2 Operations Strategy in a Global Environment Power. Point presentation to accompany Heizer and Render Operations Management, 10 e Principles of Operations Management, 8 e Power. Point slides by Jeff Heyl © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 -1
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 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 -2
Global Strategies u Boeing – sales and production are worldwide u Benetton – moves inventory to stores around the world faster than its competition by building flexibility into design, production, and distribution u Sony – purchases components from suppliers in Thailand, Malaysia, and around the world © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 -3
Global Strategies u Volvo – considered a Swedish company but until recently was controlled by an American company, Ford. The current Volvo S 40 is built in Belgium and shares its platform with the Mazda 3 built in Japan and the Ford Focus built in Europe. u 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 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 -4
Some Multinational Corporations Home Country % Sales Outside Home Country % Assets Outside Home Country % Foreign Workforce Citicorp USA 34 46 NA Colgate. Palmolive 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 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 -5
Some Multinational Corporations Home Country % Sales Outside Home Country % Assets Outside Home Country % Foreign Workforce Britain 78 50 NA Switzerland 98 95 97 Philips Netherlands Electronics 94 85 82 Siemens Germany 51 NA 38 Unilever Britain & Netherlands 95 70 64 Company ICI Nestle © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 -6
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 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 -7
Match Product & Parent u Braun Household Appliances 1. Volkswagen u Firestone Tires 2. Bridgestone u Godiva Chocolate 3. Campbell Soup u Haagen-Dazs Ice Cream 4. Tata Motors Limited u Jaguar Autos 6. Nestlé u MGM Movies u Lamborghini Autos u Alpo Petfoods © 2011 Pearson Education, Inc. publishing as Prentice Hall 5. Proctor and Gamble 7. Pillsbury 8. Sony 2 -8
Match Product & Parent u Braun Household Appliances 1. Volkswagen u Firestone Tires 2. Bridgestone u Godiva Chocolate 3. Campbell Soup u Haagen-Dazs Ice Cream 4. Tata Motors Limited u Jaguar Autos 6. Nestlé u MGM Movies u Lamborghini Autos u Alpo Petfoods © 2011 Pearson Education, Inc. publishing as Prentice Hall 5. Proctor and Gamble 7. Pillsbury 8. Sony 2 -9
Match Product & Country u Braun Household Appliances u Firestone Tires 1. Great Britain u Godiva Chocolate 2. Germany u Haagen-Dazs Ice Cream 3. Japan u Jaguar Autos u MGM Movies u Lamborghini Autos 4. United States 5. Switzerland 6. India u Alpo Pet Foods © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 10
Match Product & Country u Braun Household Appliances u Firestone Tires 1. Great Britain u Godiva Chocolate 2. Germany u Haagen-Dazs Ice Cream 3. Japan u Jaguar Autos u MGM Movies u Lamborghini Autos 4. United States 5. Switzerland 6. India u Alpo Pet Foods © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 11
Developing Missions and Strategies Mission statements tell an organization where it is going The Strategy tells the organization how to get there © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 12
Mission u Mission - where are you going? u Organization’s purpose for being u Answers ‘What do we provide society? ’ u Provides boundaries and focus © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 13
Hard Rock Cafe 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. Figure 2. 2 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 14
Arnold Palmer Hospital for Children provides state-of-the-art, family centered healthcare focused on restoring the joy of childhood in an environment of compassion, healing, and hope. Figure 2. 2 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 15
Strategy u Action plan to achieve mission u Functional areas have strategies u Strategies exploit opportunities and strengths, neutralize threats, and avoid weaknesses © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 16
Strategies for Competitive Advantage u Differentiation – better, or at least different u Cost leadership – cheaper u Response – rapid response © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 17
Competing on Differentiation Uniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts customer’s perception of value u Safeskin gloves – leading edge products u Walt Disney Magic Kingdom – experience differentiation u Hard Rock Cafe – dining experience © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 18
Competing on Cost Provide the maximum value as perceived by customer. Does not imply low quality. u Southwest Airlines – secondary airports, no frills service, efficient utilization of equipment u Wal-Mart – small overhead, shrinkage, distribution costs u Franz Colruyt – no bags, low light, no music, doors on freezers © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 19
Competing on Response u Flexibility is matching market changes in design innovation and volumes u A way of life at Hewlett-Packard u Reliability is meeting schedules u German machine industry u Timeliness is quickness in design, production, and delivery u Johnson Electric, Pizza Hut, Motorola © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 20
Issues In Operations Strategy u Resources view u Value Chain analysis u Porter’s Five Forces model u Operating in a system with many external factors u Constant change © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 21
SWOT Analysis Mission Internal Strengths External Opportunities Analysis Internal Weaknesses External Threats Strategy © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 22
International Strategy Cost Reduction Considerations High Four International Operations Strategies Figure 2. 9 u Import/export or license existing product Examples U. S. Steel Harley Davidson Low High Local Responsiveness Considerations (Quick Response and/or Differentiation) © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 23
High Four International Operations Strategies Figure 2. 9 Cost Reduction Considerations Global Strategy u Standardized product u Economies of scale u Cross-cultural learning Examples: Texas Instruments Caterpillar Otis Elevator u Import/export or license existing product Multidomestic Strategy u Use existing domestic model globally u Franchise, joint ventures, subsidiaries Examples U. S. Steel Harley Davidson Examples Heinz The Body Shop Mc. Donald’s Hard Rock Cafe International Strategy Low High Local Responsiveness Considerations (Quick Response and/or Differentiation) © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 24
High Four International Operations Strategies Transnational Strategy Figure 2. 9 Global Strategy Cost Reduction Considerations u Move material, people, ideas Examples: Texas across national Instruments Caterpillar Otis Elevator boundaries u Economies of scale Strategy Multidomestic International Strategy u Use u Cross-cultural existing globally domestic model u Import/export or u Franchise, joint ventures, learning license existing subsidiaries product u Standardized product u Economies of scale u Cross-cultural learning Examples Coca-Cola Nestlé Examples U. S. Steel Harley Davidson Low Examples Heinz The Body Shop Mc. Donald’s Hard Rock Cafe High Local Responsiveness Considerations (Quick Response and/or Differentiation) © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 25
High Four International Operations Strategies Transnational Strategy u Standardized product u Economies of scale u Cross-cultural learning Cost Reduction Considerations Global Strategy Figure 2. 9 u Move material, people, ideas across national boundaries u Economies of scale u Cross-cultural learning Examples: Texas Instruments Caterpillar Otis Elevator Examples Coca-Cola Nestlé u Import/export or license existing product Multidomestic Strategy u Use existing domestic model globally u Franchise, joint ventures, subsidiaries Examples U. S. Steel Harley Davidson Examples Heinz The Body Shop Mc. Donald’s Hard Rock Cafe International Strategy Low High Local Responsiveness Considerations (Quick Response and/or Differentiation) © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 26
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