Operations Management Chapter 2 Flashcards
Maquiladoras
Free trade zones
Mexican factories located along the US/Mexico border that receive preferential tariff treatment
Why domestic business operations move to international operation
1) Reduce costs (labor, taxes, tariffs)
2) Improve the supply chain
3) Provide better goods and services
4) Learn to improve operations
5) Attract and retain global talent
6) Understand markets
Effective OM effort must have…
1) Mission - The purpose on rationale for an organizations existence. Tells the organization where it is going.
2) Strategy - How an organization expects to achieve its mission and goals. Tells the organization how to get there.
Differentiation
Distinguishing the offerings of an organization in a way that the customer perceives as adding value.
Three strategic approaches to competitive advantage:
1) differentiation - better or at least different
2) cost leadership - cheaper
3) response - more responsive
Experience Differentiation
Engaging a customer with a product through imaginative use of the five senses, so the customer “experiences” the product.
Low-cost Leadership
Achieving maximum value as perceived by the customer.
Response
A set of values related to rapid, flexible, and reliable performance.
10 Strategic OM Decisions
1) Goods and services design
2) Quality
3) Process and capacity design
4) Location selection
5) Layout design
6) Human resources and job design
7) Supply chain management
8) Inventory
9) Scheduling
10) Maintenance
Resources View
Thinking in terms of the financial, physical, human and technological resources available and ensuring that the potential strategy is compatible with those resources.
Value chain analysis
Used to identify activities that represent strengths, or potential strengths, and may be opportunities for developing competitive advantage.
Five Forces Model
A method of analyzing the five forces in the competitive environment.
1) immediate rivals, Rivalry of Competitors
2) potential entrants, Threat of New Entrants
3) customers, Bargaining Power of Customers
4) suppliers, Bargaining Power of Suppliers
5) quality management, Threat of Substitutes
SWOT Analysis
A formal review of the internal strengths, weaknesses, and the external opportunities and threats.
KSF’s or Key (Critical) Success Factors
Those activities that are necessary for a firm to achieve its goals.
CSF is not sufficient for competitive advantage
Core Competencies are sets of unique skills, talents and capabilities that a firm does at world class standards
Core Competencies
The set of unique skills, talents, and capabilities that a firm does at a world class standard.
activity map
A graphical link of competitive advantage, KSF’s and supporting activities.
The operations managers job is to…
1) implement an OM strategy
2) provide competitive advantage
3) increase productivity
International Business
A firm that engages in cross-border transactions
Multinational Corporation (MNC)
A firm with extensive international business involvement. MNC’s buy resources, create goods or services and sell goods or services in a variety of countries.
4 ways OP Managers can approach global opportunities
1) International strategy - Global markets are penetrated using exports and licenses
2) Multidomestic strategy - OP decisions are decentralized to each country to enhance total responsiveness
3) Global Strategy - OP decisions are centralized and headquarters coordinates the standardization and learning between facilities.
4) Transnational strategy - Combines the benefits of global scale efficiencies with the benefits of local responsiveness.
Factors Affecting Mission
1) Philosophy and Values
2) Profitability and Growth
3) Public Image
4) Environment
5) Customers
6) Benefit to Society
Product Life Cycle
1) Introduction - best period to increase market share, R&D engineering is critical, product design and development critical, frequent product and process design changes, short production runs, high production costs, limited models, attention to quality
2) Growth - Practical to change price or quality image, strengthen niche, forecasting critical, product and process reliability, competitive product improvements and options, increase capacity, shift toward product focus, enhance distribution
3) Maturity - Poor time to change image, price, or quality, competitive costs become critical, defend market position, standardization, fewer product changes and more minor changes, optimum capacity, increases stability of process, long production runs, product improvement and cost cutting
4) Decline - Cost control critical, little product differentiation, cost minimization, overcapacity in the industry, prune line to eliminate items not returning good margin reduce capacity
Member countries of the European Union
Austria Belgium Bulgaria Croatia Cyprus Czech Republic Denmark Estonia Finland France German Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden United Kingdom
Strategy Development Process
Environmental Analysis - Identify the strengths, weaknesses, opportunities and threats.
Determine Corporate Mission - State the reason for the firms existence and identify the value it wishes to create
Form a Strategy - Build a competitive advantage, such as low price, design, or volume flexibility, quality, quick delivery, dependability, after sale service, broad product lines
Strategy Development and Implementation
1) Identify critical success factors (CSF) and Core competencies
2) Build and staff the organization
3) Integrate OM and other activities
The operations manager’s job is to implement an OM strategy, provide competitive advantage, and increase productivity
Four International Operations Strategies
Global Strategy - Operating decisions are centralized and headquarters coordinates the standardization and learning between facilities, high degree of centralization, end products are similar
Standardized product
Economies of scale
Cross-cultural learning
International Strategy - Global markets are penetrated using exports and licenses, least advantageous but easiest
Import/export or license existing product
Transnational Strategy - combines the benefits of global-scale efficiencies with the benefits of local responsiveness
Move material, people, or ideas across national boundaries
Economies of scale
Cross-cultural learning
Multidomestic Strategy - Operating decisions are decentralized to each country to enhance local responsiveness, little or no cost advantages, maximize competitive response for the local market
Use existing domestic model globally
Franchise, joint ventures, subsidiaries
