What is the difference between a ‘top-down’ and a ‘bottom-up’ view of operations strategy?

Thanks to invite....!!

In Top-Down approach the higher management determines objectives and how the rest of the business will work towards accomplishing specific objectives.

Down-Up approach analyze the performance and management of organization; and not general economic terms.

 

1) Top-Down approach is simple and not data intensive whereas Bottom-Up approach is complex as mathematical models are involved with intensive data.

2) Top-Down approach is backward looking whereas Bottom-Up approach is forward looking.

3) Top-Down approach analyze the impact of internal operation failure whereas Bottom-Down analyze the individual process model risk.

4) Top-Down approach consider no difference between high frequency low severity and low frequency high severity attempts whereas Bottom-Up approaches does consider.

 

 

Thank you for the invitation to share my opinion.

The difference between top down and bottom up operations strategy is that in the top down strategy the management and most of the times the owner has complete control of the operations but in the case he or she is not almost perfect in reading the market and manage the staff in the best possible manner the company may have problems. So the company lies solely on one person. In bottom up strategy operations, the staff is responsible for each level up to management level up to the owner and this can have better results because the employees have a feeling of loyalty and ownership . But in this case it can be difficult for the owner to decide due to the large number of the ideas that will be in his her disposal , plus it will be hard to manage the staff during the decision process because of their huge diversity.

Top down:This involved instructions,directives or rules and regulation from top mgt or corporate body to its subsidiaries.

Bottom up:This involved reporting to the top authorities about the operational or marketing of goods and services which may be weekly,monthly,quarterly or yearly.

A top-down strategy starts at the higher levels in an organisation and comes down to the lower levels as directives, while the bottom up starts with suggestions from the lower ranks which are passed up to the higher ranks..

Each type has its advantages and its limitations. For example, although top management has a more detailed view of the whole picture, it might be difficult to obtain stakeholder buy-in in the top-down approach. On the other hand, a bottom-up strategic approach relies on the existing expertise and knowledge, and therefore this approach may not work in a highly volatile environment.

Hi Lalia,

I can't provide a better answer than Arif Mahmood has.

Darron

Top-down and bottom-up are both strategies of information processing and knowledge ordering, used in a variety of fields including software, humanistic and scientific theories (see systemics), and management and organization. In practice, they can be seen as a style of thinking, teaching, or leadership.  Definition. The top-down approach to policy decisions, also known as autocratic leadership, is the process of upper management or the chief executive officer reaching independent conclusions that change or improve the workplace or business systems.  Structure/procedure oriented programming languages like C programming language follows top down approach. Whereas object oriented programming languages like C++ and Java programming language follows bottom up approach. ... Then, sub functions are written based on the requirement.  Strategy planning is an area where companies often struggle to find the right approach. ... In many companies, strategy planning is a top-down exercise. Plans are drawn up by senior executives and then passed down to managers who oversee this execution among staff members.  Top-Down Design, is characterized by an extensive planning and research phase that leads into the development of a product. Bottom-Up Design, takes the opposite approach. While goals for a product are still outlined, the assembly of a product is done on a system by system basis.

A Stepwise design:

A top-down approach (also known as stepwise design) is essentially the breaking down of a system to gain insight into the sub-systems that make it up. In a top-down approach an overview of the system is formulated, specifying but not detailing any first-level subsystems.

Aid:

Aid is given by donor countries to recipient countries to help their development, or help them recover from a natural disaster. ... Large scale aid is called top-down aid as it is usually given to the government of the developing country so that they can spend it on the projects that they need.

Aid is a transfer of resources from a MEDC to a LEDC. Aid includes money, equipment, food, training, skilled people and loans. Donors and Recipients. The United Nations recommends countries spend 0.7% of GNP on aid per year - few do!

Autocratic:

Autocratic leadership is “the process of upper management or the chief executive officer reaching independent conclusions that change or improve the workplace or business systems,” business writer Carol Deeb explains.

Functional Organisational Structure:

Based on a strong management hierarchy, the structure that best matches the top-down approach is the functional organizational structure. It segregates employees by function -- all the accountants and their tools work in one department, for instance.

Development:

Bottom-up development schemes are projects that are planned and controlled by local communities to help their local periphery area. ... Top-down development schemes are usually very expensive and a country often has to borrow money from large organisation like the World Bank or from companies in developed countries.

Planning:

Bottom-Up Planning is a method of planning, defining objectives and ways to achieve them through the bottom up. First, relatively close targets at lower levels of the organizational hierarchy are set. They are then gradually integrated into the framework of global goals and global strategy at higher and higher levels.

Estimation:

Bottom-up estimating is a project management technique in which the people who are going to do the work take part in the estimating process. Typically those people are the project team members.  They work with you, the project manager, to develop estimates at the task level in the work breakdown structure (WBS).

Investment:

 A bottom-up investing approach focuses on the analysis of individual stocks. In bottom-up investing, therefore, the investor focuses his or her attention on a specific company rather than on the industry in which that company operates, or on the economy as a whole, Cortazzo said.  Top-down investing is an investment approach that involves looking at the overall picture of the economy and then breaking down the various components into finer details. ... From this point, they further analyze stocks of specific companies to choose potentially successful ones as investments.

Top down = senior manager saying to person who actually does all the work "We are going to do XYZ".

Bottom up = person who actually does all the work saying to senior management "I think we should do XYZ."

Both are valuable, and which is best depends on circumstances.  Usually for incremental changes and efficiencies the bottom up approach is better.   For grand strategic initiatives, top down is normally better.

 

 

Planning from top to bottom: where the planning process begins with senior officials and down the stairs .. This portal is characterized by that the senior management officials have the ability to determine the direction in which the institution should go. They outline the heads of departments to take this into consideration. And planning from bottom to top: where senior management officials do not provide guidelines for heads of departments.

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The top down and bottom up models of strategic management vary in terms of how a business determines its operational strategies, but show similarities in how the company identifies its overarching goals. As a small business owner, you must decide how much control you want to have over the implementation of strategies to meet overarching goals. Being honest about your own business acumen can help you decide which management model is appropriate for your company.

 

Executive Decision Making

In a top down strategic management model, ownership or high-level management personnel determine objectives and how the rest of the business will work toward accomplishing those objectives. As a small business owner, this puts all the responsibility on you and your management team to come up with how you will make your company successful and how each employee will contribute to that success. Input regarding business objectives from lower-level employees in a top down strategic management model is virtually nonexistent.

Advantages and Disadvantages

If you want to direct every aspect of how your business operates to accomplish its goals and objectives, a top down strategic management model can provide you with the necessary level of control. This ensures your small business operates exactly to your specifications. Problems can arise with this strategic management model because your company's success rides directly on the shoulder's of your business savvy. If your market knowledge or product development strategies are lacking, it will show up in decreased revenues for your company. If your directions and objectives are unclear, your workers won't know how to effectively accomplish your business goals.

Workforce Strategy Development

By contrast, a bottom up strategic management model seeks to develop ideas using the brainpower of your entire workforce. You, as the small business owner, still determine the overall goals for your company along with the dates you'd like to see these goals accomplished, but your employees of all levels assist in developing the mechanisms to reach those goals. Your management team compiles all the ideas from group brainstorming sessions and departmental meetings to allow you to select the strategies showing the most promise.

Benefits and Problems

Involving your entire workforce in a bottom up strategic management model can build morale and a sense of ownership of your company's direction among employees of all levels. Your employees will be more actively engaged in the work and strive harder to reach objectives. This strategic model can also cause a logjam of ideas on your desk and make it difficult to sort through the information to come up with an effective plan for reaching company goals. You may also have to manage employee egos in selecting plans while still valuing the opinions of your entire workforce.

 

Source: http://smallbusiness.chron.com/difference-between-top-down-bottom-up-strategic-management-25957.html 

The ‘top-down’ perspective views strategic decisions at a number of levels. Corporate strategy sets the objectives for the different businesses which make up a group of businesses. Business strategy sets the objectives for each individual business and how it positions itself in its marketplace. Functional strategies set the objectives for each function’s contribution to its business strategy.

The ‘bottom-up’ view of operations strategy sees overall strategy as emerging from day-to- day operational experience.