Theory and tools of linking business and manufacturing strategies

Abstract

From the manufacturing strategy point of view, manufacturing strategy should be aligned with business strategy, and manufacturing can play an important role in developing a firm’s competitive advantage, such as cost, quality, delivery, and flexibility. However, the following two questions: 1. how business and manufacturing strategies are aligned; and 2. how manufacturing contributes to building business competitive advantage are a matter of ongoing debate, lacking empirical evidence, yet of important theoretical and practical implications. To shed light on these topics, this thesis concentrates on the content and process of linking business and manufacturing strategies, and the influence of the linkage on business competitiveness. I take a previously un-adopted perspective: integrating manufacturing strategy theory with the resource-based view (RBV), communication, and organization theory. I propose that the linkage between the two strategies could be operationalized on two levels, i.e., the macro-level linkage between business objectives and manufacturing missions, and the micro-level linkage between manufacturing missions and action programs. A two-way linking process model is developed, reconciling contradictions between the “top-down” and “bottom-up” views of the linking process. Data employed in this research come from 384 companies, collected through the third round of the International Manufacturing Strategy Survey (IMSS-III, 2000). Statistical tools used in the analyses include factor analysis, correlation analysis, hierarchical regression, and stepwise regression. Five conclusions are drawn. First, the macro-level linkages are realized mainly through the one-to-one correspondence between business objectives and manufacturing missions. Second, the macro-level linkages are moderated by a coordinating mechanism, which works on the communication between business and manufacturing departments. Third, in selecting manufacturing action programs, past experience in implementing action programs plays an important role, and managers prefer multi-purpose programs to others. Fourth, manufacturing capabilities contribute to business competitiveness in a one-to-one corresponding way. Last, the macro-level linkages have a positive influence on the contribution of manufacturing capabilities. The last two conclusions suggest that manufacturing can contribute to building business competence through the linkage between business and manufacturing strategies; the better the linkages, the more manufacturing could contribute to business competitiveness. Based on the research results, a set of practical tools is developed, including a toolbox and two reference tables. An example is provided on how to diagnose and improve the linkages between business and manufacturing strategies in reality.

Date of Award	15 Jul 2004
Original language	English
Awarding Institution	City University of Hong Kong
Supervisor	Hongyi SUN (Supervisor)