Operations Strategy in A Global Environment

Operations Strategy
in a Global Environment
A global view of operations
• Globalization is a process of interaction and integration among the

people, companies, and governments of different nations, a process
driven by international trade and investment and aided by
information technology.
Growth of World Trade as a percentage of world GDP
35 –
30 –
25 –
20 –
Percent
15 –
10 –
5–
0–
| | | | | | | | | | |
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 (est*)
Year
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
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
© 2011 Pearson Education, Inc. publishing as Prentice Hall

Some Multinational Corporations
% Sales % Assets
Outside Outside
Home Home Home % Foreign
Company Country Country Country Workforce
ICI Britain 78 50 NA
Nestle Switzerland 98 95 97
Philips Netherlands 94 85 82
Electronics
Siemens Germany 51 NA 38
Unilever Britain & 95 70 64
Netherlands
© 2011 Pearson Education, Inc. publishing as Prentice Hall

Developing Missions and Strategies
Mission statements tell an organization where it is

going
The Strategy tells the organization how to get there

Mission
 Mission - where are

you going?
 Organization’s
purpose for being
 Answers ‘What do
we provide society?’
 Provides boundaries
and focus
© 2011 Pearson Education, Inc.

publishing as Prentice Hall
To develop professionals and experts in the field of Quality Engineering & Management
and its allied areas through world-class education, Professional and corporate
development programs, conferences, media and other means of knowledge sharing,
transfer and application
To give people the power to build community and bring the world closer together.
To bring inspiration and innovation to every athlete
To direct all our organizational efforts at building upon the existing organizational strengths and
brand recognition to achieve enhanced levels of profitable growth in the core business, and
diversify into new areas that complement and supplement the core business, with the
diversification aimed at achieving excellence and industry leader status in the new areas. The
TCS People will however be encouraged to be open to unconventional ideas and services and
recognize new trends at very early stages
Strategy
 Action plan to
achieve mission
 Functional areas have
strategies
 Strategies exploit
opportunities and
strengths, neutralize
threats, and avoid
weaknesses
Strategies for competitive advantage
1. Cost
2. Quality
3. Time/Responsiveness
4. Flexibility
1- Low Cost Leadership
 Competing on low cost operations
 Achieving maximum value as perceived by customer
 Low cost strategy does not imply low value or low quality
 Examples include
 Air Indigo and Southwest Airline
 Walmart, Metro, Hyperstar
Common characteristics of cost leadership
 Very strong negotiation power with suppliers
 Reliance on economies of scale
 Run very efficient process – Productivity is the key!

2-Quality/Differentiation strategy
A firm following differentiation strategy attempts to convince

customer to pay premium price for its products and services by
providing unique and desirable features.
Examples include
- Apple
- Mercedes
- Nike
3- Time/Response
Delivery Speed – Quickly filling a customer order
On-time delivery – Meeting delivery time promises
Examples Include
- Pizza Hut delivery
- TCS – Hazir Service
- Fedex
4- Flexibility
- Product Flexibility
• Easily switch production from one item to another
• Easily customize product/service to meet customer requirement
- Volume flexibility
• Ability to ramp production up and down to meet market demand
Examples include
- Digital printing
- McDonalds Drive Through

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Operations Strategy

• Globalization is a process of interaction and integration among the

© 2011 Pearson Education, Inc. publishing as Prentice Hall

© 2011 Pearson Education, Inc. publishing as Prentice Hall

Mission statements tell an organization where it is

The Strategy tells the organization how to get there

 Mission - where are

© 2011 Pearson Education, Inc.

To bring inspiration and innovation to every athlete

 Very strong negotiation power with suppliers

 Reliance on economies of scale

 Run very efficient process – Productivity is the key!

A firm following differentiation strategy attempts to convince

On-time delivery – Meeting delivery time promises

- Pizza Hut delivery

- TCS – Hazir Service

• Easily customize product/service to meet customer requirement

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