Chapter 2 – Operations Management

Mexican factories located along the U.S./Mexico border that receive preferntial tariff treatment (free trade zones)
World Trade Organization (WTO)
An international organization that promotes world trade by lowering barriers to the free flow of goods across borders
North American Free Trade Agreement (NAFTA)
A free trade agreement between Canada, Mexico, and the United States
European Union (EU)
A European trade group that has 27 member states
Why take your business global?
To Reduce Costs, Improve the Supply Chain, Provide Bettes Goods and Services, Understand Markets, Learn to Improve Operations, Attract and Retain Global Talent
The purpose or rationale for an organization’s existence; What the organization will contribute to society
How an organization expects to achieve its mission and goals; Helps to expoit opportunities and strengths, neutralize threats, and avoid weaknesses
3 Conceptial Ways to Achieve a Mission
Differentiation, Cost Leadership, and Response
Competitive Advantage
The creation of a unique advantage over competitors
Distinguishing the offerings of an organization in a way that the customer perceives as adding value
Experience Differentiation
Engaging a customer with a product through imaginative use of the five senses, so the customer “experiences” the product
Low-Cost Leadership
Achieving maximum value as perceived by the customer, does not imply low value or low quality
A set of values related to rapid, flexible, and reliable performance; The entire range of values related to timely product development and delivery, as well as reliable scheduling and flexible performance
Operations Decisions
The strategic decisions of OM are goods and service design, quality, process design, location selection, layout design, human resources and job design, supply-chain management, inventory, scheduling, and maintenance.
Resources View
A method managers use to evaluate the resources at their disposal and manage or alter them to achieve competitive advantage
Value-Chain Analysis
A way to identify those elements in the product/ service chain that uniquely add value
Five Forces Analysis
A method of analyzing the five forces in the competitive environment: immediate rivals, potential entrants, customers, suppliers, and substitute products
SWOT Analysis
A method of determing internal strengths and weaknesses and external opportunities and threats
Key Success Factors (KSFs)
Activities or factors that are key to achieving competitive advantage
Core Competencies
A set of skills, talents, and activities in which a firm is particularly strong
Strategy Development Process
Analyze the Environment, Determine The Corporate Mission, and then Form a Strategy
Activity Map
A graphical link of competitive advantage, key success factors, and supporting activities
International Business
A frim that engages in cross-border transactions
Multinational Corporation (MNC)
A firm that has extensive involvement in international business, owning or controlling facilities in more than one country
International Strategy
A strategy in which global markets are penetrated using exports and licenses
Multidomestic Strategy
A strategy in which operating decisions are decentralized to each country to enhance local responsiveness
Global Strategy
A strategy in which operating decisions are centralized and headquarters coordinates the standardization and learning between facilities
Transnational Strategy
A strategy that combines the benefits of global-scale efficiences with the benefits of local responsiveness
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