Top-Down Approach to Operations Strategy in Small Publicly Traded Manufacturing Firms in Liverpool - Research Proposal Example

Business Research Proposal: Top-down Approach to Operations Strategy in Small Publicly Traded Manufacturing Firms in Liverpool Institution Course Date Business Research Proposal: Top-down Approach to Operations Strategy in Small Publicly Traded Manufacturing Firms in Liverpool Introduction The term “strategy” is one of the most used in the business dictionary (Slack & Lewis, 2010).A broadly acknowledged description of the word in business is one offered by Johnson et al.: the long-term direction and scope of an organisation that aims to give the organisation a competitive advantage in a dynamic business environment by deploying the organisation’s resources in manner that makes it possible for the organisation to meet stakeholder expectations (Johnson, et al., 2005). Strategy is thought to exist at three levels within an organisation: corporate, business and operational or functional levels. The corporate strategy is the highest level of strategy that defines the overall direction in which the organisation will move in the long-term (Slack & Lewis, 2010). In an organisation that comprises several business units, the corporate strategy will be concerned with what each unit will do, how resources such as money will be shared among them and how they will relate with each other. Corporate strategy is often expressed in the organisation’s mission and vision statements. Business level strategy is mainly concerned with the way a particular business unit will compete in its industry. Usually, for a single business organisation, business level strategy is the same as the corporate strategy (Cetinkaya, 2011). Operation strategy, the lowest level of strategy is concerned with the contribution of each functional area of business to corporate strategy, hence the alternative term “functional strategy”. The functional areas include human resources, finance, production, sales and marketing and public relations among others. Operation strategy has been likened to breakfast: just as breakfast is the most important meal for many people, so is operation strategy to an organisation. The strategy defines the objectives of each functional area of the business and stipulates how the function’s resources will be used to meet those objectives. In a way, operation strategy and the accompanying functional strategies are the building blocks of the house that is the organisation. There are two main approaches to operations strategy: the top-down and bottom-up approaches. In the top-down approach, corporate strategy informs and guides operation strategy. In bottom-up approach, the various functional strategies inform corporate strategy. The other approaches to operation strategy are the market-led approach and the approach that seeks to capitalise on the organisations core competence that is, what the organisation is best placed to do given its resources. The market-led approach seeks to make the organisation’s activities centre on meeting customer needs. Indeed, however developed, operation strategy must seek to be responsive to consumer needs: the primary reason businesses exist is to meet consumer needs and make a profit in the process. Purpose of the Research This research seeks to investigate the degree to which corporate strategy informs operations strategy and the effectiveness of such strategy in small manufacturing firms in Liverpool city. This purpose will be achieved through the following objectives. Research Objectives The objectives of the research are to: i. Study the processes of operations strategy formulation in the study organisations ii. Establish the actors in operations strategy formulation iii. To measure the extent to which operations strategies achieve the objectives they set out to achieve iv. To recommend policy measures for the improvement of the effectiveness of operations strategies Feasibility of the Research This research feasible because similar research has been undertaken in different settings as demonstrated in the review of literature in subsequent paragraphs. Also, the scope of the research is such that it can be completed within the permitted timeframe of three to twelve months. The researcher has narrowed down to publicly traded small manufacturing firms in Liverpool City. These criteria, the researcher believes, will produce a manageable sample size. Besides limited time, the researcher has limited funds and personnel to work with. Literature Review A 2011 study sought to investigate the relationship between strategic planning and corporate performance, as measured by financial results, in small manufacturing Jordanian firms (Aldehayyat & Twaissi, 2011). The finding of the study confirmed existing literature that supports the existence of a positive relationship between strategic planning and corporate performance. Moreover, the study reinforced existing empirical evidence of the existence of strategic planning in small firms. However, the study had its limitations. The research was limited to publicly traded small manufacturing firms in Jordan. Therefore, the extent to which the findings can be generalised is limited. The results would have become a representative and generalisable had the study considered a wider variety of firms across different sectors and in different countries. The data obtained for the purpose of the study was obtained from the participating firm rather than an independent source, a situation that compromised their reliability. The control of contingency factors such as the size of the firm, industry and internal and external environments is considered important in strategy studies (Aldehayyat & Twaissi, 2011). These factors were not controlled in the study. The main knowledge gap that emerges from this study is the method and process of strategy formulation. A 2014 study sought to propose what its authors called an integrated approach to operations strategy formulation (Kim, et al., 2014). By “integrated” they meant an approach that combines both top-down and bottom-up approaches. The study used 111 action plans, 59 top-down and the remaining 52 bottom-up from, from six German manufacturing firms. The contingency factor for the study was centralised and decentralised organisational structure. The study concluded by making some prepositions. First, the researchers proposed that the process of formulating operations strategy is an iterative, not a linear. This, they argued, is one the reasons an organisation may fail in the top-down approach to operations strategy (Kim, et al., 2014). Secondly, a decentralised organisational structure encourages the bottom-up approach whereas a centralised structure encourages top-down the approach. In the decentralised structure, functional action plans are the sources of operations strategy. Finally, top-down action plans (and operations strategies) are usually formulated to address specific priorities identified by management whereas bottom-up are often designed to pursue diverse opportunities for improvement that are beyond the strategic focus of top management, but capture the attention of low-level managers (Kim, et al., 2014). The main limitation of the study (and knowledge gap) is that it is silent on the various actors in action plan or operations strategy formulation, whether top-down or bottom-up. The study is also silent on the effectiveness of the action plans in the realisation of functional and organisational goals and objectives. Another study sought to investigate the relationship between operations strategy and flexibility in Spanish engineering consulting firms (Aranda, et al., 2011). Flexibility is a vague yet an important competitive goal. Firms seek to be flexible in their operations in order to be more responsive to their customers’ needs and other changes in the internal and external business environments. The study applies to service firms a model of flexibility adopted from manufacturing firms. The authors conclude that a well-formulated operations strategy makes a firm, whether service or manufacturing, flexible. However, the authors are silent on what it takes to formulate an effective operations strategy and the processes and actors involved. In addition, the authors treat flexibility as though it was an end in itself: in reality it is not. Firms pursue flexibility in order to be competitive or better serve their customers, for example. A 2011 study set out to investigate the relationship between manufacturing strategy and competitive strategy, two functional strategies, on the performance of Ghanaian firms (Amoako-Gyampah & Acquaah, 2008). The study found that there exists a positive relationship between competitive strategy and the various manufacturing strategies – quality, cost, delivery and flexibility. The study also found that quality is the only component of manufacturing strategy that affects performance. Thus, it makes more business sense for an organisation to focus on improving the quality of its products and services than pursuing cost leadership and differentiation strategies without doing anything to improve quality. The study does not reveal the processes through which the participating firms developed their strategies and the processes involved. Another 2011 study investigated the impact of inclusive and fragmented operations strategy formulation processes on operational performance in the personal computer industry (Brown & Squire , 2011). Inclusive manufacturing plants are those where the operation strategy is directly linked to business or corporate strategy, as the case may be, and concerned itself with broader issues such as raw material sourcing, supplier relationships and new product development. Fragmented operations strategies, where they existed, were detached from the corporate strategy and concerned themselves with technical solutions to problems in the manufacturing process. The study concludes that the process of formulating an operations strategy and its content have an impact on operations performance. However, the focus was on large global computer manufacturing firms and, as a result, the finding may not be generalised to small manufacturing firms. Research Design The proposed research is a cross-sectional, retrospective study (Babbie, 2004). It is cross-sectional in the sense that the participating firms will represent a cross-section of manufacturing firms in Liverpool. While all the manufacturing firms in Liverpool can be categorised into small, medium and large, the research focuses only on the small firms. The researcher proposes to narrow down further to those small manufacturing firms that are listed on the stock exchange. The rationale is that such firms, though small, are formal enough to undertake structured strategic planning. The study is retrospective in the sense that it will use previous strategic documents of the participating firms as opposed to the current ones. That way, the researcher will be able to assess the extent to which those documents attained the goals they sought to attain. Proposed Methodology The figure below represents Saunder’s research onion. It shows the various components of the research that are discussed below under various headings. Figure 1: Saunder’s Research Onion Source: Babbie, 2004 Philosophical Framing of the Research In philosophical terms, this is a positivist research. It is recognised that the concept of positivism is a problematic one to explain (Crowther & Lancaster, 2008). Nonetheless, positivism is premised on the argument that science is the only reliable source of knowledge as scientific knowledge is verifiable. “Causality” is a major concept of positivism (Heritier, 2008). The concept implies that there is a cause for everything. The positivist approach is suitable to this study because, as has been demonstrated throughout the review of literature, there is a positive relationship between sound operations strategy and organisational performance. Justification and Operationalisation of the Research The appropriateness of the research topic is justified by the fact that operations research has received much research attention in recent years as both scholars and practitioners increasingly appreciate the role of operations strategy in good corporate performance as measured by profits, for example(Aranda, et al., 2011). However, the bulk of the research so far has tended to focus on large international, multi-business organisations: little is known about the practice of operations strategy in small business organisations(Aldehayyat & Twaissi , 2011). The manufacturing industry was chosen because “operations”, meaning the totality of activities involved in producing and availing a product or service to the consumer, are perceived to be more critical in manufacturing than service firms(Kim, et al., 2014). A short account of Liverpool city justifies its appropriateness. Liverpool is an important British city with a long history. However, the city’s fortunes began to decline in the aftermath of the First World War as UK trade shifted from the Commonwealth and concentrated on European markets(Lee, et al., 2013). As a result, major industries relocated to England’s South east coast where new ports were developed. In order to revive the city’s economy, government policy throughout the 1950s and 60s sought to promote small manufacturing industries that could not compete with the large industries that targeted the European market. In order to identify the operations strategies formulation processes, the researcher will analyse the managements’ minutes of meetings leading the adoption of the strategy. In addition, the researcher will interview managers on the manner in which their organisations formulate operations strategy. In so doing, the researcher will also be on the lookout for actors in the process (Brown & Squire , 2011). The researcher will answer the question of the degree to which corporate strategy informs operations strategy by analysing the two concurrently. Where the two are contained in official documents, access to the documents will be sought. Otherwise, the researcher will infer corporate strategy from the stated mission and vision statements. The researcher will gain access to the firms and documents by means of a research letter issued by the university. Sampling The research will make use of purposive sampling (Delbert & Salkind, 2002). For a firm to be included, it will have to meet these criteria: it will have to be a small manufacturing firm with at least one plant in Liverpool City. Also, it will have to be listed on the London Stock Exchange for the reason given under the "research design" section above. According to the House of Commons Library, over 99% of UK businesses are small or medium-sized as of 2014 (Rhodes, 2014). These businesses are defined as those that employ between 0 and 249 people. However, the report is silent on the definition of a small business by annual turnover. For the purpose of this study, a small business is one with an annual turnover of £5 million. Given the firms small sizes, it is expected they virtually all will have centralised organisation structure, thereby eliminating the need to apply the centralisation/decentralisation as a contingency factor. A list of qualifying firms will be obtained from the London Stock Exchange out of which 30% of the firms will be picked (Delbert & Salkind, 2002) on condition that they meet the criteria specified above. Sources and Methods of Data Information will be gathered from primary as well as secondary sources. Primary sources will include interviewing managers and employees and, where appropriate, focus group discussions. Secondary sources of data will include business reports, corporate mission and vision statements and documented operations strategies. Data Analysis The data collected will be analysed through a three-stage process. The first stage will be data reduction where the mass of data will be organised and irrelevant data removed so that whatever remains is more manageable. Next, the data will be analysed and displayed. The datawill be analysed using content analysis, a group of manual and computer-aided tools for interpreting textual data. The analysis will process the data into more meaningful information that can be used to make decisions. The processed data will be presented using a variety of visual aids such as charts and graphs. These facilitate the comparison of data and are appealing to the eye. The third stage will entail verifying the findings and drawing conclusions. At this stage, the available data will be cross-checked for consistency. Ethical Issues Positivist research assumes the independence of the researcher in order that the outcomes may be objective (Tracey, 2010). One of the ways the researcher will ensure objectivity of finding is by avoiding unnecessary contact with his research assistants, especially during data collection and analysis. Interviews will be conducted anonymously: the researcher will not disclose the names of his respondents unless it will be extremely necessary, in which case he will first seek their permission. The researcher will refrain from obtaining information from employees without the permission of management. The researcher will endeavour to present information accurately as obtained without altering it. Limitations of the Approach For research involving strategy, it is important that the researcher effectively controls certain factors that are likely to alter the outcomes of the research (Aldehayyat & Twaissi , 2011). These include the size of the firm, its age and industry. Whereas efforts have been made to control the sizes of the participating firms (by limiting the study to firms with an annual turnover of £5 million or less), the researcher will not be able to control the other parameters such as the ages of the firms and the industries they operate in. indeed, doing so could lead to a very small sample size whose findings may be too unrepresentative to be generalised. Proposed Timeline The researcher proposes to undertake the research in the shortest time possible – three months - because the faster the research is done, the lower the cost. On the other hand, a protracted study is likely to incur more costs. Below is the timeline for the research: Number of Weeks Activity 1/2 Review of literature (in-depth) 1/2 Development of an improved proposal 1 Preparation of data collection instruments 1 Testing of the instruments 6 Data collection 1 Data analysis 1 Preparation of draft report 1 Preparation of final report Reference Aldehayyat, J. & Twaissi , N., 2011. Strategic Planning and Corporate Performance Relationship in Small Business Firms: Evidence from a Middle East Country Context. International Journal of Business and Management, 6(8), pp. 255-263. Amoako-Gyampah, K. & Acquaah, M., 2008. Manufacturing strategy, competitive strategy and firm performance: An empirical study in a developing economy environment. International Journal of Production Economics, Volume 111, pp. 575-592. Aranda, D., Montes , J., Fuentes , M. & Torres, I., 2011. OPERATIONS STRATEGY AND FLEXIBILITY IN ENGINEERING CONSULTING FIRMS, Granada: University of Granada . Babbie , E., 2004. The Practice of Social Research. 1st ed. California : Thomson/Wadson . Brown , S. & Squire , B., 2011. THE IMPACT OF INCLUSIVE AND FRAGMENTED OPERATIONS STRATEGY PROCESSES ON OPERATIONAL PERFORMANCE, Exeter: University of Exeter. Cetinkaya, B., 2011. Developing a Sustainable Supply Chain Strategy. Sustainable Supply Chain Management, pp. 17-55. Crowther , D. & Lancaster , G., 2008. Research Methods: A Concise Introduction to Research in Management and Business Consultancy. 1st ed. Oxford: Butterworth-Heinemann. Delbert , M. & Salkind, N., 2002. Handbook of Research Design and Measurement. 1st ed. London : Sage . Heritier, A., 2008. Causal Explanation. In: M. Keating & P. Della, eds. Approaches and Methodologies in the Social Sciences: A Pluralist Perspective. Cambridge: Cambridge University Press. Johnson , G., Scholes , K. & Whittington , R., 2005. Exploring Corporate Strategy. 7th ed. Harlow: Prentice Hall. Kim , Y., Sting , F. & Loch , C., 2014. Top-Down, Bottom-Up, or Both? Toward an Integrative Perspective on Operations Strategy Formation. Journal of Operations Management, pp. 1-43. Kim, Y., Sting , F. & Loch , C., 2014. Top-Down, Bottom-Up, or Both? Toward an Integrative Perspective on Operations Strategy Formation. Journal of Operations Mangaement, pp. 1-43. Lee, N., Sissons , P. & Jones , K., 2013. Wage inequality and employment polarisation in British cities, London : Lancaster University. Rhodes , C., 2014. Business statistics, London : House of commons Library . Slack , N. & Lewis , M., 2010. Operations Strategy. 3rd ed. Harlow : Pearson Education . Tracey, S., 2010. Qualitative Quality: Eight “Big-Tent” Criteria for Excellent Qualitative Research. Qualitattive Inquiry, 16(10), pp. 837-851. Read More