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Operations and Strategy in a Global Environment

Operations and Strategy in a Global Environment. Why Go Global?. Reduce Costs Cheaper Labor Cost benefit Better use of skilled/higher paid labor Easier government regulations Improve Supply Chain Supply of raw materials Supply of expertise. Why Go Global?.

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Operations and Strategy in a Global Environment

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  1. Operations and Strategy in a Global Environment Prepared By: Ali Siddiqi

  2. Why Go Global? • Reduce Costs • Cheaper Labor • Cost benefit • Better use of skilled/higher paid labor • Easier government regulations • Improve Supply Chain • Supply of raw materials • Supply of expertise Prepared By: Ali Siddiqi

  3. Why Go Global? • Provide Better Goods and Services • Understanding Markets • Increasing the product lifecycle • Learning to Improve Operations • Attract and Retain Global Talent Prepared By: Ali Siddiqi

  4. Missions and Strategies • Mission Why are we in business? What is our purpose? • Strategy How are we going to accomplish our purpose? Prepared By: Ali Siddiqi

  5. Mission Statements • Must be well defined • How do we contribute to society • Makes the strategy easier to define • Functional areas can determine supporting missions Prepared By: Ali Siddiqi

  6. Strategy • Action plan to achieve mission • Three ways to achieve mission and maintain a competitive advantage: • Differentiation • Cost Leadership • Response • Competitive advantage • The criterion of a system that has a unique advantage over competition Prepared By: Ali Siddiqi

  7. Competitive Advantage • Differentiation • Making the product or service unique in such a way as to add value in the customer’s perception • Experience Differentiation: Service sector • Cost Leadership • Competing on cost is difficult • Must use facilities to capacity • Low Cost Leadership involves maximizing value as defined by your customer. • Each of the 10 OM must be thoroughly examined Prepared By: Ali Siddiqi

  8. Competitive Advantage • Response • A set of values related to rapid, flexible, and reliable performance • Flexible • Reliable • Quick Prepared By: Ali Siddiqi

  9. Strategy Development and Implementation • SWOT Analysis • Critical Success Factors (CSFs) • Factors necessary to achieve competitive advantage, but not enough • Company can not do without • Core Competencies • A set skills, talents, and activities that a firm does particularly well • Give the company the extra something to achieve competitive advantage Prepared By: Ali Siddiqi

  10. Global Operations Strategy Options • International Business • A firm that engages in any type of international trade or investment • Very broad • Multinational Corporation • Extensive involvement in international business • Owning and/or controlling facilities in more than one country Prepared By: Ali Siddiqi

  11. Operations Strategies for International and MNC Firms • An Operations Manager may use four strategies to operate an international or MNC firms: • International Strategy • Multidomestic Strategy • Global Strategy • Transnational Strategy Prepared By: Ali Siddiqi

  12. International Strategy • Uses exporting and licensing to go global • Least advantage • Easiest strategy • No or minor change to production process • Few cost advantages • Differentiation used to achieve competitive advantage Prepared By: Ali Siddiqi

  13. Multidomestic Strategy • Gives a lot of autonomy (independence) to each business • Subsidiaries, franchises, joint ventures • Adjustment to local clientele • Very little or no cost advantage • Widely used in the food industry to adjust to local tastes • Exports management and process not necessarily product • Global integration of production is not critical • Responsiveness to achieve competitive advantage Prepared By: Ali Siddiqi

  14. Global Strategy • Highly centralized • Headquarters coordinate standardization and learning • Enjoys economies of scale and learning • High cost advantage • Product is standardized • Cost Leadership to achieve competitive advantage Prepared By: Ali Siddiqi

  15. Transnational Strategy • Combination of independence and centralization • Key activities are neither centralized in the parent country, nor so decentralized that each subsidiary can make its own decision • Materials, people, and ideas cross (or transgress) international borders • Country identity is not as important as its network or worldwide operations • Uses all three operations strategies to achieve competitive advantage Prepared By: Ali Siddiqi

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