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10/16/2010
1
22 Operations Strategy in a Global Environment
Operations Strategy in a Global Environment
PowerPoint presentation to accompanyPowerPoint presentation to accompany
2 - 1© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
OutlineOutline
Global Company Profile: BoeingA Global View of Operations
Cultural and Ethical Issues
2 - 2© 2011 Pearson Education, Inc. publishing as Prentice Hall
Developing Missions And Strategies
MissionStrategy
Outline Outline –– ContinuedContinued
Achieving Competitive Advantage Through Operations
Competing On Differentiation
2 - 3© 2011 Pearson Education, Inc. publishing as Prentice Hall
Competing On CostCompeting On Response
Ten Strategic OM Decisions
Outline Outline –– ContinuedContinued
Strategy Development and Implementation
Key Success Factors and Core
2 - 4© 2011 Pearson Education, Inc. publishing as Prentice Hall
Key Success Factors and Core CompetenciesBuild and Staff the OrganizationIntegrate OM with Other Activities
Outline Outline –– ContinuedContinued
Global Operations Strategy Options
International Strategy
2 - 5© 2011 Pearson Education, Inc. publishing as Prentice Hall
gyMultidomestic StrategyGlobal StrategyTransnational Strategy
Learning ObjectivesLearning Objectives
1. Define mission and strategy
When you complete this chapter you When you complete this chapter you should be able to:should be able to:
2 - 6© 2011 Pearson Education, Inc. publishing as Prentice Hall
2. Identify and explain three strategic approaches to competitive advantage
3. Identify and define the 10 decisions of operations management
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Learning ObjectivesLearning Objectives
4. Understand the significant key f t d
When you complete this chapter you When you complete this chapter you should be able to:should be able to:
2 - 7© 2011 Pearson Education, Inc. publishing as Prentice Hall
success factors and core competencies
5. Identify and explain four global operations strategy options
Some Boeing Suppliers (787)Some Boeing Suppliers (787)Firm Country ComponentLatecoere France Passenger doorsLabinel France WiringDassault France Design and
PLM software
2 - 8© 2011 Pearson Education, Inc. publishing as Prentice Hall
Messier-Bugatti France Electric brakesThales France Electrical power
conversion system and integrated standby flight display
Messier-Dowty France Landing gear structureDiehl Germany Interior lighting
Some Boeing Suppliers (787)Some Boeing Suppliers (787)Firm Country ComponentCobham UK Fuel pumps and valvesRolls-Royce UK EnginesSmiths Aerospace UK Central computer
system
2 - 9© 2011 Pearson Education, Inc. publishing as Prentice Hall
yBAE SYSTEMS UK ElectronicsAlenia Aeronautics Italy Upper center
fuselage & horizontal stabilizer
Toray Industries Japan Carbon fiber for wing and tail units
Some Boeing Suppliers (787)Some Boeing Suppliers (787)Firm Country ComponentFuji Heavy Japan Center wing boxIndustries
Kawasaki Heavy Japan Forward fuselage,Industries fixed section of wing,
l di ll
2 - 10© 2011 Pearson Education, Inc. publishing as Prentice Hall
landing gear wellTeijin Seiki Japan Hydraulic actuatorsMitsubishi Heavy Japan Wing boxIndustries
Chengdu Aircraft China RudderGroup
Hafei Aviation China Parts
Some Boeing Suppliers (787)Some Boeing Suppliers (787)Firm Country ComponentKorean Aviation South Wingtips
KoreaSaab Sweden Cargo access doors
2 - 11© 2011 Pearson Education, Inc. publishing as Prentice Hall
Global StrategiesGlobal Strategies
Boeing – sales and production are worldwideBenetton – moves inventory to stores around the world faster than its
2 - 12© 2011 Pearson Education, Inc. publishing as Prentice Hall
around the world faster than its competition by building flexibility into design, production, and distributionSony – purchases components from suppliers in Thailand, Malaysia, and around the world
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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
2 - 13© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
35 –
30 –
25 –
20ent
Growth of World TradeGrowth of World Trade
Collapse of the Berlin Wall
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20 –
15 –
10 –
5 –
0 –| | | | | | | | | | |1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 (est*)
Year
Perc
e
Figure 2.1
Some Multinational Some Multinational CorporationsCorporations
% Sales % AssetsOutside Outside
Home Home Home % ForeignCompany Country Country Country Workforce
Citicorp USA 34 46 NA
2 - 15© 2011 Pearson Education, Inc. publishing as Prentice Hall
pColgate- USA 72 63 NAPalmoliveDow USA 60 50 NAChemicalGillette USA 62 53 NAHonda Japan 63 36 NAIBM USA 57 47 51
Some Multinational Some Multinational CorporationsCorporations
% Sales % AssetsOutside Outside
Home Home Home % ForeignCompany Country Country Country Workforce
ICI Britain 78 50 NA
2 - 16© 2011 Pearson Education, Inc. publishing as Prentice Hall
Nestle Switzerland 98 95 97Philips Netherlands 94 85 82ElectronicsSiemens Germany 51 NA 38Unilever Britain & 95 70 64
Netherlands
Reasons to GlobalizeReasons to Globalize
Reasons to GlobalizeReasons to Globalize1. Reduce costs (labor, taxes, tariffs, etc.)2. Improve supply chain3 P id b tt d d i
Tangible Reasons
2 - 17© 2011 Pearson Education, Inc. publishing as Prentice Hall
3. Provide better goods and services4. Understand markets5. Learn to improve operations6. Attract and retain global talent
Intangible Reasons
Reduce CostsReduce CostsForeign locations with lower wage rates can lower direct and indirect costs
Maquiladoras
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World Trade Organization (WTO)North American Free Trade Agreement (NAFTA)APEC, SEATO, MERCOSUR, CAFTAEuropean Union (EU)
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Improve the Supply ChainImprove the Supply Chain
Locating facilities closer to unique resources
Auto design to California
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Athletic shoe production to ChinaPerfume manufacturing in France
Provide Better Goods Provide Better Goods and Servicesand Services
Objective and subjective characteristics of goods and services
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servicesOn-time deliveriesCultural variablesImproved customer service
Understand MarketsUnderstand MarketsInteracting with foreign customers and suppliers can lead to new opportunities
Cell phone
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design from EuropeCell phone fads from JapanExtend the product life cycle
Learn to Improve Learn to Improve OperationsOperations
Remain open to the free flow of ideas
General Motors partnered with a J t f t t
2 - 22© 2011 Pearson Education, Inc. publishing as Prentice Hall
Japanese auto manufacturer to learn new approaches to production and inventory control Equipment and layout have been improved using Scandinavian ergonomic competence
Attract and Retain Global Attract and Retain Global TalentTalent
Offer better employment opportunities
Better growth opportunities and
2 - 23© 2011 Pearson Education, Inc. publishing as Prentice Hall
Better growth opportunities and insulation against unemploymentRelocate unneeded personnel to more prosperous locations
Cultural and Ethical IssuesCultural and Ethical IssuesCultures can be quite differentAttitudes can be quite different towards
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PunctualityLunch breaksEnvironmentIntellectual property
ThieveryBriberyChild labor
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Companies Want To ConsiderCompanies Want To ConsiderNational literacy rateRate of innovationRate of technology changeN mber of skilled
Work ethicTax ratesInflationAvailability of raw materials
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Number of skilled workersPolitical stabilityProduct liability lawsExport restrictionsVariations in language
materialsInterest ratesPopulationNumber of miles of highwayPhone system
Match Product & ParentMatch Product & ParentBraun Household AppliancesFirestone TiresGodiva ChocolateHaagen-Dazs Ice
1. Volkswagen2. Bridgestone3. Campbell Soup4 Tata Motors Limited
2 - 26© 2011 Pearson Education, Inc. publishing as Prentice Hall
Haagen-Dazs Ice CreamJaguar AutosMGM MoviesLamborghini AutosAlpo Petfoods
4. Tata Motors Limited5. Proctor and Gamble6. Nestlé7. Pillsbury8. Sony
Match Product & ParentMatch Product & ParentBraun Household AppliancesFirestone TiresGodiva ChocolateHaagen-Dazs Ice
1. Volkswagen2. Bridgestone3. Campbell Soup4 Tata Motors Limited
2 - 27© 2011 Pearson Education, Inc. publishing as Prentice Hall
Haagen-Dazs Ice CreamJaguar AutosMGM MoviesLamborghini AutosAlpo Petfoods
4. Tata Motors Limited5. Proctor and Gamble6. Nestlé7. Pillsbury8. Sony
Match Product & CountryMatch Product & CountryBraun Household AppliancesFirestone TiresGodiva ChocolateH D I
1. Great Britain2. Germany
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Haagen-Dazs Ice CreamJaguar AutosMGM MoviesLamborghini AutosAlpo Pet Foods
3. Japan4. United States5. Switzerland6. India
Match Product & CountryMatch Product & CountryBraun Household AppliancesFirestone TiresGodiva ChocolateH D I
1. Great Britain2. Germany
2 - 29© 2011 Pearson Education, Inc. publishing as Prentice Hall
Haagen-Dazs Ice CreamJaguar AutosMGM MoviesLamborghini AutosAlpo Pet Foods
3. Japan4. United States5. Switzerland6. India
Developing Missions and Developing Missions and StrategiesStrategies
MissionMission statements tell an organization where it is going
2 - 30© 2011 Pearson Education, Inc. publishing as Prentice Hall
organization where it is going
The StrategyStrategy tells the organization how to get there
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MissionMission
Mission - where are you going?
Organization’s
2 - 31© 2011 Pearson Education, Inc. publishing as Prentice Hall
purpose for beingAnswers ‘What do we provide society?’Provides boundaries and focus
MerckMerck
The mission of Merck is to provide society with superior products and
services—innovations and solutions that improve the quality of life and
2 - 32© 2011 Pearson Education, Inc. publishing as Prentice Hall
p q ysatisfy customer needs—to provide
employees with meaningful work and advancement opportunities and
investors with a superior rate of return.
Figure 2.2
Hard Rock CafeHard Rock Cafe
Our Mission: To spread the spirit of Rock ’n’ Roll by delivering an
exceptional entertainment and dining experience. We are committed to being
2 - 33© 2011 Pearson Education, Inc. publishing as Prentice Hall
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 2.2
Arnold Palmer HospitalArnold Palmer Hospital
Arnold Palmer Hospital for Children provides state-of-the-art,
family centered healthcare
2 - 34© 2011 Pearson Education, Inc. publishing as Prentice Hall
yfocused on restoring the joy of childhood in an environment of compassion, healing, and hope.
Figure 2.2
Factors Affecting MissionFactors Affecting MissionPhilosophy and Values
Profitability and GrowthEnvironment
2 - 35© 2011 Pearson Education, Inc. publishing as Prentice Hall
Benefit to Society
Mission
Customers Public Image
Sample MissionsSample Missions
Sample Company Mission
To manufacture and service an innovative, growing, and profitable worldwide microwave communications business that exceeds our customers’ expectations.
2 - 36© 2011 Pearson Education, Inc. publishing as Prentice Hall
Sample 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 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
2 - 37© 2011 Pearson Education, Inc. publishing as Prentice HallFigure 2.3
consistent with our company mission and marketing objectives by close attention to design, procurement, 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.
Sample MissionsSample 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
2 - 38© 2011 Pearson Education, Inc. publishing as Prentice HallFigure 2.3
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.
Sample MissionsSample MissionsSample OM Department Missions
Supply-chainmanagement
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
2 - 39© 2011 Pearson Education, Inc. publishing as Prentice HallFigure 2.3
gand 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.
Strategic ProcessStrategic Process
Functional
Organization’s Mission
2 - 40© 2011 Pearson Education, Inc. publishing as Prentice Hall
Marketing Operations Finance/ Accounting
Functional Area Missions
StrategyStrategy
Action plan to achieve missionFunctional areas have strategies
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gStrategies exploit opportunities and strengths, neutralize threats, and avoid weaknesses
Strategies for Competitive Strategies for Competitive AdvantageAdvantage
Differentiation – better, or at least different
2 - 42© 2011 Pearson Education, Inc. publishing as Prentice Hall
Cost leadership – cheaperResponse – 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
2 - 43© 2011 Pearson Education, Inc. publishing as Prentice Hall
that impacts customer s perception of value
Safeskin gloves – leading edge productsWalt Disney Magic Kingdom –experience differentiationHard Rock Cafe – dining experience
Competing on CostCompeting on CostProvide the maximum value as
perceived by customer. Does not imply low quality.
S th t Ai li d
2 - 44© 2011 Pearson Education, Inc. publishing as Prentice Hall
Southwest Airlines – secondary airports, no frills service, efficient utilization of equipmentWal-Mart – small overhead, shrinkage, distribution costsFranz Colruyt – no bags, low light, no music, doors on freezers
Competing on ResponseCompeting on ResponseFlexibility is matching market changes in design innovation and volumes
A way of life at Hewlett-PackardReliability is meeting schedules
2 - 45© 2011 Pearson Education, Inc. publishing as Prentice Hall
German machine industryTimeliness is quickness in design, production, and delivery
Johnson Electric, Pizza Hut, Motorola
OM’s Contribution to StrategyOM’s Contribution to Strategy
Product
Quality
Process
Location
DIFFERENTIATIONInnovative design … Safeskin’s innovative glovesBroad product line … Fidelity Security’s mutual fundsAfter-sales service … Caterpillar’s heavy equipment
serviceExperience … Hard Rock Café’s dining
experience
COST LEADERSHIPLow overhead … Franz-Colruyt’s warehouse-type
t
10 Operations CompetitiveDecisions Approach Example Advantage
Differentiation
2 - 46© 2011 Pearson Education, Inc. publishing as Prentice Hall
Layout
Humanresource
Supply chain
Inventory
Scheduling
Maintenance
storesEffective capacity
use … Southwest Airline’saircraft utilization
Inventory management … Wal Mart’s sophisticated
distribution system
RESPONSEFlexibility … Hewlett-Packard’s response to
volatile world marketReliability … FedEx’s “absolutely, positively,
on time”Quickness … Pizza Hut’s 5-minute guarantee
at lunchtime Figure 2.4
Response(faster)
Cost leadership(cheaper)
Differentiation(better)
10 Strategic OM Decisions10 Strategic OM Decisions
1. Goods and service design
2. Quality
6. Human resources and job design
7. Supply-chain
2 - 47© 2011 Pearson Education, Inc. publishing as Prentice Hall
3. Process and capacity design
4. Location selection
5. Layout design
management8. Inventory9. Scheduling10. Maintenance
Goods and Services and Goods and Services and the 10 OM Decisionsthe 10 OM Decisions
OperationsOperationsDecisionsDecisions GoodsGoods ServicesServicesGoods and service design
Product is usually tangible
Product is not tangible
2 - 48© 2011 Pearson Education, Inc. publishing as Prentice Hall
des gQuality Many objective
standardsMany subjective standards
Process and capacity design
Customers not involved
Customer may be directly involvedCapacity 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
2 - 49© 2011 Pearson Education, Inc. publishing as Prentice Hall
labor
Layout design
Production efficiency
Enhances product and production
Human resources and job design
Technical skills, consistent labor standards, output based wages
Interact with customers, labor standards vary
Table 2.1
Goods and Services and Goods and Services and the 10 OM Decisionsthe 10 OM Decisions
OperationsOperationsDecisionsDecisions GoodsGoods ServicesServicesSupply chain
Relationship critical to final product
Important, but may not be critical
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product criticalInventory Raw materials,
work-in-process, and finished goods may be held
Cannot be stored
Scheduling Level schedules possible
Meet immediate customer demand
Table 2.1
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
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at p oduct o s te custo e s s te
Table 2.1
Managing Global Service Managing Global Service OperationsOperations
Requires a different perspective on:Requires a different perspective on:
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Capacity planningLocation planningFacilities design and layoutScheduling
Process DesignProcess Design
High
oduc
ts
Process-focusedJOB SHOPS
(Print shop, emergency room, machine shop,
fine-diningrestaurant)
Repetitive (modular) focus
Mass CustomizationCustomization at high
Volume(Dell Computer’s PC,
cafeteria)
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Low Moderate HighVolume
Moderate
Low
Varie
ty o
f Pro ASSEMBLY LINE
(Cars, appliances, TVs, fast-food restaurants) Product focused
CONTINUOUS(Steel, beer, paper, bread, institutional
kitchen)
Operations Strategies of Operations Strategies of Two Drug CompaniesTwo Drug Companies
Brand Name Drugs, Inc.Brand Name Drugs, Inc. Generic Drug Corp.Generic Drug Corp.
Competitive Competitive AdvantageAdvantage Product DifferentiationProduct Differentiation Low CostLow Cost
Product Heavy R&D investment; Low R&D investment;
2 - 54© 2011 Pearson Education, Inc. publishing as Prentice Hall
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 Major priority, exceed regulatory requirements
Meets regulatory requirements on a country by country basis
Table 2.2
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Operations Strategies of Operations Strategies of Two Drug CompaniesTwo Drug Companies
Brand Name Drugs, Inc.Brand Name Drugs, Inc. Generic Drug Corp.Generic Drug Corp.
Competitive Competitive AdvantageAdvantage Product DifferentiationProduct Differentiation Low CostLow Cost
Process Product and modular Process focused;
2 - 55© 2011 Pearson Education, Inc. publishing as Prentice Hall
Process Product and modular process; long production runs in specialized facilities; build capacity ahead of demand
Process focused; general processes; “job shop” approach, short-run production; focus on high utilization
Location Still located in the city where it was founded
Recently moved to low-tax, low-labor-cost environment
Table 2.2
Operations Strategies of Operations Strategies of Two Drug CompaniesTwo Drug Companies
Brand Name Drugs, Inc.Brand Name Drugs, Inc. Generic Drug Corp.Generic Drug Corp.
Competitive Competitive AdvantageAdvantage Product DifferentiationProduct Differentiation Low CostLow Cost
Scheduling Centralized production Many short run
2 - 56© 2011 Pearson Education, Inc. publishing as Prentice Hall
Scheduling Centralized production planning
Many short-run products complicate scheduling
Layout Layout supports automated product-focused production
Layout supports process-focused “job shop” practices
Table 2.2
Operations Strategies of Operations Strategies of Two Drug CompaniesTwo Drug Companies
Brand Name Drugs, Inc.Brand Name Drugs, Inc. Generic Drug Corp.Generic Drug Corp.
Competitive Competitive AdvantageAdvantage Product DifferentiationProduct Differentiation Low CostLow Cost
Human Hire the best; Very experienced top
2 - 57© 2011 Pearson Education, Inc. publishing as Prentice Hall
Human Resources
Hire the best; nationwide searches
Very experienced top executives; other personnel paid below industry average
Supply Chain Long-term supplier relationships
Tends to purchase competitively to find bargains
Table 2.2
Operations Strategies of Operations Strategies of Two Drug CompaniesTwo Drug Companies
Brand Name Drugs, Inc.Brand Name Drugs, Inc. Generic Drug Corp.Generic Drug Corp.
Competitive Competitive AdvantageAdvantage Product DifferentiationProduct Differentiation Low CostLow Cost
Inventory High finished goods Process focus drives up
2 - 58© 2011 Pearson Education, Inc. publishing as Prentice Hall
Inventory High finished goods inventory to ensure all demands are met
Process focus drives up work-in-process inventory; finished goods inventory tends to be low
Maintenance Highly trained staff; extensive parts inventory
Highly trained staff to meet changing demand
Table 2.2
Issues In Operations StrategyIssues In Operations Strategy
Resources viewValue Chain analysisPorter’s Five Forces model
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Porter s Five Forces modelOperating in a system with many external factorsConstant change
Product Life CycleProduct Life CycleBest 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
Cost control critical
Introduction Growth Maturity Decline
egy/
Issu
es
2 - 60© 2011 Pearson Education, Inc. publishing as Prentice Hall
position
Com
pany
Str
ate
Figure 2.5
Internet search engines
Sales
Drive-through restaurants
CD-ROMs
Analog TVs
iPods
Boeing 787
LCD & plasma TVs
Avatars
Xbox 360
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Product Life CycleProduct Life CycleProduct design and development criticalFrequent product and process design
Introduction Growth Maturity Decline
y/Is
sues
Forecasting criticalProduct and process reliabilityCompetitive
d t
StandardizationFewer product changes, more minor changesOptimum capacity
Little product differentiationCost minimizationOvercapacity in the i d t
2 - 61© 2011 Pearson Education, Inc. publishing as Prentice Hall
process design changesShort production runsHigh production costsLimited modelsAttention to quality
OM
Str
ateg
y product improvements and optionsIncrease capacityShift toward product focusEnhance distribution
Increasing stability of processLong production runsProduct improvement and cost cutting
industryPrune line to eliminate items not returning good marginReduce capacity
Figure 2.5
SWOT Analysis SWOT Analysis
Internal External
Mission
2 - 62© 2011 Pearson Education, Inc. publishing as Prentice Hall
Strategy
AnalysisStrengths
Internal Weaknesses
Opportunities
External Threats
Strategy Development ProcessStrategy Development Process
Determine the Corporate Mission
Analyze the EnvironmentIdentify the strengths, weaknesses, opportunities, and threats.
Understand the environment, customers, industry, and competitors.
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Determine the 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.
Figure 2.6
Strategy Development and Strategy Development and ImplementationImplementation
Identify key success factorsBuild and staff the organization
2 - 64© 2011 Pearson Education, Inc. publishing as Prentice Hall
Integrate OM with other activities
The operations manager’s job is to implement an OM strategy, provide competitive advantage, and increase productivity
Key Success FactorsKey Success Factors
Production/OperationsMarketing
ServiceDistributionPromotionChannels of distributionProduct positioning(image, functions)
Finance/Accounting
LeverageCost of capitalWorking capitalReceivablesPayablesFinancial control
Support a Core Competence and Implement Strategy byIdentifying and Executing the Key Success Factors in the Functional Areas
2 - 65© 2011 Pearson Education, Inc. publishing as Prentice Hall Figure 2.7
( g )Lines 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
8910
11, S1112, 14, 16
13, 1517
Courteous, but Limited Passenger
Service
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
2 - 66© 2011 Pearson Education, Inc. publishing as Prentice Hall
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Employees Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
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12
Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
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Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Employees Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
Automated ticketing machinesNo seat assignmentsNo baggage transfersNo meals (peanuts)
Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
No meals (peanuts)Lower gate costs at secondary airports
2 - 68© 2011 Pearson Education, Inc. publishing as Prentice Hall
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Employees Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
y pHigh number of flights
reduces employee idle time between flights
Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High number of flights reduces employee idle time
between flightsSaturate a city with flights,
lowering administrative
2 - 69© 2011 Pearson Education, Inc. publishing as Prentice Hall
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Employees Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
o e g ad st at ecosts (advertising, HR, etc.) per passenger for that cityPilot training required on only one type of aircraftReduced maintenance
inventory required because of only one type of aircraft
Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
Pilot training required on only one type of aircraftReduced maintenance
inventory required because of only one type of aircraft
2 - 70© 2011 Pearson Education, Inc. publishing as Prentice Hall
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Employees Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
Excellent supplier relations with Boeing has aided
financing
Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
Reduced maintenance inventory required because of only one type of aircraft
Flexible employees and Flexible union
2 - 71© 2011 Pearson Education, Inc. publishing as Prentice Hall
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Employees Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
p ystandard planes aid
schedulingMaintenance personnel trained only one type of
aircraft20-minute gate turnarounds
Flexible union contracts
Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
Automated ticketing machines
Empowered employeesHigh employee compensation
2 - 72© 2011 Pearson Education, Inc. publishing as Prentice Hall
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Employees Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
Hire for attitude, then trainHigh level of stock
ownershipHigh number of flights
reduces employee idle time between flights
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Four International Four International Operations StrategiesOperations Strategies
Con
side
ratio
ns
High Figure 2.9
Import/export or license existing product
International Strategy
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Cos
t Red
uctio
n C
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
ExamplesU.S. SteelHarley Davidson
Four International Four International Operations StrategiesOperations Strategies
Con
side
ratio
ns
High Figure 2.9
2 - 74© 2011 Pearson Education, Inc. publishing as Prentice Hall
Cos
t Red
uctio
n C
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
Four International Four International Operations StrategiesOperations Strategies
Con
side
ratio
ns
High Figure 2.9
Standardized productEconomies of scaleCross-cultural
Global Strategy
2 - 75© 2011 Pearson Education, Inc. publishing as Prentice Hall
Cos
t Red
uctio
n C
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
learningExamples
Texas InstrumentsCaterpillarOtis Elevator
Four International Four International Operations StrategiesOperations Strategies
Con
side
ratio
nsHigh
Standardized productEconomies of scaleCross-cultural learning
Examples:Texas InstrumentsCaterpillarOtis Elevator
Global Strategy
Figure 2.9
2 - 76© 2011 Pearson Education, Inc. publishing as Prentice Hall
Cos
t Red
uctio
n C
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
Four International Four International Operations StrategiesOperations Strategies
Con
side
ratio
ns
High
Standardized productEconomies of scaleCross-cultural learning
Examples:Texas InstrumentsCaterpillarOtis Elevator
Global Strategy
Figure 2.9
Use existing domestic model globallyFranchise, joint ventures
Multidomestic Strategy
2 - 77© 2011 Pearson Education, Inc. publishing as Prentice Hall
Cos
t Red
uctio
n C
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
ventures, subsidiaries
ExamplesHeinzMcDonald’sThe Body ShopHard Rock Cafe
Four International Four International Operations StrategiesOperations Strategies
Con
side
ratio
ns
High
Standardized productEconomies of scaleCross-cultural learning
Examples:Texas InstrumentsCaterpillarOtis Elevator
Global Strategy
Figure 2.9
2 - 78© 2011 Pearson Education, Inc. publishing as Prentice Hall
Cos
t Red
uctio
n C
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
Multidomestic StrategyUse existing domestic model globallyFranchise, joint ventures, subsidiaries
ExamplesHeinz The Body ShopMcDonald’s Hard Rock Cafe
10/16/2010
14
Four International Four International Operations StrategiesOperations Strategies
Con
side
ratio
ns
High
Standardized productEconomies of scaleCross-cultural learning
Examples:Texas InstrumentsCaterpillarOtis Elevator
Global Strategy
Figure 2.9
Move material, people, ideas across national boundaries
Transnational Strategy
2 - 79© 2011 Pearson Education, Inc. publishing as Prentice Hall
Cos
t Red
uctio
n C
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
Multidomestic StrategyUse existing domestic model globallyFranchise, joint ventures, subsidiaries
ExamplesHeinz The Body ShopMcDonald’s Hard Rock Cafe
Economies of scaleCross-cultural learning
ExamplesCoca-ColaNestlé
Four International Four International Operations StrategiesOperations Strategies
Con
side
ratio
ns
High
Standardized productEconomies of scaleCross-cultural learning
Examples:Texas InstrumentsCaterpillarOtis Elevator
Global Strategy Transnational StrategyMove material, people, ideas across national boundariesEconomies of scaleCross-cultural learning
ExamplesCoca-ColaNestlé
Figure 2.9
2 - 80© 2011 Pearson Education, Inc. publishing as Prentice Hall
Cos
t Red
uctio
n C
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
Multidomestic StrategyUse existing domestic model globallyFranchise, joint ventures, subsidiaries
ExamplesHeinz The Body ShopMcDonald’s Hard Rock Cafe
Ranking CorruptionRanking CorruptionRank Country 2009 CPI Score (out of 10)1 New Zealand 9.42 Demark 9.33 Singapore, Sweden 9.25 Switzerland 9.08 Australia, Canada, Iceland 8.712 Hong Kong 8.2
Least Corrupt
2 - 81© 2011 Pearson Education, Inc. publishing as Prentice Hall
12 Hong Kong 8.214 Germany 8.017 Japan, UK 7.719 USA 7.537 Taiwan 5.639 South Korea 5.556 Malaysia 4.579 China 3.689 Mexico 3.3146 Russia 2.2
Most Corrupt
2 - 82© 2011 Pearson Education, Inc. publishing as Prentice Hall
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying,
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