IB Final CORRECT ONES ch 8, 11, 12, 14, 17,

What is operations management?

The activities used to transform inputs (materials, labor, capital) into goods and services.

What is international operations management?

Operations management applied across multiple countries.

What is production management?

Operations involving the creation of tangible goods.

What is service operations management?

Operations involving the creation of intangible services.

What are the three dimensions of international production management?

Supply chain management, facilities location, and logistics.

What is supply chain management?

The processes used to acquire the resources needed to produce products.

Three impacts of supply chain management

Product cost, product quality, and internal capital requirements.

What is vertical integration?

The extent to which a firm performs stages of production itself.

High vertical integration

Firm owns many stages of production.

Low vertical integration

Firm relies on outside suppliers.

Example of high vertical integration

BP.

Example of low vertical integration

Heineken.

What is the make-or-buy decision?

Whether a firm should produce inputs itself or purchase them externally.

Four make-or-buy tradeoffs

Cost vs control, risk, investment, flexibility.

What is logistics?

Movement of materials into, within, and out of a firm.

What is productivity?

Output divided by input.

How can firms improve productivity?

Better technology, training, quality, efficient processes.

What is TQM?

Total Quality Management: continuous improvement focused on customer satisfaction.

Core idea of TQM

Quality is everyone's responsibility.

What is benchmarking?

Comparing performance against industry leaders.

What is JIT?

Just-in-Time inventory system minimizing inventory.

Benefit of JIT

Lower inventory costs.

Risk of JIT

Supply disruptions.

What is lean production?

Reducing waste while maximizing value.

What is foreign exchange?

Money denominated in another country's currency.

What is an exchange rate?

Price of one currency in terms of another.

What determines exchange rates?

Supply and demand.

What is the FX market?

Market where currencies are traded.

Spot market

Immediate currency exchange.

Forward market

Currency exchange at a future date for an agreed rate.

What is arbitrage?

Profiting from price differences across markets.

Purpose of forward contracts

Reduce exchange-rate risk.

Direct quote

Domestic currency per unit of foreign currency.

Indirect quote

Foreign currency per unit of domestic currency.

What shifts currency demand?

Imports, investment, speculation, tourism.

What shifts currency supply?

Exports, foreign investment abroad, tourism.

International strategy

Comprehensive plan for competing internationally.

Global efficiency

Reducing costs through worldwide integration.

Multinational flexibility

Responding to local market differences.

Worldwide learning

Sharing knowledge across subsidiaries.

Economies of scale

Lower average costs from higher production.

Economies of scope

Savings from producing related products.

Home replication strategy

Transfer home-country competencies abroad.

Advantage of home replication

Low cost and simple.

Disadvantage of home replication

Poor local responsiveness.

Global strategy

Standardized products worldwide.

Advantage of global strategy

High efficiency.

Disadvantage of global strategy

Low local responsiveness.

Multidomestic strategy

Customize products for each country.

Advantage of multidomestic strategy

High local responsiveness.

Disadvantage of multidomestic strategy

Higher costs.

Transnational strategy

Balance efficiency and local responsiveness.

Why is transnational difficult?

Must achieve both efficiency and flexibility.

Foreign market analysis

Evaluating foreign market opportunities.

Three steps of foreign market analysis

Assessment, evaluation, selection.

Market potential

Expected sales opportunity.

Political risk

Government actions harming business.

Legal environment

Country's laws affecting business.

Sociocultural environment

Culture, language, values affecting business.

Direct cost

Immediate financial expense.

Opportunity cost

Benefit sacrificed by choosing one option.

OLI paradigm

Ownership, Location, Internalization advantages.

Ownership advantage

Firm-specific strengths.

Location advantage

Benefits of operating in a location.

Internalization advantage

Benefits of keeping activities inside the firm.

Exporting

Selling products abroad from home country.

Licensing

Allowing another firm to use IP.

Franchising

Licensing an entire business model.

Joint venture

Shared ownership between firms.

Strategic alliance

Cooperative agreement without shared ownership.

Greenfield investment

Building a new facility abroad.

Acquisition

Buying an existing foreign company.

FDI

Foreign Direct Investment.

Advantage of exporting

Low investment.

Disadvantage of exporting

Transportation and tariff costs.

Advantage of licensing

Low risk.

Disadvantage of licensing

Loss of control.

Advantage of franchising

Rapid expansion.

Disadvantage of franchising

Maintaining quality.

Advantage of joint venture

Shared risk and local knowledge.

Disadvantage of joint venture

Shared control.

Advantage of Greenfield

Maximum control.

Disadvantage of Greenfield

High cost and slow.

Advantage of acquisition

Fast market entry.

Disadvantage of acquisition

Integration challenges.

Organization design

Structure of roles and responsibilities.

Export department

Handles exporting activities.

International division

Separate unit for international business.

Global product structure

Organized by product.

Global area structure

Organized by region.

Global functional structure

Organized by function.

Matrix structure

Combines multiple reporting relationships.

Advantage of matrix

Flexibility.

Disadvantage of matrix

Conflicting authority.

Strategic control

Monitoring long-term goals.

Operational control

Monitoring daily activities.

Financial control

Using budgets and financial performance.

Bureaucratic control

Rules and procedures.

Cultural control

Shared values guide behavior.

Compare: Global strategy vs Multidomestic strategy

Global = Efficiency

Multidomestic = Local adaptation