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© 2008 Prentice Hall, Inc. 2 – 1
Operations ManagementOperations Management
Chapter 2 – Chapter 2 – Global EnvironmentGlobal Environment and and Operations StrategyOperations Strategy
PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer/Render Heizer/Render Operations Management, Operations Management, 11 Ed.11 Ed.
Some additions and deletions have been made by Ömer Yağız to this slide set. (Revised March 2015.
© 2008 Prentice Hall, Inc. 2 – 2
OutlineOutline
Global Company Profile: BoeingGlobal Company Profile: Boeing
A Global View of OperationsA Global View of OperationsCultural and Ethical IssuesCultural and Ethical Issues
Developing Missions And Developing Missions And StrategiesStrategiesMissionMission
StrategyStrategy
© 2008 Prentice Hall, Inc. 2 – 3
Outline Outline –– Continued Continued
Achieving Competitive Advantage Achieving Competitive Advantage Through OperationsThrough OperationsCompeting On DifferentiationCompeting On Differentiation
Competing On CostCompeting On Cost
Competing On ResponseCompeting On Response
Ten Strategic OM DecisionsTen Strategic OM Decisions
© 2008 Prentice Hall, Inc. 2 – 4
Outline Outline –– Continued Continued
Strategy Development and Strategy Development and ImplementationImplementationCritical Success Factors and Core Critical Success Factors and Core
CompetenciesCompetencies
Build and Staff the OrganizationBuild and Staff the Organization
Integrate OM with Other ActivitiesIntegrate OM with Other Activities
© 2008 Prentice Hall, Inc. 2 – 5
Outline Outline –– Continued Continued
Global Operations Strategy Global Operations Strategy OptionsOptions International StrategyInternational Strategy
Multidomestic StrategyMultidomestic Strategy
Global StrategyGlobal Strategy
Transnational StrategyTransnational Strategy
© 2008 Prentice Hall, Inc. 2 – 6
Learning ObjectivesLearning Objectives
1.1. Define mission and strategyDefine mission and strategy
2.2. Identify and explain three strategic Identify and explain three strategic approaches to competitive approaches to competitive advantageadvantage
3.3. Identify and define the 10 decisions Identify and define the 10 decisions of operations managementof operations management
When you complete this chapter you When you complete this chapter you should be able to:should be able to:
© 2008 Prentice Hall, Inc. 2 – 7
Learning ObjectivesLearning Objectives
4.4. Identify five OM strategy insights Identify five OM strategy insights provided by PIMS researchprovided by PIMS research
5.5. Identify and explain four global Identify and explain four global operations strategy optionsoperations strategy options
When you complete this chapter you When you complete this chapter you should be able to:should be able to:
© 2008 Prentice Hall, Inc. 2 – 8
Some Boeing Suppliers (787)Some Boeing Suppliers (787)
FirmFirm CountryCountry ComponentComponent
LatecoereLatecoere FranceFrance Passenger doorsPassenger doors
LabinelLabinel FranceFrance WiringWiring
DassaultDassault FranceFrance Design and Design and PLM softwarePLM software
Messier-BugattiMessier-Bugatti FranceFrance Electric brakesElectric brakes
ThalesThales FranceFrance Electrical power Electrical power conversion system conversion system and integrated and integrated standby flight displaystandby flight display
Messier-DowtyMessier-Dowty FranceFrance Landing gear structureLanding gear structure
DiehlDiehl GermanyGermany Interior lightingInterior lighting
© 2008 Prentice Hall, Inc. 2 – 9
Some Boeing Suppliers (787)Some Boeing Suppliers (787)
FirmFirm CountryCountry ComponentComponent
CobhamCobham UKUK Fuel pumps and valvesFuel pumps and valves
Rolls-RoyceRolls-Royce UKUK EnginesEngines
Smiths AerospaceSmiths Aerospace UKUK Central computer Central computer systemsystem
BAE SYSTEMSBAE SYSTEMS UKUK ElectronicsElectronics
Alenia AeronauticsAlenia Aeronautics ItalyItaly Upper center Upper center fuselage & fuselage & horizontal stabilizerhorizontal stabilizer
Toray IndustriesToray Industries JapanJapan Carbon fiber for Carbon fiber for wing and tail unitswing and tail units
© 2008 Prentice Hall, Inc. 2 – 10
Some Boeing Suppliers (787)Some Boeing Suppliers (787)
FirmFirm CountryCountry ComponentComponent
Fuji HeavyFuji Heavy JapanJapan Center wing boxCenter wing box IndustriesIndustries
Kawasaki HeavyKawasaki Heavy JapanJapan Forward fuselage,Forward fuselage, IndustriesIndustries fixed section of wing, fixed section of wing,
landing gear welllanding gear well
Teijin SeikiTeijin Seiki JapanJapan Hydraulic actuatorsHydraulic actuators
Mitsubishi Heavy Mitsubishi Heavy JapanJapan Wing boxWing box IndustriesIndustries
Chengdu Aircraft Chengdu Aircraft ChinaChina RudderRudderGroupGroup
Hafei AviationHafei Aviation ChinaChina PartsParts
© 2008 Prentice Hall, Inc. 2 – 11
Some Boeing Suppliers (787)Some Boeing Suppliers (787)
FirmFirm CountryCountry ComponentComponent
Korean AviationKorean Aviation SouthSouth WingtipsWingtips KoreaKorea
SaabSaab SwedenSweden Cargo access doorsCargo access doors
© 2008 Prentice Hall, Inc. 2 – 12
Global StrategiesGlobal Strategies
Boeing – sales and production are Boeing – sales and production are worldwideworldwide
Benetton – moves inventory to stores Benetton – moves inventory to stores around the world faster than its around the world faster than its competition by building flexibility into competition by building flexibility into design, production, and distributiondesign, production, and distribution
Sony – purchases components from Sony – purchases components from suppliers in Thailand, Malaysia, and suppliers in Thailand, Malaysia, and around the worldaround the world
© 2008 Prentice Hall, Inc. 2 – 13
Global StrategiesGlobal Strategies
Volvo – considered a Swedish company Volvo – considered a Swedish company but it isbut it is ( (waswas)) controlled by an American controlled by an American company, Ford. company, Ford. Now it belongs to Geely, Now it belongs to Geely, a Chinese company. a Chinese company. The current Volvo The current Volvo S40 is S40 is assembled assembled in Belgiumin Belgium, South , South Africa, malaysia and ChinaAfrica, malaysia and China and shares its and shares its platform with the Mazda 3 built in Japan platform with the Mazda 3 built in Japan and the Ford Focus built in Europe.and the Ford Focus built in Europe.
© 2008 Prentice Hall, Inc. 2 – 14
Haier – A Chinese company, Haier – A Chinese company, produces compact refrigerators (it produces compact refrigerators (it has one-third of the US market) and has one-third of the US market) and wine cabinets (it has half of the US wine cabinets (it has half of the US market) in South Carolinamarket) in South Carolina
Globalization means that producing Globalization means that producing locally and exporting is not a viable locally and exporting is not a viable business model any more for many business model any more for many industriesindustries
Global StrategiesGlobal Strategies
© 2008 Prentice Hall, Inc. 2 – 15
Reasons to GlobalizeReasons to Globalize
Reasons to GlobalizeReasons to Globalize
1.1. Reduce costs (labor, taxes, tariffs, etc.)Reduce costs (labor, taxes, tariffs, etc.)
2.2. Improve supply chainImprove supply chain
3.3. Improve productsImprove products
4.4. Understand marketsUnderstand markets
5.5. Learn to improve operationsLearn to improve operations
6.6. Attract and retain global talentAttract and retain global talent
Tangible Tangible ReasonsReasons
Intangible Intangible ReasonsReasons
© 2008 Prentice Hall, Inc. 2 – 16
1. 1. Reduce CostsReduce Costs
Foreign locations with lower wage rates Foreign locations with lower wage rates and tariffs and tariffs can lower direct and indirect costscan lower direct and indirect costs MaquiladorasMaquiladoras (free trade zones-Mexico) (free trade zones-Mexico) World Trade Organization (WTO)World Trade Organization (WTO) Trade blocs & agreements (reduced cost of Trade blocs & agreements (reduced cost of
operating)operating) North American Free Trade Agreement (NAFTA)North American Free Trade Agreement (NAFTA) Asia-Pacific Economic Cooperation(Asia-Pacific Economic Cooperation(APECAPEC-21 -21
countries)countries) South East Asia Treaty Org(South East Asia Treaty Org(SEATOSEATO-8 countries-8 countries MERCOSUR MERCOSUR (Argentina, Brazil, Paraguay, and (Argentina, Brazil, Paraguay, and
UruguayUruguay European Union (EU)European Union (EU)
Ex: Many U.S. businesses have their call centers in India
© 2008 Prentice Hall, Inc. 2 – 17
2. 2. Improve the Supply ChainImprove the Supply Chain
Locating facilities closer to unique Locating facilities closer to unique resourcesresourcesAuto design to CaliforniaAuto design to California
Athletic shoe production to ChinaAthletic shoe production to China (it (it was South Korea before)was South Korea before)
Perfume manufacturing in FrancePerfume manufacturing in France
© 2008 Prentice Hall, Inc. 2 – 18
3. 3. Provide Better Goods Provide Better Goods and Servicesand Services
Objective and subjective Objective and subjective characteristics of goods and characteristics of goods and servicesservicesOn-time deliveriesOn-time deliveries
Cultural variablesCultural variables (customized (customized goods & services to meet unique goods & services to meet unique cultural needs) (Kıble indicators in cultural needs) (Kıble indicators in Honda for Arab countries)Honda for Arab countries)
Improved customer serviceImproved customer service (reduce (reduce response time)response time)
© 2008 Prentice Hall, Inc. 2 – 19
4. 4. Understand MarketsUnderstand Markets
Interacting with foreign customers and Interacting with foreign customers and suppliers can lead to new opportunitiessuppliers can lead to new opportunitiesCell phone design from EuropeCell phone design from Europe (Nokia) (Nokia)Cell phoneCell phone fadsfads (accessories) (accessories) from from JapanJapan
and Koreaand Korea• a device which converts your rear-view mirror into a a device which converts your rear-view mirror into a
display for the phone. So if someone is calling you, just display for the phone. So if someone is calling you, just look at the number on the mirror while you drive. look at the number on the mirror while you drive.
• Sony Ericsson has launched stereophonic speakers called Sony Ericsson has launched stereophonic speakers called MDS-65, which can be attached to the phone and give the MDS-65, which can be attached to the phone and give the effect of a mini home theatre. effect of a mini home theatre.
• just look at all the accessories for the Ipod and the Iphone.just look at all the accessories for the Ipod and the Iphone.
Extend the product life cycleExtend the product life cycle
© 2008 Prentice Hall, Inc. 2 – 20
5. L5. Learn to Improve Operationsearn to Improve Operations
Remain open to the free flow of Remain open to the free flow of ideasideasGeneral Motors partnered with a General Motors partnered with a
Japanese auto manufacturer Japanese auto manufacturer (Toyota) (Toyota) to learnto learn (NUMMI-Calif.) (NUMMI-Calif.)https://hbr.org/2009/09/nummi-what-toyota-learned
benchmarking - first practised by benchmarking - first practised by Xerox Corp.Xerox Corp.
Equipment and layout have been Equipment and layout have been improved using Scandinavian improved using Scandinavian ergonomic competenceergonomic competence
TAV –- Tepe-Akfen-Vie (Tepe TAV –- Tepe-Akfen-Vie (Tepe learned airport operations from Vie)learned airport operations from Vie)
© 2008 Prentice Hall, Inc. 2 – 21
6. 6. Attract and Retain Global Attract and Retain Global TalentTalent
Offer better employment Offer better employment opportunitiesopportunitiesBetter growth opportunities and Better growth opportunities and
insulation against unemploymentinsulation against unemployment
Relocate unneeded personnel to Relocate unneeded personnel to more prosperous locationsmore prosperous locations during during economic downturns (flexibility)economic downturns (flexibility)
Incentives for people who like to Incentives for people who like to travel travel
© 2008 Prentice Hall, Inc. 2 – 22
Cultural and Ethical IssuesCultural and Ethical Issues
Cultures can be quite differentCultures can be quite different
Attitudes can be quite different Attitudes can be quite different towards towards
PunctualityPunctuality
Lunch breaksLunch breaks
EnvironmentEnvironment
Intellectual Intellectual propertyproperty
ThieveryThievery
BriberyBribery
Child laborChild labor
My Saudi Arabian experience with punctuality!
© 2008 Prentice Hall, Inc. 2 – 23
Companies Want To ConsiderCompanies Want To Consider
National literacy rateNational literacy rate
Rate of innovationRate of innovation
Rate of technology Rate of technology changechange
Number of skilled Number of skilled workersworkers
Political stabilityPolitical stability
Product liability lawsProduct liability laws
Export restrictionsExport restrictions
Variations in languageVariations in language
Work ethicWork ethic
Tax ratesTax rates
InflationInflation
Availability of raw Availability of raw materialsmaterials
Interest ratesInterest rates
PopulationPopulation
Number of miles of Number of miles of highwayhighway
Phone systemPhone system
© 2008 Prentice Hall, Inc. 2 – 24
Match Product & ParentMatch Product & Parent
Braun Household Braun Household AppliancesAppliances
Firestone TiresFirestone Tires
Godiva ChocolateGodiva Chocolate
Haagen-Dazs Ice Haagen-Dazs Ice CreamCream
Jaguar AutosJaguar Autos
MGM MoviesMGM Movies
Lamborghini AutosLamborghini Autos
Alpo PetfoodsAlpo Petfoods
1.1. VolkswagenVolkswagen
2.2. BridgestoneBridgestone
3.3. Campbell SoupCampbell Soup
4.4. Ford Motor CompanyFord Motor Company
5.5. GilletteGillette
6.6. NestléNestlé
7.7. PillsburyPillsbury
8.8. SonySony
Match Product & ParentMatch Product & Parent ((Kimin eli kimin cebinde?)Kimin eli kimin cebinde?)
© 2008 Prentice Hall, Inc. 2 – 25
Match Product & ParentMatch Product & Parent ((Kimin eli kimin cebinde?)Kimin eli kimin cebinde?)
Braun Household Braun Household AppliancesAppliances
Firestone TiresFirestone Tires
Godiva ChocolateGodiva Chocolate
Haagen-Dazs Ice Haagen-Dazs Ice CreamCream
Jaguar AutosJaguar Autos
MGM MoviesMGM Movies
Lamborghini AutosLamborghini Autos
Alpo PetfoodsAlpo Petfoods
1.1. VolkswagenVolkswagen
2.2. BridgestoneBridgestone
3.3. Ülker GroupÜlker Group
4.4. Ford Motor CompanyFord Motor Company
5.5. GilletteGillette
6.6. NestléNestlé
7.7. PillsburyPillsbury
8.8. SonySony
© 2008 Prentice Hall, Inc. 2 – 26
Match Product & CountryMatch Product & Country
Braun Household Braun Household AppliancesAppliances
Firestone TiresFirestone Tires
Godiva ChocolateGodiva Chocolate
Haagen-Daz Ice Haagen-Daz Ice CreamCream
Jaguar AutosJaguar Autos
MGM MoviesMGM Movies
Lamborghini AutosLamborghini Autos
Alpo Pet FoodsAlpo Pet Foods
1.1. Great BritainGreat Britain
2.2. GermanyGermany
3.3. JapanJapan
4.4. United StatesUnited States
5.5. SwitzerlandSwitzerland
© 2008 Prentice Hall, Inc. 2 – 27
Match Product & CountryMatch Product & Country
Braun Household Braun Household AppliancesAppliances
Firestone TiresFirestone Tires
Godiva ChocolateGodiva Chocolate
Haagen-Daz Ice Haagen-Daz Ice CreamCream
Jaguar AutosJaguar Autos
MGM MoviesMGM Movies
Lamborghini AutosLamborghini Autos
Alpo Pet FoodsAlpo Pet Foods
1.1. Great BritainGreat Britain
2.2. GermanyGermany
3.3. JapanJapan
4.4. United StatesUnited States
5.5. SwitzerlandSwitzerland
6.6. TurkeyTurkey
7.7. IndiaIndia
© 2008 Prentice Hall, Inc. 2 – 28
Developing Missions and Developing Missions and StrategiesStrategies
MissionMission: : overall purpose of an organizationoverall purpose of an organization (misyon; varoluş nedeni)(misyon; varoluş nedeni). .
The mission of an The mission of an o organization defines its rganization defines its reason for existence.reason for existence. “Why are we in “Why are we in business?”business?”
MissionMission statements tell an organization statements tell an organization where it is goingwhere it is going
Mission of the organization plus mission of Mission of the organization plus mission of the functional areas (prod, mktg, finance, the functional areas (prod, mktg, finance, R&D, etc)R&D, etc)
© 2008 Prentice Hall, Inc. 2 – 29
Developing Missions and Developing Missions and StrategiesStrategies
The The sstrategy trategy is an organization’s is an organization’s action plan to achieve its mission action plan to achieve its mission and goalsand goals
It is a long term planIt is a long term plan
© 2008 Prentice Hall, Inc. 2 – 30
Developing Missions and Developing Missions and StrategiesStrategies
Mission statements tell an Mission statements tell an organization where it is goingorganization where it is going
The strategy tells the organization The strategy tells the organization how to get therehow to get there
© 2008 Prentice Hall, Inc. 2 – 31
FedExFedEx’s Mission’s MissionFedEx is committed to our People-Service-Profit FedEx is committed to our People-Service-Profit
philosophy. We will produce outstanding financial philosophy. We will produce outstanding financial returns by providing total reliable, returns by providing total reliable, competitively competitively
superior, global air-ground transportation of high superior, global air-ground transportation of high priority goods and documents that require rapid, priority goods and documents that require rapid, time-certain delivery. time-certain delivery. Equally important, positive Equally important, positive control of each package will be maintained using control of each package will be maintained using
real time electronic tracking and tracing systems. A real time electronic tracking and tracing systems. A complete record of each shipment and delivery will complete record of each shipment and delivery will be presented with our request for payment. We will be presented with our request for payment. We will
be helpful, courteous, and professional to each other be helpful, courteous, and professional to each other and the public. We will strive to have a completely and the public. We will strive to have a completely satisfied customer at the end of each transaction.satisfied customer at the end of each transaction.
Figure 2.2Figure 2.2
© 2008 Prentice Hall, Inc. 2 – 32
MerckMerck’s Mission’s Mission
The mission of Merck is to provide The mission of Merck is to provide society with superior products and society with superior products and
services - innovations and solutions services - innovations and solutions that improve the quality of life and that improve the quality of life and
satisfy customer needs - to provide satisfy customer needs - to provide employees with meaningful work and employees with meaningful work and
advancement opportunities and advancement opportunities and investors with a superior rate of returninvestors with a superior rate of return
Figure 2.2Figure 2.2
© 2008 Prentice Hall, Inc. 2 – 33
Hard Rock CafeHard Rock Cafe’s Mission’s Mission
Our Mission: To spread the spirit of Rock ‘n’ Our Mission: To spread the spirit of Rock ‘n’ Roll by delivering an exceptional Roll by delivering an exceptional
entertainment and dining experience. We entertainment and dining experience. We are committed to being an important, are committed to being an important,
contributing member of our community and contributing member of our community and offering the Hard Rock family a fun, healthy, offering the Hard Rock family a fun, healthy,
and nurturing work environment while and nurturing work environment while ensuring our long-term success.ensuring our long-term success.
Figure 2.2Figure 2.2
© 2008 Prentice Hall, Inc. 2 – 34
Arnold Palmer HospitalArnold Palmer Hospital
Arnold Palmer Hospital for Children provides state-of-the-art, family centered healthcare focused on
restoring the joy of childhood in an environment of compassion, healing,
and hope...
Figure 2.2Figure 2.2
© 2008 Prentice Hall, Inc. 2 – 35
TAI’s Mission (old version)TAI’s Mission (old version)
TAI is a company of dedicated, TAI is a company of dedicated, dynamic anddynamic and resourceful people resourceful people searching for excellencesearching for excellence and and continued growth in the field of continued growth in the field of aerospace. Our mission is to fulfil aerospace. Our mission is to fulfil the aerospace requirements of our the aerospace requirements of our nation and world marketnation and world marketss with with commitment to high quality, value commitment to high quality, value and on time delivery.and on time delivery.
© 2008 Prentice Hall, Inc. 2 – 36
TAI’s Mission (current version)TAI’s Mission (current version)
With our great leader Atatürk’s With our great leader Atatürk’s vision: “The Future is in the Skies” vision: “The Future is in the Skies” and our nation’s eagerness to “Build and our nation’s eagerness to “Build its own aircraft”; TAI has dedicated its own aircraft”; TAI has dedicated itself to be in the skies and space itself to be in the skies and space and be pioneers in developing and be pioneers in developing Turkey’s aviation and space industry.Turkey’s aviation and space industry.
Mission statements may change over Mission statements may change over time..time..
© 2008 Prentice Hall, Inc. 2 – 37
TAI’s Mission TAI’s Mission (most current version)(most current version)
© 2008 Prentice Hall, Inc. 2 – 38
To provide excellent telecommunication To provide excellent telecommunication solutions within the framework of Total solutions within the framework of Total Quality Management philosophy.Quality Management philosophy.
NETAŞ’s Mission NETAŞ’s Mission
© 2008 Prentice Hall, Inc. 2 – 39
Fully satisfying customer Fully satisfying customer expectations and requirements is the expectations and requirements is the guiding mission of Arçelik. In order guiding mission of Arçelik. In order to achieve and maintain the high to achieve and maintain the high standards it has, Arçelik has a standards it has, Arçelik has a continual programme of investment continual programme of investment which encompasses plants, which encompasses plants, manufacturing equipment, research manufacturing equipment, research & development and most importantly & development and most importantly personnel.personnel.
Arçelik’s Mission Arçelik’s Mission
© 2008 Prentice Hall, Inc. 2 – 40
Benefit to Society
Mission
Factors Affecting MissionFactors Affecting Mission
Philosophy and Values
Profitability and GrowthEnvironment
Customers Public Image
Benefit to stockholders
© 2008 Prentice Hall, Inc. 2 – 41
Sample MissionsSample Missions
Sample Company MissionSample Company Mission
To manufacture and service an innovative, growing, and profitable worldwide microwave communications business that exceeds our customers’ expectations.
Sample Operations Management MissionSample Operations Management Mission
To produce products consistent with the company’s mission as the worldwide low-cost manufacturer.
Figure 2.3Figure 2.3
© 2008 Prentice Hall, Inc. 2 – 42
Sample MissionsSample Missions
Figure 2.3Figure 2.3
Sample OM Department MissionsSample 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, procurement, production, and field service operations
Process design To determine and design or 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.
© 2008 Prentice Hall, Inc. 2 – 43
Sample MissionsSample Missions
Figure 2.3Figure 2.3
Sample OM Department MissionsSample 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 resourcefulness 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.
© 2008 Prentice Hall, Inc. 2 – 44
Sample MissionsSample Missions
Figure 2.3Figure 2.3
Sample OM Department MissionsSample 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 throughput and timely customer delivery through effective scheduling.
Maintenance To achieve high utilization of facilities and equipment by effective preventive maintenance and prompt repair of facilities and equipment.
© 2008 Prentice Hall, Inc. 2 – 45
Strategic ProcessStrategic Process
Marketing Operations Finance/ Accounting
Functional Area Missions
Organization’s Mission
© 2008 Prentice Hall, Inc. 2 – 46
StrategyStrategy
Action plan to Action plan to achieve missionachieve mission
Functional areas Functional areas have strategieshave strategies
Strategies exploit Strategies exploit opportunities and opportunities and strengths, neutralize strengths, neutralize threats, and avoid threats, and avoid weaknessesweaknesses
© 2008 Prentice Hall, Inc. 2 – 47
Strategies for Competitive Strategies for Competitive AdvantageAdvantage (OM) (OM)
Compete on Compete on ddifferentiation ifferentiation – – better, or at least differentbetter, or at least different
Compete on Compete on ccost ost –– cheaper cheaper
Compete on Compete on rresponse esponse – rapid – rapid responseresponse (hızlı yanıt, tepkime) (hızlı yanıt, tepkime)
My idea : Maybe a fourth one is My idea : Maybe a fourth one is qualityquality
© 2008 Prentice Hall, Inc. 2 – 48
Competing on Competing on DifferentiationDifferentiation
UniquenessUniqueness can go beyond both the can go beyond both the physical characteristics and service physical characteristics and service attributes to encompass everything attributes to encompass everything
that impacts customer’s perception of that impacts customer’s perception of valuevalue
Kimberly Clark’s Kimberly Clark’s Safeskin gloves – Safeskin gloves – leading edge productsleading edge products
Walt Disney Magic KingdomWalt Disney Magic Kingdom theme park theme park – experience differentiation– experience differentiation
Hard Rock Cafe – dining experienceHard Rock Cafe – dining experience
Tschibo stores – different conceptTschibo stores – different concept
© 2008 Prentice Hall, Inc. 2 – 49
• Honda cars with Qiblah (Kıble) indicator sold in Saudi Arabia and Gulf Honda cars with Qiblah (Kıble) indicator sold in Saudi Arabia and Gulf countriescountries
• Prayer carpets with built-in compass made in Taiwan and sold in Arab Prayer carpets with built-in compass made in Taiwan and sold in Arab countriescountries
• Cell phonesCell phones camera cameraFMFMvideovideogames games GPS GPS wi-fi wi-fi other other applicationsapplications
• Iphone and Ipad with all those wonderful applicationsIphone and Ipad with all those wonderful applications
• Cameras with built in wi-fiCameras with built in wi-fi
• The list goes on and on….The list goes on and on….
Competing on Competing on DifferentiationDifferentiation
© 2008 Prentice Hall, Inc. 2 – 50
Competing on CostCompeting on Cost
Provide the maximum value as Provide the maximum value as perceived by customer. Does not perceived by customer. Does not
imply low quality.imply low quality. Southwest Airlines – secondary Southwest Airlines – secondary
airports, no frills service, efficient airports, no frills service, efficient utilization of equipmentutilization of equipment
Pegasus Airlines in TurkeyPegasus Airlines in Turkey
Wal-Mart – small overheads, Wal-Mart – small overheads, decreased decreased shrinkage, distribution costsshrinkage, distribution costs
Belgian discount food retailer Belgian discount food retailer Franz Franz Colruyt – no bags, low light, no music, Colruyt – no bags, low light, no music, doors on freezersdoors on freezers saves energy costs saves energy costs
Low-cost leadershipLow-cost leadership
© 2008 Prentice Hall, Inc. 2 – 51
Competing on ResponseCompeting on Response
Flexibility is matching market changes in Flexibility is matching market changes in design innovation and volumesdesign innovation and volumes A way of life at A way of life at Hewlett-PackardHewlett-Packard, Apple, , Apple,
samsung, otherssamsung, others
Reliability is meeting schedulesReliability is meeting schedules German machine industryGerman machine industry
Timeliness is quickness Timeliness is quickness in design, production, in design, production, and deliveryand delivery Johnson Electric, Johnson Electric,
Bennigan’sBennigan’s(restaurant)(restaurant), , MotorolaMotorola, Domino’s Pizza, Domino’s Pizza
© 2008 Prentice Hall, Inc. 2 – 52
Competing on ResponseCompeting on Response
Examples for Quick Response:Examples for Quick Response:
Domino’s Pizza Domino’s Pizza “Türkiye’nin en sevdiği pizzaları hazırlayan Domino’s “Türkiye’nin en sevdiği pizzaları hazırlayan Domino’s Pizza olarak evlere serviste yepyeni bir dönem Pizza olarak evlere serviste yepyeni bir dönem başlatıyoruz. Ülkemizde 30 dakikada teslim garantisi başlatıyoruz. Ülkemizde 30 dakikada teslim garantisi veren tek firma olan Domino’s Pizza bugüne dek "eğer veren tek firma olan Domino’s Pizza bugüne dek "eğer geç kalırsak, sonraki siparişinizde bir pizzanız hediye" geç kalırsak, sonraki siparişinizde bir pizzanız hediye" diyorduk. Şimdi de yepyeni bir söz daha veriyor ve diyorduk. Şimdi de yepyeni bir söz daha veriyor ve “eğer 30 dakikada gelemezsek siparişinizdeki kapınızda “eğer 30 dakikada gelemezsek siparişinizdeki kapınızda hemen bir pizzanın ücretini almıyoruz” diyoruz.”hemen bir pizzanın ücretini almıyoruz” diyoruz.”
TansaşTansaş3 dakika içinde yeni bir kasanın açılması garantisi3 dakika içinde yeni bir kasanın açılması garantisi
© 2008 Prentice Hall, Inc. 2 – 53
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)
© 2008 Prentice Hall, Inc. 2 – 54
Issues In Operations StrategyIssues In Operations Strategy
Some alternative perspectives in Some alternative perspectives in establishing and implementing a establishing and implementing a strategy:strategy:
Resources viewResources view
Value Chain analysisValue Chain analysis
Porter’s Five Forces modelPorter’s Five Forces model
Operating in a system with many Operating in a system with many external factorsexternal factors
Constant changeConstant change
pg. 74 text OMITpg. 74 text OMIT
© 2008 Prentice Hall, Inc. 2 – 55
1. 1. Elements of Operations Elements of Operations Management StrategyManagement Strategy
Low-cost productLow-cost product Product-line breadthProduct-line breadth (ürün yelpazesi (ürün yelpazesi
(gamı) genişliği)(gamı) genişliği) Technical superiorityTechnical superiority Product characteristics/differentiationProduct characteristics/differentiation Continuing product innovationContinuing product innovation Low-price/high-value offeringsLow-price/high-value offerings Efficient, flexible operations adaptable to Efficient, flexible operations adaptable to
consumersconsumers Engineering research developmentEngineering research development LocationLocation SchedulingScheduling
© 2008 Prentice Hall, Inc. 2 – 56
2. 2. PreconditionsPreconditions to strategy to strategydevelopmentdevelopment
Strengths and weaknesses of competitors and Strengths and weaknesses of competitors and possible new entrants into the marketpossible new entrants into the market
Current and prospective environmental, Current and prospective environmental, technological, legal, and economic issuestechnological, legal, and economic issues
The product life cycleThe product life cycle
Resources available within the firm and within Resources available within the firm and within the OM functionthe OM function
Integration of OM strategy with company’s Integration of OM strategy with company’s strategy and with other functional areasstrategy and with other functional areas
One must understand::
© 2008 Prentice Hall, Inc. 2 – 57
3. 3. Dynamics of Dynamics of Strategic ChangeStrategic Change
Strategies change for two reasons: Changes within the organizationChanges within the organization
PersonnelPersonnel FinanceFinance TechnologyTechnology Product lifeProduct life
Changes in the environmentChanges in the environment Microsoft (SW hardware)Microsoft (SW hardware) Paşabahçe Şişe Cam (product + Paşabahçe Şişe Cam (product +
delivery + service)delivery + service)
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Product 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
any
Str
ateg
y/Is
sues
Figure 2.5
Internet search engines
Sales
Drive-through restaurants
DVDs
Analog TVs
Boeing 787
Electric vehicles
iPods
3-D game players
3D printers
Xbox 360
time
salesvolume
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Product 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
ateg
y/Is
sues
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
© 2008 Prentice Hall, Inc. 2 – 60
Strategy
Analysis
SWOT Analysis SWOT Analysis
Internal Strengths
Internal Weaknesses
External Opportunities
External Threats
Mission
Competitive Advantage
© 2008 Prentice Hall, Inc. 2 – 61
Strategy Development ProcessStrategy Development Process
Determine Corporate MissionState the reason for the firm’s existence and identify the
value it wishes to create.
Form a StrategyBuild a competitive advantage, such as low price, design, or
volume flexibility, quality, quick delivery, dependability, after-sale service, broad product lines.
Environmental & Internal AnalysisIdentify the strengths, weaknesses, opportunities, and threats.
Understand the environment, customers, industry, and competitors.
Figure 2.6Figure 2.6
© 2008 Prentice Hall, Inc. 2 – 62
Strategy Development and Strategy Development and ImplementationImplementation
Identify Identify key (key (criticalcritical)) success factors success factors (KSF’s)(KSF’s)
Build and staff the organizationBuild and staff the organization
Integrate OM with other activitiesIntegrate OM with other activities
The operations manager’s job is to implement an OM strategy, provide competitive advantage, and increase productivity
© 2008 Prentice Hall, Inc. 2 – 63
Key (critical) success Key (critical) success factors (KSF)factors (KSF)
Activities or factors that are of key Activities or factors that are of key importance for achieving competitive importance for achieving competitive advantageadvantage
You have to get them right to survive You have to get them right to survive and achieve goalsand achieve goals
McDonald’s – efficient layout, play McDonald’s – efficient layout, play area for children, efficient kitchenarea for children, efficient kitchen
Hes Kablo – quality (purity) of fiber Hes Kablo – quality (purity) of fiber optic cable optic cable www.hes.com.trwww.hes.com.tr
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Key (cKey (criticalritical)) Success Success FactorsFactors
Decisions Sample Options Chapter
ProductProduct Customized, or standardizedCustomized, or standardized 55QualityQuality Define customer expectations and how to achieve themDefine customer expectations and how to achieve them 6, S66, S6ProcessProcess Facility size, technology, capacityFacility size, technology, capacity 7, S77, S7LocationLocation Near supplier or near customerNear supplier or near customer 88LayoutLayout Work cells or assembly lineWork cells or assembly line 99Human resourceHuman resource Specialized or enriched jobsSpecialized or enriched jobs 10,10,Supply chainSupply chain Single or multiple suppliersSingle or multiple suppliers 11, S1111, S11InventoryInventory When to reorder, how much to keep on handWhen to reorder, how much to keep on hand 12, 14, 1612, 14, 16ScheduleSchedule Stable or fluctuating production rateStable or fluctuating production rate 13, 1513, 15Maintenance Maintenance Repair as required or preventive maintenanceRepair as required or preventive maintenance 1717
Marketing
ServiceServiceDistributionDistributionPromotionPromotionChannels of distributionChannels of distributionProduct positioningProduct positioning (image, functions)(image, functions)
Finance/Accounting
LeverageLeverageCost of capitalCost of capitalWorking capitalWorking capitalReceivablesReceivablesPayablesPayablesFinancial controlFinancial controlLines of creditLines of credit
Production/Operations
Figure 2.7Figure 2.7
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Core competenciesCore competencies
Temel beceriler (yetenekler)Temel beceriler (yetenekler)
A set of skills, talents and activites A set of skills, talents and activites that a firm does particularly well.that a firm does particularly well.
They allow a firm to set itself apart They allow a firm to set itself apart from competitors and gain from competitors and gain competitive advantage.competitive advantage.
IMPORTANT – KSF’s and Core competencies must be supported by related activities activity mapping
© 2008 Prentice Hall, Inc. 2 – 66
Activity mappingActivity mapping
A graphical link ofA graphical link ofcompetitive advantagecompetitive advantage
KSF’sKSF’s
supporting activitiessupporting activities
Next an example from airline industryNext an example from airline industry Southwest airlinesSouthwest airlines
Pegasus AirlinesPegasus Airlines
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Activity MappingActivity Mapping- Southwest - Southwest AirlinesAirlines
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
KSF’s
© 2008 Prentice Hall, Inc. 2 – 68
Activity MappingActivity Mapping
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 2.8Figure 2.8
Automated ticketing machines
No seat assignments
No baggage transfers
No meals (peanuts)
Activity MappingActivity Mapping- Southwest - Southwest AirlinesAirlines
© 2008 Prentice Hall, Inc. 2 – 69
Activity MappingActivity Mapping
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 2.8Figure 2.8
No meals (peanuts)
Lower gate costs at secondary airports
High number of flights reduces employee idle time
between flights
Activity MappingActivity Mapping- Southwest - Southwest AirlinesAirlines
© 2008 Prentice Hall, Inc. 2 – 70
Activity MappingActivity Mapping
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
Activity MappingActivity Mapping- Southwest - Southwest AirlinesAirlines
© 2008 Prentice Hall, Inc. 2 – 71
Activity MappingActivity Mapping
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 2.8Figure 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
Activity MappingActivity Mapping- Southwest - Southwest AirlinesAirlines
© 2008 Prentice Hall, Inc. 2 – 72
Activity MappingActivity Mapping
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 2.8Figure 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
Flexible union contracts
Activity MappingActivity Mapping- Southwest - Southwest AirlinesAirlines
© 2008 Prentice Hall, Inc. 2 – 73
Activity MappingActivity Mapping
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 2.8Figure 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
Activity MappingActivity Mapping- Southwest - Southwest AirlinesAirlines
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Implementing Strategic Decisions
TABLE 2.1 Operations Strategies of Two Drug Companies
COMPETITIVE ADVANTAGE
BRAND NAME DRUGS, INC. GENERIC DRUGS CORP.
PRODUCT DIFFERENTIATION STRATEGY
LOW COST STRATEGY
Product selection and design
Heavy R&D investment; extensive labs; focus on development in a broad range of drug categories
Low R&D investment; focus on development of generic drugs
Quality Quality is major priority, standards exceed regulatory requirements
Meets regulatory requirements on a country-by-country basis, as necessary
Process Product and modular production process; tries to have long product runs in specialized facilities; builds capacity ahead of demand
Process focused; general production processes; “job shop” approach, short-run production; focus on high utilization
Location Still located in city where it was founded Recently moved to low-tax, low-labor-cost environment
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Implementing Strategic Decisions
TABLE 2.1 Operations Strategies of Two Drug Companies
COMPETITIVE ADVANTAGE
BRAND NAME DRUGS, INC. GENERIC DRUGS CORP.
PRODUCT DIFFERENTIATION STRATEGY
LOW COST STRATEGY
Layout Layout supports automated product-focused production
Layout supports process-focused “job shop” practices
Human resources
Hire the best; nationwide searches Very experienced top executives provide direction; other personnel paid below industry average
Supply chain Long-term supplier relationships Tends to purchase competitively to find bargains
Inventory Maintains high finished goods inventory primarily to ensure all demands are met
Process focus drives up work-in-process inventory; finished goods inventory tends to be low
Scheduling Centralized production planning Many short-run products complicate scheduling
Maintenance Highly trained staff; extensive parts inventory
Highly trained staff to meet changing demands
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Strategic Planning, Core Competencies, and Outsourcing▶ Outsourcing – transferring activities that
traditionally been internal to external suppliers▶ Core competencies and non-core activities.
More non-core activities are outsourced.▶ Accelerating due to
▶ Increased expertise
▶More reliable and cheaper transportation
▶Rapid development and deployment of advancements in telecommunications and computers
▶Typical make-or-buy decision
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Strategic Planning, Core Competencies, and Outsourcing▶Subcontracting - contract
manufacturing
▶Outsourced activities
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Strategic Planning, Core Competencies, and Outsourcing▶Apple example
▶Core competency: creativity, innovation and product design
▶Outsource manufacturing
▶FoxConn manufacturing plant in China and elsewhere
▶http://en.wikipedia.org/wiki/Foxconn
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Theory of Comparative Advantage
▶If an external provider can perform activities more productively than the purchasing firm, then the external provider should do the work
▶Purchasing firm focuses on core competencies
▶Basic idea behind outsourcing
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Risks of Outsourcing
TABLE 2.2 Potential Advantages and Disadvantages of Outsourcing
ADVANTAGES DISADVANTAGES
Cost savings Increased logistics and inventory costs
Gaining outside expertise Loss of control (quality, delivery, etc.)
Improving operations and service Potential creation of future competition
Maintaining a focus on core competencies
Negative impact on employees
Accessing outside technology Risks may not manifest themselves for years
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Rating Outsourcing Providers
▶Insufficient analysis most common reason for failure
▶Factor rating method
▶Points and weights assigned for each factor to each
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Rating Provider Selection Criteria
TABLE 2.3 Factor Ratings Applied to National Architects’s Potential IT Outsourcing Providers
IMPORTANCE WEIGHTS
OUTSOURCING PROVIDERS
FACTOR (CRITERION)BIM (U.S.)
S.P.C.(INDIA)
TELCO (ISRAEL)
1. Can reduce operating costs .2 3 3 5
2. Can reduce capital investment .2 4 3 3
3. Skilled personnel .2 5 4 3
4. Can improve quality .1 4 5 2
5. Can gain access to technology not in company .1 5 3 5
6. Can create additional capacity .1 4 2 4
7. Aligns with policy/philosophy/culture .1 2 3 5
Totals 1.0 3.9 3.3 3.8
Score for BIM = (.2 * 3) + (.2 * 4) + (.2 * 5) + (.1 * 4) + (.1 * 5) + (.1 * 4) + (.1 * 2) = 3.9
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OMIT THE FOLLOWING MATERIAL
Text : pp. 83-84
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Four International Four International Operations StrategiesOperations Strategies
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HighHigh
LowLow
HighHighLowLow
Local Responsiveness ConsiderationsLocal Responsiveness Considerations(Quick Response and/or Differentiation)(Quick Response and/or Differentiation)
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
International Strategy
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HighHigh
LowLow
HighHighLowLow
Local Responsiveness ConsiderationsLocal Responsiveness Considerations(Quick Response and/or Differentiation)(Quick Response and/or Differentiation)
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
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International StrategyInternational Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
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HighHigh
LowLow
HighHighLowLow
Local Responsiveness ConsiderationsLocal Responsiveness Considerations(Quick Response and/or Differentiation)(Quick Response and/or Differentiation)
Standardized product
Economies of scale Cross-cultural
learning
ExamplesTexas InstrumentsCaterpillarOtis Elevator
Global Strategy
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HighHigh
LowLow
HighHighLowLow
Local Responsiveness ConsiderationsLocal Responsiveness Considerations(Quick Response and/or Differentiation)(Quick Response and/or Differentiation)
Standardized product Economies of scale Cross-cultural learning
ExamplesTexas InstrumentsCaterpillarOtis Elevator
Global Strategy
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
© 2008 Prentice Hall, Inc. 2 – 88
Standardized product Economies of scale Cross-cultural learning
ExamplesTexas InstrumentsCaterpillarOtis Elevator
Global StrategyGlobal Strategy
International StrategyInternational Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
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HighHigh
LowLow
HighHighLowLow
Local Responsiveness ConsiderationsLocal Responsiveness Considerations(Quick Response and/or Differentiation)(Quick Response and/or Differentiation)
Use existing domestic model globally
Franchise, joint ventures, subsidiaries
ExamplesHeinzMcDonald’sThe Body ShopHard Rock Cafe
Multidomestic Strategy
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HighHigh
LowLow
HighHighLowLow
Local Responsiveness ConsiderationsLocal Responsiveness Considerations(Quick Response and/or Differentiation)(Quick Response and/or Differentiation)
Standardized product Economies of scale Cross-cultural learning
ExamplesTexas 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
© 2008 Prentice Hall, Inc. 2 – 90
International StrategyInternational 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
Standardized product Economies of scale Cross-cultural learning
ExamplesTexas InstrumentsCaterpillarOtis Elevator
Global StrategyGlobal Strategy
Four International Four International Operations StrategiesOperations Strategies
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HighHigh
LowLow
HighHighLowLow
Local Responsiveness ConsiderationsLocal Responsiveness Considerations(Quick Response and/or Differentiation)(Quick Response and/or Differentiation)
Move material, people, ideas across national boundaries
Economies of scale Cross-cultural
learning
ExamplesCoca-ColaNestlé
Transnational Strategy
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HighHigh
LowLow
HighHighLowLow
Local Responsiveness ConsiderationsLocal Responsiveness Considerations(Quick Response and/or Differentiation)(Quick Response and/or Differentiation)
Standardized product Economies of scale Cross-cultural learning
ExamplesTexas 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
© 2008 Prentice Hall, Inc. 2 – 92
Ranking CorruptionRanking CorruptionRankRank CountryCountry 2006 CPI Score (out of 10)2006 CPI Score (out of 10)
11 FinlandFinland 9.69.611 IcelandIceland 9.69.611 New ZealandNew Zealand 9.69.655 SingaporeSingapore 9.49.477 SwitzerlandSwitzerland 9.19.11111 UKUK 8.68.61414 CanadaCanada 8.58.51515 Hong KongHong Kong 8.38.31616 GermanyGermany 8.08.01717 JapanJapan 7.67.62020 USA, BelgiumUSA, Belgium 7.37.33434 Israel, TaiwanIsrael, Taiwan 5.95.97070 Brazil, China, MexicoBrazil, China, Mexico 3.33.3121121 RussiaRussia 2.52.5122122 Turkey 3.8Turkey 3.8 2012 Rank : 54 www.transparency.org
Least Least CorruptCorrupt
Most Most CorruptCorrupt
Table 8.2Table 8.2