OM 300 1nd Edition Lecture 2 Outline of Last Lecture I Why OM II Strategy and Productivity III Measurement IV Service Sector V Challenges for OM Outline of Current Lecture II Mission and Strategy III 3 Strategic Approaches to Competitive Advantage Current Lecture Operations Strategy in a Global Environment 1 Global Strategies a Boeing sales and supply chain are worldwide i get their materials from different parts of the world b Benetton moves inventory to stores around the world faster than its competition by building flexibility into design production and distribution c Sony purchases components from suppliers in Thailand Malaysia and around the world Reasons to Globalize 1 Reduce costs labor taxes tarrifs etc 2 Improve supply chain 3 Provide better goods and services 4 Understand markets 5 Learn to improve operations 6 Attract and retain global talent Reducing Costs Foreign locations with lower wage rates can lower direct and indirect costs 1 Maquiladoras 2 World Trade Organization WTO 3 North American Free Trade Agreement NAFTA 4 APEC SEATO MERCOSUR CAFTA European Union EU These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Improve the Supply Chain 1 Locating facilities closer to unique resources a Auto design to California b Athletic shoe production to China c Perfume manufacturing in France Provide Better Goods and Services Objective and subjective characteristics of G S a On time deliveries b Cultural variables c Improved customer service Understand Markets Interacting with foreign customers and suppliers can lead to new opportunities o EXTEND THE PRODUCT LIFE CYCLE Remain open to the free flow of ideas a General motors partnered with a Japanese auto manufacturer to learn new approaches to production Attract and Retain Global Talent 1 Offer better employment opportunities a Better growth opportunities and insulation against unemployment b Relocate unneeded personnel to more prosperous locations Cultural and Ethical Issues 1 Cultures can be quite different 2 Attitudes can be quite different towards a Punctuality b Lunch breaks c Environment d Intellectual property e Thievery f Briber g Child Labor Companies want to consider 1 National literacy rate 2 Rate of innovation 3 Rate of technology change 4 Number of skilled workers 5 Political stability Product liability laws Export restrictions Variations in language 6 Work ethic 7 Tax rates 8 Inflation 9 Availability of raw materials 10 Interest rates 11 Population 12 Number of miles of highway 13 Phone system Mission 1 Mission where are you going a Organization s purpose for being b Answers what do we provide society c Provides boundaries and focus 2 Strategy tells the organization how to get there Factors Affecting Mission Strategy 1 Action plan to achieve mission 2 Functional areas have strategies 3 Strategies exploit opportunities and strengths neutralize threats and avoid weaknesses Strategies for Competitive Advantage DCR 1 Differentiation better or at least different a Competing on Differentiation i Uniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts customer s perception of value 1 Safeskin gloves leading edge products 2 Walt Disney Magic Kingdom experience differentiation 3 Hard Rock Cafe dining experience 2 Cost leadership cheaper a Provide the maximum value as perceived by customer Does not imply low quality i Southwest Airlines ii Wal Mart 3 Response rapid response a Flexibility is matching market changes in design innovation and volumes i Hewlett Packard b Reliability is meeting schedules i German machine industry c Timeliness is quickness in design production and delivery i Johnson electric Pizza Hut Motorola
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