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Operations Strategy in a Global Environment

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Title: Operations Strategy in a Global Environment


1
Operations Strategy in a Global Environment
  • Chapter 2

2
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

3
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

4
  • 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

5
Boeing Suppliers (787)
6
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7
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8
What is the Reasons to Globalize?
9
Reasons to Globalize
10
How Globalization helps to Reduce costs?
11
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)

12
How Globalization Improves the Supply Chain?
13
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.

14
How Globalization Improves the Supply Chain?
15
Improve the Supply Chain
  • Locating facilities closer to unique resources
  • Auto design to California
  • Athletic shoe production to China
  • Perfume manufacturing in France

16
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.

17
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

18
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

19
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

20
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

21
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

22
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

23
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

24
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

25
Developing Missions and Strategies
  • Mission statements tell an organization where it
    is going!?
  • The Strategy tells the organization how to get
    there!?

26
Factors Affecting Mission
27
Strategy
  • Action plan to achieve mission
  • Functional areas have strategies
  • Strategies exploit opportunities and strengths,
    neutralize threats, and avoid weaknesses

28
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

29
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

30
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

31
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

32
Strategic Process
Organizations Mission
33
OMs Contribution to Strategy
Operations Specific Competitive
Decisions Examples Strategy Used Advantage
Figure 2.4
34

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

35
Operations Strategies for Two Drug Companies
Table 2.2
36
Operations Strategies for Two Drug Companies
Table 2.2
37
Operations Strategies for Two Drug Companies
Table 2.2
38
Operations Strategies for Two Drug Companies
Table 2.2
39
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

40
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
41
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.

42
Four International Operations Strategies
43
Four International Operations Strategies
44
Four International Operations Strategies
45
Four International Operations Strategies
46
Four International Operations Strategies
47
  • Check the course Website for assignments and
    announcements!
  • Have nice day!
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