Operational management is concerned with the day-to-day activities required to produce goods and services, while strategic management focuses on activities necessary to ensure competitive positioning. Both types of thinking make a necessary contribution to organizational success. Operational management and strategic management skills are relevant to both the public and private sectors, including manufacturing, hospitals, airlines, pharmaceutical companies, schools, government agencies and nonprofit institutions.
An understanding of competitive forces in the market and a grasp of organizational strengths and weaknesses help strategic managers make the decisions that shape future direction. Decisions pertinent to strategic management include those on changes in product lineup or features, locations of new manufacturing plants, selection of new technology systems and whether to outsource. Strategic plans must remain flexible in order to adapt to change, so continuous intake and analysis of data is necessary.
Operational management involves facilitating and controlling the processes required to produce and distribute goods and services, including aspects such as supply chain management, material handling, production planning, manufacturing, quality control and inventory management. Effective operational management also requires an ongoing search for ways to improve efficiency, quality and customer satisfaction. Operational managers collaborate with marketing, finance, information technology, human resources and other support departments to coordinate necessary planning, resources and infrastructure.
Similarities and Differences
Strategic management and operational management require different background knowledge. Post-secondary programs in operational management may include courses specifically geared to daily operations, such as logistics management, production and operations management, and supply chain management. Strategic management programs are likely to include a higher proportion of broad-based theory such as economics, strategic management, strategic implementation, competitive strategy, game theory, mergers and acquisitions, and managerial economics. Strategic management functions determine direction; operational management functions make the strategic plan happen at ground level. Operational managers still need a grasp of strategic considerations, while strategic managers must understand what is going on at the operational level.
Roles in operational and strategic management exist in all types of organizations, including consulting firms. Quality control supervisor, assembly department manager and vice president of manufacturing are examples of operational management roles. Manager of corporate planning, vice president of strategic planning and director of marketing are examples of strategic management roles. Entrepreneurs and managers of new start-up operations also require strategic management skills. Top executives typically require both strategic management and operational management skills.