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  • 1. 2 - 1© 2011 Pearson Education, Inc. publishing as Prentice Hall2 Operations Strategy in aGlobal EnvironmentPowerPoint presentation to accompanyHeizer and RenderOperations Management, 10ePrinciples of Operations Management, 8ePowerPoint slides by Jeff Heyl
  • 2. 2 - 2© 2011 Pearson Education, Inc. publishing as Prentice HallOutline Global Company Profile: Boeing A Global View of Operations Cultural and Ethical Issues Developing Missions AndStrategies Mission Strategy
  • 3. 2 - 3© 2011 Pearson Education, Inc. publishing as Prentice HallOutline – Continued Achieving Competitive AdvantageThrough Operations Competing On Differentiation Competing On Cost Competing On Response Ten Strategic OM Decisions
  • 4. 2 - 4© 2011 Pearson Education, Inc. publishing as Prentice HallOutline – Continued Strategy Development andImplementation Key Success Factors and CoreCompetencies Build and Staff the Organization Integrate OM with Other Activities
  • 5. 2 - 5© 2011 Pearson Education, Inc. publishing as Prentice HallOutline – Continued Global Operations StrategyOptions International Strategy Multidomestic Strategy Global Strategy Transnational Strategy
  • 6. 2 - 6© 2011 Pearson Education, Inc. publishing as Prentice HallLearning Objectives1. Define mission and strategy2. Identify and explain three strategicapproaches to competitiveadvantage3. Identify and define the 10 decisionsof operations managementWhen you complete this chapter youshould be able to:
  • 7. 2 - 7© 2011 Pearson Education, Inc. publishing as Prentice HallLearning Objectives4. Understand the significant keysuccess factors and corecompetencies5. Identify and explain four globaloperations strategy optionsWhen you complete this chapter youshould be able to:
  • 8. 2 - 8© 2011 Pearson Education, Inc. publishing as Prentice HallSome Boeing Suppliers (787)Firm Country ComponentLatecoere France Passenger doorsLabinel France WiringDassault France Design andPLM softwareMessier-Bugatti France Electric brakesThales France Electrical powerconversion systemand integratedstandby flight displayMessier-Dowty France Landing gear structureDiehl Germany Interior lighting
  • 9. 2 - 9© 2011 Pearson Education, Inc. publishing as Prentice HallSome Boeing Suppliers (787)Firm Country ComponentCobham UK Fuel pumps and valvesRolls-Royce UK EnginesSmiths Aerospace UK Central computersystemBAE SYSTEMS UK ElectronicsAlenia Aeronautics Italy Upper centerfuselage &horizontal stabilizerToray Industries Japan Carbon fiber forwing and tail units
  • 10. 2 - 10© 2011 Pearson Education, Inc. publishing as Prentice HallSome Boeing Suppliers (787)Firm Country ComponentFuji Heavy Japan Center wing boxIndustriesKawasaki Heavy Japan Forward fuselage,Industries fixed section of wing,landing gear wellTeijin Seiki Japan Hydraulic actuatorsMitsubishi Heavy Japan Wing boxIndustriesChengdu Aircraft China RudderGroupHafei Aviation China Parts
  • 11. 2 - 11© 2011 Pearson Education, Inc. publishing as Prentice HallSome Boeing Suppliers (787)Firm Country ComponentKorean Aviation South WingtipsKoreaSaab Sweden Cargo access doors
  • 12. 2 - 12© 2011 Pearson Education, Inc. publishing as Prentice HallGlobal Strategies Boeing – sales and production areworldwide Benetton – moves inventory to storesaround the world faster than itscompetition by building flexibility intodesign, production, and distribution Sony – purchases components fromsuppliers in Thailand, Malaysia, andaround the world
  • 13. 2 - 13© 2011 Pearson Education, Inc. publishing as Prentice HallGlobal Strategies Volvo – considered a Swedish companybut until recently was controlled by anAmerican company, Ford. The currentVolvo S40 is built in Belgium and sharesits platform with the Mazda 3 built inJapan and the Ford Focus built in Europe. Haier – A Chinese company, producescompact refrigerators (it has one-third ofthe US market) and wine cabinets (it hashalf of the US market) in South Carolina
  • 14. 2 - 14© 2011 Pearson Education, Inc. publishing as Prentice Hall35 –30 –25 –20 –15 –10 –5 –0 –| | | | | | | | | | |1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 (est*)YearPercentGrowth of World TradeFigure 2.1Collapse of theBerlin Wall
  • 15. 2 - 15© 2011 Pearson Education, Inc. publishing as Prentice HallSome MultinationalCorporations% Sales % AssetsOutside OutsideHome Home Home % ForeignCompany Country Country Country WorkforceCiticorp USA 34 46 NAColgate- USA 72 63 NAPalmoliveDow USA 60 50 NAChemicalGillette USA 62 53 NAHonda Japan 63 36 NAIBM USA 57 47 51
  • 16. 2 - 16© 2011 Pearson Education, Inc. publishing as Prentice HallSome MultinationalCorporations% Sales % AssetsOutside OutsideHome Home Home % ForeignCompany Country Country Country WorkforceICI Britain 78 50 NANestle Switzerland 98 95 97Philips Netherlands 94 85 82ElectronicsSiemens Germany 51 NA 38Unilever Britain & 95 70 64Netherlands
  • 17. 2 - 17© 2011 Pearson Education, Inc. publishing as Prentice HallReasons to GlobalizeReasons to Globalize1. Reduce costs (labor, taxes, tariffs, etc.)2. Improve supply chain3. Provide better goods and services4. Understand markets5. Learn to improve operations6. Attract and retain global talentTangibleReasonsIntangibleReasons
  • 18. 2 - 18© 2011 Pearson Education, Inc. publishing as Prentice HallReduce Costs Foreign locations with lower wagerates can lower direct and indirectcosts Maquiladoras World Trade Organization (WTO) North American Free TradeAgreement (NAFTA) APEC, SEATO, MERCOSUR, CAFTA European Union (EU)
  • 19. 2 - 19© 2011 Pearson Education, Inc. publishing as Prentice HallImprove the Supply Chain Locating facilities closer tounique resources Auto design to California Athletic shoe production to China Perfume manufacturing in France
  • 20. 2 - 20© 2011 Pearson Education, Inc. publishing as Prentice HallProvide Better Goodsand Services Objective and subjectivecharacteristics of goods andservices On-time deliveries Cultural variables Improved customer service
  • 21. 2 - 21© 2011 Pearson Education, Inc. publishing as Prentice HallUnderstand Markets Interacting with foreign customersand suppliers can lead to newopportunities Cell phonedesign fromEurope Cell phonefads fromJapan Extend the product life cycle
  • 22. 2 - 22© 2011 Pearson Education, Inc. publishing as Prentice HallLearn to ImproveOperations Remain open to the free flow ofideas General Motors partnered with aJapanese auto manufacturer tolearn new approaches toproduction and inventory control Equipment and layout have beenimproved using Scandinavianergonomic competence
  • 23. 2 - 23© 2011 Pearson Education, Inc. publishing as Prentice HallAttract and Retain GlobalTalent Offer better employmentopportunities Better growth opportunities andinsulation against unemployment Relocate unneeded personnel tomore prosperous locations
  • 24. 2 - 24© 2011 Pearson Education, Inc. publishing as Prentice HallCultural and Ethical Issues Cultures can be quite different Attitudes can be quite differenttowards Punctuality Lunch breaks Environment Intellectualproperty Thievery Bribery Child labor
  • 25. 2 - 25© 2011 Pearson Education, Inc. publishing as Prentice HallCompanies Want To Consider National literacy rate Rate of innovation Rate of technologychange Number of skilledworkers Political stability Product liability laws Export restrictions Variations in language Work ethic Tax rates Inflation Availability of rawmaterials Interest rates Population Number of miles ofhighway Phone system
  • 26. 2 - 26© 2011 Pearson Education, Inc. publishing as Prentice HallMatch Product & Parent Braun HouseholdAppliances Firestone Tires Godiva Chocolate Haagen-Dazs IceCream Jaguar Autos MGM Movies Lamborghini Autos Alpo Petfoods1. Volkswagen2. Bridgestone3. Campbell Soup4. Tata Motors Limited5. Proctor and Gamble6. Nestlé7. Pillsbury8. Sony
  • 27. 2 - 27© 2011 Pearson Education, Inc. publishing as Prentice HallMatch Product & Parent Braun HouseholdAppliances Firestone Tires Godiva Chocolate Haagen-Dazs IceCream Jaguar Autos MGM Movies Lamborghini Autos Alpo Petfoods1. Volkswagen2. Bridgestone3. Campbell Soup4. Tata Motors Limited5. Proctor and Gamble6. Nestlé7. Pillsbury8. Sony
  • 28. 2 - 28© 2011 Pearson Education, Inc. publishing as Prentice HallMatch Product & Country Braun HouseholdAppliances Firestone Tires Godiva Chocolate Haagen-Dazs IceCream Jaguar Autos MGM Movies Lamborghini Autos Alpo Pet Foods1. Great Britain2. Germany3. Japan4. United States5. Switzerland6. India
  • 29. 2 - 29© 2011 Pearson Education, Inc. publishing as Prentice HallMatch Product & Country Braun HouseholdAppliances Firestone Tires Godiva Chocolate Haagen-Dazs IceCream Jaguar Autos MGM Movies Lamborghini Autos Alpo Pet Foods1. Great Britain2. Germany3. Japan4. United States5. Switzerland6. India
  • 30. 2 - 30© 2011 Pearson Education, Inc. publishing as Prentice HallDeveloping Missions andStrategiesMission statements tell anorganization where it is goingThe Strategy tells theorganization how to get there
  • 31. 2 - 31© 2011 Pearson Education, Inc. publishing as Prentice HallMission Mission - where areyou going? Organization‘spurpose for being Answers ‗What dowe provide society?‘ Provides boundariesand focus
  • 32. 2 - 32© 2011 Pearson Education, Inc. publishing as Prentice HallMerckThe mission of Merck is to providesociety with superior products andservices—innovations and solutionsthat improve the quality of life andsatisfy customer needs—to provideemployees with meaningful work andadvancement opportunities andinvestors with a superior rate of return.Figure 2.2
  • 33. 2 - 33© 2011 Pearson Education, Inc. publishing as Prentice HallHard Rock CafeOur Mission: To spread the spirit ofRock ‘n‘ Roll by delivering anexceptional entertainment and diningexperience. We are committed to beingan important, contributing member ofour community and offering the HardRock family a fun, healthy, andnurturing work environment whileensuring our long-term success.Figure 2.2
  • 34. 2 - 34© 2011 Pearson Education, Inc. publishing as Prentice HallArnold Palmer HospitalArnold Palmer Hospital forChildren provides state-of-the-art,family centered healthcarefocused on restoring the joy ofchildhood in an environment ofcompassion, healing, and hope.Figure 2.2
  • 35. 2 - 35© 2011 Pearson Education, Inc. publishing as Prentice HallBenefit toSocietyMissionFactors Affecting MissionPhilosophyand ValuesProfitabilityand GrowthEnvironmentCustomers Public Image
  • 36. 2 - 36© 2011 Pearson Education, Inc. publishing as Prentice HallSample MissionsSample Company MissionTo manufacture and service an innovative, growing, andprofitable worldwide microwave communications businessthat exceeds our customers‘ expectations.Sample Operations Management MissionTo produce products consistent with the company‘s missionas the worldwide low-cost manufacturer.Figure 2.3
  • 37. 2 - 37© 2011 Pearson Education, Inc. publishing as Prentice HallSample MissionsFigure 2.3Sample OM Department MissionsProduct design To design and produce products andservices with outstanding quality andinherent customer value.Quality management To attain the exceptional value that isconsistent with our company mission andmarketing objectives by close attention todesign, procurement, production, and fieldservice operationsProcess design To determine, design, and produce theproduction process and equipment that willbe compatible with low-cost product, highquality, and good quality of work life ateconomical cost.
  • 38. 2 - 38© 2011 Pearson Education, Inc. publishing as Prentice HallSample MissionsFigure 2.3Sample OM Department MissionsLocation To locate, design, and build efficient andeconomical facilities that will yield highvalue to the company, its employees, and thecommunity.Layout design To achieve, through skill, imagination, andresourcefulness in layout and work methods,production effectiveness and efficiencywhile supporting a high quality of work life.Human resources To provide a good quality of work life, withwell-designed, safe, rewarding jobs, stableemployment, and equitable pay, in exchangefor outstanding individual contribution fromemployees at all levels.
  • 39. 2 - 39© 2011 Pearson Education, Inc. publishing as Prentice HallSample MissionsFigure 2.3Sample OM Department MissionsSupply-chainmanagementTo collaborate with suppliers to developinnovative products from stable, effective,and efficient sources of supply.Inventory To achieve low investment in inventoryconsistent with high customer service levelsand high facility utilization.Scheduling To achieve high levels of throughput andtimely customer delivery through effectivescheduling.Maintenance To achieve high utilization of facilities andequipment by effective preventivemaintenance and prompt repair of facilitiesand equipment.
  • 40. 2 - 40© 2011 Pearson Education, Inc. publishing as Prentice HallStrategic ProcessMarketing OperationsFinance/AccountingFunctionalArea MissionsOrganization‘sMission
  • 41. 2 - 41© 2011 Pearson Education, Inc. publishing as Prentice HallStrategy Action plan toachieve mission Functional areashave strategies Strategies exploitopportunities andstrengths, neutralizethreats, and avoidweaknesses
  • 42. 2 - 42© 2011 Pearson Education, Inc. publishing as Prentice HallStrategies for CompetitiveAdvantage Differentiation – better, or atleast different Cost leadership – cheaper Response – rapid response
  • 43. 2 - 43© 2011 Pearson Education, Inc. publishing as Prentice HallCompeting onDifferentiationUniqueness can go beyond both thephysical characteristics and serviceattributes to encompass everythingthat impacts customer‘s perceptionof value Safeskin gloves – leading edge products Walt Disney Magic Kingdom –experience differentiation Hard Rock Cafe – dining experience
  • 44. 2 - 44© 2011 Pearson Education, Inc. publishing as Prentice HallCompeting on CostProvide the maximum value asperceived by customer. Does notimply low quality. Southwest Airlines – secondaryairports, no frills service, efficientutilization of equipment Wal-Mart – small overhead, shrinkage,distribution costs Franz Colruyt – no bags, low light, nomusic, doors on freezers
  • 45. 2 - 45© 2011 Pearson Education, Inc. publishing as Prentice HallCompeting on Response Flexibility is matching market changes indesign innovation and volumes A way of life at Hewlett-Packard Reliability is meeting schedules German machine industry Timeliness is quicknessin design, production,and delivery Johnson Electric,Pizza Hut, Motorola
  • 46. 2 - 46© 2011 Pearson Education, Inc. publishing as Prentice HallOM’s Contribution to StrategyProductQualityProcessLocationLayoutHumanresourceSupply chainInventorySchedulingMaintenanceDIFFERENTIATIONInnovative design … Safeskin‘s innovative glovesBroad product line … Fidelity Security‘s mutual fundsAfter-sales service … Caterpillar‘s heavy equipmentserviceExperience … Hard Rock Café‘s diningexperienceCOST LEADERSHIPLow overhead … Franz-Colruyt‘s warehouse-typestoresEffective capacityuse … Southwest Airline‘saircraft utilizationInventorymanagement … Wal Mart‘s sophisticateddistribution systemRESPONSEFlexibility … Hewlett-Packard‘s response tovolatile world marketReliability … FedEx‘s ―absolutely, positively,on time‖Quickness … Pizza Hut‘s 5-minute guaranteeat lunchtimeFigure 2.410 Operations CompetitiveDecisions Approach Example AdvantageResponse(faster)Costleadership(cheaper)Differentiation(better)
  • 47. 2 - 47© 2011 Pearson Education, Inc. publishing as Prentice Hall10 Strategic OM Decisions1. Goods andservice design2. Quality3. Process andcapacity design4. Locationselection5. Layout design6. Human resourcesand job design7. Supply-chainmanagement8. Inventory9. Scheduling10. Maintenance
  • 48. 2 - 48© 2011 Pearson Education, Inc. publishing as Prentice HallGoods and Services andthe 10 OM DecisionsOperationsDecisions Goods ServicesGoods andservicedesignProduct is usuallytangibleProduct is nottangibleQuality Many objectivestandardsMany subjectivestandardsProcessandcapacitydesignCustomers notinvolvedCustomer may bedirectly involvedCapacity mustmatch demandTable 2.1
  • 49. 2 - 49© 2011 Pearson Education, Inc. publishing as Prentice HallGoods and Services andthe 10 OM DecisionsOperationsDecisions Goods ServicesLocationselectionNear rawmaterials andlaborNear customersLayoutdesignProductionefficiencyEnhances productand productionHumanresourcesand jobdesignTechnical skills,consistent laborstandards, outputbased wagesInteract withcustomers, laborstandards varyTable 2.1
  • 50. 2 - 50© 2011 Pearson Education, Inc. publishing as Prentice HallGoods and Services andthe 10 OM DecisionsOperationsDecisions Goods ServicesSupplychainRelationshipcritical to finalproductImportant, butmay not becriticalInventory Raw materials,work-in-process,and finishedgoods may beheldCannot be storedScheduling Level schedulespossibleMeet immediatecustomer demandTable 2.1
  • 51. 2 - 51© 2011 Pearson Education, Inc. publishing as Prentice HallGoods and Services andthe 10 OM DecisionsOperationsDecisions Goods ServicesMaintenance Often preventiveand takes placeat production siteOften ―repair‖ andtakes place atcustomer‘s siteTable 2.1
  • 52. 2 - 52© 2011 Pearson Education, Inc. publishing as Prentice HallManaging Global ServiceOperations Capacity planning Location planning Facilities design and layout SchedulingRequires a different perspective on:
  • 53. 2 - 53© 2011 Pearson Education, Inc. publishing as Prentice HallProcess DesignLow Moderate HighVolumeHighModerateLowVarietyofProductsProcess-focusedJOB SHOPS(Print shop, emergencyroom, machine shop,fine-diningrestaurant)Repetitive (modular)focusASSEMBLY LINE(Cars, appliances,TVs, fast-foodrestaurants) Product focusedCONTINUOUS(Steel, beer, paper,bread, institutionalkitchen)Mass CustomizationCustomization at highVolume(Dell Computer‘s PC,cafeteria)
  • 54. 2 - 54© 2011 Pearson Education, Inc. publishing as Prentice HallOperations Strategies ofTwo Drug CompaniesBrand Name Drugs, Inc. Generic Drug Corp.CompetitiveAdvantageProduct Differentiation Low CostProductSelection andDesignHeavy R&D investment;extensive labs; focus ondevelopment in a broadrange of drugcategoriesLow R&D investment;focus on developmentof generic drugsQuality Major priority, exceedregulatory requirementsMeets regulatoryrequirements on acountry by countrybasisTable 2.2
  • 55. 2 - 55© 2011 Pearson Education, Inc. publishing as Prentice HallOperations Strategies ofTwo Drug CompaniesBrand Name Drugs, Inc. Generic Drug Corp.CompetitiveAdvantageProduct Differentiation Low CostProcess Product and modularprocess; longproduction runs inspecialized facilities;build capacity ahead ofdemandProcess focused;general processes; ―jobshop‖ approach, short-run production; focuson high utilizationLocation Still located in the citywhere it was foundedRecently moved to low-tax, low-labor-costenvironmentTable 2.2
  • 56. 2 - 56© 2011 Pearson Education, Inc. publishing as Prentice HallOperations Strategies ofTwo Drug CompaniesBrand Name Drugs, Inc. Generic Drug Corp.CompetitiveAdvantageProduct Differentiation Low CostScheduling Centralized productionplanningMany short-runproducts complicateschedulingLayout Layout supportsautomated product-focused productionLayout supportsprocess-focused ―jobshop‖ practicesTable 2.2
  • 57. 2 - 57© 2011 Pearson Education, Inc. publishing as Prentice HallOperations Strategies ofTwo Drug CompaniesBrand Name Drugs, Inc. Generic Drug Corp.CompetitiveAdvantageProduct Differentiation Low CostHumanResourcesHire the best;nationwide searchesVery experienced topexecutives; otherpersonnel paid belowindustry averageSupply Chain Long-term supplierrelationshipsTends to purchasecompetitively to findbargainsTable 2.2
  • 58. 2 - 58© 2011 Pearson Education, Inc. publishing as Prentice HallOperations Strategies ofTwo Drug CompaniesBrand Name Drugs, Inc. Generic Drug Corp.CompetitiveAdvantageProduct Differentiation Low CostInventory High finished goodsinventory to ensure alldemands are metProcess focus drives upwork-in-processinventory; finishedgoods inventory tendsto be lowMaintenance Highly trained staff;extensive partsinventoryHighly trained staff tomeet changing demandTable 2.2
  • 59. 2 - 59© 2011 Pearson Education, Inc. publishing as Prentice HallIssues In Operations Strategy Resources view Value Chain analysis Porter‘s Five Forces model Operating in a system with manyexternal factors Constant change
  • 60. 2 - 60© 2011 Pearson Education, Inc. publishing as Prentice HallProduct Life CycleBest period toincrease marketshareR&D engineering iscriticalPractical to changeprice or qualityimageStrengthen nichePoor time tochange image,price, or qualityCompetitive costsbecome criticalDefend marketpositionCost controlcriticalIntroduction Growth Maturity DeclineCompanyStrategy/IssuesFigure 2.5Internet search enginesSalesDrive-throughrestaurantsCD-ROMsAnalogTVsiPodsBoeing 787LCD &plasma TVsTwitterAvatarsXbox 360
  • 61. 2 - 61© 2011 Pearson Education, Inc. publishing as Prentice HallProduct Life CycleProduct designanddevelopmentcriticalFrequentproduct andprocess designchangesShort productionrunsHigh productioncostsLimited modelsAttention toqualityIntroduction Growth Maturity DeclineOMStrategy/IssuesForecastingcriticalProduct andprocessreliabilityCompetitiveproductimprovementsand optionsIncrease capacityShift towardproduct focusEnhancedistributionStandardizationFewer productchanges, moreminor changesOptimumcapacityIncreasingstability ofprocessLong productionrunsProductimprovementand cost cuttingLittle productdifferentiationCostminimizationOvercapacityin theindustryPrune line toeliminateitems notreturninggood marginReducecapacityFigure 2.5
  • 62. 2 - 62© 2011 Pearson Education, Inc. publishing as Prentice HallStrategyAnalysisSWOT AnalysisInternalStrengthsInternalWeaknessesExternalOpportunitiesExternalThreatsMission
  • 63. 2 - 63© 2011 Pearson Education, Inc. publishing as Prentice HallStrategy Development ProcessDetermine the Corporate MissionState the reason for the firm‘s existence and identify thevalue it wishes to create.Form a StrategyBuild a competitive advantage, such as low price, design, orvolume 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
  • 64. 2 - 64© 2011 Pearson Education, Inc. publishing as Prentice HallStrategy Development andImplementation Identify key success factors Build and staff the organization Integrate OM with other activitiesThe operations manager’s job is to implementan OM strategy, provide competitiveadvantage, and increase productivity
  • 65. 2 - 65© 2011 Pearson Education, Inc. publishing as Prentice HallKey Success FactorsProduction/OperationsFigure 2.7MarketingServiceDistributionPromotionChannels of distributionProduct positioning(image, functions)Finance/AccountingLeverageCost of capitalWorking capitalReceivablesPayablesFinancial controlLines of creditDecisions Sample Options ChapterProductQualityProcessLocationLayoutHuman resourceSupply chainInventoryScheduleMaintenanceCustomized, 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 maintenance56, S67, S7891011, S1112, 14, 1613, 1517Support a Core Competence and Implement Strategy byIdentifying and Executing the Key Success Factors in the Functional Areas
  • 66. 2 - 66© 2011 Pearson Education, Inc. publishing as Prentice HallCourteous, butLimited PassengerServiceStandardizedFleet of Boeing737 AircraftCompetitive Advantage:Low CostLean,ProductiveEmployeesShort Haul, Point-to-Point Routes, Often toSecondary AirportsHighAircraftUtilizationFrequent,ReliableSchedulesFigure 2.8Activity Mapping atSouthwest Airlines
  • 67. 2 - 67© 2011 Pearson Education, Inc. publishing as Prentice HallActivity Mapping atSouthwest AirlinesCourteous, butLimited PassengerServiceStandardizedFleet of Boeing737 AircraftCompetitive Advantage:Low CostLean,ProductiveEmployeesShort Haul, Point-to-Point Routes, Often toSecondary AirportsHighAircraftUtilizationFrequent,ReliableSchedulesFigure 2.8Automated ticketing machinesNo seat assignmentsNo baggage transfersNo meals (peanuts)
  • 68. 2 - 68© 2011 Pearson Education, Inc. publishing as Prentice HallActivity Mapping atSouthwest AirlinesCourteous, butLimited PassengerServiceStandardizedFleet of Boeing737 AircraftCompetitive Advantage:Low CostLean,ProductiveEmployeesShort Haul, Point-to-Point Routes, Often toSecondary AirportsHighAircraftUtilizationFrequent,ReliableSchedulesFigure 2.8No meals (peanuts)Lower gate costs atsecondary airportsHigh number of flightsreduces employee idle timebetween flights
  • 69. 2 - 69© 2011 Pearson Education, Inc. publishing as Prentice HallActivity Mapping atSouthwest AirlinesCourteous, butLimited PassengerServiceStandardizedFleet of Boeing737 AircraftCompetitive Advantage:Low CostLean,ProductiveEmployeesShort Haul, Point-to-Point Routes, Often toSecondary AirportsHighAircraftUtilizationFrequent,ReliableSchedulesFigure 2.8High number of flightsreduces employee idle timebetween flightsSaturate a city with flights,lowering administrativecosts (advertising, HR, etc.)per passenger for that cityPilot training required ononly one type of aircraftReduced maintenanceinventory required becauseof only one type of aircraft
  • 70. 2 - 70© 2011 Pearson Education, Inc. publishing as Prentice HallActivity Mapping atSouthwest AirlinesCourteous, butLimited PassengerServiceStandardizedFleet of Boeing737 AircraftCompetitive Advantage:Low CostLean,ProductiveEmployeesShort Haul, Point-to-Point Routes, Often toSecondary AirportsHighAircraftUtilizationFrequent,ReliableSchedulesFigure 2.8Pilot training required ononly one type of aircraftReduced maintenanceinventory required becauseof only one type of aircraftExcellent supplier relationswith Boeing has aidedfinancing
  • 71. 2 - 71© 2011 Pearson Education, Inc. publishing as Prentice HallActivity Mapping atSouthwest AirlinesCourteous, butLimited PassengerServiceStandardizedFleet of Boeing737 AircraftCompetitive Advantage:Low CostLean,ProductiveEmployeesShort Haul, Point-to-Point Routes, Often toSecondary AirportsHighAircraftUtilizationFrequent,ReliableSchedulesFigure 2.8Reduced maintenanceinventory required becauseof only one type of aircraftFlexible employees andstandard planes aidschedulingMaintenance personneltrained only one type ofaircraft20-minute gate turnaroundsFlexible unioncontracts
  • 72. 2 - 72© 2011 Pearson Education, Inc. publishing as Prentice HallActivity Mapping atSouthwest AirlinesCourteous, butLimited PassengerServiceStandardizedFleet of Boeing737 AircraftCompetitive Advantage:Low CostLean,ProductiveEmployeesShort Haul, Point-to-Point Routes, Often toSecondary AirportsHighAircraftUtilizationFrequent,ReliableSchedulesFigure 2.8Automated ticketingmachinesEmpowered employeesHigh employeecompensationHire for attitude, then trainHigh level of stockownershipHigh number of flightsreduces employee idle timebetween flights
  • 73. 2 - 73© 2011 Pearson Education, Inc. publishing as Prentice HallFour InternationalOperations StrategiesCostReductionConsiderationsHighLowHighLowLocal Responsiveness Considerations(Quick Response and/or Differentiation)Figure 2.9 Import/export orlicense existingproductExamplesU.S. SteelHarley DavidsonInternationalStrategy
  • 74. 2 - 74© 2011 Pearson Education, Inc. publishing as Prentice HallFour InternationalOperations StrategiesCostReductionConsiderationsHighLowHighLowLocal Responsiveness Considerations(Quick Response and/or Differentiation)International Strategy Import/export orlicense existingproductExamplesU.S. SteelHarley DavidsonFigure 2.9
  • 75. 2 - 75© 2011 Pearson Education, Inc. publishing as Prentice HallFour InternationalOperations StrategiesCostReductionConsiderationsHighLowHighLowLocal Responsiveness Considerations(Quick Response and/or Differentiation)International Strategy Import/export orlicense existingproductExamplesU.S. SteelHarley DavidsonFigure 2.9 Standardizedproduct Economies of scale Cross-culturallearningExamplesTexas InstrumentsCaterpillarOtis ElevatorGlobalStrategy
  • 76. 2 - 76© 2011 Pearson Education, Inc. publishing as Prentice HallFour InternationalOperations StrategiesCostReductionConsiderationsHighLowHighLowLocal Responsiveness Considerations(Quick Response and/or Differentiation) Standardized product Economies of scale Cross-cultural learningExamples:Texas InstrumentsCaterpillarOtis ElevatorGlobal StrategyInternational Strategy Import/export orlicense existingproductExamplesU.S. SteelHarley DavidsonFigure 2.9
  • 77. 2 - 77© 2011 Pearson Education, Inc. publishing as Prentice HallFour InternationalOperations StrategiesCostReductionConsiderationsHighLowHighLowLocal Responsiveness Considerations(Quick Response and/or Differentiation) Standardized product Economies of scale Cross-cultural learningExamples:Texas InstrumentsCaterpillarOtis ElevatorGlobal StrategyInternational Strategy Import/export orlicense existingproductExamplesU.S. SteelHarley DavidsonFigure 2.9 Use existingdomestic modelglobally Franchise, jointventures,subsidiariesExamplesHeinzMcDonald‘sThe Body ShopHard Rock CafeMultidomesticStrategy
  • 78. 2 - 78© 2011 Pearson Education, Inc. publishing as Prentice HallFour InternationalOperations StrategiesCostReductionConsiderationsHighLowHighLowLocal Responsiveness Considerations(Quick Response and/or Differentiation) Standardized product Economies of scale Cross-cultural learningExamples:Texas InstrumentsCaterpillarOtis ElevatorGlobal StrategyInternational Strategy Import/export orlicense existingproductExamplesU.S. SteelHarley DavidsonMultidomestic Strategy Use existingdomestic model globally Franchise, joint ventures,subsidiariesExamplesHeinz The Body ShopMcDonald‘s Hard Rock CafeFigure 2.9
  • 79. 2 - 79© 2011 Pearson Education, Inc. publishing as Prentice HallFour InternationalOperations StrategiesCostReductionConsiderationsHighLowHighLowLocal Responsiveness Considerations(Quick Response and/or Differentiation) Standardized product Economies of scale Cross-cultural learningExamples:Texas InstrumentsCaterpillarOtis ElevatorGlobal StrategyInternational Strategy Import/export orlicense existingproductExamplesU.S. SteelHarley DavidsonMultidomestic Strategy Use existingdomestic model globally Franchise, joint ventures,subsidiariesExamplesHeinz The Body ShopMcDonald‘s Hard Rock CafeFigure 2.9 Move material,people, ideasacross nationalboundaries Economies of scale Cross-culturallearningExamplesCoca-ColaNestléTransnationalStrategy
  • 80. 2 - 80© 2011 Pearson Education, Inc. publishing as Prentice HallFour InternationalOperations StrategiesCostReductionConsiderationsHighLowHighLowLocal Responsiveness Considerations(Quick Response and/or Differentiation) Standardized product Economies of scale Cross-cultural learningExamples:Texas InstrumentsCaterpillarOtis ElevatorGlobal Strategy Transnational Strategy Move material, people, ideasacross national boundaries Economies of scale Cross-cultural learningExamplesCoca-ColaNestléInternational Strategy Import/export orlicense existingproductExamplesU.S. SteelHarley DavidsonMultidomestic Strategy Use existingdomestic model globally Franchise, joint ventures,subsidiariesExamplesHeinz The Body ShopMcDonald‘s Hard Rock CafeFigure 2.9
  • 81. 2 - 81© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson EducationRanking CorruptionRank Country 2011 CPI Score (out of 10)1 New Zealand 9.52 Demark, 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 2.4LeastCorruptMostCorrupt
  • 82. 2 - 82© 2011 Pearson Education, Inc. publishing as Prentice HallAll rights reserved. No part of this publication may be reproduced, stored in a retrievalsystem, or transmitted, in any form or by anymeans, electronic, mechanical, photocopying, recording, or otherwise, without the priorwritten permission of the publisher.Printed in the United States of America.