Chapter 2 - Operations Strategy in a Global Enviornment

Mission

Defines where an organization is going; answers "What do we provide society?"

Strategy

Outlines how to achieve the mission; includes action plans for functional areas.

Factors Affecting Mission

• Environment

• Customers

• Philosophy and values

• Profitability and growth

• Public image

What does SWOT stand for?

1. Strengths

2. Weakness

3. Opportunities

4. Threats

What are the 3 steps in the strategy development process?

Analyse the environment

Determine the corporate mission

Form a strategy

What are the 3 tiers in the planning horizon?

1. Strategic Planning (Long term)

2. Tactical Planning (Short term)

3. Operational Planning (Day-today)

Reasons to Globalize

1. Costs: Lower wage rates, free trade zones, export incentives.

2. Supply Chain: Proximity to unique resources.

3. Better Goods/Services: Quality and cultural sensitivity.

4. Understand Markets: Interact with international customers.

5. Improve Operations: Learn global best practices.

6. Retain Global Talent: Attract and relocate skilled personnel.

What do we mean by objective characteristics vs sensitive characteristics in terms of goods and services quality?

Objective: On-time deliveries, high quality products

Subjective: Sensitivity to culture/infrastructure, improved customer service

Name 5 considerations before global expansion

1. No. of skilled workers

2. Tax rate

3. Language

4. Raw materials

5. Political stability

Strategies for Competitive Advantage

• Differentiation: Unique products/services (e.g., Walt Disney, Hard Rock Café).

• Cost: Max value for customers (e.g., Walmart, Porter Airlines).

• Response: Flexibility, reliability, timeliness (e.g., Pizza Hut, Motorola).

Ten Strategic OM Decisions

• Goods and service design

• Quality

• Process and capacity design

• Location selection

• Layout design

• Human resources and job design

• Supply-chain management

• Inventory management

• Scheduling

• Maintenance

Strategy Implementation

• Identify success factors.

• Build and staff the organization.

• Integrate OM with other activities to ensure alignment with strategic goals.

What is the purpose of Key Success Factors?

• Support core competencies.

• Identify and execute critical elements in functional areas.

Name the 4 International Operations Strategies

• Global: Centralized operations; economies of scale.

• Multi-domestic: Localized operations; tailored to individual markets.

• Transnational: Integrated global resources; high flexibility.

• International: Import/export with minimal local customization.

Example of Global Strategy

• Sony: Global supplier network.