ACCT401-Strategic Management Accounting

Lecture3StrategyinOperationsManagement&PerformanceObjectivesModuleLeader:[email protected]46VALUECREATIONINORGANISATIONSMANAGINGOPERATIONSANDMARKETING Recap Lecture & Seminar 2 ServiceOperationsUnderstanding Factors that Impact on Ty p i c a l Corporate/Organisations or Business Operations -PESTLEBlack Box View of OperationsManagementoBlack Box View of Corporate (Organisations)EnvironmentoOrganisations Stakeholders and theirEffectsoVision, Mission andStrategyUnderstanding Strategy in the Context of Operations inOrganisationsoDefinitionoImplications ofStrategyoCorporate vs OperationsStrategyStrategyAlignmentStrategic Ops Management Process: GenericModelAn Examination of OrganisationsEnvironmentStrategic Roles and Contribution of OperationsFunctionsLessonOutline2Operations Demand Requirements and PerformanceObjectives TheBlackBoxView ofOperationsManagementINPUTSThe Transformation ProcessOUTPUTSStaffMaterialsEnergyCapitalInformationTasksFlowsStorageVolumeVarietyVariationVisibilityCustomercontact3 The Organisations Environment: (Black Box Internal & ExternalView)SuppliersCustomersINPROCESSOUTThe Organisation6 Typical Corporate (Organisation)Stakeholders5 Strategy can be defined in many ways, including thefollowing;.....thepatternofactivitiestobefollowedbyanorganisationinpursuitofitslong-termpurpose,includingitsplacingwithinthemovement.Insimpleterms:Wherewearenow,wherewewanttogoandhowweintendtogetthere......an agreed-upon course of action and direction that helps manage the relationship between an organization and its environment. The goal is to achieve alignment or synergy so that an optimal flow of resources to the institution is achieved......as the process of identifying, protecting, leveraging and renewing the strategic capabilities of an organisation through its definition of purpose its organisation and processes, and its choice and support ofpeople.What isStrategy?6 Strategy Implications on Organisations Operations?Whatthesedefinitionshaveincommonare:-Anunderstanding/assessmentoftheorganisationsresourcesandcapabilitiesAnunderstanding/assessmentoftheexternalenvironmentFromthese,adecisiononthebestwaytouseandapplytheformertoachieveanagreedaiminthelatter....Strategyisconcernedwithdecidingthenature,domainandscopeofanorganisationsactivities(essentially,whatitislike,itsvalues,theareasitcoversandthedirectionitisgoingin),andthewayitssuccesswillbeevaluated.Thepatternofactivitiesinstrategyarisesfromtheacquisition,allocationandcommitmentofasetofresourcesandcapabilitiesbytheorganisation,inaneffectivematchwiththechallengesofitsenvironment,andfromthemanagementofthenetworkofrelationshipswithandbetweenstakeholders.7 CorporateStructure&OperationsStrategyAlignment10 The decisions taken at thetopThe general direction to gain advantage overcompetitorsThe general areas of attack in the marketplace in order to satisfyclientsSets the broad objectives -profitability, market shareetc.Achieve objectives by meeting customerrequirementsCorporatestrategy UnderstandingVision,Mission&StrategyVisionArealistic,credible,attractivefutureforyourorganisation.Alonger-rangevisionofsuccessSetsthefundamentalpurposesforwhichtheorganisationhasbeenformedPurposewhytheorganisationexistsgoalsandobjectives.ProgrammehowyouwillachieveyourpurposePrinciplewhatyourvaluesareMissionStatementAdeclarationofanorganisationspurpose;itsraisond'tre.engagesboththehearts(culture)andminds(strategy)oftheorganisationsinternalstakeholders.Agoodmission,usedwellcanbeinspirationalindevelopingastrong,sharedorganisationalculture.helpstoensurethatemployeesareemotionallytiedtotheorganisation,andthattheirgoalsaresynchronisedwiththoseoftheorganisation.12 13Mission/VisionObjectivesStrategyGoalsProgramsInterventionProgrammes(BusinessImprovementBuildingblockstoFulfilindividualStrategicintent)Corporate&OperationsStrategyFormulation HierarchyofCorporateStrategyPlanningProcessStrategiesTacticesCORPORATEMISSIONLongTe r m Goals(Typicallyabout5to10years)ObjectivesMediumTe r m Goals(Typicallyabout1to3years)AnnualBudget/StrategicPlansInterventionProgrammes(projects)/CampaignsofOperationsImprovementShortTe r m Goals(Typicallyabout1monthtoupto1yearperiod)IndividualStrategicPlansforCampaignsofOperationsImprovementproject/phasesofinterventionprogrammesEachhasElement(s)OfStrategyFormulation14 TheOrganisationsEnvironmentSuppliersCustomersExternalenvironmentPoliticalEnvironmentalSocialTe c h n o l o g i c a lLegislationEconomicCompetitorsCorporatestrategyThe Organisation14 OperationsMarketingHRMFinanceThe Organisations InternalEnvironment21 OperationsMarketingHRMFinancee.g. pricing involves -operationsmarketing financeThe Organisations InternalEnvironmentIs HRM a factorof Pricing22 InternalResources,Capabilities&CompetitiveAdvantageView18 ExternalResources,Capabilities&CompetitiveAdvantageView19 StrategicOperationsManagementProcess:AGenericModelOperations18 WhatisStrategyManagement?Thescienceand/oractofformulating,implementingandevaluatingwholeareasofanorganisationsfunctionaldecision-makingprocessontheachievementoftheirstatedobjectivesStrategicplanningisvitaltoensurethatyourorganisationfollowsthemosteffectivecoursetowardsitsmissionSunderland,19 What is the Role of the Operationsfunction?Operationsas implementerStrategyOperationsOperations implements strategyOperationsdrives strategyOperationsas driverStrategyOperationsOperationssupports strategyOperationsas supporterStrategyOperations10 The 3 keyattributes ofOperationsImplementingSupportingDrivingOperationscontributionBe dependable Operationalize strategy ExplainpracticalitiesBe appropriate Understand strategy Contribute todecisionsBeinnovativeProvide foundation of strategy Develop long-termcapabilitiesThe Strategic Role of the OperationsFunction20 MarketstrategyIdentifies the market and how tocompetethecustomershowmanywho they are -characteristicswhere theyarewhat they expect from the product, to meet theirneedswho meets the customers needs best,succeeds23 Generic Measures of Products/ServiceSuitabilityPriceQualitydesignperformanceDeliveryreliablefastCustomisation -ability to respond toeach customerdesigndeliveryEach of these applies to goods andservices24 How the market measures the productssuitability1.These criteria do not always have equalweight.Their importance is; relative to each other, and depends uponthe market.2.Some are necessary to enable the organisations product tobe considered in the market place i.eorder-qualifying.3.Once the product is considered fit for purpose (commoncompetition requirements) there are criteria which must be satisfied in order to make customer choose that particular product i.eorder-winning25 Operations Strategy Formulation Tools and Techniques1.KanoMapping2.Fish-Bone Diagram (IshakawaDiagram)3.House of Quality(HOQ)4.Bell-Curve5.Vo i c e of the Customer(VoC)6.plan Do Check Act (PDCA or DemingsCycle)7.Statistical Process Capability Charts(SPC)26 HillsmethodologyStep1Step2Step3Step4Step5Corporate objectivesMarketing strategyHow do products/ services win ordersOperationsStrategyProcesschoiceInfrastructureGrowthProfitabilityRoACashflowFinancial gearingMarkets/ segmentsRangeSpec.changeVolumesStandard/ customisationInnovationPriceQualitySpeedReliabilityRangeDesignBrandSupportJobBatchLineServiceshopProfessionalPlanningPaymentQuality systemsSupervisionOrganisation27 What Market (Demand) Requirements mean for PerformanceObjectivesPriceQuality of product design Quality of product/serviceperformanceReliabledeliveryFastdeliveryCustomisation of design Customisation of deliveryCOSTDEPENDABILITYFLEXIBILITYProduct/serviceMixVo l u m eCLOSE TO CUSTOMERSPEEDDESIGN QUALITY PERFORMANCE QUALITYMarketrequirementsPerformanceobjectives28 Five Competitive Advantage Performance Objectives Using Efficacy in OperationsStrategyQualityBeingRIGHTSpeedBeing ON TIME (FAST?)DependabilityBeing Tr u s t worthy ON TIME EVERY TIME?CostBeing VA L U E FOR MONEY(PRODUCTIVE)Being ABLE TOCHANGE (ADAPTABILITY)Flexibility29 Fast throughputQuick deliveryMinimum cost, maximumvalueReliable operationError-free processesError-free productsand servicesAbilityto changeFrequent new products,maximum choiceBenefits of Market LeadershipStrategyDependable deliveryDependabilityMinimum price, highestvalueCostSpeedQualityFlexibility30 THE OPERATIONS FUNCTION can have a:NEUTRAL/ SUPPORTIVEROLE:work to meet its own objectives -beneutral ORwork closely with other functions -besupportiveINTERNAL / EXTERNALPERSPECTIVE:be unaffected by the customer and theenvironment ORrespond to the demands of thecustomerThe Strategic Role and Contribution of OperationsManagement31 Dontholdthe organisation backCorrectstheworstproblemsGive a strategic advantageLinksoperations andstrategyAdoptsbest practiceInternally neutralStage1Stage2Stage3Stage4The Strategic Role and Contribution of OperationsManagement32 Give a strategic advantageLinksoperations andstrategyAdoptsbest practiceCorrectstheworstproblemsStage1Stage2Stage3Stage4As good asthe competitionExternally neutralDont holdthe organisation backInternally neutralThe Strategic Role and Contribution of OperationsManagement33 Dontholdthe organisation backCorrectstheworstproblemsAdoptsbest practiceLinksoperations andstrategyGive a strategic advantageInternally neutralAs good asthe competitionExternally neutralInternally supportiveBest in theindustryStage1Stage2Stage3Stage4The Strategic Role and Contribution of OperationsManagement34 The Strategic Role and Contribution of OperationsManagementInternally neutralDontholdthe organisation backCorrectstheworstproblemsAdoptsbest practiceLinksoperations andstrategyGive a strategic advantageAs good as the competitionExternally neutralInternally supportiveBestintheindustryExternallysupportiveStage1Stage2Stage3Stage4Redefinethe industrys expectations35 OpportunitiesOperationstaskOperationEnvironmentProduct/Service conceptParametersfor changeOperations potentialand capabilityValueCorporate objectivesPerformance objectivesOperations Strategy ManagementWheel36 ThankYo u37