Operations Strategy-A Literature Review

Running head: OPERATIONS STRATEGY: A LITERATURE REVIEW 1
Operations Strategy: A Literature Review
Matthew W. Morris
Liberty University

OPERATIONS STRATEGY: A LITERATURE REVIEW 2
Abstract
Operations strategy is a valuable resource that offers many advantages to organizations that fully
embrace and integrate the formation process with existing corporate strategy. In changing
environments where companies are looking for ways to increase their competitive edge while
decreasing operating expenditures, a successful formation of an operations strategy will provide
a stabilized long-term competitive advantage for the majority of organizations. Over the past 50
years, hundreds of articles have been written on the subject. These writings act to shape what we
know about the development of operations strategy, planning, and the opportunities for future
implementation and research. This paper examines the argument that exists throughout the
literature, that forming an operations strategy and integrating it with the organizations corporate
strategy can significantly improve the efficiency of an organization and reduce costs. The paper
concludes that the literature clearly supports the premise that implementing an operations
strategy is becoming increasingly important in a global business environment.

I. Introduction
A. Themes
B. Thesis
II. Operations Strategy Formation Methods
A. Top-Down Approach
B. Bottom-Up Approach
C. Integrated Process Model
D. Strategy Formation as a Continuous Process
III. Inequality Between Content and Process Literature
A. Operations Strategy Content Approach
1. Competing through manufacturing.
2. Strategic choices.
3. Best practices.
B. Operations Strategy Process Approach
C. How to Balance Content and Process
IV. The Synergy of Operations and Corporate Strategy
A. Barriers Preventing Synergy
B. Solutions to Barriers
C. Why the Integration of Operations and Corporate Strategy is Important
V. Conclusion and Recommendations
A. Strengths and Weaknesses
B. Next Steps for Future Research
C. Implications of Research
VI. References

Increased globalization, constant improvement of information technology, and the
evolving business environment has forced managers to take a strategic approach to operations
(Hayes, Pisano, Upton, & Wheelwright, 2005). Operations strategy is defined as “the pattern of
decisions which shape the long-term capabilities of any type of operations and their contribution
to overall strategy, through the reconciliation of market requirements with operations resources”
(Slack & Lewis, 2002, p. 16). The current competitive business environment has caused a shift in
the operations strategy and planning process and calls for updated research on the subject.
The term operations strategy has taken on two definitions in literature, and the current
form is often interchangeable with the term manufacturing strategy. The underlying theme that
exists within literature is the emphasis placed on developing an operations strategy that aligns
with the corporate strategy. The resulting strategy provides a framework for management to
utilize when creating the organizational design and structure that will be most effective within
the strategy.
The objective of this study is to provide a current literature review on operations strategy,
and identify common themes that exist in recent research. Three themes exist throughout the
literature, which will provide the organization for this review: (a) there are multiple accepted
methods to form an operations strategy, (b) the literature content of operations strategy vastly
outnumbers the available literature addressing the process, and (c) linking corporate strategy and
operations strategy improves company performance. Over the last ten years, operations strategy
has begun to play a more significant role in the overall strategies of organizations, with an
increase of process knowledge throughout the industry, and research with proven evidence of
improved efficiencies following implementation.

Operations Strategy Formation Methods
The process and methods used by an organization to develop an operations strategy have
varied throughout the literature, and no consensus exists supporting a singular method of
formation that is more effective than another. The process of operations strategy consists of the
action and intricacies of forming and implementing the strategy, while the content includes the
actual decisions made to address the priorities, objectives, and direction of the strategy (Kim,
Sting, & Loch, 2014). Most debates concerning the strategy formation process are split between
the formation and implementation from senior management or the on-going approach formed by
the actions and decisions of persons spread horizontally within an organization. Since Skinner
(1969) argued that manufacturing (operations) should support corporate strategy, the operations
strategy formation process has been dominated by a top-down approach that originates with
corporate leadership. The top-down approach has historically been the most studied method,
however, a bottom-up strategy has been documented as an alternative when a defined corporate
strategy does not exist (Slack & Lewis, 2011).
A third method of formation that integrated the top-down and bottom-up approach was
proposed following a study of the internal process of operations strategy in six German
manufacturing plants with 111 strategic action plans (Kim et al., 2014). This study consisted of
data collection and personal interviews focused on competitive priorities and organizational
structure to analyze the individual strategies of each manufacturing plant, and how the strategies
originated. The data provided a stark comparison between approach methods utilized by the
centralized and decentralized organizational structures included in the sample. The decentralized
organizations fostered a bottom-up approach with significant employee involvement, and the
centralized organizations imposed strict guidelines controlling daily operations. These results

support the claim that organizational theory and design influences the approach taken when
forming an operations strategy. The empirical studies and research on the three approaches to
operations strategy formation will be reviewed further in the following sections.
Top-Down Approach
This “macro-level” process is described as the planned coordination of intentions and
actions from upper level management to achieve specific outcomes and goals imposed by a
central authority (Kim & Arnold, 1996). Senior management within an organization determines
the long-term goals and how they intend to meet them prior to actions being taken, with little to
no discretion provided. Research shows a difference exists between the planned strategy and
what actually occurred, although some strategies have resulted in the desired outcome being
achieved upon implementation. Following the outcome results, management then reinforced or
adjusted the plan to meet desired goals. The trend of organizations in the current market is to
transition into more decentralized structures that offer the ability to remain flexible as the
business climate changes. A top-down approach with strict guidelines creates the potential for
incompatibility with other strategies within the organization such as marketing, and is a risky
proposition. The importance of adopting a strategy that has support from the workforce while
also aligning and integrating with other organizational strategies is paramount in the current
environment.
Bottom-Up Approach
Patterns of unplanned actions resulting in realized outcomes that were not originally
intended by senior management provide the basis of the bottom-up “micro-level” approach
process. Loose guidance and direction is provided by top management without specific details,
empowering middle managers to develop strategic initiatives that will serve their objectives

while also supporting the direction of leadership. Slack and Lewis (2011) described the principle
governing a bottom-up perspective of operations strategy as “shaping objectives and action, at
least partly by the knowledge it gains from day-to-day activities” (p. 13). A practical exercise
study demonstrated in Rytter, Boer, & Koch (2007) advanced the effectiveness of a bottom-up
approach to operations strategy formulation when collaboration is achieved from multiple
stakeholders using a constant flow of dialogue followed by action. The collaboration between
members of an organization towards a unified goal acts as motivation and positivity towards the
operations strategy formulation process. This subject, and future research on the advancement of
the bottom-up approach is important to the overall improvement of operations strategy processes.
A quality operations strategy is a key component to the success of an organization and the
improved viability of a smooth integration between operations strategy and corporate strategy.
Integrated Process Model
This model is a hybrid of the top-down and bottom-up approaches that provides a
strategy supporting the intentions of top management resulting from the actions of middle and
lower management in absence of, or despite top management intentions. Integration between the
two approaches provides guidelines for operations strategy development while also encouraging
creativity and input from middle management and individuals throughout the organization.
Barnes (2001) previously acknowledged the viability of a hybrid model of process formulation
when stating “it is the pattern of decisions actually made that constitutes a function’s strategy,
not what is said or written in annual reports or planning documents” (p. 1077). The integrated
model has garnered curiosity in recent literature despite the lack of a substantial amount of
research or data that supports or refutes its effectiveness. The integrated process model was

recently developed and lacks significant research or empirical studies to support whether the
method is effective or not. Future research must be completed to further develop this model
Strategy Formation as a Continuous Process
Recent contributions to the literature on operations strategy have continued to focus on
the top-down approach of formulate-then-implement in spite of the growing number of firms
transitioning to the learning organization principles of operation. Nielsen-Englyst (2003)
outlined a strategic management process that continuously managed strategy formation and how
it could be designed and communicated. The seven-year case study consisted of four overlapping
and iterative phases of learning, reviewing, aligning, and redirecting, and the results supported
the claim that a continuous strategy formation process is good practice. This study expanded
upon, and advanced the proposed manufacturing formulation processes of Platts, Mills, Neely,
Gregory, and Richards (1996), which called for an increased focus on how the process should be
organized and executed rather than the logic of the approach. This approach urged management
to assume a coaching role and empower others to take ownership of the mission and strategy
process. The increasing number of centralized hierarchal organizations that have transitioned into
an organic or learning organization structure will be attracted to the continuous process strategy
formation. This attraction is a result of how the strategy will allow the organization to remain
flexible while constantly improving operations strategy through a periodical assessment that will
consider fresh proposals and ideas from across the organization.
Inequality Between Content and Process Literature
Throughout the operations strategy literature, researchers tend to distinguish between
content and process approaches. Rytter et al. (2007) explains how content approaches are
concerned with how operations can design a competitive advantage. This is achieved by

providing normative guidelines on what to include when creating an operations strategy. Process
approaches focus on how to conduct operations strategy formulation and implementation
processes. The overwhelming majority of operations strategy publications are focused on content
instead of process. A recent review by Dangayach and Deshmukh (2001) revealed that out of the
260 papers reviewed on manufacturing strategy, only 23 (9 percent) addressed process issues.
The lack of process-focused literature was reiterated by Boyer, Swink, and Rosenzweig (2005),
when an examination of operations strategy literature in the Production and Operations
Management Journal revealed that out of thirty-one articles, only eight were process focused. An
analysis of differences between content and process is necessary to answer the question
concerning why there is such an imbalance between the two approaches, and how the issue may
be rectified. Research and understanding of the process surrounding a proper formulation of an
operations strategy is essential in the current volatile global business environment.
Operations Strategy Content Approach
Given its role in supporting corporate strategy, an operations strategy is designed to make
strategic choices concerning the development of the structure, infrastructure, and capabilities to
support competitive priorities. The content dimension consists of strategic choices in structure
(technology process, plant capacity and location) and infrastructure (human resources,
organizational design, information technology, management systems) that directly impact the
ability of a firm to successfully achieve their competitive priorities (cost, quality, delivery
dependability, delivery speed, flexibility) (Garrido, Martín-Peña, & García-Muiña, 2007).
Content has been described in literature as the strategic choices in process and infrastructure, and
Voss (2005) introduced a concept recognizing three different paradigms of choice and content
that exists in manufacturing strategy: (a) competing through manufacturing, (b) strategic

choices, and (c) best practices. Garrido et al. (2007) agrees with the concept of three paradigms
existing of choice and content in operations strategy, but also contents that none of the paradigms
can individually explain how to develop an effective operations strategy.
Competing through manufacturing. Skinner (1969) was the first to observe that the
manufacturing function of a company plays a more significant role than just producing and
shipping products. Wheelwright and Hayes (1985) introduced the business strategy concept of
competing through manufacturing when they recognized the strongest competitors in the
manufacturing industry had the greatest manufacturing capabilities. This approach contends that
firms should align their capabilities with identified key success factors, corporate and marketing
strategies, and marketplace demands (Voss, 2005). Researchers have become increasingly
interested in the study of the relationship that exists between operations strategy and competitive
advantage. Firms that attempt to implement a strategy of competing through manufacturing place
a much greater focus on operations strategy, and take a bottom-up approach to the formation
process which unites employees and management around a common vision for the organization.
Five competitive priorities are recognized in literature as: (a) cost targets the production
and distribution of product at low cost, (b) quality ensures that products are manufactured with
the highest quality and standards, (c) delivery dependability reassures customers and clients that
products will be received, (d) delivery speed adds to the competitive edge when customer orders
are processed and delivered expediently, and (e) flexibility is essential in to remaining
competitive by reacting to changes in product, changes in product mix, modifications to design,
fluctuations in materials, changes in sequence (Koste & Malhotra, 1999). The importance of
these five competitive priorities is that they represent focus of the overall strategy of the

organization, and how support for the recognized priorities must be included in the operational
strategy formation and implementation process.
Strategic choices. This paradigm was narrowed down to two areas, process and
infrastructure, recognized as contingency-based approaches because the decisions made are
contingent on the current context and strategy of the environment. The contingent factor that is
present with the strategic choice paradigm has raised the claim that it is the most powerful of the
strategy approaches because of how it enables companies to align the operations strategy directly
with the marketing positioning. Specific structural and infrastructure criteria involves
organizational design structure that has the potential ability to impact the choices made by the
organization based upon which approach is used when forming the operations strategy
Best practices. The third and final paradigm recently entered the operations strategy
process as a result of three recognized factors. The superior performance of the Japanese
manufacturing industry was recognized by Western nations, who then focused on reproducing
the Japanese practices. The expansion of business process-based approaches, and the increase of
national and global awards and recognition for best practices (Voss, 2005). Advanced
manufacturing technologies and better manufacturing management practices like Just-In-Time
systems are widely researched areas within operations strategy. Extensive research supports the
link between firms that operate on a best practice approach with proper implementation
consistently exceed operating performance standards (Moran & Meso, 2008). The positive
aspects of a best practice approach have also proven to be negative when organizations do not
properly implement the practice, resulting in significant failure rates during implementation of
each practice.

The three paradigms of competing through manufacturing, strategic choices, and best
practices have been completely vetted by numerous studies, and are established as essential
pieces of the operations strategy content. The significant importance of the three paradigms that
make up the content in the success of business and operations strategy is recognized through the
majority of research and literature material available compared to the process of actually forming
an operations strategy. The constantly changing global business environment that exists along
with recent literature reviews have raised concern from researchers that the process of forming
an operations strategy is not being adequately studied or developed.
Operations Strategy Process Approach
The process approach aspects of formulation are the design, development, and
implementation of the operations strategy (Dangayach & Deshmukh, 2001). Hill (1989)
developed the original foundation for formulation by designing a step-by-step procedure to
utilize when developing an operations strategy. Platts (1993) introduced a second approach to
strategy formulation that he described as a three-stage audit-based approach. The three stages
were: (a) creating the process, (b) testing and refining in a small number of companies, and (c)
investigating wider applicability by means of a survey. The progress of operations strategy
development continued when Mohanty and Deshmukh (1999) introduced a strategic model for
selecting and evaluating process in a learning organization. Current researchers are seeking an
understanding of what workers do when they produce strategy, and are uninterested in the
strategy itself (Jarzabkowski, 2005). Orlikowski and Scott (2008) addressed the growing use of
technology in the workplace and the lack of research that has been conducted on the role of
technology in organizational environments. The process approach is slowly increasing in

popularity in literature as researchers seek to understand what how strategist think and operate
when developing strategy.
How to Balance Content and Process
As the interest in how strategy is developed increases, the available literature using a
process approach is poised to increase. The content approach will absolutely maintain relevance,
and may possibly grow as researchers apply what they learn from process studies to the
mechanics of the operations strategy itself. Research studies have applied social practice theory
and ANT theory to the process approach to attempt to understand how individuals think and act
while developing strategies (Papadopoulos, Randor, & Merali, 2011). This successful research
into the minds of strategist has acted as a catalyst for an increase in literature and research on the
process of developing operations strategy. The successful research and growth in available
research on the process approach is important to the study of operations strategy because of how
it provides insight to the mind and human element of strategy development and has the potential
to create a trainable system that is able to be taught to individuals in a variety of different
environments within their particular industry.
The Synergy of Operations and Corporate Strategy
Skinner (1969) established the importance of integrating operations and corporate
strategy, and formed the foundation for continued research on the subject. Despite originating in
1969, empirical studies on the results of linking business strategy and operations strategy were
scarce until recently. A consistent line of literature from multiple researchers contends that the
business strategy must be supported by the operations strategy through a concentration on value-
added work flows that target a short list of objectives influenced by customers, competition, and
change in the environment (Mohanty & Deshmukh, 1999). The synergy of operations and

corporate strategy is the most important piece of organizational operations, and current research
(Adamides, 2015; Kiridena, Hasan & Kerr, 2009) emphasizes the advantages a company has
over the competition when these two strategies are aligned and working together. There are
barriers that exist within current organizations that create conflict in the process and need to be
remedied (Krause, Youndahl, & Ramaswamy, 2014).
The original focus of literature on operations strategy had a large focus on the repetitive
manufacturing aspect of operations rather than the constraints a poor operations strategy could
place on the overall competitiveness of an organization (Maylor, Turner, & Murray-Webster,
2015). Organizations that take on an operations strategy perspective that focuses on the decisions
being made that will impact the relationship between organizational strategy and the actual
operations of that organizations will maintain constant awareness of the operational environment.
Maylor et al. (2015) presented a study concluding that focusing operations on specific goals and
strategies was beneficial for establishing stability within an organization in order to begin the
process of strategic consensus of an operations strategy that is appropriate and properly
communicated within the organization. Krause et al. (2014) also supports this claim that
establishing stability and clear communication with a focused approach is essential to a
successful integration of operations and corporate competitive strategies.
Barriers Preventing Synergy
Krause et al. (2014) cited multiple examples of organizations in a variety of industries
that owed their competitive dominance to their excellent operational abilities such as Reliance
Industries, Wal-Mart, Procter and Gamble, and Apple Inc. Operations leadership has been
proven through a variety of qualitative studies (Kiridena et al., 2009) to reduce costs and increase
competitive power within the organizational industries, but researchers are conducting studies

into why so many companies will not work to synchronize their operational and corporate
strategies. Skinner (2007) noted that 95 percent of the companies he meets with are having a
conflict or issue between the manufacturing policies and strategies and the competitive strategy.
Krause et al. (2014) contends that an issue with successful integration within organizations is not
from a lack of effort but a disconnect in education where management and company leadership
does not completely understand how to integrate the operations function with the corporate or
competitive strategy.
Adimades (2015) cited internal politics as an additional source of disconnect within
organizations between operations and corporate strategy. Individuals in power positions and
status refused to cooperate or answer questions regarding the internal strategic process. These
players were further examined and a trend in the study showed the tendencies of certain
individuals within a transitional process who attempt to promote their personal agenda to disrupt
the creation of a new strategy within the organization. The impact these particular individuals
have on the strategizing process has the potential to be extremely negative, especially if the
individual is a part of top management. Boyer, Swink, and Rozenweig (2005) also supported the
results showing the negative effects individuals in political or power positions may have of the
transitional process. Boyer et al. (2005) identified a missing aspect of research that needed to be
completed to address the possibility of different groups within a company being realigned in
order to achieve the overall organizational goals and also the process that would support a
positive alignment not only within the internal strategies but also with external supply chain
partners.
Slack (2005) argues that although there has been an increase in awareness throughout the
business environment concerning the importance of operations strategy is has still not reached its

full potential of effectiveness. Slack (2005) provides a contrasting view to a majority of research
and literature that is available concerning operations strategy by contending that the process and
practice is irrelevant at this time. The reason for low recognition of operational strategy was a
result of the subject not necessarily representing ‘operations’ as they existed in practice within
the business industry. Further research is cited regarding the confusion caused by the
interchangeable usage of the terms manufacturing strategy and operations strategy. This
argument continues into 2015 and calls for additional research and clarification of the two terms
and their meanings. Krause et al. (2014) also made the claim to support the lack of knowledge
and understanding within organizations regarding the two terms that have often been utilized
interchangeably in both practice and in literature.
Solutions to Barriers
The trend towards decentralized organizations is increasing, and a bottom-up approach to
strategy formation is becoming a more common practice. This trend creates an opportunity for
organizations to adopt a culture where the formation of operations strategy is a collaborative
effort centered on the processes of the organization. Integrating the operations strategy with the
corporate strategy is then accomplished by knowledge and input spread horizontally through the
firm until the practice of formulating operations strategies with the competitive strategy process
becomes routine (Adamides, 2015). Incorporation of this strategy adds emotional levels of
accountability within the organization by placing direct responsibility on individuals in a social
environment. Cultural and social pressures are then applied to facilitate cooperation and a sense
of ownership in the process. Gomez (2010) further supports the claim that individuals who are
involved in the development process who have their ideas heard and appreciated by management

and their peers are more likely to develop a sense of pride and ownership of the work they
perform for the organization, result in an increase in overall efficiencies.
A variety of studies exist that investigate the science of operations strategy formation and
the social practice theory (Gomez, 2010; Jarzabkowski & Spee, 2009) in an attempt to
understand the acts of strategy production, and if they are influenced by inscribed material such
as operating standards and visual charts that exist in their working and strategizing environment.
The social practice theory research focused on individuals, their practices, and the activities
performed that contributed to the change in their strategic orientation resulting from the outcome
of strategizing compared to the ANT theory that is designed to assist in the understanding of how
practices/routines are associated to each other and changed operationally (Papadopoulos et al.,
2011). The study concluded that the necessary link for aligning operations and corporate
strategies within an organization is by properly institutionalizing the operations strategy and
processes with the corporate and competitive strategy process so the practice become an integral
and routine part of the organizational practices (Adamides, 2015).
Why the Integration of Operations and Corporate Strategy is Important
Recent studies and research conducted to investigate the impact of operations and
manufacturing success on the business success have demonstrated an overwhelmingly positive
result. The study recognized the relationship between manufacturing strategy and manufacturing
success, and concluded that the contributions of manufacturing strategies correlated directly with
an improvement in manufacturing performance. A solid manufacturing strategy plays an integral
role in a firm’s business strategies that integrates to form clear objectives and actionable items to
secure a long-term advantage over competitors that is sustainable (Moran & Meso, 2008). An
organization that successfully executes an integration of operational and competitive strategies is

scientifically proven to have a significantly greater chance of success than organizations that do
not pursue the viability of integration within their own operations.
Conclusion and Recommendations
The purpose of this study was to provide a current analysis and review of scholarly
articles and literature that covered the subject of operations strategy, and identify common
themes that existed throughout recent research. Following an exhaustive review of over 30
articles and scientific studies, the review supported each of the three main themes that were
recognized in the initial study. There are multiple accepted methods to form an operations
strategy. The literature published addressing the content of operations strategy vastly
outnumbered the available literature addressing the process approach. Linking/integrating
corporate strategy and operations strategy vastly improved company performance, and stabilized
the long-term competitive advantages of organizations that successfully completed the
integration. The articles and studies also supported the thesis statement made in the introduction,
which stated: over the last ten years, operations strategy has begun to play a more significant role
in the overall strategies of organizations, with an increase of process knowledge throughout the
industry, and research with proven evidence of improved efficiencies following implementation.
Strengths and Weaknesses
The strengths of the literature included the research that presented scientific studies in an
attempt to further increase the available knowledge on the psychology involved in the formation
of strategies by individuals in an attempt to understand how strategies are actually formed.
Another scientific study that stood out during the review was an analysis that applied the social
practice theory and the ANT theory to investigate the behavioral tendencies of employees in a
variety of situations within an organization. The results of the behavioral study provided a

significant insight into organizational structures and designs that provided the most ideal
circumstances to allow for a successful integration of the operations strategy with the corporate
strategy while also receiving buy-in from a majority of the workforce. The final strength was the
quantity of available literature concerning the content of operations strategy and how important
operations strategy is to the long-term health of any organization.
The weaknesses of the literature reviewed included the lack of available research with in
depth analysis addressing the specific step-by-step process of forming an operations strategy for
an organization. Outdated studies existed, but current research was non-existent. There was also
a general lack of current research or scientific studies that was performed over the last three
years. This lack of current research did present a challenge in citing recent sources throughout
the review, but a significant amount of information was available from sources dated in the late
90s and early 2000s. A final weakness was that many of the research studies that were available
were based on a single case instead of a broader study.
Next Steps for Future Research
The next steps for future research and scientific studies of operations strategy need to be
increasingly focused on the process involved in the strategy formation process instead of the
content after the strategy has already been created. There is a general lack of knowledge
concerning the operations strategy formation process, and also research analyzing different firms
that went through the integration process and were successful. The methods and steps taken for
firms that failed in the integration is also important to study so that the mistakes are not made by
another firm in the future. The creation of a set of guidelines for different scenarios and steps for
operations strategy development designed by an authority in the industry, such as a major

consulting firm, would significantly increase the understanding of operations strategy by both
academics and organizations.
Implications of Research
Future improvement of knowledge and understanding of operations strategy and its
implementation within an organizations processes is important for our economy in the United
States and around the globe. An increase in efficiencies due to streamlined processes and
manufacturing strategies frees up capital for investment, lowers shipping costs for consumers,
and provides increased job opportunities along with many other daily enhancements as a result of
efficient processes throughout the environment around us.

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