Development and Growth-group7

8/8/2019 Development and Growth-group7

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Development and Growth through

INTERNET

Internet Empowers Companies and Consumers

Internet users exchanges things using E-credits

that have the same function as money but haveno value except on the internet.

Global Village- neighborscan trade with eachother just like the barter system before. Ex.

Ebay, Amazon


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The Future Challenges for Operations

Management

1. Managing Global Growth

2. Understanding and Gaining competitiveadvantage from E-Commerce

3. Achieving environment soundness in

operations


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Expectation:

Opportunity to export of the host countrywould be very limited

Result:

Products good enough for export would be

separated for exportation

Those with inferior quality will be sold on thelocal market


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Under Mass Production Principle

Belief:

-If local market

experienced exportquality, they would no

longer accept the

second best.

Ex. DOLE Bananas (2nd

Biggest Exporter)


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Global Manufacturing is more on

Financial and Marketing matters than

Operations.

It refers to the distribution of production

activities in different regions through value-

added coordination activity in the supply

chain network.


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Globalization and Service Operations

Airlines, Hotels and Banks have expanded into

countries to serve their globalizing customers even

more.

Hotels Airlines(expansion (to accommodate

to different countries) passengers)

Globalization of hotels is directly linked directly to theairlines desire for best accommodation for their

customers.

Because of


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International expansions of service firms is because

of:

Strong Brands Loyal Customers

CentralizedFacilities

Reservations anddistributions

systems


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Challenges of Internationalization

Geographic distance between operating

units

Differences in the environmental context,

local market and labor conditions

Lack of direct control over business


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3 Main Forms of Control

1. Centralizing

all decisions are taken by senior

managers usually at corporate

headquarters

ex. Service firms owned and

operated


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2. Bureaucratic

involves highly detailed policies and

procedures limiting subordinate

discretion

ex. Service firms franchised or contracted


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3. Socialization

-largely through the adoption anddissemination of a shared organizational

culture, especially amongst operational

managersex. Service firms that is a result of reduction

of centralizing and bureaucracy


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Plural Processes

processes those who own and managetheir own operations and franchise

them.

Kinds of Plural Processes:

1. Modeling

2. Ratcheting

3. Local Learning

4. Market Pressure

5. Mutual Learning


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Kinds of Plural Processes:

1. Modeling

franchise operators model themselves on

company-run units, encouraging the adaptation

of system wide standards

2. Ratcheting

the combination of company-owned andfranchised units, encouraging benchmarking across

two and creating friendly competition with each

trying to outperform the other.


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3. Local learning

franchisees closeness to their market

enables the firm to learn quickly about

local market conditions

4. Market pressure

corporate staff services developed tosupport operations are exposed to marketconditions when franchisees can opt out

of utilizing services


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As corporate expand, they find the

manufacturing management techniques

and the process of knowledge exchangeare such that new plants in developing

countries can be expected to work at

world-class level about immediately.

THE ROLE OF OPERATIONS IN

CORPORATEEXPANSION


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It illustrates thechanging nature

of challengesthat operationsstrategy mustaddress.

It illustrates thechanging nature

of challengesthat operationsstrategy mustaddress.

The expanding

firms deal with

corporateexpansion by

strategic

approach.


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WORLD CLASS MANUFACTURING FIRM

Old production tooling(dedicated machinery,

fixtures, factoryequipment, etc.)

Old working practices

Seconded managers fromits plants

Recruited a localworkforce to assemble kitsof components sent from

suppliers Expected the local quality

to be poor.

DEVELOPINGCOUNTRY


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The operatives did nothing but screw

together imported parts.

Since labor cost were low, the localoperation did not add much value.

The local operatives and managers

did not learn very much aboutinternational standards of operations.

SCREWDRIVER PLANTS


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IMPORT SUBSTITUTION

POLICY

Banning theimport of

selected

items it wants

to have madelocally

The nature of

local content

is political

rather than

economic

It extending the

manufacturing base to

the suppliers means

increasing of jobs.

The degree of

learning and skills

development withinthe local workforce, is

much higher if the

proportion of

manufacturing done

locally is higher


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The nature of foreign investment for productionfacilities has changed from one of assembly to

one of more extensive manufacture and supplymanagement

This can no longer based on principle oftransferring old tooling and working

practices.

International StandardPerformance


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Local tastes

Wealth

Politicalunacceptability of

maintaining oldpractices

WORLD CLASSLEVEL


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To succeedwith the

corporateexpansion

Local supply linesmust be set up

Operative and

managementcompetences in

developing countries

must be developedto word-class level

A quick start up mustbe planned and

managed, to ensure

sufficient revenuegeneration over thelife of the product,

linked to technologyemployed


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Shi and Gregorys

Framework


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Taxonomy of International Operations Strategies

Operationslocation

Domestic/multi-domesticorientation

Global orientation

Multi-national Multiple locations,

dispersed

internationally,taking advantage

of low cost of

resources.

Sourcing may belocal or a

combination of

local/international.

Corporate value-

adding chains

are located toexploit optimal

resources and

strategic

capability. Globallogistics, global

sourcing, and

global brands.


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Taxonomy of International Operations Strategies

Operations location Domestic/multi-

domestic orientation

Global orientation

Worldwide Market-plant

strategies with

maximummarket coverage

worldwide.

Separate,

autonomousplant strategies.

Product-market,

product, and

process plantstrategies

employed,

providing global

products as wellas global

brands.


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Developing an operations strategy for

growth

A comparison of traditional and modern

aspects of this management task may

lead us to identify key parts of a strategy

for growth.


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Comparing traditional and modern approaches to

expanding operations

Factor Traditional Approach Modern Approach

Human

Resources

Recruit locals and

train them tonecessary levels

to operate

equipment;

Limited learning orskill development

Train and educate

locals to operateequipment and

develop ideas in

participative

manner (qualitycircles, employee

involvement, etc.)


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Capacity Transfer old

equipment fromhome and

produce for local

market; limit

export to thatdemanded by

local government.

Set up world-class

facilities tocompete with

products made

anywhere.


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Comparing traditional and modern approaches to expanding

operations


Process

Technology

Use old equipment

to limit investment

risks and satisfy

local market

requirements

Invest for world-

class operation

and export;

achieve

payback within

short product life


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Product

Technology

Retain at home.

Overseas plants

make oldproducts, no

longer sellable at

home.

A compromise:

high enough

technology tosatisfy local

government

stipulations/

market demands,

without releasing

advanced R&D.


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Market

Impacts

Overseas plants

do not affect

markets for homeplants.

Overseas plants

have impact on

internationalmarkets and

require strategies

that develop

network potentialwithout harming

home

employment.


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Management Second

managers fromhome country

Train and

educate localmanagers;

gradually

withdraw home

managers.


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Factor Traditional

Approach

Modern Approach

Environmental

impact

Convince local

people that the

impact is

justified by the

benefits of the

investment.

Design

environmentally

sound operations

and supply chains

to minimize impact

while maintaining

economic

performance and

remaining a good

corporate citizen


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Information Secrecy Transparency


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THECHALLENGE

OF

INTERNET


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the most potentially

significant technology facing

operations managers as the

twentieth century comes to

a close is that of theworldwide communications

available from the internet:

in practice this translates to

e-commerce (or e-business)


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Designing the Offer

Speed of Response

Transparency

Three of these challenges are:


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Designing the Offer

Offers deliver economic utility just

as products and services have always

done, but they include two otherfeatures, namely information capital

and emotional capital.


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Speed of Response

there are almost no locations on earth

where one cannot receive, process and

transmit information in the form of text,spreadsheets, databases, illustrations, video

and audio clips and so forth


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the operations manager

can no longer rely upon

reasonable expectations

for response time:

requests for services and

information may arrive at

any time and require

immediate action.


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Strategic Resonance

-is an ongoing, dynamic, strategic process

whereby customer requirements and

organizational capabilities are in harmony

and resonate.


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a term which has often been used to

describe the fit between the firmscapabilities and the market it serves.

Strategic Fit


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Firms need to

find and

exploit theirstrategic

resonance

between:

The marketand the

firms

operationscapabilities

The firmsstrategy and

its operationscapabilities

All functionsand all

levels withinthe firm


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Transparency

the amount of information available and the

technology for espionage combine to makealmost any factor in an organization

impossible to conceal.


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RECYCLINGT

his will mean at the end ofthe products useful life, theconsumer can return freeof charge fringe, ortelevision, or lawnmower,

or article of clothing, to theplace where it was bought,from whence it will bepassed to the manufacturer,

who must recycle it in someway.


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The Supply Chain

The second concern for operations managers

is the environmental soundness of the origins

of the goods and services.

This is more complex matter than the firstconcern, since the supply base is a more

complex entity to address.

It may not be manage in the planningand control way.


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SUPPLY CHAIN


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Sustainable DevelopmentSustainable Development

meeting the needs of the presentmeeting the needs of the presentwithout compromising the ability of futurewithout compromising the ability of future

generations to meet their own needs.generations to meet their own needs.


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The organization will need up-to-date

knowledge of laws and other formal

requirements that must be obeyed. This will

require a specific individual with responsibility for

environmental matters.

the individual must be the gatekeeper for the

organization.

the role of the specific individual should be the

one of catalyst.

The Environmental Manager


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