Chapter 2 Strategy and Competitiveness

2
2011 Pearson Education
The Global Environment

and Operations Strategy
2-1
Outline
Global Company Profile: Boeing
A Global View of Operations
Cultural and Ethical Issues
Developing Missions And

Strategies
Mission
Strategy
2-2
Outline Continued
Achieving Competitive Advantage
Through Operations
Competing On Differentiation
Competing On Cost
Competing On Response
Ten Strategic OM Decisions
2-3
Outline Continued
Strategy Development and
Implementation
Key Success Factors and Core
Competencies
Build and Staff the Organization
Integrate OM with Other Activities
2-4
Outline Continued
Global Operations Strategy
Options
International Strategy
Multidomestic Strategy
Global Strategy
Transnational Strategy
2-5
Learning Objectives
When you complete this chapter you
should be able to:
1. Define mission and strategy
2. Identify and explain three strategic
approaches to competitive
advantage
3. Identify and define the 10 decisions
of operations management
2-6
Learning Objectives
When you complete this chapter you
should be able to:
4. Understand the significant key
success factors and core
competencies
5. Identify and explain four global
operations strategy options
2-7
Some Boeing Suppliers (787)

Firm
Latecoere
Labinel
Dassault
Country
France
France
France
Messier-Bugatti
Thales
France
France
Messier-Dowty
Diehl
France
Germany
Component
Passenger doors
Wiring
Design and
PLM software
Electric brakes
Electrical power
conversion system
and integrated
standby flight display
Landing gear structure
Interior lighting
2-8

Firm
Cobham
Rolls-Royce
Smiths Aerospace
Country
UK
UK
UK
BAE SYSTEMS
Alenia Aeronautics
UK
Italy
Toray Industries
Japan
Component
Fuel pumps and valves
Engines
Central computer
system
Electronics
Upper center
fuselage &
horizontal stabilizer
Carbon fiber for
wing and tail units
2-9

Firm
Fuji Heavy
Industries
Kawasaki Heavy
Industries
Country
Japan
Component
Center wing box
Japan
Teijin Seiki
Mitsubishi Heavy
Industries
Chengdu Aircraft
Group
Hafei Aviation
Japan
Japan
Forward fuselage,
fixed section of wing,
landing gear well
Hydraulic actuators
Wing box
China
Rudder
China
Parts
2 - 10

Firm
Korean Aviation
Saab
Country
South
Korea
Sweden
Component
Wingtips
Cargo access doors
2 - 11
Global 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
2 - 12
Global Strategies
Volvo considered a Swedish company
but until recently was controlled by an
American company, Ford. 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.
Haier A Chinese company, produces
compact refrigerators (it has one-third of
the US market) and wine cabinets (it has
half of the US market) in South Carolina
2 - 13
Growth of World Trade

35
30
Percent
25
Collapse of the
Berlin Wall
20
15
10
5
0
|
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|
|
|
|
|
|
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1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 (est*)
Year
Figure 2.1
2 - 14
Some Multinational
Corporations
Home
Country
% Sales
Outside
Home
Country
% Assets
Outside
Home
Country
% Foreign
Workforce
Citicorp
USA
34
46
NA
ColgatePalmolive
USA
72
63
NA
Dow
Chemical
USA
60
50
NA
Gillette
USA
62
53
NA
Honda
Japan
63
36
NA
USA
57
47
51
Company
IBM
2 - 15
Some Multinational
Corporations
Home
Country
% Sales
Outside
Home
Country
% Assets
Outside
Home
Country
% Foreign
Workforce
Britain
78
50
NA
Switzerland
98
95
97
Philips
Netherlands
Electronics
94
85
82
Siemens
Germany
51
NA
38
Unilever
Britain &
Netherlands
95
70
64
Company
ICI
Nestle
2 - 16
Reasons to Globalize
Reasons to Globalize
Tangible 1. Reduce costs (labor, taxes, tariffs, etc.)
Reasons 2. Improve supply chain
3. Provide better goods and services
4. Understand markets
Intangible 5. Learn to improve operations
Reasons 6. Attract and retain global talent
2 - 17
Reduce 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)
2 - 18
Improve the Supply Chain

Locating facilities closer to
unique resources
Auto design to California
Athletic shoe production to China
Perfume manufacturing in France
2 - 19
Provide Better Goods

and Services
Objective and subjective
characteristics of goods and
services
On-time deliveries
Cultural variables
Improved customer service
2 - 20
Understand 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
2 - 21
Learn to Improve
Operations
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
2 - 22
Attract and Retain Global

Talent
Offer better employment
opportunities
Better growth opportunities and
insulation against unemployment
Relocate unneeded personnel to
more prosperous locations
2 - 23
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
2 - 24
Companies Want To Consider

National literacy rate
Rate of innovation
Work ethic
Tax rates
Rate of technology
change
Number of skilled
workers
Political stability
Inflation
Availability of raw
materials
Interest rates
Product liability laws

Export restrictions
Variations in language
Population
Number of miles of
highway
Phone system
2 - 25
Match Product & Parent

Braun Household
Appliances
Firestone Tires
1. Volkswagen
2. Bridgestone
Godiva Chocolate
Haagen-Dazs Ice
Cream
Jaguar Autos
3. Campbell Soup
MGM Movies
Lamborghini Autos
7. Pillsbury
Alpo Petfoods
4. Tata Motors Limited

5. Proctor and Gamble
6. Nestl
8. Sony
2 - 26
Match Product & Parent

Braun Household
Appliances
Firestone Tires
1. Volkswagen
2. Bridgestone
Godiva Chocolate
Haagen-Dazs Ice
Cream
Jaguar Autos
3. Campbell Soup
MGM Movies
Lamborghini Autos
7. Pillsbury
Alpo Petfoods
4. Tata Motors Limited

5. Proctor and Gamble
6. Nestl
8. Sony
2 - 27
Match Product & Country

Braun Household
Appliances
Firestone Tires
Godiva Chocolate
Haagen-Dazs Ice
Cream
Jaguar Autos
MGM Movies
Lamborghini Autos
1. Great Britain
2. Germany
3. Japan
4. United States
5. Switzerland
6. India
Alpo Pet Foods

2 - 28
Match Product & Country

Braun Household
Appliances
Firestone Tires
Godiva Chocolate
Haagen-Dazs Ice
Cream
Jaguar Autos
MGM Movies
Lamborghini Autos
1. Great Britain
2. Germany
3. Japan
4. United States
5. Switzerland
6. India
Alpo Pet Foods

2 - 29
Developing Missions and

Strategies
Mission statements tell an
organization where it is going
The Strategy tells the
organization how to get there
2 - 30
Mission
Mission - where are
you going?
Organizations
purpose for being
Answers What do
we provide society?
Provides boundaries
and focus
2 - 31
Merck
The mission of Merck is to provide
society with superior products and
servicesinnovations and solutions
that improve the quality of life and
satisfy customer needsto provide
employees with meaningful work and
advancement opportunities and
investors with a superior rate of return.
Figure 2.2
2 - 32
Hard Rock Cafe

Our Mission: To spread the spirit of
Rock n Roll by delivering an
exceptional entertainment and dining
experience. We are committed to being
an important, contributing member of
our community and offering the Hard
Rock family a fun, healthy, and
nurturing work environment while
ensuring our long-term success.
Figure 2.2
2 - 33
Arnold 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
2 - 34
Factors Affecting Mission

Philosophy
and Values
Profitability
and Growth
Environment
Mission
Customers
Public Image
Benefit to
Society
2 - 35
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 companys mission
as the worldwide low-cost manufacturer.
Figure 2.3
2 - 36
Sample Missions
Sample OM Department Missions
Product 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.
Figure 2.3
2 - 37
Sample Missions
Location
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.
Figure 2.3
2 - 38
Sample Missions
Supply-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.
Figure 2.3
2 - 39
Strategic Process
Organizations
Mission
Functional
Area Missions
Marketing
Operations
Finance/
Accounting
2 - 40
Strategy
Action plan to
achieve mission
Functional areas
have strategies
Strategies exploit
opportunities and
strengths, neutralize
threats, and avoid
weaknesses
2 - 41
Strategies for Competitive

Advantage
Differentiation better, or at
least different
Cost leadership cheaper
Response rapid response
2 - 42
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
2 - 43
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
Wal-Mart small overhead, shrinkage,
distribution costs
Franz Colruyt no bags, low light, no
music, doors on freezers
2 - 44
Competing 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
2 - 45
OMs Contribution to Strategy

10 Operations
Decisions
Product
Quality
Approach
DIFFERENTIATION
Innovative design
Broad product line
After-sales service
Process
Experience
Location
COST LEADERSHIP
Low overhead
Layout
Effective capacity
use
Human
resource
Inventory
management
Supply chain
RESPONSE
Flexibility
Inventory
Reliability
Scheduling
Quickness
Maintenance
Example
Competitive
Advantage
Safeskins innovative gloves

Fidelity Securitys mutual
funds
Caterpillars heavy equipment
service
Hard Rock Cafs dining
experience
Franz-Colruyts warehousetype stores
Differentiation
(better)
Southwest Airlines
aircraft utilization
Wal Marts sophisticated
distribution system
Hewlett-Packards response to
volatile world market
FedExs absolutely, positively,
on time
Pizza Huts 5-minute guarantee
Response
(faster)
Cost
leadership
(cheaper)
Figure 2.4
at lunchtime
2 - 46
10 Strategic OM Decisions
1. Goods and
service design
2. Quality
3. Process and
capacity design
4. Location
selection
5. Layout design
6. Human resources
and job design
7. Supply-chain
management
8. Inventory
9. Scheduling
10. Maintenance
2 - 47
Goods and Services and

the 10 OM Decisions
Operations
Decisions
Goods and
service
design
Goods
Services
Product is usually Product is not
tangible
tangible
Quality
Many objective
standards
Many subjective
standards
Process
and
capacity
design
Customers not
involved
Customer may be
directly involved
Capacity must
match demand
Table 2.1
2 - 48

the 10 OM Decisions
Operations
Decisions
Location
selection
Goods
Near raw
materials and
labor
Services
Near customers
Layout
design
Production
efficiency
Enhances product
and production
Human
resources
and job
design
Technical skills,
Interact with
consistent labor
customers, labor
standards, output standards vary
based wages
Table 2.1
2 - 49

the 10 OM Decisions
Operations
Decisions
Supply
chain
Goods
Relationship
critical to final
product
Services
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
2 - 50

the 10 OM Decisions
Operations
Decisions
Goods
Services
Maintenance Often preventive Often repair and
and takes place
takes place at
at production site customers site
Table 2.1
2 - 51
Managing Global Service

Operations
Requires a different perspective
on:
Capacity planning
Location planning
Facilities design and layout
Scheduling
2 - 52
Process Design
Variety of Products
High
Moderate
Process-focused
JOB SHOPS
(Print shop, emergency
room, machine shop,
fine-dining
Repetitive (modular)
restaurant)
focus
ASSEMBLY LINE
(Cars, appliances,
TVs, fast-food
restaurants)
Mass Customization
Customization at high
Volume
(Dell Computers PC,
cafeteria)
Product focused
CONTINUOUS
(Steel, beer, paper,
bread, institutional
kitchen)
Low
Low
Moderate
Volume
High
2 - 53
Operations Strategies of
Two Drug Companies
Competitive
Advantage
Brand Name Drugs, Inc.
Generic Drug Corp.
Product Differentiation
Low Cost
Product
Heavy R&D investment; Low R&D investment;
Selection and extensive labs; focus on focus on development
Design
development in a broad of generic drugs
range of drug
categories
Quality
Major priority, exceed

Meets regulatory
regulatory requirements requirements on a
country by country
basis
Table 2.2
2 - 54
Two Drug Companies
Competitive
Advantage
Generic Drug Corp.
Low Cost
Process
Product and modular

process; long
production runs in
specialized facilities;
build capacity ahead of
demand
Process focused;
general processes; job
shop approach, shortrun production; focus
on high utilization
Location
Still located in the city

where it was founded
Recently moved to lowtax, low-labor-cost

environment
Table 2.2
2 - 55
Two Drug Companies
Competitive
Advantage
Generic Drug Corp.
Low Cost
Scheduling
Centralized production
planning
Many short-run
products complicate
scheduling
Layout
Layout supports
automated productfocused production
Layout supports
process-focused job
shop practices
Table 2.2
2 - 56
Two Drug Companies
Competitive
Advantage
Generic Drug Corp.
Low 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 - 57
Two Drug Companies
Competitive
Advantage
Generic Drug Corp.
Low 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
2 - 58
Issues In Operations Strategy

Resources view
Value Chain analysis
Porters Five Forces model
Operating in a system with many
external factors
Constant change
2 - 59
Product Life Cycle

Company Strategy/Issues
Introduction
Growth
Maturity
Decline
Best period to
increase market
share
Practical to change
price or quality
image
Poor time to
change image,
price, or quality
R&D engineering is
critical
Strengthen niche
Competitive costs
become critical
Defend market
position
Drive-through
Internet search engines

iPods
Xbox 360
Sales
Cost control
critical
restaurants
CD-ROMs
LCD &
plasma TVs
Avatars
Boeing 787
Twitter
Analog
TVs
Figure 2.5
2 - 60
Product Life Cycle

OM 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
Maturity
Standardization
Fewer product
changes, more
minor changes
Optimum
capacity
Increasing
stability of
process
Increase capacity Long production

Shift toward
runs
product focus
Product
Enhance
distribution
Decline
Little product
differentiation
Cost
minimization
Overcapacity
in the
industry
Prune line to
eliminate
items not
returning
good margin
improvement and Reduce

capacity
cost cutting
Figure 2.5
2 - 61
SWOT Analysis
Mission
Internal
Strengths
External
Opportunities
Analysis
Internal
Weaknesses
External
Threats
Strategy
2 - 62
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 firms 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, aftersale service, broad product lines.
Figure 2.6
2 - 63
Strategy Development and

Implementation
Identify key success factors
Build and staff the organization
Integrate OM with other activities
The operations managers job is to implement
an OM strategy, provide competitive
advantage, and increase productivity
2 - 64
Key Success Factors

Support a Core Competence and Implement Strategy by
Identifying and Executing the Key Success Factors in the Functional Areas
Marketing
Service
Distribution
Promotion
Channels of distribution
Product positioning
(image, functions)
Decisions
Product
Quality
Process
Location
Layout
Human resource
Supply chain
Inventory
Schedule
Maintenance
Finance/Accounting
Production/Operations
Leverage
Cost of capital
Working capital
Receivables
Payables
Financial control
Lines of credit
Sample Options
Customized, or standardized
Define customer expectations and how to achieve them
Facility size, technology, capacity
Near supplier or near customer
Work cells or assembly line
Specialized or enriched jobs
Single or multiple suppliers
When to reorder, how much to keep on hand
Stable or fluctuating production rate
Repair as required or preventive maintenance
Chapter
5
6, S6
7, S7
8
9
10
11, S11
12, 14, 16
13, 15
17
Figure 2.7
2 - 65
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
2 - 66
Activity Mapping at
Southwest Airlines
Courteous, but
Limited Passenger
Service
Lean,
Productive
Employees

Secondary Airports
Automated ticketing machines

Competitive
Advantage:
No seat assignments
Low Cost
No baggage transfers
High
Aircraft
Utilization
No meals (peanuts)
Standardized
Fleet of Boeing
737 Aircraft
Frequent,
Reliable
Schedules
Figure 2.8
2 - 67
Activity Mapping at
Southwest Airlines
Courteous, but
Limited Passenger
Service
No meals (peanuts)
Lean,
Lower gate costs at
Productive
secondary airports
Employees

Secondary Airports
High number of flights

reduces employee
idleCost
time
Low
between flights
High
Aircraft
Utilization
Standardized
Fleet of Boeing
737 Aircraft
Frequent,
Reliable
Schedules
Figure 2.8
2 - 68
Activity Mapping at
Southwest Airlines
Courteous,
but
High number
of flights
Limited Passenger
reduces employee
idle time
Service
between flights
Lean,
Saturate a city with flights,
Productive
lowering administrative
Employees

Secondary Airports
costs (advertising, HR, etc.)

Competitive
Advantage:
per passenger
for that
city
Low Cost
Pilot training required on
Highonly one type of aircraft
Aircraft
Reduced
Utilization
maintenance
Standardized
inventory required
because
Fleet of
Boeing
of only one type737
ofAircraft
aircraft
Frequent,
Reliable
Schedules
Figure 2.8
2 - 69
Activity Mapping at
Southwest Airlines
Pilot training required on
Courteous,
butaircraft
onlyLimited
one
type
of
Passenger
Service
Reduced
maintenance
inventory required because
Lean,
Short Haul, Point-toProductive of only one type of aircraft
Point Routes, Often to
Employees
Secondary Airports
Excellent supplier relations
with Boeing
has aided
Competitive
Advantage:
financing
Low
Cost
High
Aircraft
Utilization
Standardized
Fleet of Boeing
737 Aircraft
Frequent,
Reliable
Schedules
Figure 2.8
2 - 70
Activity Mapping at
Southwest Airlines
Courteous, but
Limited
Passenger
Reduced
maintenance
Service
Lean,
Productive
Flexible
union
Employees
inventory required because

of only one type of aircraft
Short Haul, Point-to-
Point Routes, Often to
Flexible employeesSecondary
and
Airports
standard planes aid
contracts
scheduling
Low Cost
Maintenance personnel
trained only one type of
Frequent,
High
Aircraft
Reliable
aircraft
Utilization
Standardized
20-minute
gate
Fleet of Boeing
737 Aircraft
Schedules
turnarounds
Figure 2.8
2 - 71
Activity Mapping at
Southwest Airlines
Automated ticketing
Courteous,
but
machines
Limited Passenger
Service
Empowered
employees
Lean,
Productive
Employees
High
Aircraft
Utilization
High employee
compensation
Secondary Airports
Hire for attitude, then train

High
level of stock
Low
Cost
ownership
High number of flightsFrequent,

Reliable
reduces
employee idle time
Schedules
Standardized
Fleetbetween
of Boeing flights
737 Aircraft
Figure 2.8
2 - 72
International
Strategy
Cost Reduction Considerations
High
Four International
Operations Strategies
Figure 2.9
Import/export or
license existing
product
Examples
U.S. Steel
Harley Davidson
Low
Low
High
Local Responsiveness Considerations
(Quick Response and/or Differentiation)
2 - 73
High
Four International
Figure 2.9
Import/export or
license existing
product
Examples
U.S. Steel
Harley Davidson
Low
Low
High
2 - 74
Strategy
High
Four International
Operations
GlobalStrategies
Figure 2.9
Standardized
product
Economies of scale
Cross-cultural
learning
Import/export or
Examples
license existing
product
Texas Instruments
Examples
U.S.Caterpillar
Steel
Harley Davidson
Otis Elevator
Low
Low
High
2 - 75
High
Four International
Figure 2.9
Global Strategy
Standardized product
Economies of scale
Cross-cultural learning
Examples:
Texas Instruments
Caterpillar
Otis Elevator
Import/export or
license existing
product
Examples
U.S. Steel
Harley Davidson
Low
Low
High
2 - 76
High
Four International
Multidomestic
Operations
Strategies
Strategy
Figure 2.9
Global Strategy
Use existing
Economies of scale
domestic
model
Cross-cultural
learning
Examples:globally
Texas Instruments
Caterpillar
Franchise, joint
Otis Elevator
ventures,
subsidiaries
Import/export or
license existing
product
Low
Low
Examples
Heinz
Examples
U.S. Steel
McDonalds
Harley
Davidson
The Body Shop
Hard Rock Cafe
High

2 - 77
High
Four International
Figure 2.9
Global Strategy
Economies of scale
Examples:
Texas Instruments
Caterpillar
Otis Elevator
Import/export or
license existing
product
Use existing
domestic model globally
Franchise, joint ventures,
subsidiaries
Examples
U.S. Steel
Harley Davidson
Examples
Heinz
The Body Shop
McDonalds Hard Rock Cafe
Low
Low
High
2 - 78
Strategy
Global Strategy
High
Four International
Operations
Strategies
Transnational
Figure 2.9
Move material,
people, ideas
Examples:
Texas Instruments
across national
Caterpillar
Otis Elevator
boundaries
Economies of scale
Use existing
Cross-cultural
Import/export or
license
existing
learning
subsidiaries
product
Economies of scale
Examples
Coca-Cola
Nestl
Examples
U.S. Steel
Harley Davidson
Low
Low
Examples
Heinz
The Body Shop
High

2 - 79
High
Four International
Global Strategy
Transnational Strategy
Economies of scale
Move material, people, ideas

across national boundaries
Economies of scale
Examples:
Texas Instruments
Caterpillar
Otis Elevator
Examples
Coca-Cola
Nestl
Import/export or
license existing
product
Use existing
subsidiaries
Examples
U.S. Steel
Harley Davidson
Examples
Heinz
The Body Shop
Figure 2.9
Low
Low
High
2 - 80
Ranking Corruption
Rank
Country
1
New Zealand
2
Demark
3
Singapore, Sweden
5
Switzerland
8
Australia, Canada, Iceland
12 Hong Kong
14 Germany
17 Japan, UK
19 USA
37 Taiwan
39 South Korea
56 Malaysia
79 China
89 Mexico
146 Russia
2009 CPI Score (out of 10)

9.4
Least
9.3 Corrupt
9.2
9.0
8.7
8.2
8.0
7.7
7.5
5.6
5.5
4.5
3.6
Most
3.3 Corrupt
2.2
2 - 81
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The Global Environment

Developing Missions And

Ten Strategic OM Decisions

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Some Boeing Suppliers (787)

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Some Boeing Suppliers (787)

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Some Boeing Suppliers (787)

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Some Boeing Suppliers (787)

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Growth of World Trade

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Improve the Supply Chain

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Provide Better Goods

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Attract and Retain Global

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Cultural and Ethical Issues

Companies Want To Consider

Product liability laws

Match Product & Parent

4. Tata Motors Limited

Match Product & Parent

4. Tata Motors Limited

Match Product & Country

Alpo Pet Foods

Match Product & Country

Alpo Pet Foods

Developing Missions and

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Hard Rock Cafe

Arnold Palmer Hospital

Factors Affecting Mission

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Sample Operations Management Mission

To design and produce products and

To attain the exceptional value that is

To determine, design, and produce the

To locate, design, and build efficient and

To achieve, through skill, imagination, and

To provide a good quality of work life, with

To collaborate with suppliers to develop

To achieve low investment in inventory

To achieve high levels of throughput and

To achieve high utilization of facilities and

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Strategies for Competitive

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Reliability is meeting schedules

OMs Contribution to Strategy

Safeskins innovative gloves

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