTERNATIONAL CONFERENCE ON MANAGEMENT PRACTICES FOR SUSTAINABLE

GROWTH (ICMPSG), Tamil Nadu, India, July 28-30, 2010

THE RELATIONSHIP BETWEEN ALINGMENT OF

BUSINESS STRATEGY - MANUFACTURING STRATEGY
AND PERFORMANCE
Corresponding author: Shahnaz Nayebzadeh
Assistant Professor of Marketing, Business Management Department,
Faculty of Management, Islamic Azad University (Yazd Branch),
Shohada-e-Ghomnam Road,Safaiieh
Zip code: 89195/155, Yazd, Iran
Tel: (++98)351-8211391; Fax: (++98)351-8214810
snayebzadeh@gmail.com

-ABSTRACT-
The over increasing complexity of competition and variability and vacillation of commercial environment in
the world of today would lead the least default of big companies to the overabundant problems for them; thus
to survive in an industry, the necessity for having scientific guidelines and defined and compiled strategies
seems indispensable while with no specified, compiled or scientific locality getting close to unique position
is impossible ;therefore this research project is to consider the relationship between the alignment of
manufacturing-business strategies and performance in automobile industry in IRAN.
Business strategy is on the base of Michel Porter Model (1980) and two main categories, cost leadership and
differentiation strategy, which is analyzed by interviewing head managers and the details of manufacturing
strategy that involves some of key decision variables such as human resources, manufacturing planning,
materials control, vertical integration and organization and management also has been considered by giving a
questionnaire to the production/operations managers and the performance has been extracted from the
financial documents during 2000 to 2006 regarding two main criteria of sales and profitability in order to be
referred in while considering the alignment between manufacturing-business strategies and the performance.
The obtained result from the population of this research has been indicated that automobile industry tend to a
strategic shift toward differentiation strategy and decision key variables in manufacturing strategy in
alignment to higher level strategy has been changed, therefore it can be mentioned that generally
manufacturing strategy has been alignment with differentiation business strategy and growing rate of
performance measures were the consequent of this alignment.
KEYWORDS: Manufacturing strategy, decision variables in manufacturing strategy, business
strategy, generic strategy, strategic alignment, performance

INTRODUCTION
In business the word "strategy" is commonly used at three levels:
1) Corporate strategy- what set of businesses should we be in?
2) Business strategy- how should we compete in XYZ business?
3) Functional strategy- how can this function contribute to the competitive advantage of the business?
Within this hierarchy, manufacturing strategy can appear as one of the functional strategies (Mills et al.,
1995, 18), and for achieving higher level of performance it is so important that these three levels be in a
proper alignment.
In conducting this paper, two issues have motivated the researcher. The first one is the importance of
alignment between strategies of business and manufacturing levels. These two strategies have been studied
by the other researchers separately, but the matter of alignment between these two levels has not been
considered experimentally in many researches. The second issue is the necessity of paying attention to the
performance of companies and the factors that affect it, an issue that has attracted the attention of many
managers and strategists. To the researcher since protective and reinforcing manufacturing decisions of
business strategy can result in competitive privilege for the companies, thus the alignment between
manufacturing and business levels can be regarded as an important factor for determining the performance of
companies. So the effect of above mentioned alignment on the performance has been evaluated in this
research project and the attempt is to achieve the following purposes:
1. Determining the business strategy of industry according to Michel Porter's Model (1980)

۱
INTERNATIONAL CONFERENCE ON MANAGEMENT PRACTICES FOR SUSTAINABLE
GROWTH (ICMPSG), Tamil Nadu, India, July 28-30, 2010
2. Analysis of industry's conditions on the basis of decision variables in manufacturing strategy
3. Studying the extent of alignment between business and manufacturing strategy according to the definitions
of researchers
4. Evaluating the performance of the industry on the basis of selected scales
5. Studying the relationship between the defined alignment and the performance

BUSINESS LEVEL STRATEGY

According to Day (1993) “A competitive or business strategy specifies how a business intends to compete in
the markets it chooses to serve. This strategy provides the conceptual glue that gives a shared meaning to all
the separate functional activities and programs”. A well developed strategy, therefore, serves to coordinate
the competitive actions of the firm. (Vorhies et al., 1999) Michael E. Porter (1980) classified generic
competitive strategy as cost leadership strategy, differentiation strategy, and focus strategy. When the firm
has a greater cost and differentiation advantage, the inner organization of the firm could become market-
oriented. Cost advantage strategy could increase net revenue than profitability due to low price policy.
However, differentiation strategy might increase business net profit through high price using non-price
competition (Kim, 2003). According to Porter (1980), low-cost and differentiation strategies are more
important. A firm can achieve high performance in one of two ways: either by supplying different products or
to reducing the cost. He views cost leadership and differentiation as mutually exclusive. However, a focus
strategy just combines the two types of competitive advantage with the firm’s choice of narrow scope (Wu,
2004).Thus in this research project, the business strategy is divided into major parts as well, cost leadership
and differentiation.

MANUFACTURING LEVEL STRATEGY

Manufacturing strategy defined as, “the effective use of manufacturing strengths as a competitive weapon for
the achievement of business and corporate goals”. Manufacturing’s strengths are developed and sustained by
a “pattern of decisions” (Hayes & Wheelwright, 1984) as originally proposed by Mintzberg ( Mintzberg &
Waters, 1985). These are taken in a set of decision areas which encompass manufacturing strategy and are
aimed at achieving manufacturing goals that align with business and corporate goals.
To achieve competitive advantage, business strategy and manufacturing strategy should be interlinked and be
incorporated in corporate strategy (Skinner, 1969). When companies fail to recognize the relationship
between manufacturing strategy and business strategy, they may become saddled with non-competitive
production systems—which are expensive and time consuming. In the current competitive scenario,
manufacturing strategy assumes a significant importance and calls for serious research attention.

MANUFACTURING STRATEGY DEFINITION

Manufacturing strategy theory arguably has its origins in Selznick (1957). The illustration he gives of
"distinctive competence'', using the Gar Wood boat company, showed how the whole organization found it
difficult to shift production from high quality craft to low-cost, mass production. Selznick's emphasis is on
the difficulty of changing the distinctive competence, and less on the competitive advantage or disadvantage
it affords. (Spring &Dalrymple, 2000, 444)Of course, Skinner developed this specifically for the
manufacturing function with the theory of the trade-off (Skinner, 1969). Skinner (1969) is the pioneer in
defining manufacturing strategy. According to him MS refers to exploiting certain properties of the
manufacturing function as a competitive weapon. (Olhager & Rudberg, 2003) After his work on this field
various connotations of manufacturing strategy given by other researchers that are given in Table 1 it is clear
that manufacturing strategy has a significant role to play and needs critical attention in the corporate setting.

Table (1) Various Connotations of Manufacturing Strategy

Author Manufacturing strategy connotations

Skinner (1969) Manufacturing strategy refers to exploiting certain properties of the
manufacturing function as a competitive weapon
Hayes, Wheelwright (1985) A sequence of decisions that over time, enables a business unit to
achieve a desired manufacturing structure, infrastructure and set of
specific capabilities
Fine, Hax (1985) It is a critical part of the firm’s corporate and business strategies,
comprising a set of well coordinated objectives and action programs
aimed at securing a long-term sustainable advantage over competitors
Hill (1987) It represents a coordinated approach which strives to achieve

۲
INTERNATIONAL CONFERENCE ON MANAGEMENT PRACTICES FOR SUSTAINABLE
GROWTH (ICMPSG), Tamil Nadu, India, July 28-30, 2010

consistency between functional capabilities and policies and the agreed

Swamidass, Newell (1987)
McGrath, Bequillard (1989)
Hayes and Pisano (1996)
Swink, Way (1995)
Berry et al. (1995)
Cox, Blackstone (1998)
Brown (1999)
Barnes (2002)
Kathuria et al. (2003)
McCarthy (2004)
Voss (2005)
current and future competitive advantage necessary for success in the
marketplace
The effective use of manufacturing strengths as a competitive weapon
for the achievement of business and corporate goals
Manufacturing strategy as the overall plan for, how the company should
manufacture products on a world wide basis to satisfy customer demand
In today’s turbulent competitive environment a company more than
ever needs a strategy that specifies the kind of competitive advantage it
is seeking in the marketplace and articulates how that advantage is to be
achieved
Manufacturing strategy as decisions and plans affecting resources and
policies directly related to sourcing, production and delivery of tangible
products
The choice of a firm’s investment in process and infrastructure that
enables it to make and supply its products to chosen markets
A collective pattern of decisions that acts upon the formulation and
deployment of manufacturing resources. To be most effective, the
manufacturing strategy should act in support of the overall strategic
directions of the business and provide for competitive advantages
Manufacturing strategy is a driving force for continual improvements in
competitive requirements/priorities and enable the firm to satisfy a wide
variety of requirements
Manufacturing strategy is concerned with realized strategic
manufacturing decisions and actions, classifying them as either
structural( capacity, facility, production equipment, vertical integration)
or infrastructural( production planning and control, quality,
organization, human resource, new product development, and
performance measurement systems) elements
Manufacturing strategy is the development and deployment of
manufacturing capabilities in total alignment with the business unit’s
goals and strategies
The effective use of manufacturing capabilities to achieve business and
corporate goals
Manufacturing strategy argues that the firm should compete through its
manufacturing capabilities, and should align its capabilities with the key
success factors, its corporate and marketing strategies and the demands
of the marketplace

Since the main concentration of this paper is on organization strategic hierarchy from corporate strategic
level to business strategy and functional strategies, particularly manufacturing strategy; thus we review the
definitions of the researchers who considered this issue( Hayes & Wheelwright (1985); Fine & Hax (1985);
Swamidass & Newell (1987); Cox & Blackstone (1998); Kathuria et al. (2003); McCarthy (2004) ). And by
documenting these definitions the following definition can be expressed:
Manufacturing strategy is a comprehensive sample in the field of sources and production facilities that
empowers the company in achieving its manufacturing purposes, business level and corporate strategies and
goals.

MANUFACTURING STRATEGY DIVISIONS

To compartmentalization the discussion, a general model of the domain of manufacturing strategy research is
shown in Figure 1; the model broadly divides manufacturing strategy into the separate domains of process
and content. This arrangement follows the convention adopted by Adam and Swamidass (1989) in which
"process" refers to process of formulating and implementing strategy while "content" refers to the choices,
plans, and actions that make up a development of MS included all the aspects of manufacturing process and
infrastructure, many studies performed to date concentrate on only one or two of the areas represented in the
Figure.

۳
INTERNATIONAL CONFERENCE ON MANAGEMENT PRACTICES FOR SUSTAINABLE
GROWTH (ICMPSG), Tamil Nadu, India, July 28-30, 2010

Figure (1) Classification of Manufacturing Strategy

Manufacturing strategy

Content Process

Manufacturing capabilities Strategic choices Best practices

Source: Dangayach & Deshmukh (2001), "Manufacturing Strategy", International Journal of Operation and
Production management,Vol. 21,No. 7, pp 885, 886.

So many researchers have evaluated the manufacturing strategy; some of them are as follow:

Table (2) Some of Subjects in the Scope of Manufacturing Strategy Process

Author Subject
A research methodology to develop a three phases
Platts (1993)
process for formulating manufacturing strategy
A linkage model to link competitive needs and
Gilgeous (1995) operational level requirement with emphasis on
manufacturing process strengths
Mills et. al. (1995) A framework for designing manufacturing process
A manufacturing strategy model based on group
Mohanty, Deshmukh (1999)
decision support system in learning organization
Manufacturing strategy is formed in a complex
Barnes (2002) process involving a combination of deliberate and
emergent actions and decisions
A comprehensive analysis of variability and
uncertainty, and analyzing the need for flexibility
Kara, Kayis(2004)
within an organization by examining market and
manufacturing process related factors

It is clear from literature review that the content aspects seem to be dominant research theme and process
research on manufacturing strategy seems to have received less attention from researchers.
According to figure 1, the content of manufacturing strategy is divided in three sections of manufacturing
capacities, best practices and strategic choices.

MANUFACTURING CAPABILITIES
Skinner (1969; 1974) was the first to observe that a company’s manufacturing function could do more than
simply produce and ship the products. He defined manufacturing objectives as cost, quality, delivery and
flexibility and indicated that there was trade-off between them.
These objectives have been refined to more detailed levels (Neel.y, 1993; Slack, 1994) and have been labeled
as competitive priorities in the literature. These priorities are summarized below (Spring and Boaden, 1997):
cost: production and distribution of product at low cost.
Quality: manufacture of products with high quality or performance.
Delivery dependability: meet delivery schedules.
Delivery speed: react quickly to customer orders to deliver fast
Flexibility: react to changes in product, changes in product mix, modifications to design, fluctuations in
materials, and changes in sequence.
Each of different researchers has evaluated different aspects of these competitive preferences; the results of
their researches will enrich the issues which are related to manufacturing strategy, a summary of them is
mentioned below.

۴
INTERNATIONAL CONFERENCE ON MANAGEMENT PRACTICES FOR SUSTAINABLE
GROWTH (ICMPSG), Tamil Nadu, India, July 28-30, 2010
Table (3) Some of Researches in the Scope of Competitive Priority in Manufacturing
Strategy Field
Author
Hayes &
Wheelwright(1985)
Miller & Roth (1994)
Prochno & Correa (1995)
White (1996)
Ward et al.(1996)
Koste & Malhorta(1999)
Santos (2000)
Ward & Duray (2000)
Avella et al. (2001)
McCarthy (2004)
Pun (2005)
BEST PRACTICES IN MANUFACTURING STRATEGY
In recent years, the focus on best practice has increased in manufacturing strategy. Best practices include
advanced manufacturing techniques ،integrated information systems, and advanced manufacturing systems.
 Advanced manufacturing techniques
Manufacturing strategy field
Introduced a four-stage framework of manufacturing
argue that companies should go beyond looking to
align capabilities with the market
Gave detail taxonomy of manufacturing capabilities
and classified them in 11 categories which are low cost,
design flexibility, volume flexibility, quality, product
performance, speed of delivery, dependability of
deliveries, etc
Developed manufacturing strategy in environments
which are notoriously uncertain and turbulent such as
those found in developing countries with regard to
manufacturing capabilities and three level of
management and their role in those organizations
Presented a taxonomy which indicates that the range of
performance measures available to companies are
strategies of cost, quality, flexibility, delivery reliability
and speed
Studied the relationship between structure,
environment, manufacturing strategy, and business
strategy with regard to manufacturing capabilities and
competitive priorities
Explained the flexibility term in detail and discussed its
application in corporate and manufacturing strategies to
achieve superior business performance
Investigated the relationship between functional areas
of manufacturing and human resources by analyzing
the practices of human resources management
associated with the priorities of manufacturing strategy,
e.g. cost, quality, flexibility, and delivery performance
Developed a conceptual model of manufacturing
strategy and demonstrated that the strategic linkage in
of manufacturing businesses are clearer among good
performers than poor performers and suggested that
competitive strategy acts as a mediator between an
organizations environment and its of manufacturing
strategy
Analyzed the correlation between the manufacturing
strategy capabilities e.g. cost, quality, flexibility, and
delivery performance and the competitive success or
business performance
determined and defined manufacturing strategic facility
types used in manufacturing companies with regard to
manufacturing priorities and strategic choices and some
performance criteria
In an empirical investigation of strategy determinants
and choices in manufacturing enterprises found that
product and service quality, company reputation, and
production and operations costs were key components
of manufacturing strategy determinants
۵
INTERNATIONAL CONFERENCE ON MANAGEMENT PRACTICES FOR SUSTAINABLE
GROWTH (ICMPSG), Tamil Nadu, India, July 28-30, 2010
Computer-aided design (CAD)
Computer-aided engineering (CAE)
Computer-aided process planning (CAPP)
Computer numerical Control (CNC)
Direct numerical control (DNC)
Robotics (RO)
Group Technology (GT)
Flexible manufacturing systems (FMS)
Automated material handling systems (AMHS)
Bar coding (BC)
Automated storage and retrieval system (AS/RS)
 Integrated information systems
Material requirement planning (MRP)
Manufacturing resource planning (MRPII)
Enterprise resource planning (ERP)
Activity-based costing (ABC)
 Advanced manufacturing systems
Office automation (OA)
Customer relation (CR)
Total quality management (TQM)
Business process reengineering (BPR)
Statistical process control (SPC)
Just-in-time (JIT)
Benchmarking (BM)
Workforce involvement (WI)
Employee empowerment (EE)
Management training (MT)
Hayes and Wheelwright (1985) gave the concept of world class manufacturing (WCM) and Schonberger
(1986) has adopted the term, Flynn et al. (1999) has done a project on world class manufacturing and
discussed it in more detail. Typically the following characteristics of WCM can be highlighted:
 formal thrust on strategic planning
 communication of strategy to all the stakeholders
 long range orientation
 strategic role of manufacturing
 stress on continuous improvement through TQM
 supplier-customer integration
 strategic focus on development of human resources
The underlying assumption in this direction is that world class practices would lead to superior performance
and capability leading to increased competitiveness. The adoption of world class practices is just impossible
without proper use of information technology. Information technology acts as the nervous system for
advanced manufacturing technologies.

STRATEGIC CHOICES IN MANUFACTURING STRATEGY

Skinner (1969) proposed that the key choice areas manufacturing strategy are plant and equipment,
production planning and control, labor and staffing, product design and engineering, and organization and
management. Hayes and Wheelwright (1985) added process and infrastructure in the list of strategic choices.
Structural issues set the process and technology for operations whereas infrastructure provides it with long-
term competitive edge by continuously improving upon human resource policies, quality systems,
organization culture arid information technology.

۶
INTERNATIONAL CONFERENCE ON MANAGEMENT PRACTICES FOR SUSTAINABLE
GROWTH (ICMPSG), Tamil Nadu, India, July 28-30, 2010

Table (4) the Researches Conducted About Strategic Choices in Manufacturing

Strategy Field
Author

Sin-Hoon, Lay-Hong 1996

Lucia Avella et al. 1999

Platts & Gregory 1990

Schroeder et al., 2002
Maslen, Platts 1997

WheelWright 1984
McCarthy (2004)

Hayes et al. 1988

Swamidass 1986
Weir et al. 2000

Fine, Hax 1985

Barnes (2002)

Skinner 1969
Hill 1993

Total
Decision variable

Plant and equipment ● ● 2

Production planning and control ● ● ● ● ● ● ● ● 8

Product design and engineering ● ● ● 3

organization and management ● ● ● ● ● ● ● ● ● ● 10

capacity ● ● ● ● ● ● ● ● ● ● ● 11

Human resource ● ● ● ● ● ● ● ● ● ● ● ● 12

Facility ● ● ● ● ● ● ● ● ● 9

Production process ● ● ● ● ● ● 6

Quality ● ● ● ● ● ● ● ● ● ● ● ● ● 13

Vertical integration ● ● ● ● ● ● ● ● ● ● ● 11

Material control ● ● ● ● ● 5

Cost ● 1

Delivery ● 1

Flexibility ● 1

Services ● 1

Production engineering systems ● 1

New product development ● ● ● ● ● ● ● ● 8

Plant location ● ● 2

Information system ● 1

Performance measurement ● ● ● ● 4

Technology ● ● ● ● ● ● 6

۷
INTERNATIONAL CONFERENCE ON MANAGEMENT PRACTICES FOR SUSTAINABLE
GROWTH (ICMPSG), Tamil Nadu, India, July 28-30, 2010
As the above table shows, most of the attention is on quality and human resources variables and subsequently
on vertical integration, capacity, organization and management, facility, production planning and control
production process and technology.
The philosophy of strategic choices is based need to attain internal and external consistency. Failure to match
with external business, product and customer factors can lead to a mismatch with the market and
consequently erosion of market share (Chatterjee, 1998)
Withal these descriptions, manufacturing strategies (strategic choices) can be regarded as one of the most
important factors influencing the performance of the company. Accordingly the researcher has also tried to
answer some questions founded on the relationship between the analogy of managers' decisions and strategist
in the field of strategic choice as well as business strategies and performance of the company.

STRATEGIC ALLIGNMENT
In 1992 Tunaly reported a study on 184 Swedish manufacturing businesses which gave empirical support to
the hypothesis “companies with a formulated manufacturing strategy, aligned with the business strategy, will
achieve higher business performance than companies without a strategy” (Tunaly, 1992). Swamidass and
Newell (1987) in an empirical study of 35 firms found a positive relationship between the performance of the
firm (growth) and the higher the role of manufacturing managers in the firm’s strategic decision-making
process. The proof of the value of having a formulated, manufacturing strategy is building, but the case is yet
to be proven. Since the purpose of this study is to consider the relationship between business and
manufacturing strategies and performance so for evaluating the strategic alignment, some of the
manufacturing variables proportionate to statistical society were selected and analyzed according to table 5
which is adapted from different researchers' points of view.

Table (5) Strategic Alignment Definition

Business strategy
Decision category Manufacturing strategy variable Differentiation
Cost leadership strategy
strategy
1.level of employee cross-training low high
Human resource 2.level of job specialization high low
3.frequency of worker training low high
1.level of Vertical low high
Vertical integration
integration(forward)
2.level of Vertical low high
integration(backward)
1.variety of final products low high
2.level of product customization low high
3.level of production planning
production planning low high
complexity
4.level of production planning
low high
modification
Material control level of work-in-process inventory low high
1.level of centralization in decision
making high low

2.level of communication between

low
organization supervisors and subordinates high

3.level of formalization rules,

high low
procedures, and precedents

Source: Kassaee Massoud(1992), "Linkage of business and manufacturing strategy as a determinant of

enterprises performance: an empirical study in textile Industry", University of North Texas.

PERFORMANCE
Although performance can have a variety of meanings (e.g. short- or long-term, financial or organizational),
it is broadly viewed from two perspectives in the previous literature. First, there is the subjective concept,
which is primarily concerned with performance of firms relative to that of their competitors or subjective
assessment of performance in comparison to objects and competitors. The second method is the objective
concept, which is based on absolute measures of performance or objectively quantifiable accounting or

۸
INTERNATIONAL CONFERENCE ON MANAGEMENT PRACTICES FOR SUSTAINABLE
GROWTH (ICMPSG), Tamil Nadu, India, July 28-30, 2010
operative indicators. In this study, the relationship between strategic alignment and performance is measured
with tow criteria: profitability and sales.

REASEARCH QUESTIONS
Main question:
Does the alignment between manufacturing and business strategy lead to an improvement in the performance
of the company?
Since the manufacturing strategy has been considered on the basis of Michel Porter's Model (1980) and titles
such as cost leadership and differentiation and also five key decision variables such as human resources,
production planning, vertical integration, material control and organization and management were selected in
the content of manufacturing strategy, thus to answer the main question of this research some secondary
questions can be outlined as well:
1. Is there any alignment between business strategy of cost leadership and decision variable of human
resources in manufacturing strategy?
2. Is there any alignment between business strategy of cost leadership and decision variable of
production planning in manufacturing strategy?
3. Is there any alignment between business strategy of cost leadership and decision variable of vertical
integration in manufacturing strategy?
4. Is there any alignment between business strategy of cost leadership and decision variable of material
control in manufacturing strategy?
5. Is there any alignment between business strategy of cost leadership and decision variable of
organization and management in manufacturing strategy?
6. Is there any alignment between business strategy of differentiation and decision variable of human
resources in manufacturing strategy?
7. Is there any alignment between business strategy of differentiation and decision variable of
production planning in manufacturing strategy?
8. Is there any alignment between business strategy of differentiation and decision variable of vertical
integration in manufacturing strategy?
9. Is there any alignment between business strategy of differentiation and decision variable of material
control in manufacturing strategy?
10. Is there any alignment between business strategy of differentiation and decision variable of
organization and management in manufacturing strategy?

METHODOLOGY AND PROCEDURE

For measuring the key decision variables in the content of manufacturing strategy, a postal survey was
conducted to collect information from all companies in Iran automobile industry and a self-administered
questionnaire, a letter, a personalized instruction cover letter explaining the purpose of the survey and a
return envelope was sent to the production/ operations managers in the companies. The production/
operations managers were treated as the key informant. This approach implicitly assumes that the key
informant’s individual opinion accurately provides a good indication of their organization’s features.
Respondents were assured of their anonymity and offered a copy of the aggregate results of the survey. To
further enhance the response rate, every 4 weeks after the initial mailing, a follow-up letter with a
questionnaire was mailed. And also for recognizing the strategic attitude of the company in the field of
business approach (regarding Michel Porter's divisions of business strategies), some comprehensive
interviews have been done with the head managers of any companies; To measure financial performance
(profitability and sales) the company's financial documents during 2000 to 2006 were used.

RESEARCH FINDINGS AND CONCLUSION

During the study of determining the alignment between business and manufacturing strategy and its effect on
the performance and with reference to data and gathered information, the following results are to be
recognized as the main findings of this research project:
1. Studying the available documents and deeds in the field of strategic doctrines, mission and
perspective of the company as well as the interviews with the head managers supported the fact that
since 2000 strategic attitude in most of the companies in automobile industry in the field of business
strategy has been actuated toward differentiation of product according to Michel Porter's division
(1980). Since 2000 that some issues such as quality of product, specific features of a product, extra
services, product innovation, reliability, brand and specific distribution channels were attended
deeply; the main strategy in most of companies became concentrated on productivity, innovation
and quality and the perspective of industry has been introduced to capture the road transportation

۹
INTERNATIONAL CONFERENCE ON MANAGEMENT PRACTICES FOR SUSTAINABLE
GROWTH (ICMPSG), Tamil Nadu, India, July 28-30, 2010
vehicles by Iranian automobile products. So the companies in this industry have defined designing
and producing the products by up-to-date technology, continuous quality improvement of products,
processes and systems and attracting the customers' satisfaction by supplying the products and
services as its mission in order to hereby realize its chosen business strategy ( differentiation of
product).
2. studying the manufacturing strategy of the company with title of five key variables in decision with
regard to chosen business strategy within 2000 to 2006 determined the following results:
- During 2000 to 2006, decisions which were taken in the field of human resources variable
in manufacturing strategy were included of decisions in the field of training
multidimensional skills, i.e. training the required skills to one of the members of the
organization in order to do various jobs, job specification, i.e. dividing the activity into
separate and expertise duties as well as training the required skills to a member of the
organization within delegated specialized tasks; in which support the selected business
strategy of the industry ( differentiation) and according to the definition, a moderated
alignment was recognized between this variable and differentiation business strategy.

- During 2000 to 2006, decisions which were taken in the field of vertical integration in
manufacturing strategy were included of decisions in the field of achieving the ownership
or increasing the control over retail or distribution systems as well as achieving the
ownership or increasing the control over raw materials; in which to some extent has
supported the selected business strategy ( differentiation) and according to the definition, a
moderated alignment was recognized between this variable and differentiation business
strategy.

- During 2000 to 2006, decisions which were taken in the field of production planning
variable were included of decisions in the field of varying the finished products,
customizing the product, using advanced techniques in production planning and rate of
adjustment and reform in manufacturing plan; in which severely has supported the business
strategy of the organizations and according to the definition, a very high alignment was
recognized between this variable and business strategy.

- During 2000 to 2006, decisions which were taken in the field of material control variable in
manufacturing strategy were included of decisions in the field of maintaining the materials
and goods; in which to some extent has supported business strategy and according to the
definition, a moderate alignment was recognized between this variable and differentiation
business strategy.

- During 2000 to 2006, decisions which were taken in the field of organization and
management in manufacturing strategy were included of decisions in the field of
concentration extent, the amount of formality and communication between the members of
the organization; in which very severely has supported the business strategy and according
to the definition, a very high alignment was recognized between this variable and
differentiation variable of the organization.

3. After recognizing the strategic shift in industry competitive field toward differentiation strategy and
studying the extent of alignment between key variables of decision in manufacturing and business
strategy, the alignment between manufacturing strategy and differentiation business strategy was
approved.
4. The performance under two criteria of sales and profitability was studied from 2000, that was the
year of industry's strategic perspective shift, to 2006 and the results showed that IRAN automobile
industry has directed its key decision variables toward alignment with higher level strategy( product
differentiation)after selecting differentiation strategy of products and subsequently has gained a
growing performance.

Overall results in the field of alignment between manufacturing and business strategies and the
answers to research questions
By recognizing the business strategy of the industry which were on the basis of Michel Porter's Model (1980)
and ensuring of industry's strategic changes toward differentiation strategy from 2000 to 2006 and studying
the changes process of decision key variables in manufacturing strategy during this period as well as
recognizing the alignment between differentiation strategy and decision variables in manufacturing strategy
according to the definitions of the researchers, the research questions can be answered as follow.

۱۰
INTERNATIONAL CONFERENCE ON MANAGEMENT PRACTICES FOR SUSTAINABLE
GROWTH (ICMPSG), Tamil Nadu, India, July 28-30, 2010

Table (7) Research Questions and Their Answers

question answer
1. Is there any alignment between business strategy of cost leadership and decision Yes-
variable of human resources in manufacturing strategy? moderate
2. Is there any alignment between business strategy of cost leadership and decision No
variable of production planning in manufacturing strategy?
3. Is there any alignment between business strategy of cost leadership and decision Yes-
variable of vertical integration in manufacturing strategy? moderate
4. Is there any alignment between business strategy of cost leadership and decision Yes-
variable of material control in manufacturing strategy? moderate
5. Is there any alignment between business strategy of cost leadership and decision No
variable of organization and management in manufacturing strategy?
6. Is there any alignment between business strategy of differentiation and decision Yes-
variable of human resources in manufacturing strategy? moderate
7. Is there any alignment between business strategy of differentiation and decision Yes
variable of production planning in manufacturing strategy?
8. Is there any alignment between business strategy of differentiation and decision Yes-
variable of vertical integration in manufacturing strategy? moderate
9. Is there any alignment between business strategy of differentiation and decision Yes-
variable of material control in manufacturing strategy? moderate
10. Is there any alignment between business strategy of differentiation and decision Yes
variable of organization and management in manufacturing strategy?

Thus it can be mentioned that the results of studying decision variables in manufacturing strategy state that
generally manufacturing strategy of the company (according to table 7 and its related explanations) has
alignment with differentiation business strategy.

RECOMENDATIONS
Since the alignment between business and manufacturing strategy has a positive effect on the performance of
the company; therefore, to increase the profitability and sales the emphasis can be recommended on some
variables of manufacturing strategy that have less alignment with differentiation strategy, such as human
resources variable, vertical integration and material control. For this purpose, following projects and
programs are recommended:
- in the field of human resources: by defining a clear vision of training human resources and edition
of training strategy as well as educational planning and establishing training evaluation system for
assuring the effectiveness of training courses, the training of the company can be directed toward
macro policies and the purposes of human recourses planning in order to attract, preserve and
develop human resources of the companies and achieve human resources development to promote
personal abilities in management, wisdom, skill, recognizing the objects and micro and macro
targets of the organization specially recognizing future changes and empowering all the employees
in order to encounter with them .
- in the field of vertical integration: by achieving the ownership or increasing the control over
distributors of goods and finished products as well as suppliers of raw materials, the ability to work
in a growing industry can be increased, the available capital and human resources can be utilized in
an optimal way and instead pay a very high unspecific profit for it. The company can also distribute
its high demanded products in a profitable manner and determine the prices in a way that can benefit
from the competitive advantages of the market.
- In the field of material control: since one of the important problems in the most companies in lack of
control over goods and materials is due to lack of using inventory control systems to access the
correct and timely information on the extent and the type of orders and subsequently supplying and
procuring the required stock timely and economically; therefore in order to supply the raw materials
and spare parts a fitting system should be used to eliminate these defects. For instance, goods
classifying system by use of ABC method; hereto with economizing the number of recordings and
ordering ( for any order of each of determined kinds, a group of parts are ordered together) a
notable decrease is created in ordering costs. Studying the economical point of order with regard to
time and place limitations, investment and restrictions on the number of orders can also improve the
conditions of company's material control.

۱۱
INTERNATIONAL CONFERENCE ON MANAGEMENT PRACTICES FOR SUSTAINABLE
GROWTH (ICMPSG), Tamil Nadu, India, July 28-30, 2010

RECOMMENDATION FOR FURTHER STUDIES

Many researches are required to be done in the field of alignment between manufacturing and business
strategies in which some of most important title of them is mentioned below:
-A significant title for future researches can be studying the fact that whether the alignment of some variables
of manufacturing strategy with business strategy is more important than the other variables and whether we
can represent any special preference for them. In other words, to increase the performance features can
different decision variables of manufacturing strategy be weighted in order to make alignment with business
strategy?
- What were considered in this research were the current conditions of the industry in the field of alignment
between business and manufacturing level strategies, but finding the possible techniques of making
alignment between the above mentioned strategies can be a good subject for future researches.
- The other title which is recommended for further researches is studying the alignment between business
strategy and the other functional strategies such as marketing, financial, accounting, human resources and
research and development and studying the fact that whether the alignment in this condition can also result in
the improvement of company's performance?
- In studying the effect of strategic alignment on the performance in this research paper, two performance
futures of profitability and sales were regarded. Studying the other performance features as well as
performance features for each of different units of company can be another title for future researches.
- In considering the business environment and the extent of its effect on each of business and manufacturing
strategies there is also another remarkable point and subject for doing future researches. In other words,
determining the environmental influencing factors on strategic levels of the organization in dynamic and
variant environment of today can be regarded as a very significant issue in determining the destiny of
companies.
- The other titles that can be recommended for future researches can be research in the field of other content
variables of manufacturing strategies such as productive features and optimization measures in production in
order to make alignment with business strategy and determining the performance of the companies.

REFERENCES
 Adam, E.E. and Swamidass, P.M. (1989), "Assessing operations management from a
strategic perspective", Journal of Management, Vol. 15, pp. 181-203.
 Avella,L. & Fernandez, E. & Vazques,G.J. (1999)," The large Spanish industrial company:
strategies of the most competitive factories", International Journal of management Science,
No. 27, PP 497-514.
 Avella, L. & Fernandez,E. & Vazques,C.J.(2001)," Analysis of manufacturing strategy as an
explanatory factor of competitiveness in the large Spanish industrial firm", International
Journal of production Economics, No. 72, PP 139-157.
 Barnes, D. (2002), "The complexities of the manufacturing strategy formation process in
practice", International Journal of Operations & Production Management, Vol. 22,No. 10, pp.
1090-111.
 Berry, W.L., Hill,T. and Klompmaker, J.E.(1995), "Customer driven manufacturing",
International Journal of Operations & Production Management, Vol. 15, No. 3,pp. 4-15.
 Brown, S.(1999)," The role of manufacturing strategy in mass customization and agile
manufacturing", in Kanda et al.,(Eds) , International conference POMS-99(India) on
operation management for global economy,Phoenix Publishing House, New Delhi, pp.35-50.
 Chatterjee, S. (1998)," Delivering desired outcomes efficiency: the creative key to
competitive strategy", California Managing Review, Vol. 40, No. 2, pp.78-95.
 Cox, J.F. and Blackstone, J.H. (1998)," APICS Dictionary, 9th ed., Falls Church, VA.
 Day, G. S. (1993), "The capabilities of market-driven organizations", Marketing science
institute commentary, Report 93-123, Cambridge, MA: Marketing Science Institute.
 Dangayach,G. S.& Deshmukh,S. G. ( 2001)," Manufacturing strategy", International Journal
of operations and production management, Vol .21, No. 7, PP 884-932.
 Fine,C.H. and Hax,A.C.(1985)," Manufacturing strategy: a methodology and an illustration",
Interfaces, Vol. 15,No. 6, pp. 28-46.
 Flynn, B.B., Schroeder, R.G. and Flynn, E.J. (1999)," WCM: an investigation of Hays and
Wheelwrights foundation", Journal of operation management, Vol .17, PP 249-269.
 Gilgeous,V. (1995)," Strategic concerns and capability impeders", International Journal of
Operations & Production Management, Vol. 15,No. 10, pp. 4-29.
 Hayes, R.H. and Wheelwright, S.C (1985),"Restoring our competitive edge, competing
through manufacturing, John Wiley & Sons, New York.

۱۲
INTERNATIONAL CONFERENCE ON MANAGEMENT PRACTICES FOR SUSTAINABLE
GROWTH (ICMPSG), Tamil Nadu, India, July 28-30, 2010

 Hayes, R.H. and Wheelwright, S.C. (1984),"Restoring Our Competitive Edge: Competing
through Manufacturing", John Wiley, New York, NY.
 Hayes, R.H., Wheelwright, S.C. and Clark, S.C. (1988), "Dynamic Manufacturing: Creating
the Learning Organization", The Free Press, New York, NY.
 Hayes, R.H., Pisano, G.P. and Upton, D.M. (1996), "Strategic Operations: Competing
through Capabilities", The Free Press, New York, NY.
 Hill, T.J.(1987), "Teaching manufacturing strategy", International Journal of Operations and
production management, Vol. 6, No. 3, PP 10-20.
 Hill, T.J. (1993), "Manufacturing strategy", The Strategic Management of the Manufacturing
Function, 2nd ed., Macmillan, London.
 Kassaee,Massoud,(1992)"Linkage of business and manufacturing strategy as a determinant
of enterprises performance: an empirical study in textile Industry", University of North
Texas.
 Kim Yonggyu, (2003), "How Will Market Orientation and Environment and Firm’s
Character Influence Performance?",Journal of Cross Cultural Management, Vol.10, No. 4,
pp.71-88.
 Kathuria , Ravi, Porth , Stephen J. (2003), " Strategy-managerial characteristics alignment
and performance: A manufacturing perspective", International Journal of Operations &
Production Management, Vol. 23 No. 3, pp. 255-276.
 Kara, Sami and Kayis, Berman (2004)," Manufacturing flexibility and variability: an
overview", Journal of Manufacturing Technology Management, Vol. 15 , No.6 , pp. 466-478
 Koste, L.L. and Malhorta, M.K.(1999)," A theoretical framework for analyzing the
dimensions of manufacturing flexibility", Journal of Operations Management, Vol. 18, pp.
75-93.
 Maslen,R.& Platts, K.W. (1997),"manufacturing vision and competitiveness Integrated
manufacturing systems", International Journal of operations and production management ,No.
8/5, PP 313-322.
 McCarthy, Ian P. (2004)," Manufacturing strategy: understanding the fitness landscape",
International Journal of Operations & Production Management, Vol. 24, No. 2, pp. 124-150.
 McGrath,M.E. and Bequillard , R.B.(1989),"Integrated manufacturing strategies, Managing
International Manufacturing, North Holland, New York,NY.
 Miller,J.G & Roth,A.V.(1994), "A taxonomy of manufacturing strategy", Management Science,
Vol. 40, No. 3 ,PP 285-304.
 Mills,J. & Platts,K. & Gregory,M.(1995) ," A framework for the design of manufacturing
strategy process", International Journal of Operations and production management, Vol.15, No. 4,PP
17-49.
 Mohanty, R.P. & Deshmukh, S.G.(1999) , " Evaluating manufacturing strategy for a learning
organization: a case, International Journal of operations and production management ,Vol. 19,No.
3, PP 308-327.
 Mintzberg, H. and Waters, J.A. (1985), "Of strategies, deliberate and emergent'', Strategic
Management Journal, Vol. 6, pp. 257-72.
 Olhager, Jan & Rudberg, Martin (2003),"Manufacturing strategy and e-business: an
exploratory study", Journal of integrated manufacturing systems, Vol. 14, No. 4, pp.334-345.
 Platts, K.W.(1993), "A process approach to researching manufacturing strategy",
International Journal of operations and production management ,Vol 13,No 8, PP 4-17.
 Platts,K.W. and Gregory, M.J.(1990)," Manufacturing audit in the process of strategy
formulation", International Journal of operations and production management ,Vol 10,No 9, PP
5-26.
 Prochno,Paulo J. L. C. & Correa,Henrique L. (1995),"The development of manufacturing
strategy in a turbulent environment", International Journal of operations and production
management, Vol.15, No.11, PP 20-36.
 Pun, Kit Fai (2005)," An empirical investigation of strategy determinants and choices in
manufacturing enterprises", Journal of Manufacturing Technology Management, Vol. 16
,No. 3, pp. 282-301.
 Schroeder, R., Bates, K. and Juntilla, M.A. (2002), "A resource-based view of manufacturing
strategy and the relationship to manufacturing performance", Strategic Management Journal,
Vol. 23, pp. 105-17.
 Selznick, P. (1957),"Leadership in Administration: A Sociological Interpretation", Harper &
Row, New York, NY.

۱۳
INTERNATIONAL CONFERENCE ON MANAGEMENT PRACTICES FOR SUSTAINABLE
GROWTH (ICMPSG), Tamil Nadu, India, July 28-30, 2010

 Sin-Hoon Hum, Lay-Hong Leow,"Strategic manufacturing effectiveness", International

Journal of Operations and production management, Vol. 16, No. 4, 1996, PP 4-18.
 Spring,Martin &Dalrymple, John F.( 2000)," Product customisation and manufacturing
strategy", International Journal of Operations & Production Management, Vol.20,No.4, pp.
441-467.
 Skinner, W. (1969), "Manufacturing missing link in corporate strategy'', Harvard Business
Review, May-June, pp. 136-45.
 Skinner, W. (1974), "The focused factory'', Harvard Business Review, May-June, pp. 113-21.
 Slack, N.,1994, "The importance- performance matrix as a determinant of improvement
priority",International Journal of operations and production management ,Vol. 15,No. 5, PP
59-75.
 Spring, M. and Boaden, R. (1997), "One more time: how do you win orders?A critical
reappraisal of the Hill manufacturing strategy framework'', International Journal of
Operations & Production Management, Vol. 17,No. 8, pp. 757-79.
 Santos,F.C. A. (2000),"Intrgration of human resource management and competitive priorities
of manufacturing strategy", International Journal of Operations and production management,
Vol. 20, No. 5, PP 610-628.
 Swamidass, P.M.(1986) , "manufacturing strategy: its assessment and practice", Journal of
operation management, Vol.6, No.4, PP 471-484.
 Swamidass, P.M. and Newell, W.T. (1987), "Manufacturing strategy, environmental
uncertainty and performance: a path analytic model", Management Science, Vol. 33,No. 4,
pp. 509-24.
 Swink, Morgan and Way Michael H. (1995),"Manufacturing strategy: propositions, current
research, renewed directions", International Journal of operations and production
management, Vol.15, No. 7, PP 4-26.
 Tunaly,C.(1992)," Manufacturing strategy-plans and business performance", International
Journal of operations and production management, Vol. 12, No. 3, PP 4-24.
 Vorhies Douglas W., Harker Michael, C.P. Rao(1999), "The capabilities and performance
advantages of Market-driven firms", European Journal of Marketing,Vol.33,No.11/12.pp.
1171-1202.
 Voss, C.A. (2005)," Alternative paradigms for manufacturing strategy" , International
Journal of Operations & Production Management, Vol. 25, No. 12, pp. 1211-1222 .
 Ward,P.T. & Duray,R. (2000) ,"Manufacturing strategy in context: environment,
Competitive strategy and manufacturing strategy", Journal of operations management, No.18,
PP.123-138.
 Ward,P. T.& Bickford, D.J.& Leong,G. K.(1996),"Configurations of manufacturing strategy,
Business strategy, Environment and Structure", Journal of management, Vol. 22, No. 4, PP
597-626.
 Wheelwright, S.C. (1984), "Manufacturing strategy: defining the missing link", Strategic
Management Journal, Vol. 3, pp. 77-87.
 White, G.P.(1996), " A meta analysis model of manufacturing capabilities", Journal of
operation management ,Vol.14,PP.315-331.
 Weir,K.A., Kochhar,A.K., LeBeau,S.A., Edgeley,D.G.(2000), "An empirical study of the
alignment between manufacturing and marketing strategies", Journal of long range planning,
No. 33, PP 831-848.
 Wu Jyh-Jeng (2004), "Influence of market orientation and strategy on travel industry
performance: an empirical study of e-commerce in Taiwan", Journal of Tourism
Management, No.25, pp.357-365.

۱۴