Upload
collin-griffith
View
213
Download
0
Embed Size (px)
Citation preview
2 - 1© 2011 Pearson Education, Inc. publishing as Prentice Hall
22 Operations Strategy in a Global Environment
Operations Strategy in a Global Environment
PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer and Render Heizer and Render Operations Management, 10e Operations Management, 10e Principles of Operations Management, 8ePrinciples of Operations Management, 8e
PowerPoint slides by Jeff Heyl
2 - 2© 2011 Pearson Education, Inc. publishing as Prentice Hall
Global StrategiesGlobal Strategies
Boeing – Headquartered in Chicago, Boeing employs more than 170,000 people across the United States and in 70 countries. Its sales and production are worldwide.
Benetton –The Italian-based fashion designer and manufacturer has over 6,000 retail stores in more than 83 countries on every continent. Using Computer-Aided Design (CAD) of garments along with computerized garment cutting and assembly is the secret to a fast and flexible manufacturing operation.
Sony – purchases components from suppliers in Thailand, Malaysia, and around the world
2 - 3© 2011 Pearson Education, Inc. publishing as Prentice Hall
Global StrategiesGlobal Strategies
Volvo – considered a Swedish company but until recently was controlled by an American company, Ford. The current Volvo S40 is built in Belgium and shares its platform with the Mazda 3 built in Japan and the Ford Focus built in Europe.
Haier – A Chinese company, produces compact refrigerators (it has one-third of the US market) and wine cabinets (it has half of the US market) in South Carolina
2 - 4© 2011 Pearson Education, Inc. publishing as Prentice Hall
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 talent
Tangible Reasons
Intangible Reasons
2 - 5© 2011 Pearson Education, Inc. publishing as Prentice Hall
Reduce CostsReduce Costs Foreign locations with lower wage
rates can lower direct and indirect costs Maquiladora (Mexican border export
zone, populated by foreign owned factories)
World Trade Organization (WTO)
North American Free Trade Agreement (NAFTA) - Between Canada, Mexico and U.S.
2 - 6
Reduce CostsReduce Costs
APEC (Asia-Pacific Economic Cooperation between the US, Canada, Japan, South Korea, Australia, New Zealand, China, Taiwan, Hong Kong, and members of ASEAN)
SEATO (Australia, New zealand, Japan, HongKong, South Korea, Chile and New Guinea)
MERCOSUR (Argentina, Brazil, Paraguay and Uruguay
European Union (EU)
2 - 7© 2011 Pearson Education, Inc. publishing as Prentice Hall
Improve the Supply ChainImprove the Supply Chain
Locating facilities closer to unique resources Auto design to California
Athletic shoe production to China
Perfume manufacturing in France
2 - 8© 2011 Pearson Education, Inc. publishing as Prentice Hall
Provide Better Goods Provide Better Goods and Servicesand Services
Objective and subjective characteristics of goods and services On-time deliveries
Cultural variables
Improved customer service
2 - 9
Reasons to GlobalizeReasons to GlobalizeUnderstand MarketsUnderstand Markets
Interacting with foreign customers and suppliers can lead to new opportunities
Whirlpool
refrigerators
sold in Bangkok
are bright colors.
Extend the
product life cycle
2 - 10© 2011 Pearson Education, Inc. publishing as Prentice Hall
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 to production and inventory control
Equipment and layout have been improved using Scandinavian ergonomic competence
2 - 11© 2011 Pearson Education, Inc. publishing as Prentice Hall
Attract and Retain Global Attract and Retain Global TalentTalent
Offer better employment opportunities Better growth opportunities and
insulation against unemployment
Relocate unneeded personnel to more prosperous locations
2 - 12© 2011 Pearson Education, Inc. publishing as Prentice Hall
Reconciling Differences in Cultural and Social Reconciling Differences in Cultural and Social Behavior is key to the success of GLOBALIZATION Behavior is key to the success of GLOBALIZATION
EFFORTSEFFORTS
Cultures can be quite different
Attitudes can be quite different towards Punctuality
Lunch breaks
Environment
Intellectual property
Thievery
Bribery
Child labor
2 - 13© 2011 Pearson Education, Inc. publishing as Prentice Hall
Developing Missions and Developing Missions and StrategiesStrategies
MissionMission statements tell an organization where it is going
The StrategyStrategy tells the organization how to get there
2 - 14
Developing Missions and Developing Missions and StrategiesStrategies
Developing a good strategy is difficult, but it is much easier if the mission has been well defined.
2 - 15
The Mission of İzmir The Mission of İzmir University of EconomicsUniversity of Economics
To educate and equip qualified students with leadership attributes, entrepreneurial capabilities, critical thinking skills and the ability to contribute valuable research in a variety of sciences.
2 - 16© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall
MISSION:MISSION:Hard Rock CafeHard Rock Cafe
To spread the spirit of Rock ’n’ Roll by delivering an exceptional entertainment
and dining experience. We are committed to being an important,
contributing member of our community and offering the Hard Rock family a fun,
healthy, and nurturing work environment while ensuring our long-
term success.
Figure 2.2Figure 2.2
2 - 17© 2011 Pearson Education, Inc. publishing as Prentice Hall
Strategic ProcessStrategic Process
Marketing Operations Finance/ Accounting
Functional Area Missions
Organization’s Mission
2 - 18© 2011 Pearson Education, Inc. publishing as Prentice Hall
StrategyStrategy
Action plan to achieve mission
Functional areas have strategies
Strategies exploit opportunities and strengths, neutralize threats, and avoid weaknesses
2 - 19© 2011 Pearson Education, Inc. publishing as Prentice Hall
Strategies for Competitive Strategies for Competitive AdvantageAdvantage
Differentiation – better, or at least different
Cost leadership – cheaper
Response – rapid response
2 - 20© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
Handmade Silk Turkish Rugs
Walt Disney Magic Kingdom – experience differentiation
Hard Rock Cafe – dining experience
2 - 21© 2011 Pearson Education, Inc. publishing as Prentice Hall
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 overheads, direct shipments from manufacturers, reduced distribution costs with faster transportation
Pegasus Airlines -
2 - 22
Competing on ResponseCompeting on Response::Flexible, Reliable and Quick ResponseFlexible, Reliable and Quick Response
Flexibility is matching market changes in design innovation and volumes Products of Hewlett-Packard have a life cycle
of months Reliability is in meeting schedules
German machine industry Quickness
in design, production, and delivery Benetton, Motorola
2 - 23© 2011 Pearson Education, Inc. publishing as Prentice Hall
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)
2 - 24
Strategy Development for a culinary Strategy Development for a culinary school graduate who wants to open an school graduate who wants to open an
outstanding French fine dining outstanding French fine dining restaurant (DIFFERENTIATION)restaurant (DIFFERENTIATION)
Product design (Menus, meals)Product design (Menus, meals)
Location planningLocation planning
Facilities design and layoutFacilities design and layout
Human Resources, Human Resources, SchedulingScheduling
See example 1, pg. 71See example 1, pg. 71Requires a different perspective on:Requires a different perspective on:
2 - 25© 2011 Pearson Education, Inc. publishing as Prentice Hall
Process DesignProcess Design
Low Moderate HighVolume
High
Moderate
Low
Var
iety
of
Pro
du
cts
Process-focusedJOB SHOPS
(Print shop, emergency room, machine shop,
fine-diningrestaurant)
Repetitive (modular) focus
ASSEMBLY LINE(Cars, appliances,
TVs, fast-food restaurants) Product focused
CONTINUOUS(Steel, beer, paper, bread, institutional
kitchen)
Mass CustomizationCustomization at high
Volume(Dell Computer’s PC,
cafeteria)
2 - 26
Mass CustomizationMass Customization
The use of flexible computer-aided manufacturing systems to produce custom output.
Combines the low unit costs of mass production processes with the flexibility of individual customization.
2 - 27© 2011 Pearson Education, Inc. publishing as Prentice Hall
Issues In Operations StrategyIssues In Operations Strategy Resources view
Porter’s Value Chain analysis to identify opportunities for competitive advantage
Porter’s Five Forces model to analyze competitors (1. immediate rivals, 2. potential entrants, 3. customers, 4. suppliers, 5. substitute products)
External factors (political, economical factors)
Product Life Cycle
2 - 28© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
Analog TVs
iPods
Boeing 787
LCD & plasma TVs
Twitter, iphone5
Avatars
Xbox 360
2 - 29© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
2 - 30© 2011 Pearson Education, Inc. publishing as Prentice Hall
Strategy
Analysis
SWOT Analysis SWOT Analysis
Internal Strengths
Internal Weaknesses
External Opportunities
External Threats
Mission
2 - 31
Nike SWOT AnalysisNike SWOT AnalysisStrengths
- strong at research and development.
- Nike is a global brand.
Opportunities
- to develop new products such as sunglasses and jewellery.
Weaknesses
- The retail sector is very price sensitive.
Threats
- The market for sports shoes and garments is very competitive. Consumers are shopping around for a better deal.
2 - 32
SWOT Analysis SWOT Analysis
SWOT AnalysisSWOT Analysis, which is , which is a key tool in the strategic planning process can also be applied to personal career planning.
2 - 33© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
2 - 34© 2011 Pearson Education, Inc. publishing as Prentice Hall
Strategy Development and Strategy Development and ImplementationImplementation
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
2 - 35© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
2 - 36
Strategy Development and Strategy Development and ImplementationImplementation
Only by identifying Key Success Factors(KSFs) and Core Competencies can an organization achieve sustainable competitive advantage.
One of the KSFs for McDonads is layout.
Core Competency for Honda is its gas-powered engines.
2 - 37
GLOBAL OPERATIONS GLOBAL OPERATIONS STRATEGY OPTIONSSTRATEGY OPTIONS
Operations managers of international and multinational companies (IBM is a multinational company)approach global opportunies with one of four operations strategies:
1. International Strategy
2.Global Strategy
3.Multidomestic Strategy
4.Transnational Strategy
© 2011 Pearson Education, Inc. publishing as Prentice Hall
2 - 38© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
2 - 39© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
2 - 40© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
2 - 41© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
2 - 42© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
2 - 43© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
2 - 44© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
2 - 45© 2011 Pearson Education, Inc. publishing as Prentice Hall
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