Chapter 2: Operations Strategy in a Global Environment Flashcards
2.1: A Global View of Operations and Supply Chains: today’s successful operations manager has a global view of operation strategy. Since the early 1990s, nearly 3,000,000,000 people in developing countries have overcome the cultural, religious, ethnic, and political barriers that constrain productivity. And now they’re all players in the global economic stage these changes mean that, increasingly, firms find their customers and suppliers located around the world. This means increasing economic integration in interdependence of countries – in a word, globalization.
In response, organizations are hastily extending their distribution channels and supply chains globally. The result is innovative strategies where firms compete not just with their own expertise but with the talent in the globe entire global supply chain.
2.1: A Global View of Operations and Supply Chains: globalization means customers, talent, and suppliers are worldwide. The new standards of global competitiveness impact quality, variety, customization, convenience, timeliness, and cost. Globalization strategies contribute efficiency, adding value to products and services, but they also complicate the operations managers job. Complexity, risk, and competition or intensified, forcing companies to adjust for shrinking world.
• Sony purchases components from a supply chain that extends to Thailand, Malaysia, and elsewhere around the world for assembly of its electronic products, which intern are distributed around the world.
2.1: A Global View of Operations and Supply Chains:
We have identified six reasons domestic business operations decide to change to some form of international operation. They are:
- improve the supply chain
- Reduce costs and exchange rate risk
- Improve operations
- Understand markets
- Improve products
- Attract and retain global talent
2.1: A Global View of Operations and Supply Chains: improve the supply chain
The supply chain can often be improved by locating facilities in countries where unique resources are available. These resources may be human resource expertise, low cost labor, or raw material.
2.1: A Global View of Operations and Supply Chains: reduce costs and exchange rate risk
Many international operations seek to reduce risks associated with changing currency values (exchange rates) as well as take advantage of the tangible opportunities to reduce their direct cost. Less stringent government regulations on a wide variety of operation practices can also reduce indirect cost.
Shifting low skilled jobs to another country has several potential advantages. First, moving the lower skilled jobs to a lower cost location for his higher cost workers for more valuable tasks. Second, reducing wage cost allows the savings to be invested in improving products and facilities (and the restraining of existing workers, if necessary) at the Home location.
2.1: A Global View of Operations and Supply Chains: improve operations
Operations learned from better understanding of management innovations in different countries. For instance, the Japanese have improved inventory management, the Germans are aggressively using robots, and the Scandinavians have contributed to improving ergonomic‘s through the world. Providing quick and adequate services off and improved by locating facilities in the customer’s home country.
2.1: A Global View of Operations and Supply Chains: understanding markets
Because international operations require interaction with foreign customers, suppliers, and other competitive businesses international firms inevitably learn about opportunities for new products and services. Europe lead the way with cell phone innovations, and then the Japanese and Indians lived with cell phone fads. Knowledge of markets not only help firms understand where the market is going but also helps firms diversify their customer base, add production flexibility, and smooth the business cycle.
Another reason to go into foreign markets is the opportunity to extend the lifecycle of an existing product. While some products in the US are in a “Mature” stage of the product life cycle, they may represent state of the art products in less developed countries.
2.1: A Global View of Operations and Supply Chains: improve products
Learning does not take place in isolation. Firms serve themselves and their customers well when they remain open to the free flow of ideas. For example, Toyota and BMW will manage joint research and share development costs on battery research for the next generation of green cars. Similarly, international learning and operations is taking place as South Korea’s Samsung and Germany’s Robert Bosch join to produce lithium ion batteries to the benefit of both.
2.1: A Global View of Operations and Supply Chains: attach and retain global talent
Global organizations can attract and retain better employees by offering more employment opportunities. They need people in all functional areas and areas of expertise worldwide. Global firms can recruit and retain good employees because they provide both greater growth opportunities and insulation against unemployment during times of economic downturn. During economic downturn in one country or continent, a global firm has the means to relocate unneeded personnel to more prosperous locations.
2.1: A Global View of Operations and Supply Chains: cultural and ethnic issues:
Wow there are great forces driving firms towards globalization, many challenges remain. One of these challenges is reconciling differences in social and cultural behavior. With issues ranging from bribery, to child labor, to the environment, managers sometimes do not know how to respond when operating in a different culture. Why one countries culture deems acceptable may be considered unacceptable or legal in another. It is not by chance that there are fewer female managers in the Middle East than in India.
In the last decade, changes in international laws, agreements, and codes of conduct have been applied to define ethical behavior among managers around the world.
2.2: Determining Missions and Strategies: and effective operations management effort must have a mission so it knows where it is going and a strategy so it knows how to get there.
This is the case for a small domestic organization as well as a large international organization.
2.2: Determining Missions and Strategies: Economic success, indeed survival, is the result of identifying missions to satisfy a customer’s needs and wants. We defined organizations mission as it’s…
Purpose Dash what it will contribute to society.
2.2: Determining Missions and Strategies: Mission statement provide boundaries and focus for organizations and the concept around which the firm can rally. The mission states the rationale for the organization’s existence. Developing a good strategy is difficult, but it is much easier if the mission has been well defined.
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.
2.2: Determining Missions and Strategies: Once and organizations mission has been decided, each functional area within the firm determines its supporting mission. By functional area we mean the major discipline required by the firm, such as marketing, Finance/Accounting, and production/operations.
Missions for each function are developed to support the firm’s overall mission. Then within the function lower level supporting missions are established for the OM functions.
2.3: Achieving Competitive Advantage through Operations: Each of the three strategies (differentiation, low cost, and response) provides an opportunity for operations managers to achieve competitive advantage. Competitive advantage implies…
The creation of a system that has a unique advantage over competitors. The idea is to create customer value in an efficient and sustainable way. Pure forms of the these strategies may exist, but operations managers will more likely be called on to implement some combination of them.
