Transcript Operations Strategy in a Global Environment

Operations
Management
Chapter 2 –
Operations Strategy in a
Global Environment
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 6e
Operations Management, 8e
© 2006
Prentice
Hall, Inc. Hall, Inc.
©
2006
Prentice
2–1
Some Multinational
Corporations
Home
Country
% Sales
Outside
Home
Country
% Assets
Outside
Home
Country
% Foreign
Workforce
Citicorp
USA
34
46
NA
ColgatePalmolive
USA
72
63
NA
Dow
Chemical
USA
60
50
NA
Gillette
USA
62
53
NA
Honda
Japan
63
36
NA
USA
57
47
51
Company
IBM
© 2006 Prentice Hall, Inc.
2–2
Reasons to Globalize
Reasons to Globalize
Tangible  Reduce costs (labor, taxes, tariffs, etc.)
Reasons  Improve supply chain
 Provide better goods and services
 Understand markets
Intangible  Learn to improve operations
Reasons  Attract and retain global talent
Figure 2.1
© 2006 Prentice Hall, Inc.
2–3
Cultural and Ethical Issues
 Cultures can be quite different
 Attitudes can be quite different
towards
 Punctuality
 Thievery
 Lunch breaks
 Bribery
 Environment
 Child labor
 Intellectual
property
© 2006 Prentice Hall, Inc.
2–4
Hofstede’s Cultural
Dimensions
Power Distance
Hi
Low
Power and Authority are facts
of life
Minimize social/class
structures
Those in power emphasize
their position
No set hierarchy, those in
power minimize position
Centralized authority
Decentralized authority
Respect for authority
Respect for individuality
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2–5
Hofstede’s Cultural
Dimensions
Individualism
Collectivism
People take care of
themselves
Primary loyalty is to group
Make decisions based on
individual needs
Make decisions based on
group needs
I mentality
We mentality
Individuals speak out,
question and confront
Dependence on organizations
or institutions, people avoid
conflict
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2–6
Hofstede’s Cultural
Dimensions
Uncertainty Avoidance
Hi
More formal rules, prefer
details and specific plans
Low
Fewer rules, tolerate
generalizations
Less tolerant of deviant ideas, Tolerate deviance, seek
consensus seeking
individual opinions
Minimize risk
Approve of risk taking
Ritualized/ceremonial, belief
in absolute truth
Accept relativity of belief
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2–7
Developing Missions and
Strategies
Mission statements tell an
organization where it is going
The Strategy tells the
organization how to get there
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2–8
Mission
 Mission - where are
you going?
 Organization’s
purpose for being
 Answers ‘What do
we provide society?’
 Provides boundaries
and focus
© 2006 Prentice Hall, Inc.
2–9
Strategy
 Action plan to
achieve mission
 Functional areas
have strategies
 Strategies exploit
opportunities and
strengths, neutralize
threats, and avoid
weaknesses
© 2006 Prentice Hall, Inc.
2 – 10
Strategic Process
Organization’s
Mission
Functional
Area Missions
Marketing
© 2006 Prentice Hall, Inc.
Operations
Finance/
Accounting
2 – 11
Strategies for Competitive
Advantage
 Differentiation – better, or at least
different
 Cost leadership – cheaper
 Quick response – more
responsive
© 2006 Prentice Hall, Inc.
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Elements of Operations
Management Strategy







Low-cost product
Product-line breadth
Technical superiority
Product characteristics/differentiation
Continuing product innovation
Low-price/high-value offerings
Efficient, flexible operations adaptable to
consumers
 Engineering research development
 Location
 Scheduling
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2 – 13
Product Life Cycle
OM Strategy/Issues
Introduction
Product design
and
development
critical
Frequent
product and
process design
changes
Growth
Forecasting
critical
Product and
process
reliability
Maturity
Standardization
Less rapid
product changes
– more minor
changes
Competitive
product
improvements
and options
Optimum
capacity
High production
costs
Shift toward
product focus
Long production
runs
Limited models
Enhance
distribution
Product
improvement
and cost cutting
Short production
runs
Attention to
quality
Increasing
stability of
Increase capacity process
Decline
Little product
differentiation
Cost
minimization
Overcapacity
in the
industry
Prune line to
eliminate
items not
returning
good margin
Reduce
capacity
Figure 2.5
© 2006 Prentice Hall, Inc.
2 – 14
Product Life Cycle
Company Strategy/Issues
Introduction
Growth
Maturity
Best period to
increase market
share
Practical to change
price or quality
image
Poor time to
change image,
price, or quality
R&D engineering is
critical
Strengthen niche
Competitive costs
become critical
Defend market
position
CD-ROM
Internet
Sales
Decline
Cost control
critical
Fax machines
Drive-through
restaurants
Color printers
Flat-screen
monitors
DVD
3 1/2”
Floppy
disks
Figure 2.5
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Strategy Development and
Implementation
 Identify critical success factors
 Build and staff the organization
 Integrate OM with other activities
The operations manager’s job is to implement
an OM strategy, provide competitive
advantage, and increase productivity
© 2006 Prentice Hall, Inc.
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