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Topic 2: Operations Strategy in a Global Environment - Coggle Diagram
Topic 2: Operations Strategy in a Global Environment
Reasons to Globalize
2.
Reduce Costs
Reduce direct and indirect costs
Trade agreements can lower tariffs
Maquiladoras
World Trade Organization (WTO)
3.
Improve Operations
-Understand differences between how business
is handled in other countries
-Japanese – inventory management
-Germans – robots
-Scandinavians – ergonomics
4.
Understand Markets
Interacting with foreign customers, suppliers,
competition can lead to new opportunities
1.
Improve the Supply Chain
Locating facilities closer to unique resources
Auto design to California
Athletic shoe production to China
Perfume manufacturing in France
5.
Improve Improve Products
Remain open to free flow of ideas
Toyota and BMW manage joint research and development
Reduced risk, state-of-the-art design, lower costs
6.Attract and Retain Global Talent
Offer better employment opportunities
Better growth opportunities and
insulation against unemployment
Relocate unneeded personnel to more prosperous locations
Factors Affecting Mission
Mission
1.Profitability and Growth
2.Philosophy and Values
3.Environment
4.Customers
5.Benefit to Society
6.Public Image
Sample Missions
Process design
Product design
Quality management
Layout design
-Inventory
Location
Human resources
Companies Want To Consider
National literacy rate
Rate of innovation
Rate of technology change
Number of skilled workers
Developing Missions and Strategies
Mission statements
tell an organization where it is going
The Strategy
tells the organization how to get there
Strategic Process
Organization’s Mission
Functional Area Missions
Marketing
Operations
Finance/ Accounting
Strategy
Action plan to achieve mission
Functional areas have strategies
Strategies exploit opportunities strengths and
avoid weaknesses
[Strategies for Competitive Advantage]
Differentiation – better, or at least different
-Cost leadership – cheaper
Response – more responsive
Competing on Differentiation
Safeskin gloves – leading edge products
Experience Differentiation
Theme parks use sight, sound, smell, and participation
Competing on Cost
-Provide the maximum value as perceived by customer. Does not imply low quality.
Competing on Response
Flexibility is matching market changes in design innovation and volumes
*A way of life at Hewlett-Packard
Issues In Operations Strategy
Resources view
Value-chain analysis
SWOT Analysis
External Threats
Strategy
External Opportunities
Internal Weaknesses
Internal Weaknesses
Mission
Strategy Development Process
1.Analyze the Environment
2.Determine the Corporate Mission
3.Form a Strategy
Strategy Development and Implementation
Identify key success factors
Integrate OM with other activities
Build and staff the organization
Activity Mapping at
Southwest Airlines
Competitive Advantage:
Low Cost
Courteous, but Limited Passenger Service
Short Haul, Point-to-Point Routes,
Frequent, Reliable Schedules
Standardized Fleet of Boeing 737 Aircraft
Theory of Comparative Advantage
Purchasing firm focuses on core competencies
-Drives outsourcing
Risks of Outsourcing
ADVANTAGES
Cost savings
Gaining outside expertise that comes with specialization
Improving operations and service
Maintaining a focus on core competencies
Accessing outside technology
DISADVANTAGES
Increased logistics and inventory costs
Loss of control (quality, delivery)
Potential creation of future competition
Negative impact on employees
Rating Outsourcing Providers
Insufficient analysis most common reason for failure
-Factor-rating method
[Global Operations Strategy Options]
International strategy
-Import/export or license existing product
Examples:
-U.S. Steel
-Harley-Davidson
Global strategy
-Standardize product
-Economies of scale
Examples
-Texas Instruments
Caterpillar
Otis Elevator
Multidomestic
strategy
-Use existing domestic model globally
Examples
Heinz, McDonald’s
The Body Shop
Hard Rock Cafe
Transnational
strategy
Move material, people, or ideas across
national boundaries
Examples:
Coca-Cola , Nestlé