Operations Strategy versus Business Strategy



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Strategy > Best Practices > Operations Strategy versus Business Strategy

Operations Strategy versus Business Strategy
What are the the differences between the operations strategy and the business strategy? And what do they have in common? Thanks for your replies.

Operations Strategy versus Business Strategy
Sam Hwambo. BA Hons. Bus Stud (Open), Accountant, Zimbabwe, Member
Operations strategy relates to the day-to-day running of the business and is short term in nature.
The business strategy is the overall business vision looking further ahead, giving direction as to where the business wants to be say, in the next five years or so.
The operations strategy is controlled by the business strategy.

Operation versus Business Strategy
Rajeev Kumar, Manager, India, Member
There is no clear demarcation between operation and business strategy. However the business strategy is more holistic and affects the business in long term, while the operation strategy helps company to serve its customers in a better way. Operation strategy also helps to improve the bottom line of the company.

Operation Strategy and Business Strategy
KOVIT SKULSANGJUNTR, Management Consultant, Thailand, Member
Operation is what you do to achieve business results. Operation strategy is mainly considering your internal available resouces and supply, whilst the business strategy is mainly / also considering external demands.
The operation strategy shall be planned to answer the question: what are the requirement for the business?

Operations - versus Business Strategy
Although the business strategy and operation strategy form an integrated whole, they both require a different set of skill and focus.
- The business strategy deals with the future and the decisions we need to make today to manage a volitile and unpredicted future. These decisions relate to your market and how it will grow and change. It deals with how your competitors will respond and what are you going to do to counter this. It deals with complex issues such as the impact of environmental changes or "new order" questions, Tofler asked several years ago.
- An operational strategy will take these decisions and implement them in your operation! If we can get our people to understand and implement our strategic decisions faster than our competitors, we will survive!

Operations versus Business Strategy
Robert, Consultant, United States, Member
Business strategy is the bigger picture plan looking ahead for "WHAT" your company should do and be; Operations strategy is "HOW" it will be governed and measured, how it is unique, how it will create value in it's market... The shorter term plans for what's needed.

Operations versus Business Strategy
Prof. Alkis S. Magdalinos, Business Consultant, Greece, Member
Kroon from South Africa has given the best description.
Although we rarely talk about "operations strategy" but simply "operations" we need to understand that in the sequence vision-mission-planning-operations the last element means actually executing our planning.
The next element is control and evaluation; this gives us the basis for developing our new plan adapting is to new conditions both internal and external..

Operations and Business Strategy
Prof. Alkis S. Magdalinos, Business Consultant, Greece, Member
Tomas, your answer is OK. To put it more simply, "strategy" refers generally to business. When we talk about "operations" we mean "execution" of a business plan" which implements a business plan. All the best.

Operation is Part of Business Strategy
Dr Gary Jones, Business Consultant, Australia, Member
A link that seems to be missing here is that strategic management is carried out to obtain the corporations strategy. It is the implementation of the strategic foresight of the organisation (plan or policy). Operations and business strategy require management to prioritize strategy initiatives and introduce innovative strategies (real time/operations) to enable the organisation to realise its long term strategies by obtaining the corporations goal - its mission.

Operations Strategy versus Business Straegy
Prof. Alkis S. Magdalinos, Business Consultant, Greece, Member
If I am reading Gary Jones' comment correctly, he is not saying that operations is part of business strategy; he is saying, correctly, that it is its implementation.

Control and Evaluation of Strategy
Dr Gary Jones, Business Consultant, Australia, Member
Whatever title you give strategy, it is imperative that you have a measurement of its success. Without measurement you have no control over strategy implementation and/or its contribution to the successful attainment of strategic initiatives and plans. Measurement systems such as the Balanced Scorecard need to be implemented otherwise strategy will remain just that - what we will do and not what we are doing and have achieved.

Control and Evaluation Strategy
Prof. Alkis S. Magdalinos, Business Consultant, Greece, Member
Yes, but you have to take all elements of managerial actions in a logical sequence, otherwise you risk confusing concepts and the different individuals who are responsible foe each activity and action. Naturally, it all ends up with control, evaluation, adaptations to shanges in the company and the environment and corrections..

Control and Evaluation Strategy
Dr Gary Jones, Business Consultant, Australia, Member
Yes I agree - it is consistent with my initial entry in this forum. Strategic management is the prioritization of strategic actions and initiatives. Logic only follows when informed information about actions taken is provided by an information system such as the Balanced Scorecard - then a decision matrix can be established. "strategy is just an idea unless implemented, implementation success is a result of measurement" - a line from my thesis.

Operations versus Business Strategy
Steven Cofrancesco
This is an interesting thread, and I hope I can contribute:
There are considered to be three (or possibly four) levels of all organizations: corporate, business, operations (the fourth could be functional).
Operation strategy or business strategy are usually referring to those specific levels of an organization. Corporate strategy, the highest level, refers to the overarching strategy of the organization.
Business strategy usually entails development of activities that achieve their objectives (which are linked to the overarching corporate strategy). So, for example, the organization's board identifies a specific strategy they want to pursue, and the business level (the CEO and other top managers) develop specific strategies that can achieve the objectives necessary to meet the overall corporate strategy. The operational level is the one that actually performs or implements the objectives identified by the business level. However, they might develop their own "strategies" to do this.

Operations versus Business Strategy
Dr Gary Jones, Business Consultant, Australia, Member
Steven good answer. Corporate strategy is strategic planning (rationalist paradigm). The business strategy as defined by yourself is the processualist paradigm. And the operation level is a hybrid of processualist/evolutionist paradigms.
Having said that, even when we identify these different types of strategy and implementation processes, the objective is success. Which can only be done through constant measurement.
We then need to look at whether strategy is a bottom up or a top down process! - its actually a two way flow - no versus.

Operations and Business Strategy should be Bidirectional
Steven Cofrancesco
Thanks for your response, Gary. I think you are absolutely correct, that strategy formulation is not only top down or bottom up, but rather bidirectional; I might even go further by saying that it is rather interactive, going back and forth between the levels many times.
Just to be clear, I was responding to the question of the definitions of operations level and business level strategies, and not to their interplay.
However, I'm not sure I agree with your definition of corporate level strategy being held to only the rationalist paradigm (if that's what you're saying). My view is that corporate strategy is simply strategy developed at the corporate level of organizations, i.e. by boards, the CEO, and other top managers.
I do not see a connection between the type of strategy and level on which it occurs. Each organization level could conceivably engage in various types of strategy (rationality, emergent, entrepreneurial, etc).
Thank you for the discussion.

Operations versus Business Strategy
Dr Gary Jones, Business Consultant, Australia, Member
Steven its very difficult to get out ideas out in so few words. But I will have a go. By definition if the long term strategic planning (rationalist paradigm) is developed by boards CEO and senior managers, this dictates these long term plans (planning school of thought) need to be passed down to the ranks for implementation. I agree with your comments there are variations on the type of strategy development carried out in an organisation such as the entrepeneurial school, cultural school, learning school etc implementation takes the form of strategic management, formal strategic planning - rationalist paradigm (planning schools) does dot include the implementation process. Strategic management can take on many forms with the overarching paradigms of processualist or evolutionist. This is where real time strategic thinking comes into play. I enjoy a good debate on strategy - we are probably talking about the same things using different words.

Operations versus Business Strategy
Steven Cofrancesco
Gary, I'm not sure I'm understanding your main point: are you saying that because any corporate or business strategy requires implementation, which therefore intrinsically requires the participation/input of the lower levels, it is therefore not truly "corporate level" or "business level" strategy?
Perhaps I should add that I am referring to only the "development" or "formulation" of strategy, not to its second component of implementation, i.e. strategy development or formulation can take place on any level, or perhaps I should say be rooted in any level. For example, strategy could be developed for an operations phenomenon, and perhaps the strategy would be "developed" by the operations team, but other levels such as business and strategic (corporate) levels could, and probably should, participate and contribute.
Please clarify your message for me, and thank you very, very much for the discussion.

Operations versus Business Strategy
Joseph Pangilinan, Turnaround Manager, Philippines, Member
Strategy, at any level, has to do with the efforts of a company to win & to keep winning in the marketplace, i.e. to gain & sustain competitive advantage. Steven is right:
- Corporate strategy refers to over-arching strategies, say, of a conglomerate of businesses.
- Individual business units set business-level strategies that align plans with corporate strategies.
- Functional strategies refer to plans of marketing, finance, R&D & other functions.
- Operating strategies might then refer to how to operationalize strategic plans at all levels.
Strategies (to do's) must be aligned all the way: from formulation to execution; from corporate to operations. Unless there is 360 degree alignment, there will be information asymmetry and resulting dysfunctions.
A CFO may refuse to implement pre-agreed strategic plans by not approving budget allocations, because perhaps she was not consulted during strategic formulation. New strategies mean change, so a culture and policy environment where people embrace change is truly powerful.

Operations versus Business Strategy
Dr Gary Jones, Business Consultant, Australia, Member
Steven. Different words - same meanings. Strategic planning relies on its strategic processes to encompass the power and efficiency required to meet the external market, it is a prescriptive school of thought (rationalist paradigm) - what should happen (long term planning) - and yes this is corporate planning.
Strategic management is the implementation of the strategic plans and was introduced initially because strategic plans were not reaching their objectives.
What you are referring to as operational strategy is emerging strategy (descriptive school) based on the resource based view - unique internal resources that have developed in the organisation (learning school of thought) that is difficult to replicate (processualist paradigm). Thanks Steven.

Operations versus Business Strategy
Steven Cofrancesco
Thanks for your input, Joseph. I think you make a good point about alignment of strategies across levels.
Gary, I understand your point now; thanks for clarifying. Forgive me, but operational strategy is not emerging strategy, and that is I believe the overarching point I was making since the beginning of this discussion regarding operations versus business strategy. Concepts such as rationalist and emergent strategy, whether resource-based or otherwise, are not confined to certain levels, but rather can occur at any level. Perhaps emergent strategy happens at the operational level, but that doesn't mean that it can't happen at the business level or the corporate level. Therefore, the opposite is true, rational and planned strategy can occur at the operational level. Stay well, Steven.

Operations versus Business Strategy
Dr Gary Jones, Business Consultant, Australia, Member
Steven. Best way for me to sum up what I am saying is refer you to an article by Henry Mintzberg and Joseph Lampel 'Reflecting on the Strategy Process' this article asks the question 'and why must there be such a chain of causality, let alone one that runs in a single direction?' and goes on to answer it.
Where we seem not to agree on is the categorisation of the strategy process. I do not agree with the categorisation of strategy into operational, business or corporate - its all the same to form a holistic corporate strategy.
I am still saying my earlier comments hold 'different words same meaning' thanks Steven.

Strategic Health of the Goose, not Just Golden Eggs
Joseph Pangilinan, Turnaround Manager, Philippines, Member
What is the point of doubling sales, if you end up with half your sales and/or production force?
Strategic management (planning, organizing, leading, and controlling) at whatever level done (corporate, business, or operational or functional) usually refers to initiatives that strengthen the company, department or individual to fight and win more "battles" for the long term.
It refers to local actions that help the firm gain and sustain market leadership and competitive advantage, or better yet, create uncontested market space.
It usually involves strengthening the goose, and not just harvesting golden eggs.

Operations versus Business Strategy
Steven Cofrancesco
Thanks once again, Gary. I think one more point deserves attention: now I see that you are talking about the strategy process as a whole (the formulation, selection, implementation, monitoring, and evaluation) and I am talking about the level at which strategy is either formulated, conceived or applied.
I think you are right, essentially, that strategy must be holistic and cover all levels in order to be effective or "successful".
But, understanding that strategy can be conceived from, or its main purpose or goal can be applied to, a specific level provides a distinction, and one that could beneficial to any individual company or the field of strategy research in general.
What happens during the rest of the process, as you say, encompasses all levels, but strategies have an inception point, and can (although not always) have an overarching focus on one particular level. Thanks once again, Gary. Steven.

Operations versus Strategy
Dr Gary Jones, Business Consultant, Australia, Member
Hi Steven and all that are watching us butt heads. You are exactly right. There is an inception point to every subunit of strategy. This is strategic management.
Strategic management is generally seen as the implementation aspects of strategy - how to get there and in its own right a strategy process. I am a great believer that this is a bottom-up process, encouraged by management.
Staff not only are involved in the strategy making process (to limit resistance to change, as they were the contributors to the strategy and hence the changes required to achieve that strategy) they can provide input (ideas) into the process that is not garnished by managerial responsibility.
Effectively they take ownership. Enjoying this exchange of ideas - thanks Steven.

Ambiguous Terms..
Jaap de Jonge, Editor, Netherlands
Steven, Gary, unfortunately there is no common and agreed definition of the terms 'strategy', 'strategic management' and 'strategic planning':
- The various schools of thought on strategic management define them differently
- The context and circumstances in which these terms are used may also indicate a different meaning, and
- There are also cultural dimensions involved, because they may be used differently in different parts of the world.
Good discussion anyway...

Operations versus Business Strategy
Steven Cofrancesco
Thanks once again, Gary; I think it's been a beneficial discussion.
The Editor also makes a very accurate point about no agreed upon definitions. However, that's exactly the purpose of such discussions, i.e. to question existing works, concepts, and thoughts by the great and well-known thinkers.
We might end up supporting their thoughts and definitions, or somehow contributing to developing new ones.
Either way, questioning and discussing is a vital part of knowledge development. This was beneficial to me, and I hope it was beneficial to some others as well. Thanks once again, and be well, Steven.

Business Strategy versus Operations Strategy
Nasir Awan, Strategist, Saudi Arabia, Member
In fact once the business strategy is well set than the next steps are execution and integration in the whole operations.
Getting the business strategy rightly executed is done through fine tuning all operational dynamics. That includes the alignment of the organization structure, competencies, policies & procedures and the talent.
This results in process excellence for achieving the set aspirations / targets through making the strategy everyone's job. This means the strategy becomes the talk of the town and every individual performs their role while being in operations.
Broadly strategy has 3 phases (setting, implementing and evaluating). That creates the success!

Strategic Planning Going to Lower Levels
Jose R Paz Barahona, Professor, Costa Rica, Member
In the practical day to day reality, I don´t feel that strategic planning must always go top and down, back and forth, sometime it must be set up and comunicated, and then you order your resources and go.
Strategic planning is to develop a vision and follow it. You may need to talk to lower levels in order to redirect their short term focus, but not to ask which direction the company should follow.

Business Strategy versus Operations Strategy
Lesley Govender, South Africa, Member
Both are intertwined. However there is an hierarchy to eventually achieving results. Whilst business strategies are competitor / mandate related, operations strategies are more hands-on and about what makes a company unique.
For instance everyone knows what banks do but its their operations that attract you to a particular bank. Both typers of strategy require unique skills and unique outcomes meant to achieve shareholder satisfaction.

Operations Strategy versus Business Strategy
Ajai Dayal, Business Consultant, India, Member
The "operations strategy" is traditionally / normally referred to as "operations planning and control".
It has a time horizon of approx 1 year. Compare this against of a business strategy which has a time horizon of 5 / 10 years and in very volatile environments 3 years.

Operations Strategy versus Business Straegy
Prof. Alkis S. Magdalinos, Business Consultant, Greece, Member
Dear Ajal, you are quite right. A long period of time is far more difficult to extrapolate than a short period, since the chances of extreme changes are greatly exaggerated; let alone the fact that in our days it is difficult to make projections even for shorter periods of time!

Strategy: Business and Operations
Joe N.Cavada, Management Consultant, Philippines, Member
@Robert : I agree business strategy focuses on WHAT, while operations strategy focuses on the HOW.
Being strategy, both are long-term.
The former deals with goals, objectives, structures, milestones, financials, market shares.
The latter deals with resources (human and material) and their utilization.

Operations Strategy versus Business Strategy
rio-roshi merit, Student (University), Nigeria, Member
- Operations strategy takes into consideration only the day-day activities.
- The operations strategy acts on the foundation made already/available by the business strategy.
- The business strategy programmes, while the operations strategy interprets.
- The business strategy is confidential, while the operations strategy is not.

Who is Dealing with Operations Strategy versus Business Strategy?
Moses Mutethia Muriungi, Strategy Consultant, Kenya, Member
I like these scholarly managerial contributions from all of you, and I concur that business strategy focuses on the bigger picture pointing to the direction and ultimate strategic intent, while the ops strategy mainly focuses on the day-to-day running of an organization.
Another aspect is that many a times, the business strategy is handled by the top-level managerial people who are charged with the mandate of foreseeing where the org will be in future, while the operation strategy is typically taken care of by middle-level managers.

Operations Strategy versus Business Strategy
Business strategy is when a Mark Zuckerberg decides to design a new generational social network website for millions around the world; operations strategy is to call it face Facebook, and decided through operations strategy to roll out the location, human resources, finances and legal strategies. Hence the terms and its distinctive different meanings. They both have a mapped out plan as to where the company wants to go in accordance with its vision and goals.

Three Levels of Strategy
Steven Delport, Consultant, South Africa, Member
Depending on the type of organisation there will be three or two levels of strategy - corporate, business and functional.
- Corporate strategy - if a large, diversified corporation, the corporate strategy will look at decisions like: type of businesses, where in the world it operates, what businesses to invest or divest in, etc.
- Business strategy - each (strategic) business unit within the corporate is responsible for its own business strategy - how it will compete in the markets, that is, in the environment which includes customers, markets, competitors and substitute products.
- Functional strategy - within the business, each function (operations, marketing, HR, finance, etc) needs to formulate their own strategy on how they will contribute to and support the goals and objectives of the business strategy. The various functional strategies need to be integrated and supportive of each other. The operations strategy is a functional strategy.

Operations versus Business Strategy
Alan Kennedy
If we accept Henri Fayol's observation, in General and Industrial Management, 1916, that there are strategies common to all organizations, we can see that all organizations follow one or more of the following eight strategies: business definition, risk, growth, financial management, R&D/technology, organization management, marketing, and service delivery (also known as production or manufacturing depending on the business of the organization).
This allows us to look at strategy as a specific form of activity, rather than categorize it as “business“, “corporate“, or “functional“.
We can also attribute a duration to it so, for example, we talk about our “1 year production strategy“ or our “3 year finance strategy“.
If we can talk about specific activities and their durations, we can eliminate the confusion that arises from using categories of strategies, such as “operations“ or “business“. We can focus on how responsibilities for management of the eight should be allocated, which, of course, will be different from company to company.

Business Strategy versus Operations Strategy
Bernhard Keim, Business Consultant, Germany, Premium Member
Operations Strategy is about HOW to go,
Business Strategy is about WHERE to go.
Operations refers to the machine you are running, Business is what it has been built for.

Response to Sams Reaction
Thomas Solomon, Student (University), Nigeria, Member
@Sam Hwambo. BA Hons. Bus Stud (Open) what you take to be business strategy is not, but rather an organisation vision statement. Whereas a business strategy is the step by step process or procedures and plans put in place in order to achieve the organisation's mission and vision statement, and operation strategy is also the step by step procedures and plans employed in order to achieve and execute an operation successfully and effectively.

Operations Strategy versus Business Strategy
Ajai Dayal, Business Consultant, India, Member
Business Strategy is
1. Choosing an empty space to conquer when there is no competition
2. Choosing specific direction /parameter where it can outperform competitors in the eyes of customer if the business is operating in intensely competitive space (similar to more than 360 directional choices for an individual in life).
3. Build capabilities to win
Operations strategy is a term we must avoid in management. Let us rather call it AOP - Annual Operating Plan. It is a plan that flows from the business strategy and details the way to exploit the capability created for the benefit of customer and investor over a year.

Business Strategy versus Operations Strategy - an Oxymoron?
Andrew Blaine, Business Consultant, South Africa, Member
If the business strategy is to compete with the operational strategy in a business the result must be failure.
Business strategy and operational strategy must work together in harmony for a business to develop and grow towards success. Normally the business strategy determines the operational strategy and this should always remain so.
The danger that results from reversal of these roles can lead to a loss of overall direction of the business which, very often, results in failure of the business.

Operations Strategy versus Business Strategy
mattwatson, Business Consultant, Member
Basically Operation strategy is a small side of Business strategy. A business strategy should be planned quite early when starting a business. The operation strategy is dealing with how the several steps are to be implemented. So, it is clear that Business strategy is a bigger matter than the rest. In my case when I was about to start my own business I was also confused of preparing all these.

The Good Ship Strategy
Andrew Blaine, Business Consultant, South Africa, Member
Assume, for an instant, that the business is a ship. The overall determination of destination and functioning of the ship is the responsibility of the Captain. However, the ship needs to function to actually reach the desired destinations. This is the responsibility of the Engineer.
In the case of Strategy, the business and operation strategies are similar. Tship is still capable of realizing its destinations without the engine room (by sail?) but, without a destination, there is no role for the operations strategy.
This picture is simplistic but, I hope, has merit?

Operations Versus Business Strategies
K.Narayana Moorthy, HR Consultant, India, Member
Operations Strategy is typically dealing with: cycle time; working capital; customer service; cost; process activities; technology; skills and knowledge; assets and facilities, performance management; and culture & climate.
Business Strategy is typically dealing with: financial strategies, vision, exit, succession;- intelligent investment; revenue growth-(covering market penetration-market extension-market expansion-market creation); cash flow; working capital; retentions strategy; margins and pricing; and taxation.

Understanding Operations versus Business Strategies
rajiv gupta, Business Consultant, India, Member
A simple analogy is to equate business strategy with 'doing the right things', which is usually in the context of customer segment(s)/market selection and corresponding product definition for that customer segment(s). It is usually performed by the top management.
Operations strategy on the other hand is around 'doing things right'. This is usually in context of actually delivering the product to the specified customer segment(s). This is mostly done by the front line staff under the supervision of functional heads.The former is mostly concerned about effectiveness and the latter with efficiency.

Doing the Right Things Right
Bernhard Keim, Business Consultant, Germany, Premium Member
The business strategy handles the "raison d'être" of a business. It focuses on the business model, the market conditions etc.
The operational strategy focuses on the things and measures to make the business strategy happen.
Business strategy’s focus is more on effectiveness, operational strategy on efficiency.
Even the best operational strategy fails if it focuses on the wrong products and markets (e.g., even the best farrier could not stop the declining demand for horseshoes).
But even the best business strategy fails, if the company is not able to deliver the value in an appropriate way. The ability to deliver in a superior way is the subject of operational strategy.


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