1 / 90

Operations Management Operations Strategy in a Global Environment Chapter 2

Operations Management Operations Strategy in a Global Environment Chapter 2. Outline. GLOBAL COMPANY PROFILE: BOEING DEVELOPING MISSIONS AND STRATEGIES Mission Strategy ACHIEVING COMPETITIVE ADVANTAGE THROUGH OPERATIONS Competing on Differentiation Competing on Cost Competing on Response

sanne
Download Presentation

Operations Management Operations Strategy in a Global Environment Chapter 2

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Operations ManagementOperations Strategy in a Global EnvironmentChapter 2 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  2. Outline • GLOBAL COMPANY PROFILE: BOEING • DEVELOPING MISSIONS AND STRATEGIES • Mission • Strategy • ACHIEVING COMPETITIVE ADVANTAGE THROUGH OPERATIONS • Competing on Differentiation • Competing on Cost • Competing on Response • TEN STRATEGIC OM DECISIONS © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  3. Outline - Continued • ISSUES IN OPERATIONS STRATEGY • Research • Preconditions • Dynamics • STRATEGY DEVELOPMENT AND IMPLEMENTATION • Identify Critical Success Factors • A Global view of Operations Cultural and Ethical Issues • Build and Staff the Organization • Integrate OM with Other Activities © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  4. Outline - Continued • GLOBAL OPERATIONS STRATEGY OPTIONS • International Strategy • Multidomestic Strategy • Global Strategy • Transnational Strategy © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  5. Learning Objectives When you complete this chapter, you should be able to : Identify or Define: • Mission • Strategy • Ten Decisions of OM • Multinational Corporations © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  6. Learning Objectives - Continued Describe or Explain: • Specific approaches used by OM to achieve strategies • Differentiation • Low Cost • Response • Four Global Operations Strategies • Why Global Issues are Important © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  7. Examples of Global Strategies • Boeing – both sales and production are worldwide. • Benetton – moves inventory to stores around the world faster than its competitor by building flexibility into design, production, and distribution • Sony – purchases components from suppliers in Thailand, Malaysia, and around the world • GM is building four similar plants in Argentina, Poland, China, and Thailand © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  8. Firm Country Parts Alenia Italy Wing flaps AeroSpace Australia Rudder Technologies CASA Spain Ailerons Fuji Japan Landing gear doors, wing section GEC Avionics United Kingdom Flight computers Korean Air Korea Flap supports Aerospace Menasco Canada Landing gears Short Brothers Ireland Landing gear doors Singapore Singapore Landing gear doors Aerospace Boeing Suppliers (777) © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  9. The Role of • Maquiladoras • World Trade Organization (WTC) • North American Free Trade Agreement (NAFTA) • European Union (EU) © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  10. Management Issues in Global Operations Global Strategic Context • Differentiation • Cost leadership • Response Supply Chain Management Location Decisions Logistics Management © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  11. Supply-Chain Management • Sourcing • Vertical integration • Make-or-buy decisions • Partnering © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  12. Location Decisions • Country-related issues • Product-related issues • Government policy/political risk • Organizational issues © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  13. Materials Management • Flow of materials • Transportation options and speed • Inventory levels • Packaging • Storage © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  14. Defining Global Operations • International business - engages in cross-border transactions • Multinational Corporation - has extensive involvement in international business, owning or controlling facilities in more than one country • Global company - integrates operations from different countries, and views world as a single marketplace • Transnational company - seeks to combine the benefits of global-scale efficiencies with the benefits of local responsiveness © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  15. Company Home % Sales % Assets % Foreign Country Outside Outside Workforce Home Home Country Country NA Citicorp 34 46 USA Colgate- USA 72 63 NA Palmolive Dow USA 60 50 NA Chemical Gillette USA 62 53 NA Honda Japan 63 36 NA IBM USA 57 47 51 Some Multinational Corporations © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  16. Company Home % Sales % Assets % Foreign Country Outside Outside Workforce Home Home Country Country ICI Britain 78 50 NA Nestlé Switzerland 98 95 97 Philips Netherlands 94 85 82 Electronics Siemens Germany 51 NA 38 Unilever Britain & Netherlands 95 70 64 Some Multinational Corporations © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  17. Pontiac - the LeMans Included the Following • About $6,000 heads to South Korea for auto’s assembly • $3,500 goes to Japan for engines, axles, and electronics • $1,500 goes to Germany for design • $800 goes to Taiwan, Singapore, and Japan for smaller parts • $500 heads to England for marketing • $100 goes to Ireland for information technology • the rest  $7,600, goes to GM and its US bankers, insurance agents, and attorneys. © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  18. Reasons to Globalize Operations Tangible Intangible • Reduce costs (labor, taxes, tariffs, etc.) • Improve the supply chain • Provide better goods and services • Attract new markets • Learn to improve operations • Attract and retain global talent © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  19. Trade and Tariff • Maquiladoras - Mexican factories located along the U.S.-Mexico border that receive preferential tariff treatment • GATT - an international treaty that helps promote world trade by lowering barriers to the free flow of goods across borders • NAFTA - a free trade agreement between Canada, Mexico, and the United States © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  20. Trade PaysGDP (PPP*) per Person 1990 Growth Rates, % *PPP – Purchasing Power Parity © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  21. Free trade may take us into the era of the floating factory - a six person crew will take a factory from port to port in order to obtain the best market, material, labor and tax advantages © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  22. Achieving Global Operations-Four Considerations- • Global product design • Global process design and technology • Global factory location analysis • Impact of Culture and Ethics © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  23. Global Product Design • Remember social and cultural differences • packaging and marketing can help make product seem “domestic” but - • “liter” versus “quart” • “sweetness” and “taste” © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  24. Global Process Design and Technology • Information technology enables management of integrated, globally dispersed operation • Texas Instruments: 50 plants in 19 countries • Hewlett-Packard - product development teams in U.S., Japan, Great Britain, and Germany • Reduces time-to-market © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  25. Global Facility Location Analysis Using CSFs for Country Selection • Select CSFs based on parent organization;’s strategic or operations objectives • Obtain country-specific information on the CSFs • Evaluate each country’s CSFs using a 1 (bad) to 5 (good) rating scale • Sum the ratings © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  26. You May Wish To Consider • work ethic • tax rates • inflation • availability of raw materials • interest rates • population • number of miles of highway • national literacy rate • rate of innovation • rate of technology change • number of skilled workers • stability of government • product liability laws • export restrictions • similarity in language © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  27. GlobalImpact of Culture and Ethics • Cultures differ! Some accept/expect: • variations in punctuality • long lunch hours • expectation of thievery • bribery • little protection of intellectual property © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  28. Ranking Corruption 1. Finland 9.7 • Denmark & New Zealand (Tie) 9.5 … • Canada 9.0 … 10. United Kingdom 8.7 … • United States 7.7 … 18. Germany & Israel (Tie) 7.3 … • Japan 7.1 … • Italy 5.2 … • China 3.5 … • Egypt 3.4 … • India & Russia (Tie) 2.7 … • Nigeria 1.6 • Bangladesh 1.2 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  29. To Establish Global Services • Determine if sufficient people or facilities exist to support the service • Identify foreign markets that are open - not controlled by governments • Determine what services are of most interest to foreign customers • Determine how to reach global customers © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  30. Managing Global Service Operations Must take a different perspective on • Capacity planning • Location Planning • Facilities design and layout • Scheduling © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  31. Some Definitions • International business • A firm that engages in cross-border transactions. • Multinational Corporation (MNC) • A firm that has extensive involvement in international business, owning or controlling facilities in more than one country © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  32. Some Global Strategies • International Strategy: uses exports and licenses to penetrate the global area • Multidomestic Strategy: uses decentralized authority with substantial autonomy at each business • Global Strategy: Uses a high degree of centralization, with headquarters coordinating to seek standardization and learning between plants • Transnational Strategy: Exploits economies of scale and learning, as well as pressure for responsiveness, by recognizing that core competencies reside everywhere in the organization © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  33. Match Product & Parent 1. Volkswagen 2. Bidermann International 3. Bridgestone 4. Campbell Soup 5. Credit Lyonnais 6. Ford Motor Company 7. Gillette 8. Grand Metropolitan 9. Michelin 10. Nestlé • Arrow shirts • Braun Household Appliances • Burger King • Firestone Tires • Godiva Chocolate • Haagen_dazs Ice Cream • Jaguar Autos • MGM Movies • Lamborghini Autos • Goodrich Tires • Alpo Petfoods © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  34. Match Product & Country 1. France 2. Great Britain 3. Germany 4. Japan 5. United States 6. Switzerland • Arrow shirts • Braun Household Appliances • Burger King • Firestone Tires • Godiva Chocolate • Haagen_Dazs Ice Cream • Jaguar Autos • MGM Movies • Lamborghini Autos • Goodrich Tires • Alpo Petfoods © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  35. Developing Missions and Strategies © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  36. Mission - where are you going? • Organization’s purpose for being • Provides boundaries & focus • Answers ‘What do we provide society?’ © 1995 Corel Corp. Mission © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  37. Mission of FedEx FedEx is committed to our People-Service-Profit philosophy. We will produce outstanding financial returns by providing total reliable, competitively superior, global air-ground transportation of high priority goods and documents that require rapid, time-certain delivery. Equally important, positive control of each package will be maintained using real time electronic tracking and tracing systems. A complete record of each shipment and delivery will be presented with our request for payment. We will be helpful, courteous, and professional to each other and the public. We will strive to have a completely satisfied customer at the end of each transaction. © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  38. Sample Mission - Merck The mission of Merck is to provide society with superior products and services - innovations and solutions that improve the quality of life and satisfy customer needs - to provide employees with meaningful work and advancement opportunities and investors with a superior rate of return © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  39. Mission of the Hard Rock Café To spread the spirit of Rock ‘n’ Roll by delivering an exceptional entertainment and dining experience. We are committed to being an important, contributing member of our community and offering the Hard Rock family a fun, healthy, and nurturing work environment while ensuring our long-term success. © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  40. Factors Affecting Mission Philosophy & Values Profitability Environment & Growth Mission Customers Public Image Benefit to Society © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  41. Mission/Strategy • Mission - where you are going • Strategy - how you are going to get there; an action plan © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  42. Action plan to achieve mission • Shows how mission will be achieved • Company has a business strategy • Functional areas have strategies © 1995 Corel Corp. Strategy © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  43. Company Mission Business Strategy Functional Area Strategies Functional Area Marketing Operations Fin./Acct. Decisions Decisions Decisions Strategy Process © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  44. Strategies for Competitive Advantage • Differentiation • Cost leadership • Quick response © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  45. Competing on Differentiation Uniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts customer’s perception of value © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  46. Competing on Cost Provide the maximum value as perceived by customer Does not imply low value or low quality © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  47. Competing on Response • Flexibility • Reliability • Timeliness Requires institutionalization within the firm of the ability to respond © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  48. Competing, Regardless of the Basis, Requires the institutionalization within the firm of the ability to change, and to adapt © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  49. Operations Decisions Specific Strategy Used Competitive Advantage Examples Quality Product Process Location Layout Human Resource Supply Chain Inventory Scheduling Maintenance FLEXIBILITY Sony’s constant innovation of new products Design HP’s ability to follow the printer market Volume Southwest Airlines No-frills service LOW COST DELIVERY Pizza Hut’s five-minute guarantee at lunchtime Speed Differentiation (Better) Dependability Federal Express’s “absolutely, positively on time” QUALITY Conformance Motorola’s automotive products ignition systems Cost leadership (Cheaper) Motorola’s pagers Performance IBM’s after-sale service on mainframe computers AFTER-SALE SERVICE Fidelity Security’s broad line of mutual funds BROAD PRODUCT LINE OM’s Contribution to Strategy Response (Faster) © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  50. 10 Strategic OM Decisions • Goods & service design • Quality • Process & capacity design • Location selection • Layout design • Human resource and job design • Supply-chain management • Inventory • Scheduling • Maintenance © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

More Related