Bài giảng Operations Management - Chapter 2: Operations Strategy in a Global Environment

Operations ManagementOperations Strategy in a Global EnvironmentChapter 21OutlineGLOBAL COMPANY PROFILE: BOEINGDEVELOPING MISSIONS AND STRATEGIESMissionStrategyACHIEVING COMPETITIVE ADVANTAGE THROUGH OPERATIONSCompeting on DifferentiationCompeting on CostCompeting on ResponseTEN STRATEGIC OM DECISIONS2Outline - ContinuedISSUES IN OPERATIONS STRATEGYResearchPreconditionsDynamicsSTRATEGY DEVELOPMENT AND IMPLEMENTATIONIdentify Critical Success FactorsA Global view of Operations Cultural and Ethical IssuesBuild and Staff the OrganizationIntegrate OM with Other Activities3Outline - ContinuedGLOBAL OPERATIONS STRATEGY OPTIONSInternational StrategyMultidomestic StrategyGlobal StrategyTransnational Strategy4Learning ObjectivesWhen you complete this chapter, you should be able to : Identify or Define:MissionStrategyTen Decisions of OMMultinational Corporations5Learning Objectives - ContinuedDescribe or Explain:Specific approaches used by OM to achieve strategies DifferentiationLow CostResponseFour Global Operations StrategiesWhy Global Issues are Important6Examples of Global StrategiesBoeing – both sales and production are worldwide.Benetton – moves inventory to stores around the world faster than its competitor by building flexibility into design, production, and distributionSony – purchases components from suppliers in Thailand, Malaysia, and around the worldGM is building four similar plants in Argentina, Poland, China, and Thailand7Boeing Suppliers (777)FirmCountryPartsAleniaItalyWing flapsAeroSpaceTechnologiesAustraliaRudderCASASpainAileronsdoors, wing sectionFujiJapanLanding gearGEC AvionicsUnited KingdomFlight computersKorean AirKoreaFlap supportsMenascoAerospaceCanadaLanding gearsShort BrothersIrelandLanding gear doorsSingaporeAerospaceSingaporeLanding gear doors8The Role ofMaquiladorasWorld Trade Organization (WTC)North American Free Trade Agreement (NAFTA)European Union (EU)9Management Issues in Global OperationsGlobal Strategic ContextDifferentiationCost leadershipResponseLogistics ManagementLocation DecisionsSupply Chain Management10Supply-Chain ManagementSourcingVertical integrationMake-or-buy decisionsPartnering11Location DecisionsCountry-related issuesProduct-related issuesGovernment policy/political riskOrganizational issues12Materials ManagementFlow of materialsTransportation options and speedInventory levelsPackagingStorage13Defining Global OperationsInternational business - engages in cross-border transactionsMultinational Corporation - has extensive involvement in international business, owning or controlling facilities in more than one countryGlobal company - integrates operations from different countries, and views world as a single marketplaceTransnational company - seeks to combine the benefits of global-scale efficiencies with the benefits of local responsiveness14Some Multinational CorporationsWorkforceCompanyHomeCountry% SalesOutsideHomeCountry% AssetsOutsideHomeCountry% ForeignColgate-PalmoliveUSA7263NADowChemicalUSA6050NAGilletteUSA6253NAHondaJapan6336NAIBMUSA574751CiticorpUSA3446NA15Some Multinational CorporationsWorkforceCompanyHomeCountry% SalesOutsideHomeCountry% AssetsOutsideHomeCountry% ForeignICIBritain7850NANestléSwitzerland989597PhilipsNetherlands948582SiemensGermany51NA38ElectronicsUnileverBritain & Netherlands95706416Pontiac - the LeMans Included the FollowingAbout $6,000 heads to South Korea for auto’s assembly$3,500 goes to Japan for engines, axles, and electronics$1,500 goes to Germany for design$800 goes to Taiwan, Singapore, and Japan for smaller parts$500 heads to England for marketing$100 goes to Ireland for information technologythe rest  $7,600, goes to GM and its US bankers, insurance agents, and attorneys.17Reasons to Globalize OperationsReduce costs (labor, taxes, tariffs, etc.)Improve the supply chainProvide better goods and servicesAttract new marketsLearn to improve operationsAttract and retain global talentTangibleIntangible18Trade and TariffMaquiladoras - Mexican factories located along the U.S.-Mexico border that receive preferential tariff treatmentGATT - an international treaty that helps promote world trade by lowering barriers to the free flow of goods across bordersNAFTA - a free trade agreement between Canada, Mexico, and the United States19Trade PaysGDP (PPP*) per Person 1990 Growth Rates, %*PPP – Purchasing Power Parity20 Free trade may take us into the era of the floating factory - a six person crew will take a factory from port to port in order to obtain the best market, material, labor and tax advantages 21Achieving Global Operations-Four Considerations-Global product designGlobal process design and technologyGlobal factory location analysisImpact of Culture and Ethics22Global Product DesignRemember social and cultural differencespackaging and marketing can help make product seem “domestic” but -“liter” versus “quart”“sweetness” and “taste”23Global Process Design and TechnologyInformation technology enables management of integrated, globally dispersed operationTexas Instruments: 50 plants in 19 countriesHewlett-Packard - product development teams in U.S., Japan, Great Britain, and GermanyReduces time-to-market24Global Facility Location AnalysisSelect CSFs based on parent organization;’s strategic or operations objectivesObtain country-specific information on the CSFsEvaluate each country’s CSFs using a 1 (bad) to 5 (good) rating scaleSum the ratingsUsing CSFs for Country Selection25You May Wish To Considernational literacy raterate of innovationrate of technology changenumber of skilled workersstability of governmentproduct liability lawsexport restrictionssimilarity in languagework ethictax ratesinflationavailability of raw materialsinterest ratespopulationnumber of miles of highway26GlobalImpact of Culture and EthicsCultures differ! Some accept/expect:variations in punctualitylong lunch hoursexpectation of thieverybriberylittle protection of intellectual property27Ranking Corruption1. Finland 9.7Denmark & New Zealand (Tie) 9.5Canada 9.010. United Kingdom 8.7United States 7.718. Germany & Israel (Tie) 7.3Japan 7.1Italy 5.2China 3.5Egypt 3.4India & Russia (Tie) 2.7Nigeria 1.6Bangladesh 1.228To Establish Global ServicesDetermine if sufficient people or facilities exist to support the serviceIdentify foreign markets that are open - not controlled by governmentsDetermine what services are of most interest to foreign customersDetermine how to reach global customers29Managing Global Service OperationsMust take a different perspective onCapacity planningLocation PlanningFacilities design and layoutScheduling30Some DefinitionsInternational businessA firm that engages in cross-border transactions.Multinational Corporation (MNC)A firm that has extensive involvement in international business, owning or controlling facilities in more than one country31Some Global StrategiesInternational Strategy: uses exports and licenses to penetrate the global areaMultidomestic Strategy: uses decentralized authority with substantial autonomy at each businessGlobal Strategy: Uses a high degree of centralization, with headquarters coordinating to seek standardization and learning between plantsTransnational Strategy: Exploits economies of scale and learning, as well as pressure for responsiveness, by recognizing that core competencies reside everywhere in the organization32Match Product & ParentArrow shirtsBraun Household AppliancesBurger KingFirestone TiresGodiva ChocolateHaagen_dazs Ice CreamJaguar AutosMGM MoviesLamborghini AutosGoodrich TiresAlpo Petfoods1. Volkswagen2. Bidermann International3. Bridgestone4. Campbell Soup5. Credit Lyonnais6. Ford Motor Company7. Gillette8. Grand Metropolitan9. Michelin10. Nestlé33Match Product & CountryArrow shirtsBraun Household AppliancesBurger KingFirestone TiresGodiva ChocolateHaagen_Dazs Ice CreamJaguar AutosMGM MoviesLamborghini AutosGoodrich TiresAlpo Petfoods1. France2. Great Britain3. Germany4. Japan5. United States6. Switzerland34Developing Missions and Strategies35MissionMission - where are you going?Organization’s purpose for beingProvides boundaries & focusAnswers ‘What do we provide society?’© 1995 Corel Corp.36Mission of FedExFedEx 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.37Sample Mission - MerckThe 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 return38Mission of the Hard Rock CaféTo 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.39Factors Affecting MissionMissionPhilosophy &ValuesProfitability& GrowthEnvironmentCustomersPublic ImageBenefit toSociety40Mission/StrategyMission - where you are goingStrategy - how you are going to get there; an action plan41StrategyAction plan to achieve missionShows how mission will be achievedCompany has a business strategyFunctional areas have strategies © 1995 Corel Corp.42Strategy ProcessMarketingDecisionsOperationsDecisionsFin./Acct.DecisionsCompanyMissionBusinessStrategyFunctional AreaFunctional AreaStrategies43Strategies for Competitive AdvantageDifferentiationCost leadershipQuick response44Competing on DifferentiationUniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts customer’s perception of value45Competing on CostProvide the maximum value as perceived by customerDoes not imply low value or low quality46Competing on ResponseFlexibilityReliabilityTimelinessRequires institutionalization within the firm of the ability to respond47Competing, Regardless of the Basis,Requires the institutionalization within the firm of the ability to change, and to adapt48OM’s Contribution to StrategyResponse(Faster)QualityProductProcessLocationLayoutHuman ResourceSupply ChainInventorySchedulingMaintenanceHP’s ability to follow the printer marketDifferentiation(Better)Cost leadership(Cheaper)Southwest Airlines No-frills serviceSony’s constant innovation of new productsPizza Hut’s five-minute guarantee at lunchtimeFederal Express’s “absolutely, positively on time”Motorola’s automotive products ignition systemsMotorola’s pagersIBM’s after-sale service on mainframe computersFidelity Security’s broad line of mutual fundsFLEXIBILITYDesignVolumeLOW COSTDELIVERYSpeedDependabilityQUALITYConformancePerformanceAFTER-SALE SERVICEBROAD PRODUCT LINEOperations DecisionsExamplesSpecific Strategy UsedCompetitive Advantage4910 Strategic OM DecisionsGoods & service design Quality Process & capacity design Location selection Layout design Human resource and job design Supply-chain management Inventory Scheduling Maintenance50Goods & Services and the 10 OM Decisions51Goods & Services and the 10 OM Decisions – Continued52Goods & Services and the 10 OM Decisions – Continued53Goods & Services and the 10 OM Decisions – Continued54Process Design Low Moderate HighVolumeHighModerateLowVariety of ProductsProcess-focusedJob Shops(Print shop, emergencyroom , machine shop,fine diningRepetitive (modular)focusAssembly line(Cars, appliances, TVs, fast-food restaurants)Product-focusedContinuous(steel, beer, paper, bread, institutional kitchen)Mass CustomizationCustomization at high Volume(Dell Computer’s PC)55Operations Strategies for Two Drug Companies56Operations Strategies for Two Drug Companies - Continued57Operations Strategies for Two Drug Companies - Continued58Operations Strategies for Two Drug Companies - Continued59Characteristics of High ROI FirmsHigh quality product High capacity utilizationHigh operating effectivenessLow investment intensityLow direct cost per unitFrom the PIMS study of the Strategic Planning Institute60Strategic Options Managers Use to Gain Competitive Advantage28% - Operations Management18% - Marketing/distribution17% - Momentum/name recognition16% - Quality/service14% - Good management 4% - Financial resources 3% - Other61Strategic Options Managers Use to Gain Competitive Advantage28% Operations ManagementLow- cost productProduct-line breadthTechnical superiorityProduct characteristics/differentiationContinuing product innovationLow-price/high-value offeringsEfficient, flexible operations adaptable to consumersEngineering research developmentLocationScheduling62Preconditions -To Implement a StrategyOne must understand:Strengths & weaknesses of competitors and new entrants into the marketCurrent and prospective environmental, legal, and economic issuesThe notion of product life cycleResources available with the firm and within the OM functionIntegration of OM strategy with company strategy and with other functions.63Impetus for Strategy ChangeChanges in the organizationStages in the product life cycleChanges in the environment64Stages in the Product Life CycleIntroduction Growth Maturity Decline Growth rate65Best period to increase market shareR&D engineering are criticalProduct design and development are criticalFrequent product and process design changesOver-capacityShort production runsHigh skilled-labor contentHigh production costsLimited number of modelsUtmost attentions to qualityQuick elimination of market-revealed design defects IntroductionStrategy & Issues During Product LifeCompany Strategy & IssuesOM Strategy & Issues66Strategy & Issues During Product LifePractical to change prices or quality imageMarketing is criticalStrengthen nicheForecasting is criticalProduct and process reliabilityCompetitive product improvements and optionsShift toward product orientedEnhance distributionCompany Strategy & IssuesOM Strategy & Issues Growth67Strategy & Issues During Product LifePoor time to increase market shareCompetitive costs become criticalPoor time to change price, image, or qualityDefend position via fresh promotional and distribution approachesStandardizationLess rapid product changes and more minor annual model changesOptimum capacityIncreasing stability of manufacturing processLower labor skillsLong production runsAttention to product improvement and cost cuttingRe-examination of necessity of design compromisesCompany Strategy & IssuesOM Strategy & Issues Maturity68Strategy & Issues During Product LifeCost control critical to market shareLittle product differentiationCost minimizationOvercapacity in the industryPrune line to eliminate items not returningGood marginReduce capacityCompany Strategy & IssuesOM Strategy & Issues Decline69Strategy and Issues During a Product’s Life70Strategy Development and ImplementationIdentify critical success factorsBuild and staff the organization71SWOT Analysis ProcessEnvironmental AnalysisDetermine Corporate MissionForm a Strategy72SWOT Analysis to Strategy FormulationStrategyMissionExternalOpportunitiesInternalStrengthsInternalWeaknessesExternalThreatsCompetitiveAdvantage73Identifying Critical Success FactorsDecisions Sample Option ChapterProduct Customized, or standardized 5Quality Define customer expectations and how to achieve them 6, S6Process Facility size, technology, capacity 7, S7Location Near supplier or customer 8Layout Work cells or assembly line 9Human resource Specialized or enriched jobs 10, S10Supply chain Single or multiple source suppliers 11, S11Inventory When to reorder, how much to keep on hand 12, 14,16Schedule Stable or fluctuating productions rate 13, 15Maintenance Repair as required or preventive maintenance 17MarketingServiceDistributionPromotionChannels of distributionProduct positioning (image, functions)Finance/AccountingLeverageCost of capitalWorking capitalReceivablesPayablesFinancial controlLines of creditProduction/Operations74Activity Mapping: Southwest Airline’s Low Cost Competitive AdvantageCourteous, but limited passenger serviceLean, productive employeesShort haul, point-to-point routes, often to secondary airportsHigh aircraft utilizationStandardized fleet of Boeing 737 aircraftFrequent, reliable schedulesCompetitive Advantage:Low Cost75Activity Mapping: Southwest Airline’s Low Cost Competitive AdvantageCourteous, but limited passenger serviceNo seat assignmentsNo baggage transfersAutomated ticketing machinesNo meals76Activity Mapping: Southwest Airline’s Low Cost Competitive AdvantageShort haul, point-to-point routes, often to secondary airportsLower gate costs at secondary airportsHigh number of flights, reduces employee idle time between flights77Activity Mapping: Southwest Airline’s Low Cost Competitive AdvantageFrequent, reliable schedulesHigh number of flights reduces employee idle time between flightsSaturate a city with flights lowering administrative costs per passenger for that city78Activity Mapping: Southwest Airline’s Low Cost Competitive AdvantageStandardized fleet of Boeing 737 aircraftPilot training on only one type of aircraftReduced maintenance inventory required because of only one type of aircraftExcellent supplier relations with Boeing has aided financing79Activity Mapping: Southwest Airline’s Low Cost Competitive AdvantageHigh aircraft utilizationFlexible employees and standard planes aids schedulingFlexible union contractsMaintenance personnel trained on only one type of aircraft20 minute gate turnarounds80Activity Mapping: Southwest Airline’s Low Cost Competitive AdvantageLean, productive employeesHigh level of stock ownershipHire for attitude, then trainHigh employee compensationEmpowered employeesAutomated ticket machines81Activity Mapping: Southwest Airline’s Low Cost Competitive AdvantageCourteous, but limited passenger serviceLean, productive employeesShort haul, point-to-point routes, often to secondary airportsHigh aircraft utilizationStandardized fleet of Boeing 737 aircraftFrequent, reliable schedulesCompetitive Advantage:Low Cost82Southwest Airline’s Low Cost Competitive Advantage83Vanguard’s Activity SystemA broad array of mutual funds excluding some fund categoriesEfficient investment management approach offering good consistent performanceStraightforward client communication and educationStrict cost controlDirect distributionsVery low expenses passed on to client84How It WorksCompanyMissionBusinessStrategyFunctional AreaStrategiesMarketingDecisionsOperationsDecisionsFin./Acct.DecisionsIf competitive advantage, leads to achievingDistinctive competencies affect85Four International Operations Strategies86Multidomestic StrategyOperating decisions are decentralized to each country to enhance local responsiveness87Global StrategyOperating decisions are centralized and headquarters coordinates the standardization and learning between facilities88Transnational StrategiesCombines the benefits of global-scale efficiencies with the benefits of local responsiveness89International StrategyGlobal markets are penetrated using exports and licenses90