HR Om11 ch02 GE-r-1
HR Om11 ch02 GE-r-1
HR Om11 ch02 GE-r-1
Environment and
Operations Strategy
2-1
Percent
45
40
35
30
25
20
15
10 |
Year
2014 Pearson Education
Figure 2.1
2-2
Reasons to Globalize
1. Improve the supply chain
2. Reduce costs (labor, taxes, tariffs, etc.)
3. Improve operations
4. Understand markets
5. Improve products
6. Attract and retain global talent
2-3
2-4
Reduce Costs
Foreign locations with lower wage rates
can lower direct and indirect costs
Trade agreements can lower tariffs
Maquiladoras
World Trade Organization (WTO)
North American Free Trade Agreement
(NAFTA)
APEC, SEATO, MERCOSUR, CAFTA
European Union (EU)
2014 Pearson Education
2-5
Improve Operations
Understand differences between
how business is handled in other
countries
Japanese inventory management
Scandinavians ergonomics
2-6
Understand Markets
Interacting with foreign customers,
suppliers, competition can lead to
new opportunities
Cell phone
design moved
from Europe
to Japan
Extend the
product life
cycle
2014 Pearson Education
2-7
Improve Products
Remain open to free flow of ideas
Toyota and BMW manage joint
research and development
Reduced risk, state-of-the-art design,
lower costs
2-8
2-9
Punctuality
Thievery
Lunch breaks
Bribery
Environment
Child labor
Intellectual
property
2 - 10
Work ethic
Rate of innovation
Tax rates
Rate of technology
change
Inflation
Number of skilled
workers
Availability of raw
materials
Political stability
Interest rates
Population
Number of miles of
highway
Phone system
Export restrictions
Variations in language
2014 Pearson Education
2 - 11
1. Volkswagen
Firestone Tires
2. Bridgestone
Godiva Chocolate
3. Campbell Soup
Haagen-Dazs Ice
Cream
Jaguar Autos
MGM Movies
Lamborghini Autos
Alpo Petfoods
2 - 12
1. Volkswagen
Firestone Tires
2. Bridgestone
Godiva Chocolate
3. Campbell Soup
Haagen-Dazs Ice
Cream
Jaguar Autos
MGM Movies
Lamborghini Autos
Alpo Petfoods
2 - 13
Braun Household
Appliances
Firestone Tires
1. Great Britain
Godiva Chocolate
2. Germany
Haagen-Dazs Ice
Cream
3. Japan
Jaguar Autos
MGM Movies
Lamborghini Autos
Alpo Petfoods
4. United States
5. Switzerland
6. India
2 - 14
Braun Household
Appliances
Firestone Tires
1. Great Britain
Godiva Chocolate
2. Germany
Haagen-Dazs Ice
Cream
3. Japan
Jaguar Autos
MGM Movies
Lamborghini Autos
Alpo Petfoods
4. United States
5. Switzerland
6. India
2 - 15
2 - 16
Mission
2 - 17
Environment
Mission
Customers
Public Image
Benefit to
Society
2 - 18
Strategic Process
Organizations
Mission
Functional Area
Missions
Marketing
Operations
Finance/
Accounting
2 - 19
Sample Missions
Sample Company Mission
To manufacture and service an innovative, growing, and
profitable worldwide microwave communications business
that exceeds our customers expectations.
Figure 2.3
2014 Pearson Education
2 - 20
Strategy
Strategies exploit
opportunities and
strengths, neutralize
threats, and avoid
weaknesses
2 - 21
2 - 22
Competing on Differentiation
Uniqueness can go beyond both the
physical characteristics and service
attributes to encompass everything that
impacts customers perception of value
2 - 23
Competing on Cost
Provide the maximum value as
perceived by customer. Does not imply
low quality.
2 - 24
Competing on Response
Flexibility is matching market changes in
design innovation and volumes
A way of life at Hewlett-Packard
Timeliness is quickness
in design, production,
and delivery
Johnson Electric,
Pizza Hut, Motorola
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2 - 25
Strategy
DIFFERENTIATION:
Innovative design
Broad product line
After-sales service
Experience
COST LEADERSHIP:
Low overhead
Example
Safeskins innovative gloves
Fidelity Securitys mutual
funds
Caterpillars heavy equipment
service
Hard Rock Cafs dining
experience
Effective capacity
use
Inventory
management
Walmarts sophisticated
distribution system
Supply chain
Inventory
Scheduling
RESPONSE:
Flexibility
Reliability
Quickness
Maintenance
2014 Pearson Education
Competitive
Advantage
Hewlett-Packards response to
volatile world market
FedExs absolutely, positively,
on time
Pizza Huts 5-minute guarantee
at lunchtime
Differentiation
(better)
Response
(faster)
Cost
leadership
(cheaper)
Figure 2.4
2 - 26
SWOT Analysis
Mission
Internal
Strengths
External
Opportunities
Analysis
Internal
Weaknesses
External
Threats
Strategy
2 - 27
2 - 28
Marketing
Service
Distribution
Promotion
Channels of distribution
Product positioning
(image, functions)
10 OM Decisions
Product
Quality
Process
Location
Layout
Human resource
Supply chain
Inventory
Schedule
Maintenance
2014 Pearson Education
Finance/Accounting
Production/Operations
Leverage
Cost of capital
Working capital
Receivables
Payables
Financial control
Lines of credit
Sample Options
Customized, or standardized; sustainability
Define customer expectations and how to achieve them
Facility size, technology, capacity, automation
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, S5
6, S6
7, S7
8
9
10
11, S11
12, 14, 16
13, 15
17
Figure 2.7
2 - 29
Figure 2.9
Cost Reduction
International strategy
(eg, Harley-Davidson
U.S. Steel)
Import/export or
license existing
product
Low
Low
High
Local Responsiveness
(Quick Response and/or Differentiation)
2 - 30
High
Figure 2.9
International
strategy
(eg, Harley-Davidson
U.S. Steel)
Import/export or
license existing
product
Low
Low
High
Local Responsiveness
(Quick Response and/or Differentiation)
2 - 31
Figure 2.9
Cost Reduction
Global strategy
(eg, Caterpillar
Texas Instruments
Otis Elevator)
International
strategy
Standardize product
(eg,Harley-Davidson
Steel)
U.S.
Economies
of scale
Import/export or
license
existing
Cross-cultural
product
learning
Low
Low
High
Local Responsiveness
(Quick Response and/or Differentiation)
2 - 32
Global strategy
(eg, Caterpillar
Texas Instruments
Otis Elevator)
Figure 2.9
Cost Reduction
Standardize product
Economies of scale
Cross-cultural learning
International
strategy
(eg, Harley-Davidson
U.S. Steel)
Import/export or
license existing
product
Low
Low
High
Local Responsiveness
(Quick Response and/or Differentiation)
2 - 33
Global strategy
(eg, Caterpillar
Texas Instruments
Otis Elevator)
Multidomestic
strategy
Standardize
product
(eg, Heinz,
McDonalds
Economies of scale
Cross-cultural
learning
The
Body Shop
Hard Rock Cafe)
Cost Reduction
Figure 2.9
International
strategy
(eg, Harley-Davidson
U.S. Steel)
product
Low
Low
High
Local Responsiveness
(Quick Response and/or Differentiation)
2 - 34
Global strategy
(eg, Caterpillar
Texas Instruments
Otis Elevator)
Figure 2.9
Cost Reduction
Standardize product
Economies of scale
Cross-cultural learning
International
strategy
(eg, Harley-Davidson
U.S. Steel)
Import/export or
license existing
product
Low
Multidomestic
strategy
(eg, Heinz, McDonalds
The Body Shop
Hard Rock Cafe)
Use existing domestic
model globally
Franchise, joint
ventures,
subsidiaries
Low
High
Local Responsiveness
(Quick Response and/or Differentiation)
2 - 35
High
Low
Global strategy
(eg, Caterpillar
Texas Instruments
Otis Elevator)
Transnational
strategy
(eg,
Standardize
product
Coca-Cola,
Nestl)
Economies of scale
Cross-cultural learning
Move material,
people, ideas across
Multidomestic
International
national
boundaries
strategy
strategy
(eg, Heinz, McDonalds
(eg, Harley-Davidson
U.S.Economies
ofBody
scale
The
Shop
Steel)
Hard Rock Cafe)
Cross-cultural
Import/export
or
Use existing domestic
license existing
model globally
product learning
Franchise, joint
Figure 2.9
ventures,
subsidiaries
Low
High
Local Responsiveness
(Quick Response and/or Differentiation)
2 - 36
Global strategy
(eg, Caterpillar
Texas Instruments
Otis Elevator)
Cost Reduction
Standardize product
Economies of scale
Cross-cultural learning
International
strategy
(eg, Harley-Davidson
U.S. Steel)
Import/export or
license existing
product
Low
Transnational
strategy
(eg, Coca-Cola, Nestl)
Figure 2.9
Move material,
people, ideas across
national boundaries
Economies of scale
Cross-cultural
learning
Multidomestic
strategy
(eg, Heinz, McDonalds
The Body Shop
Hard Rock Cafe)
Use existing domestic
model globally
Franchise, joint
ventures,
subsidiaries
Low
High
Local Responsiveness
(Quick Response and/or Differentiation)
2 - 37
Ranking Corruption
Rank
Country
2012 CPI Score (out of 100)
1
Demark, Finland, New Zealand
90
Least
4
Sweden
88
Corrupt
5
Singapore
87
6
Switzerland
86
7
Australia, Norway
85
9
Canada, Netherlands
84
13 Germany
79
14 Hong Kong
77
17 Japan, UK
74
19 USA
73
37 Taiwan
61
39 Israel
60
45 South Korea
56
Most
80 China
39
Corrupt
123 Vietnam
31
133 Russia
28
2014 Pearson Education
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