Ch 2: The Global Environment and Operations Strategy Flashcards
What are the six reasons why domestic operations decide
Reduce Costs (labour(low-skilled, taxes(tax breaks in JA/free), tariffs(NAFTA/EU-trading groups), etc.)
Improve the supply chains- locate facilities that have access to better resources- labour, raw material, expertise
Provide better goods and services- Meet cultural needs; reduce response time to customers
Understand markets- locate new opportunities for products and services. Also, you can extend the product life cycle- a “mature” product in US, maybe state-of-the-art
Learn to improve operations- glean ideas from collaborations with oversees
Attract and retain global talent - Through offering moe employment opportunities
Cultural and Ethical Issues
Bribery, child labour, environmental issues.
Many reforms- WTO made policies to protect govt and industries from foreign firms that engage in unethical conduct.
Developing Missions and Strategies- what is a mission?
The purpose of the organization- it will contribute to society
Strategy
The org. action plan to achieve its mission
Three ways that firms can achieve their mission
- Differentiation- uniqueness
- Cost Leadership- adequate quality, lowest cost-value
- Response-flexible, reliable,quick: ability to match changes in volatile market place; scheduling; speed in design, production, and delivery
10 decisions and strategy- Strategy can be achieved when you managers make effective decisions in 10 areas of OM
Goods and Service Design:
Quality
Process and Capacity Design
Location Selection:
Layout Design
Human Resource and Job Design
Supply-chain man
Inventory Man
Scheduling
Maintenance
Issues in Operations Strategy-OM is a key player- perspectives useful before implementing a strategy
Resources View- If financial, physical, human and technological resources available and ensuring that the potential strategy is compatible with the resources
Value-chain analysis- looking at those activities with the opportunity/[potential opportunity for the firm to have competitive advantage.- Areas where the firm add its unique value through product research, design, hr etc.
Five Forces model - analysing competitors. Potential competing forces include immediate rivals, potential entrants, customers, suppliers, and substitute products
Must also consider other forces- political, legal, cultural
Firm also undergoes constant change
Strategy Development and Implementation Using SWOT
SWOT- Formal review of internal strengths, weaknessess, opportunities and Threats
Key Success Factors
Those Activities that are necessary for a firm to achieve its goals
Core Competencies
Unique skills, talents, and capabilities that a firm does at a world-class standard. (Allow firm to set itself apart)
Three-step process of OM manager’s job
- Identify key success factors and strategy
- Group the necessary activities into an organizational structure.
- Staff with personnel who will get the job done.
What is the OM’s Job essentially?
To implement OM strategy, provide competitive advantage, and increase productivity.
OM with other activities
OM is likely to be more successful when the operations strategy is integrated with other areas like marketing, finance, IT, and HR.
Types of Global operations startegy
International Strategy- uses exports and licenses to penetrate global arena
Multi-Domestic Strategy:
Global Strategy
Transnational Strategy
International Business
any firm that engages in international trade or investment
Multinational Corporation
Firm with extensive international business involvement
International Strategy
- Uses exporst and licenses to penetrate the global arena
Adv
Leat advantageous, little responsiveness and little cost advantage- far from new market- costs to export, waiting time
However, it is often the easiest as it requires less change to existing operations, and licensing agreements usually leave much of the risk to the licensee
Multi-domestic Strategy
decentralized authority with substansial autonomy at each busness- to enhance responsiveness
-Basically the company was successful at home, so all they do is alter the product to suit needs of global market- McDonalds- give beer in Germany and beefless burgers in India
Dis
Little/no cost advantage
Global Strategy- review
Operating decisions are centralized and headquarters coordinates the standardization and learning between facilities ( Like Dufry)
-Appropriate when the aim is cost reduction
-Not good when demand for local responsiveness is high
-
Transnational Strategy
-Combines the adv of global-scale efficiencies and local responsiveness- Core competence can exits beyond “home”
-these firms Have the potential to pursue all 3 strategies
-Goes beyond borders
-At a stage where country identity is not as important as the network of worldwide operations- Like Nestle (its swiss, but most sales occur outside of Switzerland)
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