Operations

Management
Operations Strategy in a Global
Environment

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Principles of Operations Management, 5e, and Operations 2-1
Management, 7e
 Learning Objectives
When you complete this chapter, you should
be able to :
Identify or Define:
Mission
Strategy
Ten Decisions of OM
Multinational Corporations

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Principles of Operations Management, 5e, and Operations 2-2
Management, 7e
 Learning Objectives - Continued
Describe or Explain:
Specific approaches used by OM to achieve
strategies
Differentiation
Low Cost
Response

Four Global Operations Strategies

Why Global Issues are Important

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Principles of Operations Management, 5e, and Operations 2-3
Management, 7e
 Developing Missions and
Strategies

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Principles of Operations Management, 5e, and Operations 2-4
Management, 7e
 Mission

Mission - where are you

going?
Organizations purpose for being
Provides boundaries & focus
Answers What do we provide
society?

1995 Corel Corp.

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Principles of Operations Management, 5e, and Operations 2-5
Management, 7e
 Mission/Strategy

Mission - where you are going

Strategy - how you are going to get there; an

action plan

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Principles of Operations Management, 5e, and Operations 2-6
Management, 7e
 Strategy

Action plan to achieve

mission
Shows how mission will be
achieved
Company has a business
strategy
Functional areas have
strategies 1995 Corel Corp.

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Principles of Operations Management, 5e, and Operations 2-7
Management, 7e
 Strategy Process
Company
Mission

Business
Strategy

Functional
Functional Area
Area
Strategies

Marketing Operations Fin./Acct.

Decisions Decisions Decisions

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Principles of Operations Management, 5e, and Operations 2-8
Management, 7e
 Strategies for Competitive
Advantage
Differentiation

Cost leadership

Quick response

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Principles of Operations Management, 5e, and Operations 2-9
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 Competing on Differentiation

Uniqueness can go beyond both the physical

characteristics and service attributes to
encompass everything that impacts customers
perception of value

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Principles of Operations Management, 5e, and Operations 2-10
Management, 7e
 Competing on Cost

Provide the maximum value as perceived by

customer

Does not imply low value or low quality

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Principles of Operations Management, 5e, and Operations 2-11
Management, 7e
 Competing on Response

Flexibility
Reliability
Timeliness

Requires institutionalization within the firm of the

ability to respond

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Principles of Operations Management, 5e, and Operations 2-12
Management, 7e
 OMs Contribution to Strategy
Operations Specific Competitive
Decisions Examples Strategy Used Advantage
Quality FLEXIBILITY
Sonys constant innovation of new products Design
Product HPs ability to follow the printer market Volume

Process Southwest Airlines No-frills service LOW COST

Location DELIVERY
Pizza Huts five-minute guarantee at lunchtime Speed
Layout Federal Expresss absolutely, positively on time Dependability Differentiation
(Better)
Human Resource
QUALITY
Motorolas automotive products ignition systems Conformance Response
Supply Chain Cost (Faster)
Motorolas pagers Performance leadership
(Cheaper)
Inventory
IBMs after-sale service on mainframe computers AFTER-SALE SERVICE
Scheduling
Fidelity Securitys broad line of mutual funds BROAD PRODUCT LINE
Maintenance

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Principles of Operations Management, 5e, and Operations 2-13
Management, 7e
 Process Design
Customization at high
High Process-focused Volume
Job Shops Mass Customization
(Print shop, emergency
(Dell Computers PC)
room , machine shop,
Repetitive (modular)
fine dining
focus
Variety of Products

Assembly line
Moderate (Cars, appliances, TVs,
fast-food restaurants) Product-focused
Continuous
(steel, beer, paper,
bread, institutional
kitchen)
Low
Low Moderate High
Volume
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Principles of Operations Management, 5e, and Operations 2-14
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 Preconditions -
To Implement a Strategy
One must understand:
Strengths & weaknesses of competitors and new
entrants into the market
Current and prospective environmental, legal, and
economic issues
The notion of product life cycle
Resources available with the firm and within the OM
function
Integration of OM strategy with company strategy and
with other functions.
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Principles of Operations Management, 5e, and Operations 2-15
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 Impetus for Strategy Change

Changes in the organization

Stages in the product life cycle
Changes in the environment

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Principles of Operations Management, 5e, and Operations 2-16
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 Stages in the Product Life Cycle

Introduction
Growth rate

Growth

Maturity

Decline

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Principles of Operations Management, 5e, and Operations 2-17
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 Strategy and Issues During a
Products Life

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Principles of Operations Management, 5e, and Operations 2-18
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 Strategy Development and
Implementation

Identify critical success factors

Build and staff the organization

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Principles of Operations Management, 5e, and Operations 2-19
Management, 7e
 SWOT Analysis Process

Environmental Analysis

Determine Corporate Mission

Form a Strategy
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Principles of Operations Management, 5e, and Operations 2-20
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 SWOT Analysis to Strategy
Formulation

Mission

Internal External
Strengths Opportunities
Strategy

Internal External
Weaknesses Threats
Competitive
Advantage
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Principles of Operations Management, 5e, and Operations 2-21
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 How It Works

If competitive Distinctive
advantage, leads to Company
competencies affect
achieving Mission

Business
Strategy

Functional Area
Strategies

Marketing Operations Fin./Acct.

Decisions Decisions Decisions

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Principles of Operations Management, 5e, and Operations 2-22
Management, 7e
 Four International Operations
Strategies

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Principles of Operations Management, 5e, and Operations 2-23
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 Global Strategy

Operating decisions are centralized and

headquarters coordinates the standardization
and learning between facilities

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Principles of Operations Management, 5e, and Operations 2-24
Management, 7e
 International Strategy

Global markets are penetrated using exports and

licenses

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Principles of Operations Management, 5e, and Operations 2-25
Management, 7e