Operations Strategy in a Global Environment

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Operations Strategy in a Global Environment

• Chapter 2

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When we complete this chapter you should know

• What is Mission and Strategy
• Explain ten decisions of OM
• Describe and explain Differentiation, Low Cost,
  Response
  
• Four Global operations Strategies
• Why Global issues are important

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Global Strategies

• Boeing sales and production are worldwide
• Benetton moves inventory to stores around the
  world faster than its competition by building
  flexibility into design, production, and
  distribution
• Sony purchases components from suppliers in
  Thailand, Malaysia, and around the world

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• Volvo considered a Swedish company but it is
  controlled by an American company, Ford. The
  current Volvo S40 is built in Belgium and shares
  its platform with the Mazda 3 built in Japan and
  the Ford Focus built in Europe.
• Haier A Chinese company, produces compact
  refrigerators (it has one-third of the US market)
  and wine cabinets (it has half of the US market)
  in South Carolina

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Boeing Suppliers (787)
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What is the Reasons to Globalize?
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Reasons to Globalize
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How Globalization helps to Reduce costs?
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Reduce Costs

• Foreign locations with lower wage rates can lower
  direct and indirect costs
  
• Maquiladoras
• World Trade Organization (WTC)
• North American Free Trade Agreement (NAFTA)
• APEC, SEATO, MERCOSUR
• European Union (EU)

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How Globalization Improves the Supply Chain?
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What is a supply chain?

• A supply chain is a network of facilities and
  distribution options that performs the functions
  of procurement of materials transformation of
  these material into intermediate and finished
  products and distribution of these finished
  products to customers.

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How Globalization Improves the Supply Chain?
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Improve the Supply Chain

• Locating facilities closer to unique resources
• Auto design to California
• Athletic shoe production to China
• Perfume manufacturing in France

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Globalization can provide Better Goods and
Services

• Improved understanding as the result of a local
  presence permits firm to customize products and
  services to meet unique cultural needs in foreign
  markets.
• Objective and subjective characteristics of goods
  and services
  
• On-time deliveries
• Cultural variables
• Reduce response time.

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Understand Markets

• Interacting with foreign customer and suppliers
  can lead to new opportunities
  
• Cell phone design from Europe
• Cell phone fads from Japan
• Extend the product life cycle

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Learn to Improve Operations

• Remain open to the free flow of ideas
• General Motors partnered with a Japanese auto
  manufacturer to learn
  
• Scandinavian design ideas have been used to
  improve equipment design and layout

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Attract and Retain Global Talent

• Offer better employment opportunities
• Better growth opportunities and insulation
  against unemployment
  
• Relocate unneeded personnel to more prosperous
  locations
  
• Incentives for people who like to travel

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Cultural and Ethical Issues

• Cultures can be quite different
• Attitudes can be quite different towards

• Punctuality
• Lunch breaks
• Environment
• Intellectual property

• Thievery
• Bribery
• Child labor

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Match Product Parent

• Braun Household Appliances
• Firestone Tires
• Godiva Chocolate
• Haagen-Dazs Ice Cream
• Jaguar Autos
• MGM Movies
• Lamborghini Autos
• Alpo Petfoods

• Volkswagen
• Bridgestone
• Campbell Soup
• Ford Motor Company
• Gillette
• Nestlé
• Pillsbury
• Sony

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Match Product Parent

• Braun Household Appliances
• Firestone Tires
• Godiva Chocolate
• Haagen-Dazs Ice Cream
• Jaguar Autos
• MGM Movies
• Lamborghini Autos
• Alpo Petfoods

• Volkswagen
• Bridgestone
• Campbell Soup
• Ford Motor Company
• Gillette
• Nestlé
• Pillsbury
• Sony

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Match Product Country

• Braun Household Appliances
• Firestone Tires
• Godiva Chocolate
• Haagen-Dazs Ice Cream
• Jaguar Autos
• MGM Movies
• Lamborghini Autos
• Alpo Petfoods

• Great Britain
• Germany
• Japan
• United States
• Switzerland

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Match Product Country

• Braun Household Appliances
• Firestone Tires
• Godiva Chocolate
• Haagen-Dazs Ice Cream
• Jaguar Autos
• MGM Movies
• Lamborghini Autos
• Alpo Petfoods

• Great Britain
• Germany
• Japan
• United States
• Switzerland

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Developing Missions and Strategies

• Mission statements tell an organization where it
  is going!?
  
• The Strategy tells the organization how to get
  there!?
  

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Factors Affecting Mission
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Strategy

• Action plan to achieve mission
• Functional areas have strategies
• Strategies exploit opportunities and strengths,
  neutralize threats, and avoid weaknesses

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How firms achieve competitive advantage through
operations?

• Firms achieve missions in three conceptual ways
• Differentiation
• Cost leadership
• Response
• This means operations managers are called to
  deliver goods and services that are 1- better or
  at least different 2- cheaper 3- more responsive

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Competing on Differentiation

• Uniqueness can go beyond both the physical
  characteristics and service attributes to
  encompass everything that impacts customers
  perception of value

• Safeskin gloves leading edge products
• Walt Disney Magic Kingdom experience
  differentiation
  
• Hard Rock Cafe theme experience

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Competing on Cost

• Provide the maximum value as perceived by
  customer. Does not imply low quality.

• Southwest Airlines secondary airports, no
  frills service, efficient utilization of
  equipment, no downtown offices, matching capacity
  with demand
• Wal-Mart small overheads, shrinkage,
  distribution costs, direct shipment, rapid
  transportation

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Competing on Response

• Flexibility is matching market changes in design
  innovation and volumes
  
• Institutionalization at Hewlett-Packard
• Reliability is meeting schedules
• German machine industry
• Timeliness is quickness in design, production,
  and delivery
  
• Johnson Electric, Bennigans, Motorola

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Strategic Process
Organizations Mission
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OMs Contribution to Strategy
Operations Specific Competitive
Decisions Examples Strategy Used Advantage
Figure 2.4
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Differentiation, low cost, and response can be
achieved when managers make effective decisions
in 10 areas of OM (operations decisions)

• Goods and service design
• Quality
• Process and capacity design
• Location selection
• Layout design

• Human resource and job design
• Supply-chain management
• Inventory
• Scheduling
• Maintenance

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Operations Strategies for Two Drug Companies
Table 2.2
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Operations Strategies for Two Drug Companies
Table 2.2
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Operations Strategies for Two Drug Companies
Table 2.2
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Operations Strategies for Two Drug Companies
Table 2.2
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Strategic Options to Gain a Competitive Advantage

• 28 - Operations Management
• 18 - Marketing/distribution
• 17 - Momentum/name recognition
• 16 - Quality/service
• 14 - Good management
• 4 - Financial resources
• 3 - Other

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Strategy Development and Implementation

• Identify critical success factors
• Build and staff the organization
• Integrate OM with other activities

The operations managers job is to implement an
OM strategy, provide competitive advantage, and
increase productivity
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Global operations strategy options

• As we suggested early many operations strategies
  now require an international dimension.
  
• Operations managers of international and
  multinational firms approach global opportunities
  with one of four operations strategies.

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Four International Operations Strategies
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Four International Operations Strategies
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Four International Operations Strategies
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Four International Operations Strategies
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Four International Operations Strategies
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• Check the course Website for assignments and
  announcements!
  
• Have nice day!