heizer_om13_ch02.pptx

Operations Strategy in a Global Environment 2 PowerPoint presentation to accompany Heizer, Render, Munson Operations Management, Thirteenth Edition, Global Edition Principles of Operations Management, Eleventh Edition PowerPoint slides by Jeff Heyl Copyright © 2020 Pearson Education Ltd. All Rights...

Operations Strategy in a Global Environment 2 PowerPoint presentation to accompany Heizer, Render, Munson Operations Management, Thirteenth Edition, Global Edition Principles of Operations Management, Eleventh Edition PowerPoint slides by Jeff Heyl Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2-1 Learning Objectives When you complete this chapter you should be able to: 2.1 Define mission and strategy 2.2 Identify and explain three strategic approaches to competitive advantage 2.3 Understand the significant key success factors and core competencies Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2-2 Learning Objectives When you complete this chapter you should be able to: 2.4 Use factor rating to evaluate both country and provider outsources 2.5 Identify and explain four global operations strategy options Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2-3 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 Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2-4 Global Strategies ▶ Volvo – considered a Swedish company, purchased by a Chinese company, Geely. The current Volvo S40 is assembled in Belgium and Malaysia on a platform shared with the Mazda 3 (built in Japan) and the Ford Focus (built in six countries including the U.S.). ▶ Haier – A Chinese company, produces compact refrigerators (it has one-third of the U.S. market) and wine cabinets (it has half of the U.S. market) in South Carolina and other appliances in Kentucky. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2-5 Reasons to Globalize 1. Improve the supply chain 2. Reduce costs and exchange rate risks 3. Improve operations 4. Understand markets 5. Improve products 6. Attract and retain global talent Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2-6 Improve the Supply Chain ▶ Locating facilities closer to unique resources ▶ Auto design to California ▶ Perfume manufacturing in France Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2-7 Reduce Costs ▶ Risks associated with currency exchange rates ▶ Reduce 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) Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2-8 Improve Operations ▶ Understand differences between how business is handled in other countries ▶ Japanese – inventory management ▶ Germans – robots ▶ Scandinavians – ergonomics ▶ International operations can improve response time and customer service Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2-9 Understand Markets ▶ Interacting with foreign customers, suppliers, competition can lead to new opportunities ▶ Cell phone design moved from Europe to Japan and India ▶ Extend the product life cycle Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 10 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 Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 11 Attract and Retain Global Talent ▶ Offer better employment opportunities ▶ Better growth opportunities and insulation against unemployment ▶ Relocate unneeded personnel to more prosperous locations Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 12 Cultural and Ethical Issues ▶ Social and cultural behavior differs ▶ International laws, agreements, codes of conduct for ethical behaviors ▶ Despite cultural and ethical differences, we observe extraordinary mobility of capital, information, goods, and people Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 13 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 ► Transportation infrastructure ► Communication system ▶ Export restrictions ▶ Variations in language Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 14 Match Product and Parent ► Braun Household Appliances 1. Volkswagen ► Firestone Tires 2. Bridgestone ► Godiva Chocolate 3. Campbell Soup ► Haagen-Dazs Ice Cream 4. Tata Motors Limited ► Jaguar Autos ► GE Appliances ► Lamborghini Autos ► Alpo Petfoods Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 5. Proctor & Gamble 6. Nestlé 7. Pillsbury 8. Haier 2 - 15 Match Product and Country ► Braun Household Appliances ► Firestone Tires ► Godiva Chocolate ► Haagen-Dazs Ice Cream ► Jaguar Autos ► GE Appliances ► Lamborghini Autos ► Alpo Petfoods Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 1. 2. 3. 4. 5. 6. Great Britain Germany China United States Switzerland India 2 - 16 Developing Missions and Strategies Mission statements tell an organization where it is going The Strategy tells the organization how to get there Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 17 Mission ► Mission - where is the organization going? ► Organization’s purpose for being ► Answers “What do we contribute to society?” ► Provides boundaries and focus Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 18 Factors Affecting Mission Philosophy and Values Profitability and Growth Environment Mission Customers Public Image Benefit to Society Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 19 Strategic Process Organization’s Mission Functional Area Missions Marketing Operations Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Finance/ Accounting 2 - 20 Sample Missions Sample Company Mission To manufacture and service an innovative, growing, and profitable worldwide microwave communications business that exceeds our customers’ expectations. Sample Operations Management Mission To produce products consistent with the company’s mission as the worldwide low-cost manufacturer. Figure 2.3 Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 21 Strategy Strategies require managers to ► Develop action plan to achieve mission ► Ensure functional areas have supporting strategies ► Exploit opportunities and strengths, neutralize threats, and avoid weaknesses Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 22 Strategies for Competitive Advantage 1. Differentiation – better, or at least different 2. Cost leadership – cheaper 3. Response – more responsive Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 23 Experience Differentiation Engaging a customer with a product through imaginative use of the five senses, so the customer “experiences” the product ► Theme parks use sight, sound, smell, and participation ► Movie theatres use sight, sound, moving seats, smells, and mists of rain ► Restaurants use music, smell, and open kitchens Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 24 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 Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 25 Issues In Operations Strategy ▶ ▶ ▶ ▶ Resources view Value-chain analysis Porter’s Five Forces model Operating in a system with many external factors ▶ Constant change Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 26 Product Life Cycle OM OMStrategy/Issues Strategy/Issues Introduction Product design and development critical Frequent product and process design changes Short production runs High production costs Limited models Attention to quality Growth Forecasting critical Product and process reliability Competitive product improvements and options Increase capacity Shift toward product focus Enhance distribution Maturity Standardization Fewer rapid product changes, more minor changes 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 Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 27 SWOT Analysis Mission Internal Strengths External Opportunities Analysis Internal Weaknesses External Threats Strategy Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 28 Strategy Development Process Analyze the Environment Identify the strengths, weaknesses, opportunities, and threats. Understand the environment, customers, industry, and competitors. Determine the Corporate Mission State the reason for the firm’s 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. Figure 2.6 Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 29 Activity Mapping at Southwest Airlines 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 Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 30 Strategic Planning, Core Competencies, and Outsourcing ▶ Outsourcing – transferring activities that have traditionally been internal to external suppliers ▶ Accelerating due to 1) Increased technological expertise 2) More reliable and cheaper transportation 3) Rapid development and deployment of advancements in telecommunications and computers Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 2 - 31