Let’s recap the past 4 segments on business strategy and what Kepner & Tregoe call the driving force behind the strategy. Here is what we’ve covered so far:
1. Overview of the concept of driving force
2. Market driven company strategies
3. Product driven company strategies
4. Technology as a firm’s driving force
5. Methods of Sale and Distribution as the Driving Forces for Strategy
Today we will discuss the firm’s Production Capabilities as the driving force of strategy.
A firm’s production capabilities include the production knowledge, processes, systems, and equipment required for the creation of specific products, and the ability to improve on these systems. If your firm is a service organization, then the production capability includes the systems and processes necessary to provide the service and any supporting materials, processes, etc.
Production Capabilities as the Driving Force
The firm whose strategy is driven by Production Capability will only offer only the products and services that can be made or developed using its production knowledge and processes.
There are two forms of production that can drive the organization. The first is a commodity business characterized by long production runs, economies of scale, and maximum efficiencies. New products could be similar to or very different from current products but still using the existing production processes and knowledge.
This type of organization may also elect to manufacture products for other companies as a method of maximizing utilization and/or efficiencies.
The other type of Production Capability as a Driving Force is the job-shop type of business. This organization manufactures a wide variety of products and components. New products or type of work taken-on would use these same types of production abilities. As this type of firm matures, they would probably add a variety of capabilities and services to broaden the their base of customers and provide more flexibility and value added.
Check here for initial post of this series, “What is Driving Your Company?”
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