ch03

IONA CollegeOperations ManagementMBA-540: 

IONA College Operations Management MBA-540 Jerry Fjermestad

Slide2: 

Operations Management Operations in a Global Environment Chapter 3

Outline: 

Outline Global Company Profile: Boeing Why Global Operations are Important Achieving Global Operations Global Product Design Global Process Design and Technology Global Facility Location Impact of Culture and Ethics Global Issues in Service Operations

Outline - continued: 

Outline - continued Global Issues in Service Operations Managing Global Service Operations Global Operations Strategies International Strategy Multi-domestic Strategy Global Strategy Transnational Strategy

Learning Objectives: 

Learning Objectives When you complete this chapter, you should be able to : Identify or Define: International business Multinational corporation Transnational Strategy Maquiladora Critical success factors in location analysis

Learning Objectives - continued: 

Learning Objectives - continued When you complete this chapter, you should be able to : Describe or Explain: Global facility location analysis Cultural and ethical issues in operations Why global issues are important Four global operations strategies

Boeing Suppliers (777): 

Boeing Suppliers (777)

Examples: 

Examples Boeing - flourishes because both its sales and production are world-wide Benetton - moves inventory to stores around the world faster than its competitors Sony - purchases components from suppliers in Thailand, Malaysia, etc. General Motors - simultaneously building four similar plants in Argentine, Poland, China, and Thailand so that they can learn from each other and drive down cost while increasing quality

Management Issues in Global Operations: 

Management Issues in Global Operations Global Strategic Context Differentiation Cost leadership Response Logistics Management Location Decisions Supply Chain Management

Supply-Chain Management: 

Supply-Chain Management Sourcing Vertical integration Make-or-buy decisions Partnering

Location Decisions: 

Location Decisions Country-related issues Product-related issues Government policy/political risk Organizational issues

Materials Management: 

Materials Management Flow of materials Transportation options and speed Inventory levels Packaging Storage

Defining Global Operations: 

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

Some Multinational Corporations: 

Some Multinational Corporations

Some Multinational Corporations: 

Some Multinational Corporations Workforce Company Home Country % Sales Outside Home Country % Assets Outside Home Country % Foreign

Global Operations Strategies: 

Global Operations Strategies

Pontiac - the LeMans Included the Following: 

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.

Reasons to Globalize Operations: 

Reasons to Globalize Operations 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 Tangible Intangible

Trade and Tariff: 

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

Slide20: 

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

Achieving Global Operations-Four Considerations-: 

Achieving Global Operations -Four Considerations- Global product design Global process design and technology Global factory location analysis Impact of Culture and Ethics

Global Competitiveness of Countries: 

Global Competitiveness of Countries Singapore …………………... United States ………………. Hong Kong …………………. Taiwan ………………………. Canada ………………………. Switzerland …………………. Luxembourg ……………….. United Kingdom …………... Netherlands ………………... Ireland ………………………. Australia ……………………. Finland ……………………… New Zealand ………………. Japan ……………………….. ……... Russia ………………………. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 ….. 59 Country 1999 Ranking

Global Product Design: 

Global Product Design Remember social and cultural differences packaging and marketing can help make product seem “domestic” but - “liter” versus “quart” “sweetness” and “taste”

Global Process Design and Technology: 

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

Global Facility Location Analysis: 

Global Facility Location Analysis 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 Using CSFs for Country Selection

You May Wish To Consider: 

You May Wish To Consider 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 work ethic tax rates inflation availability of raw materials interest rates population number of miles of highway

CSF in Location Analysis: 

CSF in Location Analysis

CSF in Location Analysis - continued: 

CSF in Location Analysis - continued

GlobalImpact of Culture and Ethics: 

Global Impact of Culture and Ethics Cultures differ! Some accept/expect: variations in punctuality long lunch hours expectation of thievery bribery little protection of intellectual property

Ranking Corruption: 

Ranking Corruption 1. Denmark 10.0 2. Finland 9.6 3. Sweden 9.5 4. New Zealand 9.4 5. Iceland 9.3 17. United States 7.5 76. Russia 2.4 77. Ecuador 2.3 79. Columbia 2.2 80. Indonesia 2.0 85. Cameroon 1.4

To Establish Global Services: 

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

Managing Global Service Operations: 

Managing Global Service Operations Must take a different perspective on Capacity planning Location Planning Facilities design and layout Scheduling

Some Definitions: 

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

Some Global Strategies: 

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

Four International Operations Strategies: 

Four International Operations Strategies Caterpillar Otis Elevator Coca-Cola Nestlés U.S. Steel Harley Davidson Heinz McDonalds

Match Product & Parent: 

Match Product & Parent 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 a. Volkswagen b. Bidermann International c. Bridgestone d. Campbell Soup e. Credit Lyonnais f. Ford Motor Company g. Gillette h. Grand Metropolitan i. Michelin j. Nestlé

Match Product & Country: 

Match Product & Country 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 1. France 2. Great Britain 3. Germany 4. Japan 5. United States 6. Switzerland