2 - 1© 2011 pearson education 2 2 the global environment and operations strategy powerpoint...
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2 - 1© 2011 Pearson Education
22 The Global Environment and Operations StrategyThe Global Environment and Operations Strategy
PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer and Render Heizer and Render Operations Management, 10e, Global Edition Operations Management, 10e, Global Edition Principles of Operations Management, 8e, Global EditionPrinciples of Operations Management, 8e, Global Edition
PowerPoint slides by Jeff Heyl
2 - 2© 2011 Pearson Education
OutlineOutline
Global Company Profile: Boeing
A Global View of Operations
Developing Missions And Strategies
Achieving Competitive Advantage Through Operations strategy (differentiation ,cost ,and response)
Ten Strategic OM Decisions
Strategy Development and Implementation
Global Operations Strategy options (international – multinational – global - transnational )
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Learning ObjectivesLearning Objectives
1. Define mission and strategy2. Identify and explain three strategic approaches
to competitive advantage3. Identify and define the 10 decisions of OM4. Understand the significant key success factors
and core competencies5. Identify and explain four global operations
strategy options
By the end of this chapter you should By the end of this chapter you should be able to:be able to:
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Global company Global company Some Boeing Suppliers (787)Some Boeing Suppliers (787)
Firm Country Component
Latecoere France Passenger doors
Labinel France Wiring
Dassault France Design and PLM software
Messier-Bugatti France Electric brakes
Thales France Electrical power conversion system and integrated standby flight display
Messier-Dowty France Landing gear structure
Diehl Germany Interior lighting
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Some Boeing Suppliers (787)Some Boeing Suppliers (787)Firm Country Component
Cobham UK Fuel pumps and valves
Rolls-Royce UK Engines
Smiths Aerospace UK Central computer system
BAE SYSTEMS UK Electronics
Alenia Aeronautics Italy Upper center fuselage & horizontal stabilizer
Toray Industries Japan Carbon fiber for wing and tail units
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Some Boeing Suppliers (787)Some Boeing Suppliers (787)Firm Country Component
Fuji Heavy Japan Center wing box Industries
Kawasaki Heavy Japan Forward fuselage, Industries fixed section of wing,
landing gear well
Teijin Seiki Japan Hydraulic actuators
Mitsubishi Heavy Japan Wing box Industries
Hafei Aviation China Parts
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Some Boeing Suppliers (787)Some Boeing Suppliers (787)Firm Country Component
Korean Aviation South Wingtips Korea
Saab Sweden Cargo access doors
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Global StrategiesGlobal Strategies
Benetton – moves inventory to stores around the world faster than its competitors by building flexibility into design, production, and distribution
Sony – purchases components from suppliers in Thailand, Malaysia, and around the world
Volvo – considered a Swedish company but until recently was controlled by an American company ( Ford).
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35 –
30 –
25 –
20 –
15 –
10 –
5 –
0 –| | | | | | | | | | |
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 (est*)
Year
Per
cen
t
Growth of World TradeGrowth of World Trade
Figure 2.1
Collapse of the Berlin Wall
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Reasons to GlobalizeReasons to Globalize
Reasons to GlobalizeReasons to Globalize
1. Reduce costs (labor, taxes, tariffs, etc.)2. Improve supply chain3. Provide better goods and services4. Understand markets5. Learn to improve operations6. Attract and retain global talent7. Cultural and Ethical Issues
Tangible Reasons
Intangible Reasons
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Reduce CostsReduce Costs Foreign locations with lower wage
rates can lower direct and indirect costs (salary-electricity ….etc)
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Improve the Supply ChainImprove the Supply Chain
Locating facilities closer to unique resources Auto design to California
Sport shoe production to China
Perfume manufacturing in France
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Provide Better Goods Provide Better Goods and Servicesand Services
Satisfy the different needs of goods and services On-time deliveries
Cultural variation
Improved customer service
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Understand MarketsUnderstand Markets
Interacting with foreign customers and suppliers can lead to new opportunities Cell phone
design from Europe
Cell phone fads from Japan
Extend the product life cycle
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Learn to Improve Learn to Improve OperationsOperations
Remain open to the free flow of ideas General Motors partnered with a
Japanese auto manufacturer to learn new approaches for production and inventory control
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Cultural and Ethical IssuesCultural and Ethical Issues
Cultures and attitude can be quite different towards
Child labor
Lunch breaks
Environment
Intellectual property
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Many factors must be Many factors must be ConsideredConsidered
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
Phone system
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Developing Missions and Developing Missions and StrategiesStrategies
The MissionThe Mission statements tell an organization where it is going
While The StrategyStrategy tells the organization how to get there
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MissionMission
Mission - where are you going? Organization’s
purpose for being
Answers ‘What do we provide society?’
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MerckMerck
Our mission is to provide society with superior products and services—
innovations and solutions that improve the quality of life and satisfy customer
needs—to provide employees with meaningful work and advanced
opportunities and investors with a superior rate of return.
Figure 2.2
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Palmer HospitalPalmer Hospital
Palmer Hospital for Children - provides state-of-the-art, family centred healthcare focused on
restoring the joy of childhood in an environment of compassion,
healing, and hope.
Figure 2.2
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Benefit to Society
Mission
Factors Affecting MissionFactors Affecting Mission
Philosophy and Values
Profitability and GrowthEnvironment
Customers Public Image
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Sample MissionsSample Missions
Company Mission
To manufacture and service an innovative, growing, and profitable worldwide successful communications business that exceeds our customers’ expectations.
Operations Management Mission
To produce products consistent with the company’s mission as the worldwide low-cost manufacturer.
Figure 2.3
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Sample MissionsSample Missions
Figure 2.3
Sample OM Department Missions
Product design To design and produce products and services with outstanding quality and inherent customer value.
Quality management To attain the exceptional value that is consistent with our company mission and marketing objectives by close attention to design, production, and field service operations
Process design To determine, design, and produce the production process and equipment that will be compatible with low-cost product, high quality, and good quality of work life at economical cost.
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Sample MissionsSample Missions
Figure 2.3
Sample OM Department Missions
Location To locate, design, and build efficient and economical facilities that will yield high value to the company, its employees, and the community.
Layout design To achieve, through skill, imagination, and resources in layout and work methods, production effectiveness and efficiency while supporting a high quality of work life.
Human resources To provide a good quality of work life, with well-designed, safe, rewarding jobs, stable employment, and equitable pay, in exchange for outstanding individual contribution from employees at all levels.
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Sample MissionsSample Missions
Figure 2.3
Sample OM Department Missions
Supply-chain management
To collaborate with suppliers to develop innovative products from stable, effective, and efficient sources of supply.
Inventory To achieve low investment in inventory consistent with high customer service levels and high facility utilization.
Scheduling To achieve high levels of productivity and timely customer delivery through effective scheduling.
Maintenance To achieve high utilization of facilities and equipment by effective maintenance of facilities and equipment.
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Strategic ProcessStrategic Process
Marketing Operations Finance/ Accounting
Functional Area Missions
Organization’s Mission
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StrategyStrategy
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 Strategies for Competitive AdvantageAdvantage
Differentiation – better, or at least different
Cost leadership – cheaper
Flexibility -rapid response
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Competing on Competing on DifferentiationDifferentiation
Uniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts customer’s perception
of value
Safe skin innovative gloves – leading edge products
Walt Disney Magic Kingdom – experience differentiation
Hard Rock Cafe – dining experience
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Competing on CostCompeting 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
Wal-Mart – small overhead, shrinkage, distribution costs
Franz Colruyt – no bags, low light, no music, doors on freezers
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Competing on flexibilityCompeting on flexibility Flexibility is matching market changes in
design innovation and volumes A way of life at Hewlett-Packard
Reliability is meeting schedules German machine industry
Timeliness is quickness in design, production, and delivery Pizza Hut, Motorola
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OM’s Contribution to StrategyOM’s Contribution to Strategy
Product
Quality
Process
Location
Layout
Human resource
Supply chain
Inventory
Scheduling
Maintenance
DIFFERENTIATIONInnovative design … Safeskin’s innovative gloves Broad product line … Fidelity Security’s mutual
funds After-sales service … Caterpillar’s heavy equipment
service Experience … Hard Rock Café’s dining
experience
COST LEADERSHIP Low overhead … Franz-Colruyt’s warehouse-
type stores Effective capacity use … Southwest Airline’s
aircraft utilization Inventory management … Wal Mart’s sophisticated
distribution system
RESPONSE Flexibility … Hewlett-Packard’s response to
volatile world market Reliability … FedEx’s “absolutely,
positively, on time” Quickness … Pizza Hut’s 5-minute guarantee
at lunchtime
Figure 2.4
10 Operations CompetitiveDecisions Approach Example Advantage
Response(faster)
Cost leadership(cheaper)
Differentiation(better)
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Ten strategic OM decisionsTen strategic OM decisionsOM decision concept
Product design
Designing goods and services defines much of the transformation process ; it usually determine the lower limits of cost and the upper limits of quality
Quality The customer’s quality expectation must be determined so that policies and procedures established to identify and achieve that quality
Process & Capacity design
Process decision commit management to specific technology , quality , human resources use , and maintenance, that expenses
determine much of the firm’s basic cost
Location selection
this decision may determine the firm’s ultimate successAny error decision may overwhelm any other efficiencies
layout design Material flows , capacity needs, personnel levels, technology decisions and inventory requirement influence layout
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Ten strategic OM decisionsTen strategic OM decisions
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Human resources & job design
Providing the quality of work life , determine the talented and skills people
Supply chain management
Determine what is to be made and what is to be purchased (quality – delivery - innovation) . Mutually trust between buyer and supplier is necessary for effective purchasing
Inventory Suppliers, production schedules and human resource planning are considered for more inventory efficiency
Scheduling The demands on human resources and facilities must be determined and controlled for developing the feasible and efficient schedules
Maintenance Decisions must be made regarding desired levels of reliability and stability .Systems must be established to maintain that reliability & stability
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Goods and Services and Goods and Services and the 10 OM Decisionsthe 10 OM Decisions
OperationsOperationsDecisionsDecisions GoodsGoods ServicesServicesProduct design
product is usually tangible
product is not tangible
Quality Many objective (battery life )standards
Many subjective standards (nice colour)
Process and
capacity design
Customers is not involved
Capacity may or may not match demand
Customer must directly involved
Capacity must match demand
Table 2.1
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Goods and Services and Goods and Services and the 10 OM Decisionsthe 10 OM Decisions
OperationsOperationsDecisionsDecisions GoodsGoods ServicesServicesLocation selection
Near raw materials and labor
Near customers
Layout design
Enhances production efficiency
Enhances product and production
Human resources and job design
Workforce focused on technical skills, consistent labor standards, output -based wages
Workforce must be able to interact with customers, labor standards vary depending on customer requirements
Table 2.1
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Goods and Services and Goods and Services and the 10 OM Decisionsthe 10 OM Decisions
OperationsOperationsDecisionsDecisions GoodsGoods ServicesServicesSupply chain management
Relationship critical to final product
Important, but may not be critical
Inventory Raw materials, work-in-process, and finished goods may be inventoried
Cannot be stored
Scheduling Level schedules possible
Meet immediate customer demand
Table 2.1
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Goods and Services and Goods and Services and the 10 OM Decisionsthe 10 OM Decisions
OperationsOperationsDecisionsDecisions GoodsGoods ServicesServicesMaintenance Often preventive
and takes place at production site
Often “repair” and takes place at customer’s site
Table 2.1
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Issues In Operations StrategyIssues In Operations Strategy
Resources view
Value Chain analysis
Porter’s Five Forces model
Organization’s operating system
Constant change
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(1)Resource View(1)Resource View
a view in which managers thinking in terms of financial ,physical, human and technological resources available and ensuring that the potential strategy is compatible with those resources.
Mangers evaluate these resources in order to achieve competitive advantages
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(2)Value –chain analysis (2)Value –chain analysis
A way to identify the elements in the products /services chain that uniquely add value .
It is used to identify activities that represent strengths, or opportunities for developing competitive advantages
The areas where the firm can add its unique values through product research , design , human resources, supply chain management , quality management , process innovation
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(3)(3) Porter’s Five Forces Porter’s Five Forces ModelModel
According to Porter there are 5 potential competing forces:-
1.Immediate rivals
2.Potential entrants
3.Customers
4.Suppliers
5.Substitute products
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( 4) Organization’s operating ( 4) Organization’s operating system system
The firm is operating in a system with many external factors
Political , cultural , legal, product life cycle ...etc are in flux
The internal changes combined with the external changes require strategies that are dynamic
As example the following figure shows us how the changes in the product lifecycle can affect the OM strategy
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2 - 45© 2011 Pearson Education
Product Life CycleProduct Life Cycle
Best period to increase market share
R&D engineering is critical
Practical to change price or quality image
Strengthen niche
Poor time to change image, price, or quality
Competitive costs become criticalDefend market position
Cost control critical
Introduction Growth Maturity Decline
Co
mp
an
y S
tra
teg
y/Is
sue
s
Figure 2.5
Internet search engines
Sales
Drive-through restaurants
CD-ROMs
Ana log TVs
iPods
Boeing 787
LCD & plasma TVs
Avatars
Xbox 360
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Product Life CycleProduct Life Cycle
Product design and development critical
Frequent product and process design changes
Short production runs
High production costs
Limited models
Attention to quality
Introduction Growth Maturity Decline
OM
Str
ate
gy
/Issu
es
Forecasting critical
Product and process reliability
Competitive product improvements and options
Increase capacity
Shift toward product focus
Enhance distribution
Standardization
Fewer product changes, more minor changes
Optimum capacity
Increasing stability of process
Long production runs
Product improvement and cost cutting
Little product differentiation
Cost minimization
Overcapacity in the industry
Prune line to eliminate items not returning good margin
Reduce capacity
Figure 2.5
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(5) (5) SWOTSWOT Analysis Analysis A method of determine, internal
(Strengths& Weakness) and external (Opportunities & Threats)
The purpose of this analysis is to maximize the strengths & opportunity and minimize or avoid the weakness & threats
According to this analysis strategy will be performed as shown by the following figure
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2 - 48© 2011 Pearson Education
Strategy
Analysis
SWOTSWOT Analysis Analysis
Internal Strengths
Internal Weaknesses
External Opportunities
External Threats
Mission
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Strategy Development ProcessStrategy Development Process
Determine the Corporate Mission
State the reason for the firm’s existence and identify the value it wishes to create.
Form a Strategy
Build a competitive advantage, such as low price, design, or volume flexibility, quality, quick delivery, dependability, after-
sale service, broad product lines.
Analyze the EnvironmentIdentify the strengths, weaknesses, opportunities, and threats.
Understand the environment, customers, industry, and competitors.
Figure 2.6
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OM Strategy Development OM Strategy Development and Implementationand Implementation
Identify key success factors
Build and staff the organization
Integrate OM with other activities
The operations manager’s job is to implement an OM strategy, provide competitive advantage, and increase productivity
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Key Success FactorsKey Success Factors
Production/Operations
Figure 2.7
Marketing
ServiceDistributionPromotionChannels of distributionProduct positioning (image, functions)
Finance/Accounting
LeverageCost of capitalWorking capitalReceivablesPayablesFinancial controlLines of credit
Decisions Sample Options Chapter
ProductQualityProcessLocationLayoutHuman resourceSupply chainInventoryScheduleMaintenance
Customized, or standardizedDefine customer expectations and how to achieve themFacility size, technology, capacityNear supplier or near customerWork cells or assembly lineSpecialized or enriched jobsSingle or multiple suppliersWhen to reorder, how much to keep on handStable or fluctuating production rateRepair as required or preventive maintenance
56, S67, S7
89
1011, S11
12, 14, 1613, 15
17
Support a Core Competence and Implement Strategy by Identifying and Executing the Key Success Factors in the Functional Areas
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Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
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Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
Automated ticketing machines
No seat assignments
No baggage transfers
No meals (peanuts)
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Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
No meals (peanuts)
Lower gate costs at secondary airports
High number of flights reduces employee idle time
between flights
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Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
High number of flights reduces employee idle time
between flights
Saturate a city with flights, lowering administrative
costs (advertising, HR, etc.) per passenger for that city
Pilot training required on only one type of aircraft
Reduced maintenance inventory required because of only one type of aircraft
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Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
Pilot training required on only one type of aircraft
Reduced maintenance inventory required because of only one type of aircraft
Excellent supplier relations with Boeing has aided
financing
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Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
Reduced maintenance inventory required because of only one type of aircraft
Flexible employees and standard planes aid
scheduling
Maintenance personnel trained only one type of
aircraft
20-minute gate turnarounds
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Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
Automated ticketing machines
Empowered employees
High employee compensation
Hire for attitude, then train
High level of stock ownership
High number of flights reduces employee idle time
between flights
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International business & International business & A multinational corporation A multinational corporation
(MNC)(MNC) International business is a firm that engage in
cross- border transactions.
A multinational corporation (MNC) is a firm with extensive international business involvement
MNCs buy resources , create goods & service and sell the production in a variety of countries
IBM is a good example of an MNC that imports electronic components to the USA from over 50 countries and exports components to over 130 countries , it has facilities in 45 countries and earns more than half its sales and profits abroad
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International Operations International Operations Strategies Strategies
According to local responsiveness and cost reduction, four operations strategies have been performed for the global and MNCs
1. International strategy
2. Multinational strategy
3. Global strategy
4. Transnational strategy
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International StrategyInternational Strategy(little local responsiveness and little cost (little local responsiveness and little cost
advantages ) advantages )
It depends on using the exports and license to penetrate the global market
It is the least advantages with little local responsiveness and little cost advantages
It is the easiest strategy
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Multi-Domestic Strategy Multi-Domestic Strategy (significant local responsiveness but little (significant local responsiveness but little
cost advantages )cost advantages )
Organizationally , these organization are typically subsidiaries , franchise ,or joint ventures
The advantages of this strategy is maximizing the responsiveness for the local market
The disadvantages , it has no cost advantages
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Global Strategy Global Strategy (little local responsiveness but significant (little local responsiveness but significant
cost advantages)cost advantages)
It has a high degree of centralization with headquarters coordinating the organization by which it can achieve the economic of scale
This strategy is appropriate for cost reduction
While it has no recommended when the demand for local responsiveness is high
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Transnational StrategyTransnational Strategy (significant local responsiveness and (significant local responsiveness and
significant cost advantages)significant cost advantages) It exploits the economic of scale and
learning as well as high responsiveness
Its basic “ core competence doesn’t reside in just the home country but can exist anywhere in the world”
These firms have the potential to pursue all three operation strategies (differentiation- low cost – response )
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Four International Four International Operations StrategiesOperations StrategiesC
ost
Red
uct
ion
Co
nsi
der
atio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
Figure 2.9
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
International Strategy
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Four International Four International Operations StrategiesOperations StrategiesC
ost
Red
uct
ion
Co
nsi
der
atio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
Figure 2.9
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Four International Four International Operations StrategiesOperations StrategiesC
ost
Red
uct
ion
Co
nsi
der
atio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
Figure 2.9
Standardized product
Economies of scale Cross-cultural
learning
ExamplesTexas InstrumentsCaterpillarOtis Elevator
Global Strategy
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Four International Four International Operations StrategiesOperations StrategiesC
ost
Red
uct
ion
Co
nsi
der
atio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
Standardized product Economies of scale Cross-cultural learning
Examples:Texas InstrumentsCaterpillarOtis Elevator
Global Strategy
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
Figure 2.9
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Four International Four International Operations StrategiesOperations StrategiesC
ost
Red
uct
ion
Co
nsi
der
atio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
Standardized product Economies of scale Cross-cultural learning
Examples:Texas InstrumentsCaterpillarOtis Elevator
Global Strategy
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
Figure 2.9
Use existing domestic model globally
Franchise, joint ventures, subsidiaries
ExamplesHeinzMcDonald’sThe Body ShopHard Rock Cafe
Multidomestic Strategy
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Four International Four International Operations StrategiesOperations StrategiesC
ost
Red
uct
ion
Co
nsi
der
atio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
Standardized product Economies of scale Cross-cultural learning
Examples:Texas InstrumentsCaterpillarOtis Elevator
Global Strategy
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
Multidomestic Strategy Use existing
domestic model globally Franchise, joint ventures,
subsidiaries
ExamplesHeinz The Body ShopMcDonald’s Hard Rock Cafe
Figure 2.9
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Four International Four International Operations StrategiesOperations StrategiesC
ost
Red
uct
ion
Co
nsi
der
atio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
Standardized product Economies of scale Cross-cultural learning
Examples:Texas InstrumentsCaterpillarOtis Elevator
Global Strategy
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
Multidomestic Strategy Use existing
domestic model globally Franchise, joint ventures,
subsidiaries
ExamplesHeinz The Body ShopMcDonald’s Hard Rock Cafe
Figure 2.9
Move material, people, ideas across national boundaries
Economies of scale Cross-cultural
learning
ExamplesCoca-ColaNestlé
Transnational Strategy
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Four International Four International Operations StrategiesOperations StrategiesC
ost
Red
uct
ion
Co
nsi
der
atio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
Standardized product Economies of scale Cross-cultural learning
Examples:Texas InstrumentsCaterpillarOtis Elevator
Global Strategy Transnational Strategy
Move material, people, ideas across national boundaries
Economies of scale Cross-cultural learning
ExamplesCoca-ColaNestlé
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
Multidomestic Strategy Use existing
domestic model globally Franchise, joint ventures,
subsidiaries
ExamplesHeinz The Body ShopMcDonald’s Hard Rock Cafe
Figure 2.9