Documente Academic
Documente Profesional
Documente Cultură
Global economy
2–1
Overview
• Introduction
• Today’s Global Business Conditions
• Operations Strategy
• Forming Operations Strategies
• Wrap-Up: What World-Class
Producers Do
2–2
Introduction
• Operational effectiveness is the ability to perform
similar operations activities better than
competitors.
2–4
Some Multinational
Corporations
% Sales % Assets
Outside Outside
Home Home Home % Foreign
Company Country Country Country Workforce
Citicorp USA 34 46 NA
Colgate- USA 72 63 NA
Palmolive
Dow USA 60 50 NA
Chemical
Gillette USA 62 53 NA
Honda Japan 63 36 NA
IBM USA 57 47 51
2–5
Some Multinational
Corporations
% Sales % Assets
Outside Outside
Home Home Home % Foreign
Company Country Country Country Workforce
Nestle Switzerland 98 95 97
Philips Netherlands 94 85 82
Electronics
Siemens Germany 51 NA 38
Unilever Britain & 95 70 64
Netherlands
2–6
Reasons to Globalize
2–7
Global Strategies
Sony – purchases components from suppliers in
Thailand, Malaysia, and around the world
2–8
Mission
Mission - where are
you going?
Organization’s
purpose for being
Answers ‘What do
we provide to
society?’
Provides boundaries
and focus
2–9
Strategic Process
Organization’s
Mission
Functional
Area Missions
Finance/
Marketing Operations
Accounting
2 – 10
Strategy
Action plan to
achieve mission
Functional areas
have strategies
Strategies exploit
opportunities and
strengths, neutralize
threats, and avoid
weaknesses
2 – 11
Mission/Strategy/Tactics
2 – 12
Strategy Example
Example
Rakesh is B Tech student. He would like to have a
career in business management, have a good
job, and earn enough income to live comfortably
• Mission: Live a good life
• Goal: Successful career in business
mgmt, good income
• Strategy: Obtain Management
education
• Tactics: Select a MBA institute
• Operations: Admission, buy books, Select
courses, study, exam, get job
2 – 13
Strategy Development Process
Environmental Analysis
Identify the strengths, weaknesses, opportunities, and threats.
Understand the environment, customers, industry, and competitors.
Form a Strategy
Build a competitive advantage, such as low price, design, or
volume flexibility, quality, quick delivery, dependability, after-
sale service, broad product lines.
2 – 14
Strategy Development and
Implementation
2 – 15
Order Winners
and Order Qualifiers
Source: Adapted from Nigel Slack, Stuart Chambers, Robert Johnston, and Alan
Betts, Operations and Process Management, Prentice Hall, 2006, p. 47
1-162 – 16
Critical Success Factors and Core
Competencies
2 – 17
Strategies for Competitive
Advantage
2 – 18
Operational Measures
Quality Cost
First pass yield, quality cost, defects Average days of inventory,
per million, number of suggestions manufacturing cost as percentage of
per employee, process capability sales, procurement cost,
indices
Delivery Flexibility
Lead time for order fulfillment, Number of models introduced, New
Procurement and manufacturing lead product development time, Breadth
time, On time delivery for suppliers,, and depth of the product offerings,
Schedule adherence Process and manufacturing flexibility
Indirect Measures
Indirect labour to direct labour ratio, Average training time per employee,
Number of suggestions per employee, Non value added content in processes,
Number of certified deliveries
2 – 19
Model for Strategy Formulation
Competitive dynamics Order winners/
at the market place Order qualifiers
Corporate strategy
2 – 20
Goods and Services and
the 10 OM Decisions
Operations
Decisions Goods Services
Goods and Product is usually Product is not
service tangible tangible
design
Quality Many objective Many subjective
standards standards
Process Customers not Customer may be
and involved directly involved
capacity Capacity must
design match demand
2 – 21
Goods and Services and
the 10 OM Decisions
Operations
Decisions Goods Services
Supply chain Relationship critical Important, but may
to final product not be critical
2 – 23
Product Life Cycle
Introduction Growth Maturity Decline
Best period to Practical to change Poor time to Cost control
Company Strategy/Issues
Sales iPods
3 1/2”
Xbox 360 Floppy
disks
2 – 24
Operations Strategies for
Two Drug Companies
Brand Name Drugs, Inc. Generic Drug Corp.
Competitive
Product Differentiation Low Cost
Advantage
Product Heavy R&D investment; Low R&D investment;
Selection and extensive labs; focus on focus on development
Design development in a broad of generic drugs
range of drug
categories
Quality Major priority, exceed Meets regulatory
regulatory requirements requirements on a
country by country
basis
2 – 25
Operations Strategies for
Two Drug Companies
Brand Name Drugs, Inc. Generic Drug Corp.
Competitive
Product Differentiation Low Cost
Advantage
Process Product and modular Process focused;
process; long general processes; “job
production runs in shop” approach, short-
specialized facilities; run production; focus
build capacity ahead of on high utilization
demand
Location Still located in the city Recently moved to low-
where it was founded tax, low-labor-cost
environment
2 – 26
Operations Strategies for
Two Drug Companies
Brand Name Drugs, Inc. Generic Drug Corp.
Competitive
Product Differentiation Low Cost
Advantage
Scheduling Centralized production Many short-run
planning products complicate
scheduling
2 – 27
Operations Strategies for
Two Drug Companies
Brand Name Drugs, Inc. Generic Drug Corp.
Competitive
Product Differentiation Low Cost
Advantage
Human Hire the best; Very experienced top
Resources nationwide searches executives; other
personnel paid below
industry average
2 – 28
Operations Strategies for
Two Drug Companies
Brand Name Drugs, Inc. Generic Drug Corp.
Competitive
Product Differentiation Low Cost
Advantage
Inventory High finished goods Process focus drives up
inventory to ensure all work-in-process
demands are met inventory; finished
goods inventory tends
to be low
Maintenance Highly trained staff; Highly trained staff to
extensive parts meet changing demand
inventory
2 – 29
Operations Strategy at Wal-
Mart
2 – 30
Activity Mapping
Courteous, but
Limited Passenger
Service
Competitive Advantage:
Low Cost
High Frequent,
Aircraft Reliable
Utilization Standardized Schedules
Fleet of Boeing
737 Aircraft
2 – 31
Four International
Operations Strategies
International
High
Strategy
Export or license
Cost Reduction Considerations
existing product
Examples
U.S. Steel
Harley Davidson
Low
Low High
Local Responsiveness Considerations
(Quick Response and/or Differentiation) 2 – 32
Four International
Operations Strategies
High
Cost Reduction Considerations
International Strategy
Import/export or
license existing
product
Examples
U.S. Steel
Harley Davidson
Low
Low High
Local Responsiveness Considerations
(Quick Response and/or Differentiation) 2 – 33
Four International
Operations Strategies
Global
High Strategy
Standardized
Cost Reduction Considerations
product
Economies of scale
Cross-cultural
learning
Examples
International Strategy
Import/export or
Texas Instruments
license existing
product
Examples Caterpillar
Otis Elevator
U.S. Steel
Harley Davidson
Low
Low High
Local Responsiveness Considerations
(Quick Response and/or Differentiation) 2 – 34
Four International
Operations Strategies
High
Global Strategy
Standardized product
Cost Reduction Considerations
Economies of scale
Cross-cultural learning
Examples
Texas Instruments
Caterpillar
Otis Elevator
International Strategy
Import/export or
license existing
product
Examples
U.S. Steel
Harley Davidson
Low
Low High
Local Responsiveness Considerations
(Quick Response and/or Differentiation) 2 – 35
Four International
Multidomestic
Operations Strategies
Strategy
High
Use existing
Global Strategy
Standardizeddomestic model
Cost Reduction Considerations
product
Economies of scale
globally
Cross-cultural learning
Texas
Examples
Franchise, joint
Instruments
Caterpillar
Otis Elevatorventures,
subsidiaries
International Strategy
Examples
Import/export or
license existing
product Heinz
Examples McDonald’s
U.S. Steel
Harley Davidson
Low
Low High
Local Responsiveness Considerations
(Quick Response and/or Differentiation) 2 – 36
Four International
Operations Strategies
High
Global Strategy
Standardized product
Cost Reduction Considerations
Economies of scale
Cross-cultural learning
Examples
Texas Instruments
Caterpillar
Otis Elevator
Low
Low High
Local Responsiveness Considerations
(Quick Response and/or Differentiation) 2 – 37
Four International
Operations Strategies
Transnational
High Strategy
Move material,
Global Strategy
Standardized product
Cost Reduction Considerations
people, ideas
Economies of scale
Cross-cultural learning
Low Nestlé
Low High
Local Responsiveness Considerations
(Quick Response and/or Differentiation) 2 – 38
Four International
Operations Strategies
High
Global Strategy Transnational Strategy
Standardized product Move material, people, ideas
Cost Reduction Considerations
Low
Low High
Local Responsiveness Considerations
(Quick Response and/or Differentiation) 2 – 39
THANK YOU
2 – 40