Operations

Management
Operations Strategy in a Global
Environment
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Learning Objectives
When you complete this chapter, you should
be able to :
Identify or Define:

Mission
Strategy
Ten Decisions of OM
Multinational Corporations

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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

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Developing Missions and

Strategies

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Mission
Mission - where are you
going?

Organizations purpose for being

Provides boundaries & focus
Answers What do we provide
society?

1995 Corel Corp.

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Mission/Strategy
Mission - where you are going
Strategy - how you are going to get there; an
action plan

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Strategy
Action plan to achieve
mission
Shows how mission will be
achieved
Company has a business
strategy
Functional areas have
strategies
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1995 Corel Corp.

2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Strategy Process
Company
Mission
Business
Strategy
Functional
Functional Area
Area
Strategies
Marketing
Decisions
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Operations
Decisions
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Fin./Acct.
Decisions
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Strategies for Competitive

Advantage
Differentiation
Cost leadership
Quick response

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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

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

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

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OMs Contribution to Strategy

Operations
Decisions

Specific
Strategy Used

Examples

Quality
Product

FLEXIBILITY

Sonys constant innovation of new products

HPs ability to follow the printer market

Process

Design
Volume

Southwest Airlines No-frills service

LOW COST

Location

DELIVERY

Pizza Huts five-minute guarantee at lunchtime

Federal Expresss absolutely, positively on time

Layout

Speed
Dependability

Human Resource
Supply Chain
Inventory
Scheduling
Maintenance

Competitive
Advantage

Differentiation
(Better)

QUALITY

Motorolas automotive products ignition systems

Motorolas pagers

IBMs after-sale service on mainframe computers

Fidelity Securitys broad line of mutual funds

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Conformance
Performance

Cost
leadership
(Cheaper)

Response
(Faster)

AFTER-SALE SERVICE

BROAD PRODUCT LINE

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Process Design
High

Customization at high
Volume

Process-focused

Job Shops

Variety of Products

(Print shop, emergency

room , machine shop,
fine dining

Mass Customization
(Dell Computers PC)
Repetitive (modular)
focus

Assembly line
(Cars, appliances, TVs,
fast-food restaurants)

Moderate

Product-focused

Continuous
(steel, beer, paper,
bread, institutional
kitchen)
Low
Low
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Moderate

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Volume

High
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Preconditions To Implement a Strategy

One must understand:

Strengths & weaknesses of competitors and new

entrants into the market
Current and prospective environmental, legal, and
economic issues
The notion of product life cycle
Resources available with the firm and within the OM
function
Integration of OM strategy with company strategy and
with other functions.
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Impetus for Strategy Change

Changes in the organization
Stages in the product life cycle
Changes in the environment

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Growth rate

Stages in the Product Life Cycle

Introduction
Growth
Maturity
Decline

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Strategy and Issues During a

Products Life

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Strategy Development and

Implementation
Identify critical success factors
Build and staff the organization

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SWOT Analysis Process

Environmental Analysis

Determine Corporate Mission

Form a Strategy
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SWOT Analysis to Strategy

Formulation
Mission
Internal
Strengths

External
Opportunities
Strategy

Internal
Weaknesses

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Competitive
Advantage
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External
Threats

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How It Works
If competitive
advantage, leads to
achieving

Company
Mission

Distinctive
competencies affect

Business
Strategy
Functional Area
Strategies
Marketing
Decisions
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Decisions
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Fin./Acct.
Decisions
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Four International Operations

Strategies

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Global Strategy
Operating decisions are centralized and
headquarters coordinates the standardization
and learning between facilities

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International Strategy
Global markets are penetrated using exports and
licenses

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