Chapter 2 – Operations Management in a Global Environment – Flashcards
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Reasons to Globalize
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• Reduce costs (labor, taxes, tariffs, etc.) •improve supply chain • provide better goods and services • understand markets •learn more to improve operations • attract and retain global talent
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Reduce Costs
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foreign location with lower wage rates can lower direct and indirect costs
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Improve Supply Chain
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locating facilities close to unique resources
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Provide Better Goods and Services
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objective and subjective characteristics of goods and services; on-time deliveries, cultural variables, improved customer service
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Understand Markets
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interactive with foreign customers and suppliers can lead to new opportunities
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Learn to Improve Operations
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remain open to the free flow of ideas
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Attract and Retain Global talent
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offer better employment opportunities; growth opportunities and insulation against unemployment; relocate unneeded personnel to more prosperous locations
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Cultural and Ethical Issues
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Cultures/Attitudes are different: punctuality, lunch breaks, environment, intellectual property, thievery, bribery, child labor
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Consider
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literacy rate• National literacy rate •Rate of innovation •Rate of technology change •Number of skilled workers •Political stability •Product liability laws •Export restrictions •Variations in language • Work ethic •Tax rates •Inflation •Availability of raw materials •Interest rates •Population • Number of miles of highway •Phone system
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Develop a Mission
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mission statements tell an organization where it is going •organization purpose for being • answers "What do we provide society?" • provides boundaries and focus
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Factors Affecting Mission
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philosophy and values • profitability and growth • public image • benefit to society • customers • environment
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Develop a Strategy
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the strategy tells the organization how to get there •action plan to achieve mission • functional areas have strategies • strategies exploit opportunities and strengths, neutralize threats, and avoid weaknesses
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Strategies for Competitive Advantage
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• differentiation - better, or at least different • cost leadership - cheaper • response - rapid response
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Differentiation
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uniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts customer's perception of value
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Cost
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provide the maximum value as perceived by the customer; does not imply low quality
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Response
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flexibility in matching market changes in design innovation and volumes; reliability in meeting standards; timeliness in design, production, and delivery
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10 Strategic OM Decisions
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•Goods and Service Design • Quality •Process and Capacity Design •Location selection • Layout Design • Human Resource and Job Design • Supply-Chain Management • Inventory •Scheduling •Maintenance
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Managing Global Operations
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requires perspective on •capacity planning •location planning •facilities design and layout •scheduling
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Issues in Operations Strategy
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•resources view •value chain analysis •Porter's Five Forces Model •operating in a system with many external factors •constant change
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Product Life Cycle
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introduction > growth > maturity > decline
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Introduction
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Company Strategies/Issues - best period to increase market share; R&D engineering is critical OM Strategies/Issues - design and development is critical, frequent changes; short production runs; high production costs; limited models; attention to quality
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Growth
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Company Strategies/Issues - practical to change price or quality image; strengthen niche OM Strategies/Issues - forecasting critical; product design and reliability; competitive product improvements and options; increase capacity; shift toward product focus; enhance distribution
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Maturity
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Company Strategies/Issues - poor time to change image, price, or quality; competitive costs become critical to defend market position OM Strategies/Issues - standardization; fewer product changes, more minor changes; optimum capacity; increasing stability of process; long production runs; product improvement and cost cutting
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Decline
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Company Strategies/Issues - cost control is critical OM Strategies/Issues - little product differentiation; cost minimization; overcapacity in the industry; prune line to elimination items not return good margin; reduce capacity
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Strategy Development Process
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Analyze the Market > Determine the Corporation Mission > Form a Strategy
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Analyze the Market
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identify the SWOT; understand the environment, customers, industry and competitors
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Determine the Corporate Mission
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State the reason for the firm's existence and identify the value it wishes to create
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Form a Strategy
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Build a competitive advantage, such as low price, design, or volume flexibility, quality, quick delivery, dependability, after-sale service, broad product lines
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Strategy Development and Implementation
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• identify key success factors • build and staff the organization • integrate OM with other activities
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International Operations Strategies
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•Global Strategy •Transnational Strategy • International Strategy •Multidomestic Strategy
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Global Strategy
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high cost reduction/low local responsiveness considerations standardized product; economics of scale; cross-cultural learning ex: Texas Instruments; Caterpillar; Otis Elevator
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Transnational Strategy
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high cost reduction/high local responsiveness considerations move material, people, ideas across national boundaries; economics of scale; cross-cultural learning ex: Coca-cola, Nestle
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International Strategy
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low cost reduction/local responsiveness considerations import/export or license existing product ex: US Steel, Harley Davidson
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Multi-Domestic Strategy
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use domestic model globally; franchise, joint ventures, subsidiaries ex: Heinz, McDonalds, The Body Shop, Hard Rock Café
