Operations is one of the three strategic functions of any organization. This means that it is a vital part of accomplishing the organization’s strategy and ensuring its long-term survival. The other two areas of strategic importance to the organization are marketing and finance. For example, a company that makes team jerseys for sport teams must have strong marketing ability to identify groups of customers, understand their needs, and communicate with them to win their business. The company must also manage its finances so it can pay for building and equipment expenses, bank loans, worker wages, and supplies. Finally, the company must have strong operations skills so it can provide customized team jerseys that are attractive, durable, affordable and delivered on time to the customer.
The operations strategy should support the overall organization strategy. For example, JetBlue airlines is a successful airline that has an organization strategy of providing high-value air transportation service to travelers. JetBlue strives to provide fun, comfortable, and safe air service to popular destinations at a price that middle-income passengers can afford. Given JetBlue’s organization strategy, JetBlue features an operations strategy that focuses on low costs, competent and service-oriented employees, and reliable aircraft.
JetBlue’s operations strategy is driven by its organization strategy. For example, JetBlue locates (“location” is an operations decision area) its main transportation hub in New York City, a city of 19 million people that helps ensure that JetBlue’s planes fly at full capacity. In the area of equipment decisions, JetBlue operates only one type of aircraft, the Airbus 330. The Airbus 330 has high passenger carrying capacity (to maximize revenue), provides good fuel economy and requires only two pilots (versus three) to operate. Having one type of aircraft reduces training costs for pilots and mechanics, reduces investments in parts inventories, and enables JetBlue to negotiate greater discounts on high-volume purchases from Airbus. In another key operations area, JetBlue pays careful attention to hiring, training, and compensating employees who can deliver excellent service, loyalty, and high levels of productivity.
In addition to an operations strategy, JetBlue also has financial and marketing strategies that support its organization strategy. One part of its financial strategy is securing sufficient amounts of capital to help the start-up airline establish reliable service and gain a loyal clientele. JetBlue’s marketing strategy keeps advertising costs under control by attracting free media publicity that emphasizes its fun and affordable airline service.