Operations in A Global Environment: Week 1

Operations in a Global
Environment
Week 1
2014 Pearson Education, Inc.
1-1
Outline
1.1 Operations and Productivity
1.2 Competing in a Global Market
Cases
Hard Rock Caf
Star Bucks
Boeing
Regal Marine
1-2
Topics
Define Operations Management

Organizing to Produce Goods and Services
The Supply Chain
Why Study OM?
What Operations Managers Do
10 strategic decisions OM Decisions
Global Company Profile: Hard Rock Cafe
1-3
topics
The Heritage of Operations Management

Operations for Goods and Services
The Productivity Challenge
New Challenges in Operations
Management
Ethics, Social Responsibility, and
Sustainability
1-4
Topics
A Global View of Operations
Achieving Competitive Advantage

Through Operations
Issues in Operations Strategy
Strategy Development and

Implementation
Strategic Planning, Core Competencies,

and Outsourcing
Global Operations Strategy Options
1-5
What Is Operations
Management?
Production is the creation of
goods and services
Operations management (OM) is
the set of activities that create
value in the form of goods and
services by transforming inputs
into outputs
1-6
Organizing to Produce
Goods and Services
Essential functions of an organization:
1. Marketing generates demand
2. Production/operations creates the
product
3. Finance/accounting tracks how well
the organization is doing, pays bills,
collects the money
Examples..
1-7
Organizational Charts
Figure 1.1
1-8
Figure 1.1
1-9
Figure 1.1
1 - 10
The Supply Chain

A global network of organizations and
activities that add value to provide
customers with goods and services
Members of the supply chain collaborate to
achieve high levels of customer satisfaction,
efficiency and competitive advantage.
Farmer
Syrup
producer
Bottler
Distributor
Retailer
Figure 1.2
1 - 11
Why Study OM?

1. OM is one of three major functions of any
organization, we want to study how people
organize themselves for productive
enterprise
2. We want (and need) to know how goods
and services are produced
3. We want to understand what operations
managers do
4. OM is such a costly part of an
organization
1 - 12
Options for Increasing

Contribution
TABLE 1.1
MARKETING
OPTION
FINANCE
/ACCOUNTING
OPTION
OM OPTION
CURRENT
INCREASE
SALES
REVENUE 50%
REDUCE
FINANCE
COSTS 50%
REDUCE
PRODUCTION
COSTS 20%
$100,000
$150,000
$100,000
$100,000
Cost of goods
80,000
120,000
80,000
64,000
Gross margin
20,000
30,000
20,000
36,000
Finance costs
6,000
6,000
3,000
6,000
Subtotal
14,000
24,000
17,000
30,000
Taxes at 25%
3,500
6,000
4,200
7,500
Contribution
$ 10,500
$ 18,000
$ 12,750
$ 22,500
Sales
1 - 13
Where are the OM Jobs?
Technology/methods
Facilities/space utilization
Strategic issues
Response time
People/team development
Customer service
Quality
Cost reduction
Inventory reduction
Productivity improvement
1 - 14
Ten Strategic Decisions

TABLE 1.2
DECISION
CHAPTER(S)
1.
Design of goods and services
5, Supplement 5
2.
Managing quality
6, Supplement 6
3.
Process and capacity design
7, Supplement 7
4.
Location strategy
5.
Layout strategy
6.
Human resources and job design
10
7.
Supply-chain management
11, Supplement
11
8.
Inventory management
12, 14, 16
9.
Scheduling
13, 15
10. Maintenance
17
1 - 15
The Strategic Decisions

1. Design of goods and services
Defines what is required of operations
Product design determines quality,
sustainability and human resources
2. Managing quality
Determine the customers quality expectations
Establish policies and procedures to identify
and achieve that quality
Table 1.2 (cont.)
1 - 16

3. Process and capacity design
How is a good or service produced?
Commits management to specific
technology, quality, resources, and
investment.
4. Location strategy
Nearness to customers, suppliers, and
talent.
Considering costs, infrastructure, logistics,
and government.
Table 1.2 (cont.)
1 - 17

5. Layout strategy
Integrate capacity needs, personnel levels,
technology, and inventory
Determine the efficient flow of materials,
people, and information.
6. Human resources and job design

Recruit, motivate, and retain personnel with
the required talent and skills.
Integral and expensive part of the total
system design.
Table 1.2 (cont.)
1 - 18

7. Supply-chain management
Integrate supply chain into the firms strategy.
Determine what is to be purchased, from
whom, and under what conditions.
8. Inventory management
Inventory ordering and holding decisions.
Optimize considering customer satisfaction,
supplier capability, and production schedules.
Table 1.2 (cont.)
1 - 19

9. Scheduling
Determine and implement intermediateand short-term schedules.
Utilize personnel and facilities while
meeting customer demands.
10. Maintenance
Consider facility capacity, production
demands, and personnel.
Maintain a reliable and stable process.
Table 1.2 (cont.)
1 - 20
Operations Management
at Hard Rock Cafe
First opened in 1971
Now 150 restaurants in over 53 countries
(Festival City in Dubai, UAE)
Rock music memorabilia

Creates value in the form of good food and
entertainment
3,500+ custom meals per day in Orlando (USA)
How does an item get on the menu?
Role of the Operations Manager
2014
2014
Pearson
Pearson
Education,
Education,
Inc.Inc.
1 - 21
Certifications
APICS, the Association for Operations
Management
American Society for Quality (ASQ)
Institute for Supply Management (ISM)
Project Management Institute (PMI)
Council of Supply Chain Management
Professionals
Charter Institute of Purchasing and Supply
(CIPS)
1 - 22
Significant Events in OM
2011
Pearson
Education,
2014
Pearson
Education,Inc.
Inc.
publishing as Prentice Hall
Figure 1.3
1 - 23
Differences Between Goods and

Services
TABLE 1.3
CHARACTERISTICS OF SERVICES
CHARACTERISTICS OF GOODS
Intangible: Ride in an airline seat
Tangible: The seat itself
Produced and consumed

simultaneously: Beauty salon produces
a haircut that is consumed as it is
produced
Product can usually be kept in inventory

(beauty care products)
Unique: Your investments and medical

care are unique
Similar products produced (iPods)
High customer interaction: Often what

the customer is paying for (consulting,
education)
Limited customer involvement in

production
Inconsistent product definition: Auto

Insurance changes with age and type of
car
Product standardized (iPhone)
Often knowledge based: Legal,

education, and medical services are
hard to automate
Standard tangible product tends to

make automation feasible
Services dispersed: Service may occur

at retail store, local office, house call,
or
via Pearson
internet.
2014
Education, Inc.
Product typically produced at a fixed

facility
1 - 24
Goods and Services

Automobile
Computer
Installed carpeting
Fast-food meal
Restaurant meal/auto repair
Hospital care
Advertising agency/
investment management
Consulting service/
teaching
Counseling
100%
|
75
|
50
|
25
|
Percent of Product that is a Good

0
|
25
|
50
|
75
|
100%
|
Percent of Product that is a Service

1 - 25
Productivity Challenge
Productivity is the ratio of outputs (goods and
services) divided by the inputs (resources
such as labor and capital)
The objective is to improve productivity!
Important Note!
Production is a measure of output only
and not a measure of efficiency
1 - 26
Improving Productivity at
Starbucks
A team of 10 analysts
continually look for ways
to shave time. Some
improvements:
Stop requiring signatures
on credit card purchases
under $25
Saved 8 seconds
per transaction
Change the size of the ice

scoop
Saved 14 seconds
per drink
New espresso machines
Saved 12 seconds
per shot
1 - 27
Improving Productivity at
Starbucks
A team of 10 analysts
continually look for ways
to shave time. Some
improvements:
Operations improvements have

helped StarbucksSaved
increase
yearly
Stop requiring signatures
8 seconds
revenue per outlet
bytransaction
$250,000 to
on credit card purchases
per
under $25
$1,000,000 in seven years.
27%, or
Change the size Productivity
of the ice has improved
Saved 14by
seconds
about 4.5% per year.
scoop
per drink
New espresso machines
Saved 12 seconds
per shot
1 - 28
Productivity
Productivity =
Units produced
Input used
Measure of process improvement

Represents output relative to input
Only through productivity increases
can our standard of living improve
1 - 29
Multi-Factor Productivity
Productivity =
Output
Labor + Material + Energy +
Capital + Miscellaneous
Also known as total factor productivity
Output and inputs are often expressed in

dollars
Multiple resource inputs multi-factor productivity

1 - 30
Measurement Problems
1. Quality may change while the
quantity of inputs and outputs
remains constant
2. External elements may cause an
increase or decrease in productivity
3. Precise units of measure may be
lacking
1 - 31
Productivity Variables
1. Labor - contributes
about 10% of the
annual increase
2. Capital - contributes
about 38% of the
annual increase
3. Management contributes about 52%
of the annual increase
1 - 32
Key Variables for Improved

Labor Productivity
1. Basic education appropriate for the
labor force
2. Diet of the labor force
3. Social overhead that makes labor
available
Challenge is in maintaining and enhancing
skills in the midst of rapidly changing
technology and knowledge
1 - 33
Management factor
Ensures labor and capital are effectively
used to increase productivity
Use of knowledge
Application of technologies
Knowledge societies
Difficult challenge
1 - 34
Productivity and the

Service Sector
1. Typically labor intensive
2. Frequently focused on unique individual
attributes or desires
3. Often an intellectual task performed by
professionals
4. Often difficult to mechanize and automate
5. Often difficult to evaluate for quality
1 - 35
Productivity at Taco Bell

Improvements:
Revised the menu
Designed meals for easy
preparation
Shifted some preparation to
suppliers
Efficient layout and automation
Training and employee empowerment
New water and energy saving grills
1 - 36
Results:
Productivity
at Taco Bell
Preparation time cut to 8 seconds
Management span of control increased from 5

Improvements
to 30 :
In-store labor cut by 15 hours/day
Floor space reduced by more than 50%
Stores average 164 seconds/customer from
drive-up to pull-out
Water- and energy-savings grills conserve 300
million gallons of water and 200 million KwH of
electricity each year
Green-inspired cooking method saves 5,800
restaurants $17 million per year
1 - 37
Changing Challenges
Traditional
Approach
Reasons for
Change
Current
Challenge
Ethics and
regulations
not at the
forefront
Public concern over

pollution, corruption,
child labor, etc.
High ethical and

social
responsibility;
increased legal
and professional
standards
Local or
national
focus
Growth of reliable, low

cost communication
and transportation
Global focus,
international
collaboration
Lengthy
product
development
Shorter life cycles;

growth of global
communication; CAD,
Internet
Rapid product
development;
design
collaboration

Figure 1.5
1 - 38
Changing Challenges
Traditional
Approach
Reasons for
Change
Current
Challenge
Low cost
production,
with little
concern for
environment;
free
resources
(air, water)
ignored
Public sensitivity to
environment; ISO 14000
standard; increasing
disposal costs
Environmentally
sensitive
production; green
manufacturing;
sustainability
Low-cost
standardized
products
Rise of consumerism;
increased affluence;
individualism
Mass
customization

Figure 11.5
- 39
Changing Challenges
Traditional
Approach
Reasons for
Change
Current
Challenge
Emphasis on
specialized,
often manual
tasks
Recognition of the
employee's total
contribution; knowledge
society
Empowered
employees;
enriched jobs
In-house
production;
low-bid
purchasing
Rapid technological
change; increasing
competitive forces
Supply-chain
partnering; joint
ventures, alliances
Large lot
production
Shorter product life

cycles; increasing need
to reduce inventory
Just-In-Time
performance;
lean; continuous
improvement

Figure 1.5
1 - 40
Ethics, Social Responsibility,

and Sustainability
Challenges facing
operations managers:
Develop and produce safe, high-quality
green products
Train, retrain, and motivate employees
in a safe workplace
Honor stakeholder commitments
1 - 41
Boeings Global Supply-Chain

Strategy
Some of the International Suppliers of Boeing 787 Components
SUPPLIER
HEADQUARTERS
COUNTRY
COMPONENT
Latecoere
France
Passenger doors
Labinel
France
Wiring
Dassault
France
Design and PLM software
Messier-Bugatti
France
Electric brakes
Thales
France
Electrical power conversion

system and integrated
standby flight display
Messier-Dowty
France
Landing gear structure
Diehl
Germany
Interior lighting
2014
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Strategy
SUPPLIER
HEADQUARTERS
COUNTRY
COMPONENT
Cobham
UK
Fuel pumps and valves
Rolls-Royce
UK
Engines
Smiths Aerospace
UK
Central computer systems
BAE Systems
UK
Electronics
Alenia Aeronautica
Italy
Upper center fuselage and

horizontal stabilizers
Toray Industries
Japan
Carbon fiber for wing and tail

units
Fuji Heavy Industries
Japan
Center wing box
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Strategy
SUPPLIER
HEADQUARTERS
COUNTRY
COMPONENT
Kawasaki Heavy
Industries
Japan
Forward fuselage, fixed

sections of wing, landing
gear wheel well
Teijin Seiki
Japan
Hydraulic actuators
Mitsubishi Heavy
Industries
Japan
Wing box
Chengdu Aircraft Group
China
Rudder
Hafei Aviation
China
Parts
Korean Airlines
South Korea
Wingtips
Saab
Sweden
Cargo and access doors
2014
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Global Strategies
Boeing sales and supply chain are
worldwide
Benetton moves inventory to stores around
the world faster than its competition by
building flexibility into design, production,
and distribution
Sony purchases components from
suppliers in Thailand, Malaysia, and around
the world
1 - 45
Reasons to Globalize
1. Improve the supply chain
2. Reduce costs (labor, taxes, tariffs, etc.)
3. Improve operations
4. Understand markets
5. Improve products
6. Attract and retain global talent
1 - 46
Improve the Supply Chain

Locating facilities closer to unique
resources
Auto design to California
Athletic shoe production to China
Perfume manufacturing in France
1 - 47
Reduce Costs
Foreign locations with lower wage rates
can lower direct and indirect costs
Trade agreements can lower tariffs
Maquiladoras
World Trade Organization (WTO)
North American Free Trade Agreement
(NAFTA)
APEC, SEATO, MERCOSUR, CAFTA
European Union (EU)
1 - 48
Improve Operations
Understand differences between
how business is handled in other
countries
Japanese inventory management
Scandinavians ergonomics
International operations can

improve response time and
customer service
1 - 49
Understand Markets
Interacting with foreign customers,
suppliers, competition can lead to
new opportunities
Cell phone
design moved
from Europe
to Japan
Extend the
product life
cycle
1 - 50
Improve Products
Remain open to free flow of ideas
Toyota and BMW manage joint
research and development
Reduced risk, state-of-the-art design,
lower costs
Samsung and Bosch jointly produce

batteries
1 - 51
Attract and Retain Global

Talent
Offer better employment opportunities
Better growth opportunities and
insulation against unemployment
Relocate unneeded personnel to more
prosperous locations
1 - 52
Cultural and Ethical Issues

Cultures can be quite different
Attitudes can be quite different towards
Punctuality
Thievery
Lunch breaks
Bribery
Environment
Child labor
Intellectual
property
1 - 53
Companies Want To Consider

National literacy rate
Work ethic
Rate of innovation
Tax rates
Rate of technology
change
Inflation
Number of skilled
workers
Availability of raw
materials
Political stability
Interest rates
Product liability laws
Population
Number of miles of
highway
Phone system
Export restrictions
Variations in language
1 - 54
Developing Missions and

Strategies
Mission statements tell an
organization where it is going
The Strategy tells the
organization how to get
there
1 - 55
Strategies for Competitive

Advantage
1. Differentiation better, or at least
different
2. Cost leadership cheaper
3. Response more responsive
1 - 56
Competing on Differentiation
Uniqueness can go beyond both the
physical characteristics and service
attributes to encompass everything that
impacts customers perception of value
Safeskin gloves leading edge products
Walt Disney Magic Kingdom experience differentiation
Hard Rock Cafe dining experience
Emirates airlines leading service and route offer
1 - 57
Competing on Cost
Provide the maximum value as perceived
by customer. Does not imply low quality.
Southwest Airlines secondary airports,

no frills service, efficient utilization of
equipment
Walmart small overhead, shrinkage,

and distribution costs
Franz Colruyt no bags, no bright lights,

no music, and doors on freezers
1 - 58
Competing on Response
Flexibility/agility is matching market changes
in design innovation and volumes
A way of life at Hewlett-Packard
Reliability is meeting schedules

German machine industry
Timeliness is quickness
in design, production,
and delivery
Johnson Electric,
Pizza Hut, Motorola
1 - 59
OMs Contribution to Strategy

10 Operations
Decisions
Product
Quality
Process
Location
Layout
Human
resource
Strategy
DIFFERENTIATION:
Innovative design
Broad product line
After-sales service
Experience
COST LEADERSHIP:
Low overhead
Example
Safeskins innovative gloves
Fidelity Securitys mutual
funds
Caterpillars heavy equipment
service
Hard Rock Cafs dining
experience
Effective capacity
use
Franz-Colruyts warehousetype stores

Southwest Airlines
aircraft utilization
Inventory
management
Walmarts sophisticated
distribution system
Supply chain
Inventory
Scheduling
RESPONSE:
Flexibility
Reliability
Quickness
Maintenance
Competitive
Advantage
Hewlett-Packards response to
volatile world market
FedExs absolutely, positively,
on time
Pizza Huts 5-minute guarantee
at lunchtime
Differentiation
(better)
Response
(faster)
Cost
leadership
(cheaper)
Figure 2.4
1 - 60
Company Strategy/Issues
Impact of Product Life Cycle on

Operations Management
Introduction
Growth
Best period to
increase market
share
Practical to change
price or quality
image
R&D engineering is
critical
Strengthen niche
Maturity
Decline
Poor time to
change image,
price, or quality
Cost control
critical
Competitive costs
become critical
Defend market
position
Drive-through
Internet search engines
restaurants
Xbox 360
Boeing 787
Sales
3-D game
players
Google glass
DVDs
iPads
iPods
3D printers
Electric vehicles
Analog
TVs
Figure 2.5
1 - 61
OM Strategy/Issues
Impact of Product Life Cycle on Operations

Management
Introduction
Growth
Product design
and development
critical
Forecasting critical
Standardization
Frequent product
and process
design changes
Product and
process reliability
Competitive
product
improvements and
options
Fewer product
changes, more
minor changes
Short production
runs
High production
costs
Limited models
Attention to quality
Increase capacity
Shift toward
product focus
Enhance
distribution
Maturity
Optimum capacity
Increasing stability
of process
Long production
runs
Product
improvement and
cost cutting
Decline
Little product
differentiation
Cost
minimization
Overcapacity in
the industry
Prune line to
eliminate items
not returning
good margin
Reduce
capacity
Figure 2.5
1 - 62
Example of implementing OM strategy:

Activity Mapping at Southwest Airlines (similar to
Fly Dubai)
Courteous, but
Limited Passenger
Service
Lean,
Productive
Employees
Short Haul, Point-toPoint Routes, Often to

Secondary Airports
Competitive Advantage:
Low Cost
High
Aircraft
Utilization
Standardized
Fleet of Boeing
737 Aircraft
Frequent,
Reliable
Schedules
Figure 2.8
1 - 63
Activity Mapping at
Southwest Airlines
Courteous, but
Limited Passenger
Service
Lean,
Short Haul, Point-toProductive
Point Routes, Often to
Employees Automated ticketing machinesSecondary Airports
No seat assignments
Competitive
Advantage:
No baggage
transfers
Low Cost
High
Aircraft
Utilization
No meals (peanuts)
Standardized
Fleet of Boeing
737 Aircraft
Frequent,
Reliable
Schedules
Figure 2.8
1 - 64
Activity Mapping at
Southwest Airlines
Courteous, but
Limited Passenger
Service
No meals (peanuts)
Lean, gate costs at secondary

Lower
Productive
airports
Employees

Secondary Airports
High number of flights reduces

employeeCompetitive
idle time between
Advantage:
flights
Low Cost
High
Aircraft
Utilization
Standardized
Fleet of Boeing
737 Aircraft
Frequent,
Reliable
Schedules
Figure 2.8
1 - 65
Activity Mapping at
Southwest Airlines
Courteous, but
Limited Passenger
Service
Lean,
Productive
Employees

Secondary Airports
High number of flights reduces

Competitive
Advantage:
employee
idle time between
flights
Low Cost
Saturate a city with flights,
lowering administrative costs
High
(advertising, HR, etc.) per
Aircraft
passenger for that city
Utilization
Standardized
Pilot training required
only
Fleet of on
Boeing
one type of 737
aircraft
Aircraft
Reduced maintenance
inventory required because of
Frequent,
Reliable
Schedules
Figure 2.8
1 - 66
Activity Mapping at
Southwest Airlines
Courteous, but
Limited Passenger
Service
Lean,
Productive
Employees
Pilot training required on only

Short Haul, Point-toone type of aircraft
Point Routes, Often to
Reduced maintenance Secondary Airports

only one type of aircraft
Competitive Advantage:
Excellent
supplier
relations
Low
Cost
with Boeing has aided financing
High
Aircraft
Utilization
Standardized
Fleet of Boeing
737 Aircraft
Frequent,
Reliable
Schedules
Figure 2.8
1 - 67
Activity Mapping at
Southwest Airlines
Courteous, but
Limited Passenger
Service
Lean,
Productive
Employees
Flexible
union
contracts

Secondary Airports
Reduced maintenance

Competitive
Advantage:
only one
type of aircraft
High
Aircraft
Utilization
Low
Cost
Flexible
employees and
standard planes aid scheduling
Frequent,
Maintenance personnel trained
only one type of aircraft Reliable
Schedules
Standardized
20-minute
gate turnarounds
Fleet of Boeing
737 Aircraft
Figure 2.8
1 - 68
Activity Mapping at
Southwest Airlines
Courteous, but
Automated
ticketing machines
Limited
Passenger
Service
Empowered
employees
High employee compensation
Short Haul, Point-toHire for attitude, then
train
Point
Routes, Often to
Lean,
Productive
Employees
Secondary Airports
High level of stock ownership
High number
of flights reduces
Competitive
Advantage:
employee idle time between
Low Cost
flights
High
Aircraft
Utilization
Standardized
Fleet of Boeing
737 Aircraft
Frequent,
Reliable
Schedules
Figure 2.8
1 - 69
Implementing Strategic
Decisions
TABLE 2.1
Operations Strategies of Two Drug Companies

BRAND NAME DRUGS, INC.
GENERIC DRUGS CORP.
COMPETITIVE
ADVANTAGE
PRODUCT DIFFERENTIATION
STRATEGY
LOW COST STRATEGY
Product
selection and
design
Heavy R&D investment; extensive labs;

focus on development in a broad range
of drug categories
Low R&D investment; focus on

development of generic drugs
Quality
Quality is major priority, standards

exceed regulatory requirements
Meets regulatory requirements on a

country-by-country basis, as necessary
Process
Product and modular production

process; tries to have long product runs
in specialized facilities; builds capacity
ahead of demand
Process focused; general production

processes; job shop approach, shortrun production; focus on high utilization
Location
Still located in city where it was founded
Recently moved to low-tax, low-laborcost environment
1 - 70
Implementing Strategic
Decisions
TABLE 2.1
Operations Strategies of Two Drug Companies

BRAND NAME DRUGS, INC.
GENERIC DRUGS CORP.
COMPETITIVE
ADVANTAGE
PRODUCT DIFFERENTIATION
STRATEGY
LOW COST STRATEGY
Layout
Layout supports automated productfocused production
Layout supports process-focused job

shop practices
Human
resources
Hire the best; nationwide searches
Very experienced top executives

provide direction; other personnel paid
below industry average
Supply chain
Long-term supplier relationships
Tends to purchase competitively to find

bargains
Inventory
Maintains high finished goods inventory

primarily to ensure all demands are met
Process focus drives up work-inprocess inventory; finished goods

inventory tends to be low
Scheduling
Centralized production planning
Many short-run products complicate

scheduling
Maintenance
Highly trained staff; extensive parts

inventory
Highly trained staff to meet changing

demands
1 - 71
Strategic Planning, Core

Competencies, and Outsourcing
Outsourcing transferring activities that
traditionally been internal to external suppliers
Accelerating due to
Increased technological expertise
More reliable and cheaper transportation
Rapid development and deployment of
advancements in telecommunications and
computers
1 - 72
Strategic Planning, Core

Competencies, and Outsourcing
Subcontracting - contract manufacturing
Outsourced activities
1 - 73
Risks of Outsourcing
TABLE
2.2
Potential Advantages and Disadvantages of

Outsourcing
ADVANTAGES
DISADVANTAGES
Cost savings
Increased logistics and

inventory costs
Gaining outside expertise
Loss of control (quality,

delivery, etc.)
Improving operations and

service
Potential creation of future

competition
Maintaining a focus on core

competencies
Negative impact on employees
Accessing outside technology
Risks may not manifest

themselves for years
1 - 74
Global Operations Strategy

Options
High
Global strategy
(eg, Caterpillar
Texas Instruments
Otis Elevator)
Cost Reduction
Standardize product
Economies of scale
Cross-cultural learning
International
strategy
(eg, Harley-Davidson
U.S. Steel)
Import/export or
license existing
product
Low
Transnational
strategy
(eg, Coca-Cola, Nestl)
Figure 2.9
Move material,
people, ideas across
national boundaries
Economies of scale
Cross-cultural
learning
Multidomestic
strategy
(eg, Heinz, McDonalds
The Body Shop
Hard Rock Cafe)
Use existing domestic
model globally
Franchise, joint
ventures,
subsidiaries
Low
High
Local Responsiveness
(Quick Response and/or Differentiation)
1 - 75

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Operations in a Global

2014 Pearson Education, Inc.

Define Operations Management

2014 Pearson Education, Inc.

The Heritage of Operations Management

2014 Pearson Education, Inc.

A Global View of Operations

Achieving Competitive Advantage

Issues in Operations Strategy

Strategy Development and

Strategic Planning, Core Competencies,

Global Operations Strategy Options

2014 Pearson Education, Inc.

2014 Pearson Education, Inc.

2014 Pearson Education, Inc.

2014 Pearson Education, Inc.

The Supply Chain

2014 Pearson Education, Inc.

Why Study OM?

Options for Increasing

2014 Pearson Education, Inc.

Where are the OM Jobs?

2014 Pearson Education, Inc.

Ten Strategic Decisions

Design of goods and services

Process and capacity design

Human resources and job design

The Strategic Decisions

The Strategic Decisions

The Strategic Decisions

6. Human resources and job design

Table 1.2 (cont.)

2014 Pearson Education, Inc.

The Strategic Decisions

The Strategic Decisions

Now 150 restaurants in over 53 countries

(Festival City in Dubai, UAE)

Rock music memorabilia

Differences Between Goods and

Intangible: Ride in an airline seat

Tangible: The seat itself

Produced and consumed

Product can usually be kept in inventory

Unique: Your investments and medical

Similar products produced (iPods)

High customer interaction: Often what

Limited customer involvement in

Inconsistent product definition: Auto

Product standardized (iPhone)

Often knowledge based: Legal,

Standard tangible product tends to

Services dispersed: Service may occur

Product typically produced at a fixed

Goods and Services

Percent of Product that is a Good

Percent of Product that is a Service

Change the size of the ice

New espresso machines

2014 Pearson Education, Inc.

Operations improvements have

2014 Pearson Education, Inc.

Measure of process improvement

Also known as total factor productivity