Professional Documents
Culture Documents
Management
Chapter 2 –
Operations Strategy in a
Global Environment
Globalization
Reasons to Globalize
Reduce costs (labor, taxes etc.)
Improve supply chain
Provide better goods and services
Understand markets
Learn to improve operations
Attract and retain global talent
Reduce Costs
Foreign locations with lower wage
rates can lower direct and indirect
costs
Improve the Supply Chain
Locating facilities closer to
unique resources
Provide Better Goods
and Services
Objective and subjective
characteristics of goods and
services
On-time deliveries
Cultural variable.
Improved customer service
Understand Markets
Interacting with foreign customer
and suppliers can lead to new
opportunities
Cell phone design from Europe
Extend the product life cycle
Learn to Improve Operations
Punctuality Bribery
Lunch breaks Child labor
Environment
Developing Missions and
Strategies
Functional Area
Missions
Finance/
Marketing Operations
Accounting
Strategy
Action plan to achieve
mission
Functional areas have
strategies
Strategies exploit
opportunities and
strengths, neutralize
threats, and avoid
weaknesses
Strategies for Competitive
Advantage
4. Location DELIVERY
Pizza Hut’s five-minute guarantee at lunchtime Speed
5. Layout Dependability
Federal Express’s “absolutely, positively on time” Differentiation
(Better)
6. Human QUALITY
Motorola’s automotive products ignition systemsConformance Response
Resource Cost (Faster)
Honda Performance leadership
7. Supply Chain (Cheaper)
10.Maintenance
Goods & Services and the 10
OM Decisions
Operations Goods Services
Decisions
Goods & Product is usually Product is usually
services tangible intangible
decisions
Quality Objective quality Subjective quality
standards standards
Process Customer not involved Customer may be directly
and inmost of process involvedin process.
capacity Capacity must match
design demand to avoidlost sales
Goods & Services and the 10
OM Decisions – Continued
Operations Goods Services
Decisions
Location May need to be near rawMay need to be near customer
Selection materials or labor force Car rental, hair stylist
Layout Layout can enhance Can enhance product as well as
Design production efficiency Production
Human Work
force focused on Direct workforce usually
Resources technical skills. needed
and Job Labor standards consistent.
Design Output-
based wage system.
Goods & Services and the 10
OM Decisions – Continued
Operations Goods Services
Decisions
Supplychain Supply-chain Supply-chainrelationships
management relationships critical to important, notnecessarily
final product critical
Inventory Rawmaterials, work - Most services can notbe
in-process, and stored
finishedgoods
Scheduling Abilitytoconvert Primarilyconcernedwith
inventorymayallow meetingthecustomer's
levelingof production immediateschedule
rates
Goods & Services and the 10
OM Decisions – Continued
Operations Goods Services
Decisions
Maintenance Maintenanceis often Maintenanceis often
preventiveandtakes "repair"andtakes placeat
placeattheproduction thecustomer's site
site
Strategic Options Managers use to
gain Competitive Advantage
Low-cost product
Product-line breadth
Technical superiority
Product characteristics/differentiation
Continuing product innovation
Low-price/high-value offerings
Efficient, flexible operations adaptable to
consumers
Engineering research development
Location
Scheduling
Process Design
Customization at high
High Process-focused Volume
Job Shops Mass
(Print shop, emergency
Customization
(Dell Computer’s PC)
room , machine shop,
Repetitive (modular)
Variety of Products
fine dining
focus
Assembly line
Moderate (Cars, appliances, TVs,
fast-food restaurants) Product-focused
Continuous
(steel, beer,
paper, bread,
institutional
Low kitchen)
Low Moderate High
Volume
Product Life Cycle
Introduction Growth Maturity Decline
Best period to Practical to change Poor time to change Cost control
increase market price or quality image, price, or critical
Company Strategy/Issues
Internet Drive-through
restaurants
Color printers
Sales
3 1/2”
Floppy
Flat-screen disks
monitors DVD
Product Life Cycle
Introduction Growth Maturity Decline
Product design Forecasting critical Standardization Little product
and development Product and Less rapid product differentiation
critical process reliability changes – more Cost
OM Strategy/Issues
• International Strategy
• Multidomestic Strategy
• Global Strategy
• Transnational Strategy
International Strategy
• Selling product or services outside the
firm’s home market.
• By means of export.
• E.g Shan Foods, Lucky Cement, Gul
Ahmed Textile.
Multidomestic Strategy
• Strategy and operating decisions are
decentralized in each country.
• Products and services are tailored to local
market.
• Business unit in each country are
independent of each country.
• By means of franchise.
• E.g McDonalds, KFC
Global Strategy
• Products are standardized across
national markets.
• High degree of centralization.
• Emphasize on economies of scale.
• E.g Caterpillar.
Transnational Strategy
• Seeks to achieve cost reduction and
local responsiveness.
• Difficult to achieve.
• Emphasize on economies of scale as
well as pressure for responsiveness.
• E.g Nestle, P&G.