chapter2

Operations Strategy in a Global Environment: 

Operations Strategy in a Global Environment Dr. Keong Leong Management Department UNLV

Outline: 

Outline Global Company Profile: Boeing Managing Global Operations Developing Mission and Strategies Achieving Competitive Advantage Through Differentiation, Cost, Response Global Operations Strategy Options International Strategy, Multidomestic Strategy, Global Strategy, Transnational Strategy

Examples of Global Strategies: 

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

Boeing 777 Suppliers: 

Boeing 777 Suppliers

The Role of: 

The Role of Maquiladoras World Trade Organization (WTO) North American Free Trade Agreement (NAFTA) European Union (EU) Mercosur APEC

Slide6: 

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 Reasons to Globalize Operations Tangible Intangible

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 & Technology: 

Global Process Design & 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 Impact of Culture & Ethics: 

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

Ranking Corruption: 

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

Match Product & Parent: 

Match Product & Parent Arrow shirts Braun Household Appliances Lotus Autos Firestone Tires Godiva Chocolate Haagen-Daz Ice Cream Jaguar Autos MGM Movies Lamborghini Autos Goodrich Tires Alpo Petfoods Volkswagen Bidermann International Bridgestone Campbell Soup Credit Lyonnais Ford Motor Company Gillette Grand Metropolitan Michelin Nestlé Proton

Match Product & Country: 

Match Product & Country Arrow shirts Braun Household Appliances Lotus Autos Firestone Tires Godiva Chocolate Haagen-Daz Ice Cream Jaguar Autos MGM Movies Lamborghini Autos Goodrich Tires Alpo Petfoods France Great Britain Germany Japan United States Switzerland Malaysia

Mission: 

Mission

Mission of FedEx: 

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.

Mission of the Hard Rock Café: 

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.

Strategy: 

Strategy

Strategy Process: 

Strategy Process Company Mission Business Strategy

Strategies for Competitive Advantage: 

Strategies for Competitive Advantage Differentiation Cost leadership Quick response

Competing on Differentiation: 

Competing on Differentiation Uniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts customer’s perception of value

Competing on Cost: 

Competing on Cost Provide the maximum value as perceived by customer Does not imply low value or low quality

Competing on Response: 

Competing on Response Flexibility Reliability Timeliness Requires institutionalization within the firm of the ability to respond

OM’s Contribution to Strategy: 

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

Strategy and Issues During a Product’s Life Cycle: 

Strategy and Issues During a Product’s Life Cycle

SWOT Analysis - Strategy Formulation: 

SWOT Analysis - Strategy Formulation Strategy Mission External O pportunities Internal S trengths Internal W eaknesses External T hreats Competitive Advantage

Southwest Airline’s Low Cost Competitive Advantage: 

Southwest Airline’s Low Cost Competitive Advantage

Defining Global Operations: 

Defining Global Operations International business – any firm that engages in international trade or investment. Multinational Corporation (MNC) is a firm with extensive international business involvement. MNCs buy resources, create goods and services, and sell goods or services in a variety of countries.

Four Global Strategies: 

Four 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

4 International Operations Strategies: 

4 International Operations Strategies

Key Learning Outcome: 

Key Learning Outcome Ability to identify or define: Mission Strategy Ability to describe or explain specific approaches used by OM to achieve competitive advantage: Differentiation Low Cost Response Four global operations strategies Why global issues are important