2. om strategy chapter 2.ppt
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Heizer, Render, Griffin Operations Management Canadian Edition
Chapter 2: Operations Strategy in a Global Environment
Copyright © 2014 Pearson Canada Inc
Slides adapted for Canada by Mats Gerschman
2 - 2Copyright © 2014 Pearson Canada Inc
OutlineOutline Global Company Profile: Boeing A Global View of Operations Developing Missions and
Strategies Achieving Competitive Advantage
Through Operations Ten Strategic OM Decisions
2 - 3Copyright © 2014 Pearson Canada Inc
Outline Outline –– Continued Continued Issues in Operations Strategy Strategy Development and
Implementation Global Operations Strategy
Options
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Learning ObjectivesLearning Objectives
1. Define mission and strategy2. Identify and explain three strategic
approaches to competitive advantage
3. Identify and define the 10 decisions of operations management
When you complete this chapter you When you complete this chapter you should be able to:should be able to:
2 - 5Copyright © 2014 Pearson Canada Inc
Learning ObjectivesLearning Objectives
4. Understand the significance of key success factors and core competencies
5. Identify and explain four global operations strategy options
When you complete this chapter you When you complete this chapter you should be able to:should be able to:
2 - 6Copyright © 2014 Pearson Canada Inc
Some Boeing Suppliers (787)Some Boeing Suppliers (787)Firm Country ComponentLatecoere France Passenger doorsLabinel France WiringDassault France Design and
PLM softwareMessier-Bugatti France Electric brakesThales France Electrical power
conversion system and integrated standby flight display
Messier-Dowty France Landing gear structureDiehl Germany Interior lighting
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Some Boeing Suppliers (787)Some Boeing Suppliers (787)Firm Country Component
Rolls-Royce UK Engines
BAE SYSTEMS UK ElectronicsAlenia Aeronautics Italy Upper centre
fuselage and horizontal stabilizer
Kawasaki Heavy Japan Forward fuselage, Industries fixed section of wing,
landing gear wellToray Industries Japan Carbon fibre for
wing and tail unitsChengdu Aircraft China Rudder Group
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Global StrategiesGlobal Strategies
Boeing – sales and production 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
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Global StrategiesGlobal Strategies Volvo – a Swedish company, it was
controlled by an American company, Ford, and is now owned by Geely of China. The current Volvo S40 is built in Belgium and shares its platform with the Mazda 3 built in Japan and the Ford Focus built in Europe
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35 –
30 –
25 –
20 –
15 –
10 –
5 –
0 –| | | | | | | | | | |1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 (est*)
Year
Perc
ent
Growth of World TradeGrowth of World Trade
Figure 2.1
Collapse of the Berlin Wall
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Reasons to GlobalizeReasons to Globalize
Reasons to GlobalizeReasons to Globalize1. Reduce costs (labour, taxes, tariffs, etc.)2. Improve the supply chain3. Provide better goods and services4. Understand markets5. Learn to improve operations6. Attract and retain global talent
Tangible Reasons
Intangible Reasons
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Reduce CostsReduce Costs Foreign locations with lower wage
rates can lower direct and indirect costs Maquiladoras World Trade Organization (WTO) North American Free Trade
Agreement (NAFTA) APEC, SEATO, MERCOSUR, CAFTA European Union (EU)
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Improve the Supply ChainImprove the Supply Chain
Locating facilities closer to unique resources Metal companies to Northern
Ontario Auto design to California Athletic shoe production to China Perfume manufacturing in France
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Provide Better Goods Provide Better Goods and Servicesand Services
Objective and subjective characteristics of goods and services On-time deliveries Cultural variables Improved customer service
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Understand MarketsUnderstand Markets Interacting with foreign customers
and suppliers can lead to new opportunities Cell phone design from Europe Cell phone fads from Japan Extend the product life cycle
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Learn to Improve Learn to Improve OperationsOperations
Remain open to the free flow of ideas General Motors partnered with a
Japanese auto manufacturer to learn new approaches to production and inventory control
Equipment and layout have been improved using Scandinavian ergonomic competence
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Attract and Retain Global Attract and Retain Global TalentTalent
Offer better employment opportunities Better growth opportunities and
insulation against unemployment Relocate unneeded personnel to
more prosperous locations
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Cultural and Ethical IssuesCultural and Ethical Issues Cultures can be quite different Attitudes can be quite different
towards Punctuality Lunch breaks Environment Intellectual
property
Thievery Bribery Child labour
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Companies Want To ConsiderCompanies Want To Consider National literacy rate Rate of innovation Rate of technology
change Number of skilled
workers Political stability Product liability laws Export restrictions Variations in language
Work ethic Tax rates Inflation Availability of raw
materials Interest rates Population Number of miles of
highway Phone system
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Developing Missions and Developing Missions and StrategiesStrategies
MissionMission statements tell an organization where it is going
The StrategyStrategy tells the organization how to get there
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MissionMission
Mission - where are you going? Organization’s
purpose for being Answers ‘What do
we provide society?’ Provides boundaries
and focus
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Telfer School of Telfer School of Management VisionManagement Vision
The Telfer School of Management at the University of Ottawa aims to be recognized as a leading institution for management education and innovative research. Through its academic programs, offered in both English and French, the Telfer School seeks to prepare its students to assume leadership positions in today’s global economy and to instill in them the highest standards of integrity, ethics and social consciousness.
© 2011 Pearson Education, Inc. publishing as Prentice Hall
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Telfer School of Telfer School of Management MissionManagement Mission
The Telfer School of Management seeks to provide its students with: Strong analytical, communication and
leadership skills; The ability to perform in a culturally
diverse workplace; The capability to apply and integrate
knowledge from the core disciplines of management.
© 2011 Pearson Education, Inc. publishing as Prentice Hall
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Telfer School of Telfer School of Management MissionManagement Mission
The Telfer School of Management seeks to add value to external stakeholders by:
Leveraging the unique resources of the National Capital Region to undertake and disseminate basic and applied research in distinctive areas of management of relevance to national and international organizations.
Engaging in activities that build and strengthen partnerships with its many constituents in the technology, health, non-profit and governmental sectors across Canada and internationally.
© 2011 Pearson Education, Inc. publishing as Prentice Hall
2 - 25Copyright © 2014 Pearson Canada Inc
Royal Canadian Mounted Royal Canadian Mounted PolicePolice
The RCMP is Canada’s national police service. Proud in our traditions and
confident in meeting future challenges, we commit to preserve peace, uphold the law and provide quality service in
partnership with our communities.
Figure 2.2
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Hard Rock CafeHard Rock Cafe
Our Mission: To spread the spirit of rock ’n’ roll by creating authentic
experiences that rock
Figure 2.2
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Arnold Palmer HospitalArnold Palmer Hospital
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.
Figure 2.2
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Benefit to Society
Mission
Factors Affecting MissionFactors Affecting MissionPhilosophy and Values
Profitability and GrowthEnvironment
Customers Public Image
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Sample MissionsSample 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
2 - 30© 2011 Pearson Education, Inc. publishing as Prentice Hall
Sample MissionsSample Missions
Figure 2.3
Sample OM Department MissionsProduct design To design and produce products and
services with outstanding quality and inherent customer value.
Quality management To attain the exceptional value that is consistent with our company mission and marketing objectives by close attention to design, procurement, production, and field service operations
Process design To determine, design, and produce the production process and equipment that will be compatible with low-cost product, high quality, and good quality of work life at economical cost.
2 - 31© 2011 Pearson Education, Inc. publishing as Prentice Hall
Sample MissionsSample Missions
Figure 2.3
Sample OM Department MissionsLocation To locate, design, and build efficient and
economical facilities that will yield high value to the company, its employees, and the community.
Layout design To achieve, through skill, imagination, and resourcefulness in layout and work methods, production effectiveness and efficiency while supporting a high quality of work life.
Human resources To provide a good quality of work life, with well-designed, safe, rewarding jobs, stable employment, and equitable pay, in exchange for outstanding individual contribution from employees at all levels.
2 - 32© 2011 Pearson Education, Inc. publishing as Prentice Hall
Sample MissionsSample Missions
Figure 2.3
Sample OM Department MissionsSupply-chain management
To collaborate with suppliers to develop innovative products from stable, effective, and efficient sources of supply.
Inventory To achieve low investment in inventory consistent with high customer service levels and high facility utilization.
Scheduling To achieve high levels of throughput and timely customer delivery through effective scheduling.
Maintenance To achieve high utilization of facilities and equipment by effective preventive maintenance and prompt repair of facilities and equipment.
2 - 33© 2011 Pearson Education, Inc. publishing as Prentice Hall
StrategyStrategy Action plan to
achieve mission Functional areas
have strategies Strategies exploit
opportunities and strengths, neutralize threats, and avoid weaknesses
2 - 34ADM 3301 ~ Rim Jaber
STRATEGY PROCESSSTRATEGY PROCESSCompanyMission
BusinessStrategy
Functional AreaStrategies
MarketingDecisions
OperationsDecisions
SW OTAnalysis
EnvironmentalAnalysis
Fin./Acct.Decisions
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Strategies for Competitive Strategies for Competitive AdvantageAdvantage
Differentiation – better, or at least different
Cost leadership – cheaper Response – rapid response
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Competing on Competing on DifferentiationDifferentiation
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 Café – dining experience
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Competing on CostCompeting on CostProvide the maximum value as
perceived by customer. Does not imply low quality.
Porter Airlines – secondary airports, few fare options, smaller crews, no expensive ticket offices
Walmart – small overhead, shrinkage, distribution costs
Franz Colruyt – no bags, low light, no music, doors on freezers
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Competing on ResponseCompeting on Response Flexibility 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
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OM’s Contribution to StrategyOM’s Contribution to Strategy
Figure 2.4
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Ten Strategic OM DecisionsTen Strategic OM Decisions
1. Goods and service design
2. Quality 3. Process and
capacity design4. Location
selection5. Layout design
6. Human resources and job design
7. Supply-chain management
8. Inventory9. Scheduling10. Maintenance
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Goods and Services and Goods and Services and the 10 OM Decisionsthe 10 OM Decisions
OperationsOperationsDecisionsDecisions GoodsGoods ServicesServicesGoods and service design
Product is usually tangible
Product is not tangible
Quality Many objective standards
Many subjective standards
Process and capacity design
Customer not involved
Customer may be directly involvedCapacity must match demand
Table 2.1
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Goods and Services and Goods and Services and the 10 OM Decisionsthe 10 OM Decisions
OperationsOperationsDecisionsDecisions GoodsGoods ServicesServicesLocation selection
Near raw materials and labour
Near customers
Layout design
Production efficiency
Enhances product and production
Human resources and job design
Technical skills, consistent labour standards, output based wages
Interact with customers, labour standards vary
Table 2.1
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Goods and Services and Goods and Services and the 10 OM Decisionsthe 10 OM Decisions
OperationsOperationsDecisionsDecisions GoodsGoods ServicesServicesSupply chain
Relationship critical to final product
Important, but may not be critical
Inventory Raw materials, work-in-process, and finished goods may be held
Cannot be stored
Scheduling Level schedules possible
Meet immediate customer demand
Table 2.1
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Goods and Services and Goods and Services and the 10 OM Decisionsthe 10 OM Decisions
OperationsOperationsDecisionsDecisions GoodsGoods ServicesServicesMaintenance Often preventive
and takes place at production site
Often “repair” and takes place at customer’s site
Table 2.1
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Managing Global Service Managing Global Service OperationsOperations
Capacity planning Location planning Facilities design and layout Scheduling
Requires a different perspective on:Requires a different perspective on:
2 - 46© 2011 Pearson Education, Inc. publishing as Prentice Hall
Operations Strategies of Operations Strategies of Two Drug CompaniesTwo Drug Companies
Brand Name Drugs, Inc.Brand Name Drugs, Inc. Generic Drug Corp.Generic Drug Corp.
Competitive Competitive AdvantageAdvantage Product DifferentiationProduct Differentiation Low CostLow Cost
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 Major priority, exceed regulatory requirements
Meets regulatory requirements on a country by country basis
Table 2.2
2 - 47© 2011 Pearson Education, Inc. publishing as Prentice Hall
Operations Strategies of Operations Strategies of Two Drug CompaniesTwo Drug Companies
Brand Name Drugs, Inc.Brand Name Drugs, Inc. Generic Drug Corp.Generic Drug Corp.
Competitive Competitive AdvantageAdvantage Product DifferentiationProduct Differentiation Low CostLow Cost
Process Product and modular process; long production runs in specialized facilities; build capacity ahead of demand
Process focused; general processes; “job shop” approach, short-run production; focus on high utilization
Location Still located in the city where it was founded
Recently moved to low-tax, low-labor-cost environment
Table 2.2
2 - 48© 2011 Pearson Education, Inc. publishing as Prentice Hall
Operations Strategies of Operations Strategies of Two Drug CompaniesTwo Drug Companies
Brand Name Drugs, Inc.Brand Name Drugs, Inc. Generic Drug Corp.Generic Drug Corp.
Competitive Competitive AdvantageAdvantage Product DifferentiationProduct Differentiation Low CostLow Cost
Scheduling Centralized production planning
Many short-run products complicate scheduling
Layout Layout supports automated product-focused production
Layout supports process-focused “job shop” practices
Table 2.2
2 - 49© 2011 Pearson Education, Inc. publishing as Prentice Hall
Operations Strategies of Operations Strategies of Two Drug CompaniesTwo Drug Companies
Brand Name Drugs, Inc.Brand Name Drugs, Inc. Generic Drug Corp.Generic Drug Corp.
Competitive Competitive AdvantageAdvantage Product DifferentiationProduct Differentiation Low CostLow Cost
Human Resources
Hire the best; nationwide searches
Very experienced top executives; other personnel paid below industry average
Supply Chain Long-term supplier relationships
Tends to purchase competitively to find bargains
Table 2.2
2 - 50© 2011 Pearson Education, Inc. publishing as Prentice Hall
Operations Strategies of Operations Strategies of Two Drug CompaniesTwo Drug Companies
Brand Name Drugs, Inc.Brand Name Drugs, Inc. Generic Drug Corp.Generic Drug Corp.
Competitive Competitive AdvantageAdvantage Product DifferentiationProduct Differentiation Low CostLow Cost
Inventory High finished goods inventory to ensure all demands are met
Process focus drives up work-in-process inventory; finished goods inventory tends to be low
Maintenance Highly trained staff; extensive parts inventory
Highly trained staff to meet changing demand
Table 2.2
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Issues In Operations StrategyIssues In Operations Strategy
Resources view Value-chain analysis Porter’s five forces model Operating in a system with many
external factors Constant change
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Product Life CycleProduct Life CycleBest period to increase market share
R&D engineering is critical
Practical to change price or quality image
Strengthen niche
Poor time to change image, price, or quality
Competitive costs become criticalDefend market position
Cost control critical
Introduction Growth Maturity Decline
Com
pany
Str
ateg
y/Is
sues
Figure 2.5
Internet search engines
Sales
Drive-thru restaurants
CD-ROMs
Analogue TVs
iPods
Boeing 787
LCD and plasma TVs
Avatars
Xbox 360
2 - 53Copyright © 2014 Pearson Canada Inc
Product Life CycleProduct Life CycleProduct design and development criticalFrequent product and process design changesShort production runsHigh production costsLimited modelsAttention to quality
Introduction Growth Maturity Decline
OM
Str
ateg
y/Is
sues
Forecasting criticalProduct and process reliabilityCompetitive product improvements and optionsIncrease capacityShift toward product focusEnhance distribution
StandardizationFewer product changes, more minor changesOptimum capacityIncreasing stability of processLong production runsProduct improvement and cost cutting
Little product differentiationCost minimizationOvercapacity in the industryPrune line to eliminate items not returning good marginReduce capacity
Figure 2.5
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Strategy
Analysis
SWOT Analysis SWOT Analysis
Internal Strengths
Internal Weaknesses
External Opportunities
External Threats
Mission
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Strategy Development ProcessStrategy Development Process
Determine the Corporate MissionState the reason for the firm’s existence and identify the value it
wishes to create.
Form a StrategyBuild a competitive advantage, such as low price, design, or
volume flexibility, quality, quick delivery, dependability, after-sale service, broad product lines.
Analyze the EnvironmentIdentify the strengths, weaknesses, opportunities, and threats.
Understand the environment, customers, industry, and competitors.
Figure 2.6
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Strategy Development and Strategy Development and ImplementationImplementation
Identify key success factors Build and staff the organization Integrate OM with other activities
The operations manager’s job is to implement an OM strategy, provide competitive advantage, and increase productivity
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Key Success FactorsKey Success Factors
Production/Operations
Figure 2.7
Marketing
ServiceDistributionPromotionChannels of distributionProduct positioning (image, functions)
Finance/Accounting
LeverageCost of capitalWorking capitalReceivablesPayablesFinancial controlLines of credit
Decisions Sample Options Chapter
ProductQualityProcessLocationLayoutHuman resourceSupply chainInventoryScheduleMaintenance
Customized or standardizedDefine customer expectations and how to achieve themFacility size, technology, capacityNear supplier or near customerWork cells or assembly lineSpecialized or enriched jobsSingle or multiple suppliersWhen to reorder, how much to keep on handStable or fluctuating production rateRepair as required or preventive maintenance
56, S67, S7
89
1011, S11
12, 14, 1613, 15
17
Support a Core Competence and Implement Strategy by Identifying and Executing the Key Success Factors in the Functional Areas
2 - 58ADM 3301 ~ Rim Jaber
THE PLANNING THE PLANNING CONTINUUMCONTINUUM
Strategic planning Tactical Planninglong time horizonless certaintyless structuredpoorly defined information requirementsirreversible impactfocus on the whole
short time horizonmore certaintymore structuredwell-defined information requirementsreversible impactfocus on parts
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Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
2 - 60© 2011 Pearson Education, Inc. publishing as Prentice Hall
Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
Automated ticketing machinesNo seat assignmentsNo baggage transfersNo meals (peanuts)
2 - 61© 2011 Pearson Education, Inc. publishing as Prentice Hall
Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
No meals (peanuts)Lower gate costs at secondary airports
High number of flights reduces employee idle time
between flights
2 - 62© 2011 Pearson Education, Inc. publishing as Prentice Hall
Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
High number of flights reduces employee idle time
between flightsSaturate a city with flights,
lowering administrative costs (advertising, HR, etc.) per passenger for that cityPilot training required on only one type of aircraftReduced maintenance
inventory required because of only one type of aircraft
2 - 63© 2011 Pearson Education, Inc. publishing as Prentice Hall
Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
Pilot training required on only one type of aircraftReduced maintenance
inventory required because of only one type of aircraftExcellent supplier relations
with Boeing has aided financing
2 - 64© 2011 Pearson Education, Inc. publishing as Prentice Hall
Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
Reduced maintenance inventory required because of only one type of aircraft
Flexible employees and standard planes aid
schedulingMaintenance personnel trained only one type of
aircraft20-minute gate turnarounds
Flexible union contracts
2 - 65© 2011 Pearson Education, Inc. publishing as Prentice Hall
Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.8
Automated ticketing machines
Empowered employeesHigh employee compensation
Hire for attitude, then trainHigh level of stock
ownershipHigh number of flights
reduces employee idle time between flights
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Four International Four International Operations StrategiesOperations StrategiesC
ost R
educ
tion
Con
side
ratio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
International StrategyImport/export or
license existing product
ExamplesU.S. SteelHarley Davidson
Figure 2.9
2 - 67Copyright © 2014 Pearson Canada Inc
Four International Four International Operations StrategiesOperations StrategiesC
ost R
educ
tion
Con
side
ratio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
Standardized productEconomies of scaleCross-cultural learning
Examples:Texas InstrumentsCaterpillarOtis Elevator
Global Strategy
International StrategyImport/export or
license existing product
ExamplesU.S. SteelHarley Davidson
Figure 2.9
2 - 68Copyright © 2014 Pearson Canada Inc
Four International Four International Operations StrategiesOperations StrategiesC
ost R
educ
tion
Con
side
ratio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
Standardized product Economies of scale Cross-cultural learning
Examples:Texas InstrumentsCaterpillarOtis Elevator
Global Strategy
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
Multidomestic Strategy Use existing
domestic model globally Franchise, joint ventures,
subsidiaries
ExamplesHeinz The Body ShopMcDonald’s Hard Rock Café
Figure 2.9
2 - 69Copyright © 2014 Pearson Canada Inc
Four International Four International Operations StrategiesOperations StrategiesC
ost R
educ
tion
Con
side
ratio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
Standardized product Economies of scale Cross-cultural learning
Examples:Texas InstrumentsCaterpillarOtis Elevator
Global Strategy Transnational Strategy Movement of material, people,
ideas across national boundaries
Economies of scale Cross-cultural learning
ExamplesCoca-ColaNestlé
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
Multidomestic Strategy Use existing
domestic model globally Franchise, joint ventures,
subsidiaries
ExamplesHeinz The Body ShopMcDonald’s Hard Rock Cafe
Figure 2.9
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Ethics: Ranking CorruptionEthics: Ranking CorruptionRank Country 2011 CPI Score (out of
10)1 New Zealand 9.52 Denmark, Finland 9.45 Singapore 9.26 Norway 9.08 Australia, Switzerland 8.810 Canada 8.712 Hong Kong 8.414 Germany, Japan 8.016 UK 7.824 USA 7.132 Taiwan 6.143 South Korea 5.460 Malaysia 4.375 China 3.6112 Vietnam 2.9143 Russia 2.4
Least Corrupt
Most Corrupt
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SummarySummary Global operations provide challenges and
opportunities Organizations identify their strengths and
weaknesses Missions and strategies are then developed Competitive advantages can be achieved
from global operations OM managers have huge impact on the
decision making
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