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BUS810: VALUE STRATEGY AND OPERATIONS: PLANNING AND CONTROL

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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  1. BUS810: VALUE STRATEGY AND OPERATIONS: PLANNING AND CONTROL

  2. Lecture One: Outline • Introduction • Value Strategy • Operations • Business Models • Management Models • Planing and Control

  3. 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”.

  4. Introduction (con’t) • operations can be defined as ‘production, logistics and service’

  5. Introduction (con’t) • operations management often preoccupies management, often at the expense of strategic planning.

  6. Value Strategy • Mintzberg’s Five Ps for Strategy include:

  7. 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

  8. Value Strategy (cont’d) • (2) Strategy is a Ploy or a specific manoeuvre intended to outwit the competitor.

  9. 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.

  10. 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

  11. Value Strategy (cont’d) • (5) Strategy is a Pattern, or specifically a pattern in a stream of actions

  12. Value Strategy (cont’d) • Day defines strategies as ‘directional statements’, the direction is set by four choices:

  13. Value Strategy (cont’d) • Arena: the markets to serve and customer segments to target.

  14. Value Strategy (cont’d) • Advantage: the positioning theme that differentiates the business from competitors

  15. Value Strategy (cont’d) • Access: the communication and distribution channels used to reach the market

  16. Value Strategy (cont’d) • Activities: the appropriate scale and scope of activities to be performed

  17. Operations Source: Walters (2002)

  18. Operations (cont’d) • Walters suggests operations strategy has five key features:

  19. Operations (cont’d) • a visionary

  20. Operations (cont’d) • inter-organisational core processes

  21. Operations (cont’d) • supporting infrastructure

  22. Operations (cont’d) • the customer as a major stakeholder

  23. Operations (cont’d) • inter-organisational planning

  24. Business Models • The business enterprise model links strategic and operational areas of the company Source: Walters et al (1997)

  25. Business Models (cont’d) The Du Pont Model Source: Walters et al 1997

  26. 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).

  27. 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.

  28. Business Models (cont’d). Net present value Future amount Present value = Interest rate x time in years Source: Walters et al (1997)

  29. Management Models Source: Walters (2002)

  30. 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

  31. 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

  32. Management Models (cont’d) Knowledge management • the organisational capability which identifies, locates (creates or acquires), transfers, converts and distributes knowledge into competitive advantage

  33. 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.

  34. 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?

  35. Discussion Questions (cont’d) • How can strategic and operational decisions be integrated to maximise shareholder value?

  36. 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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