Manufacturing strategy formation process: case study of Iranian manufacturing companies/ Gamybos strategijos formavimo procesas Irano gamybos imonese.
Ghazinoory, Sepehr ; Khotbesara, Rahman Mahdiani ; Fardoei, Sedigheh Rezaeian 等
1. Introduction
Today, manufacturing companies are forced to stand up to
competitors in the light of a highly competitive environment. This can
be achieved by a specific alignment of the manufacturing function (Thun
2008). Manufacturing is one of several functions that have to support
the achievement of the overall objectives for a company. The task can be
fulfilled with support from a well formulated and implemented
manufacturing strategy (Safsten et al. 2007). In many industrial
companies, the manufacturing operations is the largest, the most
complex, and the most difficult to manage component of the firm. The
formation of a comprehensive manufacturing strategy affects, and is
affected by, many organizational groups inside and outside the firm
(Hax, Majluf 1996). Skinner (1969) is the forerunner in defining
manufacturing strategy. According to his studies manufacturing strategy
refers to exploiting certain capabilities of the manufacturing function
as a competitive weapon. These capabilities are affected by a number of
factors. Amongst these are technologies utilised (e.g.; process
technology, JIT), sociological factors inside the firm (including
political and behavioural), and external variables (e.g. governmental
regulations, societal culture). Barnes (2002a, b) proposes a framework
that takes into consideration the above variables. His main hypothesis
is that firms manufacturing strategy is affected by these variables in
deliberate and emergent route.
In this paper, six manufacturing companies of Iran were studied in
order to understanding of the process of manufacturing strategy
formation. For this we use Barnes's studies (Barnes 2002a, b) as
theoretical framework for this study will be explained in the
methodology section.
The rest of the paper is organised as follows: section 2 deals with
the literature review. Section 3 presents the methodology of the paper.
Section 4 offers the results of the study. Finally, section 5 discusses
the main results of the investigation, and also offers conclusions and
directions for future research.
2. Literature review
A manufacturing strategy is a set of manufacturing policies
designed to maximize performance among trade-offs among success criteria
to meet the manufacturing task determined by a corporate strategy
(Skinner 2007).
Hayes and Wheelwright (1985) have defined manufacturing strategy as
a consistent pattern of decision making in the manufacturing function
which is linked to the business strategy. Hill (1987) said that
manufacturing strategy represents a coordinated approach, which tries to
achieve consistency between functional capabilities and policies for
success in the marketplace. Swamidass and Newell (1987), describe
manufacturing strategy as a tool for use of manufacturing strengths as a
competitive weapon to attain business and corporate objectives. Devaraj
et al. (2001) compare the Hayes and Wheelwright's product-process
matrix and the approach of generic manufacturing strategies introduced
by Kotha and Orne (1989) empirically. Bates et al. (2001) analyse
manufacturing strategies empirically by using the scales anticipation of
technologies, communication of strategy, formal planning, business
strategy linkage, and strategy strength. Cagliano et al. (2005),
investigate different types of manufacturing strategies based on the
data of the International Manufacturing Strategy Survey (IMSS) project.
Other definitions of manufacturing strategy are given below: Swink
and Way (1995): Manufacturing strategy as decisions and plans affecting
resources and policies directly related to sourcing, production and
delivery of tangible products. Berry et al. (1995): The choice of a
firm's investment in process and infrastructure that enables it to
make and supply its products to chosen markets. Cox and Blackstone
(1998): A collective pattern of decisions that acts upon the formulation
and deployment of manufacturing resources. Miltenburg (2008):
Manufacturing strategy is a plan for moving a company from where it is
to where it wants to be.
Manufacturing strategy is a driving force for continual
improvements in competitive requirements and enables the firm to satisfy
a wide variety of requirements.
The manufacturing strategy literature includes contents and
process.
In the academic literature, as well as in practice, there is more
or less consensus in what constitutes the content of manufacturing
strategy. Manufacturing strategy objectives are defined around the
generic areas of cost, flexibility, quality, dependability
(on-time-delivery) and speed (Adamides, Pomonis 2009). Decision areas
and related activities for achieving these objectives have been
categorized by Hayes and Wheelwright (1985) into structural (amount,
timing and type of capacity, size, location and specialization of
facilities, direct process technology (equipment, level of automation,
linkages), and level and type of integration (vertical-horizontal,
forward-backward, extent, balance)) and infrastructural, i.e. human
resources (skills, wages policies, social environment), quality
practices (systems and control), production planning and control
procedures (decision rules, indirect process technologies,
centralization), as well as general organizational attributes
(structures, roles, interfaces and interconnections). The majority of
manufacturing strategy scholars adheres to this list, sometimes with
some additions and modifications, in proposing/prescribing (their own)
manufacturing strategy formulation processes (Adamides, Pomonis 2009).
Manufacturing content are components that form it and show what the
decisions and actions are. It includes manufacturing capabilities,
strategic choices and best practices (Dangayash, Deshmukh 2001). Content
literature addresses issues of competitive priorities, which includes
(Theodorou, Florou 2008): Cost, quality, flexibility, dependability and
innovation.
Decision in manufacturing-related issues are often grouped into
areas also known as decision categories. The categories are divided into
structural and infrastructural categories. The structural decision areas
are characterized by their long-term impact; they are difficult to
reverse or undo and they often require a substantial capital investment
(Safsten et al. 2007). The most important of these areas in
manufacturing literature are process technology, facilities, capacity
and vertical integration. The infrastructural decision areas are often
considered to be more tactical in nature; they are built up by ongoing
decisions and generally do not require extensive capital investment
(Safsten et al. 2007). It includes quality, organization, manufacturing
planning and control.
Manufacturing process explains how a strategy is formed and how
those decisions and actions come about. Manufacturing process is
regarded as the implementation and improvement of manufacturing
strategies in order to enhance the manufacturing function's
capabilities (Halgren, Olhager 2005).
The manufacturing strategy process describes the formulation and
implementation of a manufacturing strategy (Safsten et al. 2007). This
part of the manufacturing strategy area has attracted less attention in
the research community than the manufacturing strategy content
(Dangayash, Deshmukh 2001). The few manufacturing strategy process
models in the literature are essentially hierarchical (Ward et al.
1990). Here corporate strategy drive Business strategy, which, in turn,
drives the functional strategies and there are feedbacks on functional
capabilities provided throughout the process (Platts et al. 1998).
Various connotations of manufacturing strategy are given in Table 1.
Many reviewers of the manufacturing strategy literature including
Leong et al. (1990), Adam and Swamidass (1989), Anderson et al. (1989),
have noted the continued dominance of Skinner's (1969)
Prescriptive, top-down, corporate planning model, with its emphasis on
the formulation of plans for subsequent implementation. The most
important manufacturing strategy writers including Hill (1985), Platts
and Gregory (1990), Mills et al. (1996) have followed Skinner's
prescriptive intent, primarily focusing on how managers should ensure
that an effective manufacturing strategy is formulated rather than how
it might be formed in practice (Barnes 2002a). These models are based on
the deliberate view of strategy formulation as a planned and rational
activity. While based on Barns view which is influenced by studies done
be Bailey and Johnson (1992), Bailey and Avery (1998), and Mintzberg
(1978) in strategy formation as well, some other emergent factors like
political, cultural, economic, and legal obligations have to be
considered.
The strategy process can be seen as a "complex interactive
process, in which politics, values, organizational culture and
management styles determine or constrain" strategic decisions and
actions (Mintzberg, Quinn 1991; Ghazinoory et al. 2009). Mintzberg
(1978) stated that the strategy process is best viewed as strategy
formation rather than formulation then implementation.
On the other hand, some studies have stressed the importance of
organizational flexibility in high-tech firms (Maidique, Hayes 1984;
Nakamura 1986; Bahrami, Evans 1987; Bourgeois, Eisenhardt 1987; Scherer,
McDonald 1988; Covin et al. 1990; Dodgson, Rothwell 1991; Berry, Taggart
1998). In this respect, Dodgson and Rothwell (1991) argue small firms to
possess considerable potential advantages over large firms in that they
have less organizational rigidity than large multidivisional firms,
which results in an ability to facilitate effectively information and
communication flows within the organization and to respond quickly to
marketplace stimuli. Extensive empirical investigations by Covin et al.
(1990) and Bahrami and Evans (1987) led them to conclude that small
firms operating in high-tech industries tend to have entrepreneurial
management styles and structures which are characterized by informal
control mechanisms, adaptability, flexibility, and open communication
channels.
Ghazinoory and Farazkish (2010) argue the planning and formulation
of strategy must be tightly coupled with its implementation in a dynamic
feedback loop.
3. Theoretical framework
Manufacturing strategy frameworks or models are helpful because
they identify the objects that comprise manufacturing strategy and
organize these objects into a structure that enables a company to
understand and use the objects to develop strategy (Miltenburg 2008).
Based on the Bailey and Avery (1998), Bailey and Johnson (1992),
strategy perspectives model, Barnes has presented the manufacturing
strategy process model (Fig. 1). Bailey and Johnson (1992) and Bailey
and Avery (1998), categorized six perspectives of strategy formation:
1. Planning (equal to Mintzberg's deliberate strategy): This
perspective describes the strategy formation as an intentional and
logical process, involving a rational, sequential, and analytical set of
procedures.
2. Incrementalism (equal to Mintzberg's emergent strategy):
According to the incremental perspective, strategy is developed in an
iterative manner, encompassing feedback loops to previous phases in
which problems and solutions may be redefined or redeveloped.
3. Political (i.e. application applies of power and influence by
individuals and groups within the organization): The political
perspective views the strategy formation as a negotiation process
developed by the firm. In this perspective, different interest groups or
stakeholders, both internal and external to the organization, come into
play, each one with their own goals and objectives.
4. Cultural (i.e. the influence of shared assumptions, beliefs,
norms and values of organizational members): The cultural perspective
describes the strategic process based on the concept of business
culture. Shared frames of reference, which are the organization's
beliefs, enable the organization and the world in which it operates to
be understood.
5. Command (i.e. the impact of a strong dominant commander): This
perspective defines strategy as a visionary process, in which the leader
establishes a founder play an important role.
6. Enforced choice (i.e. the effect of powerful external factors):
The enforced choice perspective was developed through the organizational
ecology perspective proposed by Hannan and Freeman (1989), among others
based on the consideration of strategy as a reactive and deterministic
process. In enforced perspective, realized strategy is determined by
powerful factors in the external environment that limit the
organization's strategic choices.
[FIGURE 1 OMITTED]
With the generation of these strategy perspectives, Barnes (2002a)
has developed his model.
The model shows that manufacturing strategy is formed through both
a deliberate and an emergent route. In the deliberate route, the
manufacturing strategy is developed as the result of a managerial
interpretation of ownership and external factors (Barnes 2002a).
Similarly, managers develop a set of manufacturing objectives as a
result of the implication for manufacturing of the marketing strategy,
identified as a result of their interpretation of the business strategy
and also their interpretation of implications for manufacturing of
ownership and external factors (Barnes 2002a).
[FIGURE 2 OMITTED]
Managerial interpretations are used by some manufacturing strategy
activities and decisions which were taken after manufacturing
objectives. In the emergent route, the other strategy activities and
decisions occur in action just as the other managers interpret some
concepts for manufacturing out of other ownership and external factors.
Every instance of the managerial interpretation occurs in a specific
context of the organization.
Based upon Barnes' model we developed a new simple model. This
model has some exclusive features compared to current model. The first
and most important feature which is shown in the process of strategy
formation is in the relationship between cultural, political and
individual factors. As it is illustrated in the Fig. 2 for testing this
path between mentioned factors we stated the following hypotheses:
H1: Cultural factors has influenced on political factors.
H2: Political factors has influenced on individual factors.
H3: Individual factors has influenced on managerial interpretation.
Previous research studies on manufacturing strategy have focused
mostly on economic measures of corporate performance. Studies in the
area of social are still lacking. The goal of this article is to explore
this issue, with special emphasis on a developing cultural context which
affects on individual aspect of decision making in the process of
strategy formation.
4. Methodology
To acquire valid and reliable multiple and diverse realities,
multiple methods of searching or gathering data are in order (Kaklauskas
et al. 2009). An open-ended perspective with the notion of data by
allowing participants in a research assist the researcher in the
research question as well as with the data collection. Multiple methods,
such as, observation, interviews and recordings will lead to more valid,
reliable and diverse construction of realities. To improve the analysis
and understanding of construction of others, there is a step taken by
researchers to involve several investigators or peer researchers'
interpretation of the data at different time or location. In a related
way, qualitative research can "use investigator triangulation and
consider the ideas and explanations generated by additional researchers
studying the research participants" (Johnson 1997; Golafshani
2003). Hence author followed mentioned theoretical framework in the
methodology of the paper.
A case study methodology was used to investigate the process of
formation of manufacturing strategy in six small manufacturing companies
in Iran. This section includes of data collection from interview and
analysis of the collected data base on qualitative research method.
Hence, the aim of the research is to test the hypothesis to
determine experimentally the impact of some new components of the
Barnes' model. In the other word the author assess model in six
Iranian companies to investigate and test the fitness of the
Barnes' model in another situation like Iranian companies and
finally, in article the purpose is to find and describe the impact of
supplementary components in Iranian companies.
4.1. Data collection
A case study methodology was used to investigate the process of
formation of manufacturing strategy in six small manufacturing companies
in Iran (Ghazinoory, Khotbesara 2007). All field data was collected
through interviews. The interview questions have been designed by
considering notes quoted in Barnes's model and have been asked as
semi-structured ones from senior managers of studied companies. Some of
them are as follow:
1. Does the firm have a specific strategic planning?
2. How the structural decisions (capacity, establishments,
production facilities, vertical coherence) and sub structural ones
(production planning and control, quality) are made?
3. How does the company win the orders in a marketplace? (price,
quality, delivery, color variety, production diversity, design,
trademark image in customer's mind, after sale services)
4. How do you identify costumers and market needs in terms of
manufacturing?
5. Do you assess your competitors' manufacturing capabilities?
How? (threats and opportunities)
6. What are your manufacturing resources? And how are they
recognized? (advantages and disadvantages)
7. Are there any new production process or operation which may be
useful for the organization?
8. What is the relation between decisions and manufacturing
operation and the higher goals of the organization (growth, survival,
profit sharing, capital return, etc.), strategies and decisions related
to the business (in what kind of business does the organization involve
itself? How does it position itself in business arena?), strategies and
decisions related to market (segmentation of product and market, volume,
standardization, innovation level, to be a leader or follower)
9. Who are involved in decision making related to production?
10. Is there a classification for a specific product in your firm?
11. How the decisions related to the goals of the production (cost,
quality, flexibility, delivery, innovation) are made?
12. How do you assess the effect of economic, cultural, political,
social and environmental factors on the manufacturing function?
13. Which are the strategic decisions in manufacturing field and
how they are made?
14. How do you assess the effect of cultural factors on political
factors?
15. How do you assess the effect of individual factors on political
factors?
16. How do you assess the effect of cultural factors on individual
factors?
17. How do you assess the effect of political factors on individual
factors?
18. How do you assess the effect of political factors on cultural
factors?
The needed data were gathered in the studied firms by meeting the
senior managers in various sessions (managing director, planning
director, production manager, research manager, and QC director) and
doing various interviews with them and examining the documents. For
providing a common frame for the interviews, the interviewees were
provided with some definition on issues related to manufacturing
strategy and decision making areas.
To enrich the data scientifically, some free interviews were
carried out by those who are knowledgeable in strategy, which had a good
agreement with the results of interviews with the managers.
All interviews were recorded on a tape to be analyzed later in
order to maximize time management.
4.2. Data analysis
The empirical data was gathered 2 years ago and after this 2 years
the feedback from studied companies show the same results which we had
achieved.
Those activities carried out for reliability and validity of the
present essay based on Yin (1994) are as follows:
--Construct validity: a great number of the sources were used to
collect data, including interviews, observation, and examination of the
documents and observation of manufacturing and technological processes
of the studied firms. Further, the experts' views were used in this
regard.
--Internal validity: in analyzing data, the interpretation of the
perceived relations and gathered information by case studies based on
Bailey, Johnson and Avery's model was used.
--External validity: although it is impossible to talk decisively
about the external validity of the research, we have tried to somehow
provide this kind of validity by selecting a proper number of firms for
the case study. There is not any ideal number for cases, but numbers
between 4 to 10 are generally proved to be useful. For present research
6 cases were selected.
--Reliability: to demonstrate the reliability, the development of
the databases was used in a way that in every firm some interviews with
managers and employees were carried out and nearly the same results were
provided.
5. Results
5.1. The main features of the process of manufacturing strategy
formation in the case companies
MECO Company: MECO works in the area of electro motors
manufacturing and home appliances. Its market share is about 15 percent.
The products features of this company include high volume, low value and
simple technical and product processing so there is no need for highly
skilled workers. The company is owned by shareholders, but they do not
manage it. The strategy formation process in this company is
characterized by the following:
The decisions and actions for manufacturing are taken in an
emergent way in a repetitive and adaptive process consisting of trials
and error, and in some cases by a series of random reactions which
indicates the fact that the existing manufacturing strategy is formed in
an emergent manner in absence of any strategic planning. There is no
obvious process to link the manufacturing process to business strategy.
Although it seems that there is no unity about what the manufacturing
purpose, there is not any written manufacturing strategy or plan.
There is little or no focus on coordination and their interrelated
components. There is some evidence of a strong historical manufacturing
culture which apparently acts as a barrier to changes. The prevailing
manufacturing paradigm was for years based on a necessity of confronting
marketing strategy with high volume, low price and low variety in the
product. But now this method is not proper because the market
requirements have shifted their orientation towards products with higher
value and lower volume.
The company managers who make the final decisions in the
manufacturing area are influenced both by ownership factors (the
influence of owner's visions on business strategy which, in itself,
depends on mental goals of the executives) and external pressures (by
customers, market and economic situation of the community). These
factors, as well as individual interpretation of the managers of the
manufacturing purpose and business strategy, have profound impact on the
manufacturing strategy formation process. Since there are various power
bases in this company influencing manufacturing, it seems that there are
some political factors influencing it as well.
FGCO Company: The main areas of activity for this company include
manufacturing and development of machine tools and milling machines,
high pressure molding, machine making, industrial automation, CNC
controllers, and designing and manufacturing of production lines. It
takes hold of 35 percent of market share. The product features in FGCO
include low volume, high value and technically advanced, and their
production processes are capital-intensive and need highly skilled
personnel to produce. The ownership and management of the company is
family based. It's manufacturing strategy formation process is
characterized as follows:
The Manufacturing strategy formation process in FGCO has mostly
been deliberative (the result of implementation of predetermined
intentions which are derived in a rational and analytic and sequential
process from business strategy) and top-down. In spite of using formal
business planning, there was no formal manufacturing strategy planning.
A manufacturing task was commonly accepted, though there was no written
manufacturing strategy or plan. The cultural impact on manufacturing
strategy formation was so strong that it seemed that the majority of
manufacturing strategy stems from a powerful vision and totally shared
manufacturing purpose and goal in the firm.
SSCO Company: This Company is active in manufacturing automotive
and industrial parts. Its major customers and markets are manufacturers
of home appliances and auto makers. Its market share in some components
is 100 percent and in others is about 30 percent. SSCO's products
are characterized by high volume, high value and technically advanced.
The manufacturing processes are capital-intensive and need highly
skilled staff. The company is owned by shareholders who are managers of
the company too. The feature of the manufacturing strategy formation
process is as follows:
The Manufacturing strategy formation process in SSCO has mostly
been deliberative. It seemed that manufacturing strategy was a rational
reaction to the business strategy imperatives. But despite using a
formal business planning process by the company, there was not a formal
manufacturing strategy, nor was there a written manufacturing strategy
or manufacturing plan.
The other feature of the manufacturing strategy formation process
was the role played by the prevailing individual (i.e. the operations
manager). He has imposed the preponderance of the evident manufacturing
strategy. There is also some evidence of organizational culture impact
on the formation of the manufacturing strategy because there was a
shared belief in manufacturing value for the company. Also, the managing
director's political ability (negotiation and bargaining) has some
influences in making decisions related to manufacturing.
KPCO Company: This Company is active in manufacturing industrial
pressing machines used in military and automotive industries. Its main
customers are auto makers and military institutions. Its market share in
some items like automatic converting presses is 100 percent and in the
remaining areas is about 30 percent. Its products are characterized by
low volume, high value and technically advanced. The manufacturing
processes are capital-intensive and need highly skilled staff. The
company ownership and management is family based.
The manufacturing strategy formation process had a powerful
emergent aspect and a weaker cultural one. The emergent aspect was
evidenced in the way that manufacturing strategy was adopted to suit the
changing demands of customers. There was no document about strategic
planning for business or manufacturing. It was probable that culture had
little impact on manufacturing strategy formation since there was a
common understanding about the manufacturing task among KPCO managers
who had a long standing record. In some decisions there was commanding
aspect evident too.
MICO Company: This Company is active in manufacturing industrial
pressing machines used in tire production and steel industries. Its
market share is 20 percent. The MICO's products are characterized
by medium volume, medium value and technically advanced. The
manufacturing processes are capital-intensive and need highly skilled
staff. It is owned and managed by shareholders.
The manufacturing strategy formation process had powerful cultural
and political aspects. There was no evidence about deliberative planning
for business or manufacturing. The political aspect was apparently so
strong that political conflicts were forming an important part in
internal framework. Evidently there was not a mutual understanding about
a manufacturing task. And there was no evidence of the use of formal
business planning in the company.
AFCO Company: This Company is active in manufacturing refrigerator
and freezer components and other home appliances. Its market share is 30
percent. AFCO's products are characterized by high volume, low
value and technically simple. The manufacturing processes are
labor-intensive and do not need highly skilled staff. The company is
owned by the managing director who is also the company leader.
The manufacturing strategy formation process had powerful cultural,
emergent and commanding aspects. There was no evidence about
deliberative planning for business or manufacturing. Evidently there was
no strategic planning for business or manufacturing. The impact of an
individual was apparent in the company. He was the founder and chairman
of the company.
The key features of manufacturing strategy formation in the case
companies are illustrated in Table 2.
5.2. Manufacturing strategy formation model
The Manufacturing strategy formation model has been reached by the
combination of the results of interviews with the case company's
managers and Barnes's model. This model shows that the
manufacturing strategy formation is done through a complex process which
includes a combination of emergent and deliberated actions and
decisions. The managerial interpretations are influenced by individual,
cultural, and political factors. Cultural factors impact on political
factors. Also, political factors impact on individual factors. Other our
findings are:
--Individual: All managers are people with different personalities,
knowledge and experience which influence them by their record, education
and working experience.
--Cultural: the organization culture and especially any deep-rooted
collective beliefs about manufacturing function play a role.
--Political: There is a Machiavellian type of power politics within
these organizations that plays a role in this process.
Based on this model, the core of decision making about
manufacturing strategy is managerial ideas, external and ownership
factors, and corporate goals, as well as market strategy via a
deliberative way and in the form of synergy, as well as via an emergent
route, lead to manufacturing strategy formation.
6. Discussion
In all companies, the manufacturing strategy is formed through a
complex process which includes a combination of deliberate and emergent
actions and decisions. It seems that the strategy concept by Mintzberg
and Quinn (1991) as a "complex interactive process" which
includes "policy, values, and organization culture and management
styles" is valid in manufacturing strategy formation as business
strategy formation.
All companies studied show a degree of incrementalism which is due
to lack of strategic planning and influence of unwanted factors on the
formation of these strategies (Ghazinoory et al. 2011).
The inherent influence of business factors on manufacturing
strategy formation is visible in all studied companies. The results show
that a strategic planning format has a major role in the manufacturing
strategy development process.
In all intended firms, cultural factors affect the manufacturing
strategy formation. logically it is expected that the organization
culture has an influence on manufacturing strategy
formation just as what is realized in business strategy. In those
firms with a high level of political influence in manufacturing strategy
formation there is a high level of incrementalism as well. It is no
surprise that political processes tend to cause emergent strategies,
since both actions and decisions are taken by bargaining, maneuvering,
preventing, and other tactics of organizational policy.
Each and every firm showed some evidence about the key role of
managerial interpretations in translating obtained information into
strategy actions and decisions. The role of managerial interpretations
is not appreciated in the manufacturing strategy literature. Seemingly,
it is assumed that actions and decisions related to manufacturing will
be the same, regardless of who are involved. This research shows, as
Barren's does, that it is not so; therefore, it highlights the
contextual factors of people, organizational policy and culture on
managerial interpretations.
The findings of the research denote the limiting and influencing
role of the external factors including politics and economics governing
the decision maker>s mind. They overshadow the strategic choices in
the field of manufacturing. In Barnes's study, the external factors
had not such a deep impact on manufacturing strategy formation, which is
due to the differences in political and economic and business
environments in developed and developing countries.
The firms with high levels of deliberateness in manufacturing
strategy formation (FGCO, SSCO) were those whose managers in all levels
were educated in the highest level of business training. Managers
formally trained are aware of strategic planning processes and
considered it as favorable. Thus they will get a high level of
deliberateness in manufacturing strategy formation by using strategic
approaches. although there are differences between economic and
political environment and cultural heterogeneity between the studied
countries (Iran and UK), the results are the same. Perhaps the reason of
this sameness is this fact that this case study was carried out to just
check out the factors influencing on the formation of the manufacturing
strategy and better understanding of it. If the rate and kind of the
effect of each factor were analyzed, there would be some distinct
differences.
7. Conclusions
The present study is based on Barnes' study on 6 UK companies
active in the field of manufacturing.
The contribution of the research presented in this paper lies along
two dimensions. In the first we put some changes on Barnes' model
and in the second we examined this conceptual model with Iranian case
studies and results justified empirically in 6 Iranian manufacturing
companies.
The main finding of this study is that it is not possible to
determine manufacturing strategy through a top-down planning process.
Culture, leadership, policy and incrementalism have their own undeniable
roles in manufacturing strategy formation. Cultural factors impact on
political factors, and political factors impact on individual factors.
In manufacturing strategy formation, the political behavior has a
direct link to incrementalism in a way that by decreasing one, the other
will decrease and vice versa.
The model found for manufacturing strategy in Iranian companies can
help researchers understand the present interactions in manufacturing
strategy formation in other countries.
Finally, this research opens the ground for further analysis which
should include other important variables of the proposed model like:
external factors, uncertainty of the environment and contingencies like:
age and size of the firm, etc. Moreover, results might be validated by
increasing the number of the firms and including firms from different
branches and extending the time period of the study applying a dynamic
systems approach.
doi.org/10.3846/20294913.2011.603475
Received 29 July 2009; accepted 20 January 2011
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Sepehr Ghazinoory (1), Rahman Mahdiani Khotbesara (2), Sedigheh
Rezaeian Fardoei (3)
Department of Information Technology Management, Tarbiat Modares
University, Tehran, Iran (2) Faculty of Management and Economic, Science
and Research Branch, Islamic Azad University, Tehran, Iran (3)
Department of Industrial Engineering, Payam-e-Noor University, Tehran,
Iran E-mails: (1)
[email protected] (corresponding author); (2)
[email protected]; (3)
[email protected]
Sepehr GHAZINOORY. Associate professor in Department of Information
Technology Management, Tarbiat Modares University, Tehran, Iran. He
received his BSc, MSc and PhD in Industrial Engineering from Iran
University of Science and Technology (IUST). He has authored numerous
books and articles about cleaner production, strategic planning and
management of technology in Persian and English. He was also consultant
to the Iran presidential Technology Co-operation Office (TCO) for four
years and senior consultant in formulating the Iran Nanotechnology
National Initiative. He is currently a consultant to different
ministries and organizations.
Rahman Mahdiani KHOTBESARA. Master of Science in Technology
Management. National Research Institute for Science Policy, Technologist
and Strategic planning Consultant. Author and co-Author of 5 Papers.
Research Interests: Manufacturing Systems and Technology Foresight.
Sedigheh Rezaeian FARDOEI. PhD student of Industrial Engineering of
Payam Noor University, Tehran, Iran. She is working as professor in
department of Industrial Engineering. She was received honours in her
BS. (Industrial Management) and MS (Information Technology Management)
as first status student. She has published 18 papers at national and
international level and 2 books in the fields of Information Technology
Management, Information Systems, Knowledge Management and Industrial
Engineering with significant research contributions. She was editor of
an Information Technology Management journal for 2 years in Iran and she
has 5 years of experience in consulting in the fields of Information
Technology Management, Strategic Management and Knowledge Management in
different institutes.
Table 1. Various Connotations of Manufacturing strategy
Author Manufacturing strategy connotation
Skinner (1969) Manufacturing strategy refers to
exploiting certain properties of the
manufacturing function as a competitive
weapon.
Hayes and Heelwright A sequence of decisions that over time,
(1985) enables a business unit to achieve a
desired Manufacturing structure,
infrastructure and set of specific
capabilities.
Fine and Hax (1985) It is a critical part of the firm's
corporate and business strategies,
comprising a set of well coordinated
objectives and action programs aimed at
securing a long-term sustainable
advantage over competitors.
Hill (1987) It represents a coordinated approach
which strives to achieve consistency
between functional capabilities and
policies and the agreed current and
future competitive advantage necessary
for success in the marketplace.
Swamidass and Newell The effective use of Manufacturing
(1987) McGrath and strengths as a competitive weapon for
Bequillard (1989) the achievement of business and
corporate goals Manufacturing strategy
as the overall plan for, how the company
should Manufacture products on a
world-wide basis to satisfy customer
demand.
Hayes and Pisano (1994) In today's turbulent competitive
environment a company more than ever
needs a strategy that specifies the kind
of competitive advantage it is seeking
in the marketplace and articulates how
that advantage is to be achieved.
Swink and Way (1995) Manufacturing strategy as decisions and
plans affecting resources and policies
directly related to sourcing, production
and delivery of tangible products.
Berry et al. (1995) The choice of a firm's investment in
processes and infrastructure that
enables it to make and supply its
products to chosen markets.
Cox ans Blackstone A collective pattern of decisions that
(1998) acts upon the formulation and deployment
of manufacturing resources, to be must
effective, the manufacturing strategy
should act in support of the overall
strategic directions of the business and
provide for competitive advantages.
Brown (1999) Manufacturing strategy is a driving
force for continual improvements in
competitive requirements/priorities and
enable the firm to satisfy a wide
variety of requirements.
Table 2. Key features of manufacturing strategy formation in the
case companies
Case company ME CO FGCO SSCO
Products Electro motors Machine tools Automotive and
and home industrial
appliances parts
Employees 50 30 35
Markets Iran Iran Iran
Ownership Owned bye Subsidiary of Owned and
state Shareholders a family-owned managed bye
company Shareholders
Products high volume, low volume, high volume,
Features low value and high value and high value and
technically technically technically
simple advanced advanced
Production Labor- Capital- Capital-
Processes intensive, Low- intensive, intensive,
skilled staff Highly-skilled Highly-skilled
staff staff
Manufacturing Not Articulated Articulated
Task Articulated
Formal NO YES YES
Business
Planning
Process
The order of Emergent, Deliberate, Deliberate,
Characteristics Cultural, Cultural, Command,
of the Political Emergent Cultural,
manufacturing Emergent
strategy
Process
Case company KPCO MICO AFCO
Products industrial industrial Refrigerator
pressing pressing and freezer
machines machines components
Employees 40 5 33
Markets Iran Iran Iran
Ownership Subsidiary of Owned and Owner-Managed
state a family-owned managed bye
company Shareholders
Products low volume, medium volume, high volume,
Features high value and medium value low value and
technically and technically technically
advanced advanced simple
Production Capital- Capital- Labor-
Processes intensive, intensive, intensive, Low-
Highly-skilled Highly-skilled skilled staff
staff staff
Manufacturing Not Not Not
Task Articulated Articulated Articulated
Formal YES YES NO
Business
Planning
Process
The order of Deliberate, Political, Command,
Characteristics Cultural, Cultural, Emergent,
of the Command Emergent Cultural
manufacturing
strategy
Process
