Operations Management: Chapter 2 - Operations Strategy in A Global Environment
Operations Management: Chapter 2 - Operations Strategy in A Global Environment
Operations Management: Chapter 2 - Operations Strategy in A Global Environment
Management
Chapter 2
Operations Strategy in
a Global Environment
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 7e
Operations Management, 9e
2008 Prentice Hall, Inc.
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Learning Objectives
When you complete this chapter you
should be able to:
1. Define mission and strategy
2. Identify and explain three strategic
approaches to competitive
advantage
3. Identify and define the 10 decisions
of operations management
2008 Prentice Hall, Inc.
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Learning Objectives
When you complete this chapter you
should be able to:
4. Identify five OM strategy insights
provided by PIMS research
5. Identify and explain four global
operations strategy options
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Global Strategies
Boeing sales and production are
worldwide
Benetton moves inventory to stores
around the world faster than its
competition by building flexibility into
design, production, and distribution
Sony purchases components from
suppliers in Thailand, Malaysia, and
around the world
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Global Strategies
Volvo considered a Swedish company
but it is controlled by an American
company, Ford. The current Volvo S40 is
built in Belgium and shares 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
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Reasons to Globalize
Reasons to Globalize
Tangible 1. Reduce costs (labor, taxes, tariffs, etc.)
Reasons 2. Improve supply chain
3. Provide better goods and services
4. Understand markets
Intangible 5. Learn to improve operations
Reasons 6. Attract and retain global talent
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Reduce Costs
Foreign locations with lower wage
rates can lower direct and indirect
costs
Maquiladoras
World Trade Organization (WTO)
North American Free Trade
Agreement (NAFTA)
APEC, SEATO, MERCOSUR
European Union (EU)
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Understand Markets
Interacting with foreign customers
and suppliers can lead to new
opportunities
Cell phone
design from
Europe
Cell phone
fads from
Japan
Extend the product life cycle
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Mission
Mission - where are
you going?
Organizations
purpose for being
Answers What do
we provide society?
Provides boundaries
and focus
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FedEx
FedEx is committed to our People-Service-Profit
philosophy. We will produce outstanding financial
returns by providing total reliable, competitively
superior, global air-ground transportation of high
priority goods and documents that require rapid,
time-certain delivery. Equally important, positive
control of each package will be maintained using
real time electronic tracking and tracing systems. A
complete record of each shipment and delivery will
be presented with our request for payment. We will
be helpful, courteous, and professional to each other
and the public. We will strive to have a completely
satisfied customer at the end of each transaction.
Figure 2.2
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Merck
The mission of Merck is to provide
society with superior products and
services - innovations and solutions
that improve the quality of life and
satisfy customer needs - to provide
employees with meaningful work and
advancement opportunities and
investors with a superior rate of return
Figure 2.2
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Figure 2.2
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Figure 2.2
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Environment
Mission
Customers
Public Image
Benefit to
Society
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Sample Missions
Sample Company Mission
To manufacture and service an innovative, growing, and
profitable worldwide microwave communications business
that exceeds our customers expectations.
Figure 2.3
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Sample Missions
Sample OM Department Missions
Product design
Quality management
Process design
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Sample Missions
Sample OM Department Missions
Location
Layout design
Human resources
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Sample Missions
Sample OM Department Missions
Supply chain
management
Inventory
Scheduling
Maintenance
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Strategic Process
Organizations
Mission
Functional
Area Missions
Marketing
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Operations
Finance/
Accounting
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Strategy
Action plan to
achieve mission
Functional areas
have strategies
Strategies exploit
opportunities and
strengths, neutralize
threats, and avoid
weaknesses
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Competing on
Differentiation
Uniqueness can go beyond both the
physical characteristics and service
attributes to encompass everything
that impacts customers perception of
value
Safeskin gloves leading edge products
Walt Disney Magic Kingdom
experience differentiation
Hard Rock Cafe dining experience
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Competing on Cost
Provide the maximum value as
perceived by customer. Does not
imply low quality.
Southwest Airlines secondary
airports, no frills service, efficient
utilization of equipment
Wal-Mart small overheads, shrinkage,
distribution costs
Franz Colruyt no bags, low light, no
music, doors on freezers
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Competing on Response
Flexibility is matching market changes in
design innovation and volumes
Institutionalization at Hewlett-Packard
Timeliness is quickness
in design, production,
and delivery
Johnson Electric,
Bennigans, Motorola
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10 Strategic OM Decisions
1. Goods and
service design
2. Quality
3. Process and
capacity design
4. Location
selection
5. Layout design
6. Human resources
and job design
7. Supply chain
management
8. Inventory
9. Scheduling
10. Maintenance
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Goods
Services
Product is usually Product is not
tangible
tangible
Quality
Many objective
standards
Many subjective
standards
Process
and
capacity
design
Customers not
involved
Customer may be
directly involved
Capacity must
match demand
Table 2.1
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Goods
Near raw
materials and
labor
Services
Near customers
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
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Goods
Relationship
critical to final
product
Services
Important, but
may not be
critical
Inventory
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
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Table 2.1
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Form a strategy
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