Page 30 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Unit 2: Strategy and Operations Strategy

4. Timeliness in the ……………… model varies because it is both individual specific and Notes
situation specific.

2.2 Competitive Strategy

Corporate Strategy and Objectives have a major impact in determining the different operational
parameters at the corporate level. We have discussed some of these in the previous section,
however, there are many other factors and the list may differ from one organization to the next
and between different time periods for an organization as well. The principle impact on these
parameters comes from competitive strategies.
Corporate strategies and competitive strategies form a hierarchy of strategies. Corporate
strategies are concerned with the type of business the organization is in, its overall competitive
position and how the resources of the organization have to be deployed. The business strategies
are basically competitive strategies. The objectives of these strategies are about how to compete
successfully in particular markets, and how can the business units acquire competitive advantage.
Sun-Tzu, a Chinese strategist and general, made an observation in Art of War: “The more
opportunities that I seize, the more opportunities that multiply before me.” This phenomenon
is at the heart of strategy. Organizations compete successfully by seizing opportunities. At the
business unit level, the strategic decision that the organization needs to take is ‘how will it place
its products in the marketplace’? What will be the basis for it to gain competitive advantage?
Organizations achieve competitive advantage by providing their customers with what they
want, or need, better or more effectively than competitors and in ways the competitors find
difficult to imitate. The strategy for each organization is unique reflecting the particular
circumstances it faces.
There are two schools of thought on developing competitive strategies. On the one hand, the
concept of Generic Strategies is promoted by strategic thinkers like Michael Porter. On the other
hand, Prahalad and Hamel promote the “Resource based Approach”. However, we will lay
greater emphasis on Generic Strategies as these are industry focused and reflect more closely the
requirements of the OM Strategy. In order to succeed in this, organizations have found many
offensive and defensive actions to defend their position in the industry and cope with competitive
forces.
There are two basic types of competitive advantage a firm can possess: low cost or differentiation.
The two basic types of competitive advantage combined with the scope of activities for which a
firm seeks to achieve them, lead to three internally consistent generic competitive strategies.
These strategies are:

 Cost Leadership,
 Differentiation, and
 Focus Strategies.
The third type of competitive strategy, focus strategy, has two variants—cost focus and
differentiation focus. These strategies can be used by the organization to outperform competition
and defend its position in the industry.

The Generic Competitive Strategies are shown in Figure below. These strategies need to be
examined in conjunction with the ‘competitive capabilities’ of the organization and the external
environment. Effectively implementing any of the generic competitive strategies usually requires
total commitment and determined organizational support from OM. There needs to be
compatibility between corporate level strategy and the strategy at the operational level.

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