Course Overview

Operations strategy, which extends the concept of manufacturing strategy to all operations, examines strategy for operations within the firm. The course will examine how manufacturing and operations can be used as competitive weapons. We will also examine the critical strategic issues such as outsourcing and globalization. Operations strategy consists of the strategic use of manufacturing as well as other types of operations such as supply chain operations of a retailer or other service operation. Traditionally, these areas have been viewed as narrow, functional areas, and management of them was based on some simple criterion such as cost minimization. More recently, managers and business observers have understood that manufacturing and operations have to be managed in the broader context of business strategy. In this sense, decisions on manufacturing and operations capabilities must fit and be consistent with the business strategy. Furthermore, decisions about different areas of manufacturing must be consistent with each other. Choices about facilities, capacity, vertical integration, process technology, control and information systems, sourcing, human resources, organization and other areas are all strategic choices that significantly affect what the business brings to the marketplace. The course will examine how decisions in these areas can be made in a coherent manner.

Beyond integration of manufacturing decisions with business strategy, manufacturing and operations strategy emphasizes the concept of operations. Using the broad notion of manufacturing, a company's strength in manufacturing and operations can gain a significant competitive advantage. Such an advantage can accrue through superior product development, cost, quality, features, etc.

The course will be divided into four parts. In the first part, we will examine general concepts such as competitive leverage using manufacturing and operations, the fit of the various elements of manufacturing, and manufacturing focus. In part two we will examine the key elements and decision categories in an operations strategy. These include facilities and capacities, technology, and the other decision categories noted above. In each of these areas, we will examine how different choices affect the business competitively.

In the third part of the course, we will examine how these different elements can be combined into a coherent strategy. We will examine different strategic approaches, each of which places requirements on manufacturing and operations, but which allow different means for companies to compete. These approaches include competing on cost and productivity; quality; availability and flexibility; and features, innovativeness and new products. For each means of competition, the various pieces, facilities, technology etc., must all be consistent with the strategic goal.

Part 4 examines some issues in manufacturing and operations policy and strategy that are particularly relevant today. These issues revolve around outsourcing and globalization. For example, how much should a company outsource? Can a company give up all of its manufacturing? We will also explore globalization. Should an economy such as the U.S. concerned about the flight of jobs over seas to China and India? Such themes, while a focus in part 4, will also appear in other parts of the course. Part 4 will also explore the future of operations and manufacturing.

The course will be based largely on case studies, and sessions will (hopefully) include a great deal of class discussions. We will have some lectures.


The standard written assignments will be a case write-up "Applichem" that the entire class will do plus three short executive summaries for sessions that you will sign up for. If anyone is interested in working on a special topic, we can consider a substitution for the other assignments. Our policy for this class is that you should not benefit from anyone who has already participated in a faculty-led discussion of the case, at Sloan or at another school.

The executive summaries will be shorter reports that are for cases of your choosing. For most classes, we will have three teams of two prepare these reports and open the class.


Grades will be based one-third on participation and two-thirds on written material.