In last week’s blog post, I demonstrated how important a clear mission statement could be for a company, and finished up my research on the topic of mission statement. This week we will switch gear and dive into a brand new topic – operation strategy. In today’s post, I will introduce the definition of operation strategy and then dive into specific parts of it. I will also go over some real examples from companies we are familiar with to demonstrate the ideas we will be discussing.
Generally, operation strategy refers to “the methods companies use to reach their objectives.” Specifically, it can represent a plan that demonstrates how a company, driven by the overall goal of the business, will “allocate resources in order to support infrastructure and production” to “maximize the effectiveness of production while minimizing costs.” Lots of different operation strategies have been developed, as entrepreneurship has become more and more mainstream over the past couple years; however, we can still divide the general concept of “operation strategy” into 5 sub-categories: corporate strategy, customer-driven strategies, developing core competencies, competitive priorities, and product and service development.
Corporate strategy, also known as the business strategy, focuses on how a company works as a system to complete and expand itself. Entrepreneurs need a correct corporate strategy to expand the operation of the company with maximized effectiveness. Just like “the muscles of the heart depend on brain functions in a human body,” companies rely on a corporate strategy to make progress towards the ultimate goal. Note here that a company’s corporate strategy does not need to stay the same all the time. Sometimes a correct strategy may require you to divide the company up, while other times a correct strategy means to acquire or cooperate with another company. How to properly use resources and how to manage relationships with other companies make up the corporate strategy. For example, Dell’s corporate strategy was to acquire Intel many years ago, and it turned out to be successful because Dell completely realized how Intel has been a key supplier and how they could improve their own organization by acquiring Intel to produce computers more effectively.
Different from corporate strategy, customer-driven strategies focus more on the public rather than other existing businesses. Customer-driven approaches allow companies to fulfill the needs of the target market better so that they can maximize their production efficiency. A correct customer-driven strategy requires business owners to develop a method of operation that is specific to a certain group of customers. Entrepreneurs should actively monitor market trends to take advantage of existing target customers and protect them from possible threats. Take Rolex, a luxury watch brand as our example. Rolex knows that their target customers are those upperclassmen who are willing to pay extra for better quality products. So they develop a system that actively communicates with the upperclass of the society to collect customer feedbacks to improve the quality of their products. We may blame Rolex for its “overpriced” products and its preference to the rich, but we cannot deny its success because it has developed a correct customer-driven strategy.
Developing core competencies and competitive priorities both focus on the company’s strategy to stand out among fierce competitions, as core competencies emphasize more on the company’s internal structure while competitive priorities stress more on the company’s external outlook. Companies with core competencies often have well-trained staff, optimal business locations and marketing expertise. And companies with competitive priorities often provide better care of their customers by producing quality products that meet the needs of the customers. Apple is a company with strong core competencies, as the employees are mostly well-educated and masterful. And Uber can be a great demonstration of competitive priorities, as it provides customers with great service at a fair price.
Last but not least, let’s take a look at the last category, product and service development. “Strategies behind the development of products and services should consider design, innovation and added values.” As I mentioned in my earlier blog posts on the relationship between innovation and entrepreneurship, product development and innovation can be vital to a company’s success. There are many different strategies in the area of product development. Some companies choose to give their new products a “beta test,” while other confident ones directly release newly developed items into the market. No matter what, a good strategy for product renewal and development is crucial to a company’s development. Adidas keeps getting popularity because the company is always updating their technology in the design of clothing and footwear. By contrast, Kodak, once a premiere photo printing and film making company in the beginning of the 21st century, has disappeared on the market because of its inability to develop new technologies.
With the last category covered above, we wrap up this week’s blog post on the topic of operation strategies of enterprises. Actually this blog post has covered many topics we will be discussing in the upcoming weeks: the study of the “target market” corresponds with the introduction of “customer-driven strategies;” the study on market competition and competitive edge is related with the discussion of “core competencies” and “competitive priorities;” the research on different revenue models can demonstrate a company’s “corporate strategy;” the topic of “product innovation,” obviously, falls into the category “product and service development,” and the research on “marketing” will be a conclusion about how to present all those things to the public. Even management, something we won’t get to in several months, is highly related with the concept of “core competencies” in this blog post. So I believe this blog post can be a good reference of my future posts.
Next week I will drift back to my research on sneakers and provide some updates of my own business. And then we will dive right back into the world of entrepreneurship. Stay tuned! Peace out!