Mngt 377 Ch 2 PPS

Mngt 377 Ch 2 PPS - Production/Operations Management...

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Unformatted text preview: Production/Operations Management Chapter 2 – Operations Strategy in a Global Environment MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. 1 Some Multinational Corporations Company Citicorp ColgatePalmolive Dow Chemical Gillette Honda IBM Home Country USA USA USA USA Japan USA % Sales Outside Home Country 34 34 72 72 60 60 62 62 63 63 57 57 % Assets Outside Home Country 46 63 50 53 36 47 Prof. Li Northeastern Illinois Univ. % Foreign Workforce NA NA NA NA NA NA NA NA NA NA 51 2 MNGT 377 Production/Operations Management Some Multinational Corporations Company ICI Nestle Home Country Britain Switzerland % Sales Outside Home Country 78 78 98 98 94 94 51 51 95 95 % Assets Outside Home Country 50 95 85 NA NA 70 % Foreign Workforce NA NA 97 82 38 38 64 Philips Netherlands Electronics Electronics Siemens Unilever Germany Britain & Netherlands Netherlands MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. 3 Reasons to Globalize Reasons to Globalize Tangible Reasons Reduce costs (labor, taxes, tariffs, etc.) Reduce Improve supply chain Improve Understand markets Understand Provide better goods and services Provide Learn to improve operations Learn Attract and retain global talent Attract Intangible Reasons MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. 4 Reduce Costs Foreign locations with lower wage Foreign rates can lower direct and indirect costs Maquiladoras Maquiladoras World Trade Organization (WTO) World North American Free Trade North Agreement (NAFTA) APEC, SEATO, MERCOSUR APEC, European Union (EU) European MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. 5 Improve the Supply Chain Locating facilities closer to unique Locating resources Auto design to California Auto Athletic shoe production to China Athletic Perfume manufacturing in France Perfume MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. 6 Understand Markets Interacting with foreign customer Interacting and suppliers can lead to new opportunities Cell phone design from Europe Cell Cell phone fads from Japan Cell Extend the product life cycle Extend MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. 7 Provide Better Goods and Services Objective and subjective Objective characteristics of goods and services On-time deliveries On Cultural variables Cultural Improved customer service Improved MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. 8 Cultural and Ethical Issues Cultures can be quite different Cultures Attitudes can be quite different Attitudes towards Punctuality Punctuality Lunch breaks Lunch Environment Environment Intellectual Intellectual property MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. Thievery Thievery Bribery Bribery Child labor Child 9 Developing Missions and Strategies Mission statements tell an organization where it is going The Strategy tells the organization how to get there MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. 10 Mission Mission - where are Mission you going? Organization’s Organization purpose for being Answers ‘What do we Answers provide to society?’ Provides boundaries Provides and focus MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. 11 11 Hard Rock Café Our Mission: To spread the spirit of Rock ‘n’ Roll by delivering an exceptional entertainment and dining experience. We are committed to being 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. MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. Figure 2.2 12 12 Strategy Action plan to achieve Action mission Functional areas have Functional strategies Strategies exploit Strategies opportunities and strengths, neutralize threats, and avoid weaknesses MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. 13 13 Strategic Process Organization’s Mission Functional Area Missions Marketing Operations Finance/ Accounting 14 14 MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. Achieving Competitive Advantages through Operations Differentiation – better, or at least Differentiation different Cost leadership – cheaper Cost Quick response – more responsive Quick MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. 15 15 Competing on Differentiation Uniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts customer’s perception of value Safeskin gloves – leading edge products Safeskin Walt Disney Magic Kingdom – Walt experience differentiation Hard Rock Cafe – theme experience Hard MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. 16 16 Competing on Cost Provide the maximum value as perceived by customer. Does not imply low quality. Southwest Airlines – secondary Southwest airports, no frills service, efficient utilization of equipment Wal-Mart – small overheads, shrinkage, Wal distribution costs MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. 17 17 Competing on Response Flexibility is matching market changes in Flexibility design innovation and volumes Institutionalization at Hewlett-Packard Institutionalization Reliability is meeting schedules Reliability German machine industry German Timeliness is quickness in design, Timeliness production, and delivery Johnson Electric, Bennigan’s, Motorola Johnson MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. 18 18 Process Design High Process-focused Mass Customization JOB SHOPS Customization at high Volume (Print shop, emergency room, machine shop, (Dell Computer’s PC) fine dining Repetitive (modular) focus ASSEMBLY LINE (Cars, appliances, TVs, fast-food Product focused restaurants) CONTINUOUS (steel, beer, paper, bread, institutional kitchen) Variety of Products Moderate Low Low MNGT 377 Production/Operations Management Moderate Volume Prof. Li Northeastern Illinois Univ. High 19 19 Characteristics of High ROI Firms High quality product High High capacity utilization High High operating effectiveness High Low investment intensity Low Low direct cost per unit Low MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. 20 20 Preconditions One must understand: Strengths and weaknesses of competitors and Strengths possible new entrants into the market Current and prospective environmental, Current technological, legal, and economic issues The product life cycle The Resources available within the firm and within the Resources OM function Integration of OM strategy with company’s strategy Integration and with other functional areas MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. 21 21 Dynamics of Strategic Change Changes within the organization Changes Personnel Personnel Finance Finance Technology Technology Product life Product Changes in the environment Changes MNGT 377 Production/Operations Management Prof. Li Northeastern Illinois Univ. 22 22 Product Life Cycle Introduction Company Strategy/Issues Best period to increase market share R&D engineering is critical critical Growth Practical to change price or quality image image Strengthen niche Maturity Poor time to change image, price, or quality Competitive costs become critical become Defend market position Decline Cost control critical critical CD-ROM Internet Sales Color printers Drive-through restaurants Fax machines Flat-screen monitors MNGT 377 Production/Operations Management DVD 3 1/2” Floppy disks Prof. Li Northeastern Illinois Univ. 23 23 Four International Operations Strategies High Cost Reduction Considerations International Strategy Import/export or license existing product Examples U.S. Steel Harley Davidson Low Low MNGT 377 Production/Operations Management High Local Responsiveness Considerations Prof. Li (Quick Response and/or Differentiation) Northeastern Illinois Univ. 24 24 Four International Operations Strategies High Cost Reduction Considerations International Strategy Import/export or license existing product Examples U.S. Steel Harley Davidson Low Low MNGT 377 Production/Operations Management High Local Responsiveness Considerations (Quick Response and/or Differentiation) Northeastern Illinois Univ. Prof. Li 25 25 Four International Operations Global Strategies High Cost Reduction Considerations Strategy Standardized product Economies of scale Cross-cultural learning International Strategy Import/export or license existing product Examples Texas Instruments Examples Caterpillar U.S. Steel Otis Harley Davidson Elevator High Local Responsiveness Considerations (Quick Response and/or Differentiation) Northeastern Illinois Univ. Prof. Li Low Low MNGT 377 Production/Operations Management 26 26 Four International Operations Strategies High Global Strategy Cost Reduction Considerations Standardized product 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 MNGT 377 Production/Operations Management High Local Responsiveness Considerations (Quick Response and/or Differentiation) Northeastern Illinois Univ. Prof. Li 27 27 Four International Operations Multidomestic Strategies Strategy High Cost Reduction Considerations Use existing Standardized product domestic model Economies of scale Cross-cultural learning globally Examples Texas Instruments Franchise, joint Caterpillar Otis Elevator ventures, subsidiaries Global Strategy International Strategy Import/export or license existing product Low Low Examples Heinz Examples U.S. SteelMcDonald’s Harley Davidson The Body Shop Hard Rock Cafe High Local Responsiveness Considerations (Quick Response and/or Differentiation) Northeastern Illinois Univ. Prof. Li MNGT 377 Production/Operations Management 28 28 Four International Operations Strategies High Global Strategy Cost Reduction Considerations Standardized product 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 Multidomestic Strategy Use existing domestic model globally Franchise, joint ventures, subsidiaries Examples Heinz The Body Shop McDonald’s Hard Rock Cafe Low Low MNGT 377 Production/Operations Management High Local Responsiveness Considerations (Quick Response and/or Differentiation) Northeastern Illinois Univ. Prof. Li 29 29 Four International Operations Transnational Strategies High Global Strategy Strategy Cost Reduction Considerations Move material, people, ideas Examples across national Texas Instruments Caterpillar boundaries Otis Elevator Economies of scale Cross-cultural International Strategy Multidomestic Strategy Use existing learning Import/export or domestic model globally Standardized product Economies of scale Cross-cultural learning license existing product Examples U.S. Steel Harley Davidson Low Low Examples Coca-Cola Nestlé Franchise, joint ventures, subsidiaries Examples Heinz The Body Shop McDonald’s Hard Rock Cafe High Local Responsiveness Considerations (Quick Response and/or Differentiation) Northeastern Illinois Univ. Prof. Li MNGT 377 Production/Operations Management 30 30 Four International Operations Strategies High Global Strategy Transnational Strategy Move material, people, ideas across national boundaries Economies of scale Cross-cultural learning Examples Coca-Cola Nestlé Cost Reduction Considerations Standardized product 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 Multidomestic Strategy Use existing domestic model globally Franchise, joint ventures, subsidiaries Examples Heinz The Body Shop McDonald’s Hard Rock Cafe Low Low MNGT 377 Production/Operations Management High Local Responsiveness Considerations (Quick Response and/or Differentiation) Northeastern Illinois Univ. Prof. Li 31 31 ...
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This note was uploaded on 03/14/2011 for the course MNGT 377 taught by Professor Woolman during the Spring '10 term at N.E. Illinois.

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