J0444
OPERATION MANAGEMENT
Strategi Operasi di
Lingkungan Global
Universitas
Bina Nusantara
Examples of Global Strategies
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Boeing – both sales and production are
worldwide.
Benetton – moves inventory to stores around
the world faster than its competitor by building
flexibility into design, production, and
distribution
Sony – purchases components from suppliers
in Thailand, Malaysia, and around the world
GM is building four similar plants in Argentina,
Poland, China, and Thailand
Boeing Suppliers (777)
Firm
Country
Parts
Alenia
Italy
Wing flaps
AeroSpace
Technologies
CASA
Fuji
Australia
Rudder
Spain
Japan
Ailerons
Landing gear
doors, wing section
GEC Avionics
Korean Air
Menasco Aerospace
United Kingdom
Korea
Canada
Flight computers
Flap supports
Landing gears
Short Brothers
Ireland
Landing gear doors
Singapore
Aerospace
Singapore
Landing gear doors
The Role of
Maquiladoras
 World Trade Organization (WTC)
 North American Free Trade Agreement
(NAFTA)
 European Union (EU)
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Management Issues in
Global Operations
Global Strategic
Context
– Differentiation
– Cost leadership
– Response
Supply Chain
Management
Location
Decisions
Logistics
Management
Supply-Chain Management
Sourcing
 Vertical integration
 Make-or-buy decisions
 Partnering
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Location Decisions
Country-related issues
 Product-related issues
 Government policy/political risk
 Organizational issues
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Materials Management
Flow of materials
 Transportation options and speed
 Inventory levels
 Packaging
 Storage
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Defining Global Operations
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International business - engages in cross-border
transactions
Multinational Corporation - has extensive
involvement in international business, owning or
controlling facilities in more than one country
Global company - integrates operations from
different countries, and views world as a single
marketplace
Transnational company - seeks to combine the
benefits of global-scale efficiencies with the
benefits of local responsiveness
Some Multinational Corporations
Company
Home
Country
% Sales
Outside
Home
% Assets
Outside
Home
% Foreign
Workforce
Citicorp
USA
Country
34
Country
46
NA
ColgatePalmolive
USA
72
63
NA
Dow
Chemical
Gillette
USA
60
50
NA
USA
62
53
NA
Honda
Japan
63
36
NA
IBM
USA
57
47
51
Some Multinational
Corporations
Company
Home
Country
% Sales
Outside
Home
Country
% Assets
Outside
Home
Country
% Foreign
Workforce
ICI
Britain
78
50
NA
Nestlé
Switzerland
98
95
97
Philips
Electronics
Siemens
Netherlands
94
85
82
Germany
51
NA
38
Unilever
Britain &
Netherlands
95
70
64
Reasons to Globalize
Operations
Tangible
Reduce costs (labor, taxes, tariffs,
etc.)
 Improve the supply chain
 Provide better goods and services
 Attract new markets
 Learn to improve operations
Intangible  Attract and retain global talent
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Trade and Tariff
Maquiladoras - Mexican factories located
along the U.S.-Mexico border that
receive preferential tariff treatment
 GATT - an international treaty that helps
promote world trade by lowering
barriers to the free flow of goods across
borders
 NAFTA - a free trade agreement
between Canada, Mexico, and the
United States
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Trade Pays
GDP (PPP*) per Person
1990 Growth Rates, %
*PPP – Purchasing Power Parity
5
4
3
2
1
0
-1
More globalized
poor countries
Rich
countries
Less globalized
poor countries
Free trade may
take us into the era of the floating
factory - a six person crew will take
a factory from port to port in order
to obtain the best market, material,
labor and tax advantages
Achieving Global Operations
-Four Considerations-
Global product design
 Global process design and
technology
 Global factory location analysis
 Impact of Culture and Ethics
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Global
Product Design
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Remember social and cultural
differences
– packaging and marketing can help make
product seem “domestic” but  “liter”
versus “quart”
 “sweetness” and “taste”
Global
Process Design and Technology
Information technology enables
management of integrated, globally
dispersed operation
 Texas Instruments: 50 plants in 19
countries
 Hewlett-Packard - product development
teams in U.S., Japan, Great Britain, and
Germany
 Reduces time-to-market
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Global
Facility Location Analysis
Using CSFs for Country Selection
Select CSFs based on parent
organization;’s strategic or operations
objectives
 Obtain country-specific information on
the CSFs
 Evaluate each country’s CSFs using a 1
(bad) to 5 (good) rating scale
 Sum the ratings
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You May Wish To
Consider
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national literacy rate
rate of innovation
rate of technology
change
number of skilled
workers
stability of
government
product liability laws
export restrictions
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work ethic
tax rates
inflation
availability of raw
materials
interest rates
population
number of miles of
highway
Managing Global Service
Operations
Must take a different perspective on
 Capacity planning
 Location Planning
 Facilities design and layout
 Scheduling
Some Global Strategies
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International Strategy: uses exports and
licenses to penetrate the global area
Multidomestic Strategy: uses decentralized
authority with substantial autonomy at each
business
Global Strategy: Uses a high degree of
centralization, with headquarters
coordinating to seek standardization and
learning between plants
Transnational Strategy: Exploits economies of
scale and learning, as well as pressure for
responsiveness, by recognizing that core
competencies reside everywhere in the
organization
Match Product & Parent
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Arrow shirts
Braun Household
Appliances
Burger King
Firestone Tires
Godiva Chocolate
Haagen_dazs Ice Cream
Jaguar Autos
MGM Movies
Lamborghini Autos
Goodrich Tires
Alpo Petfoods
1. Volkswagen
2. Bidermann International
3. Bridgestone
4. Campbell Soup
5. Credit Lyonnais
6. Ford Motor Company
7. Gillette
8. Grand Metropolitan
9. Michelin
10. Nestlé
Match Product & Country
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Arrow shirts
Braun Household
Appliances
Burger King
Firestone Tires
Godiva Chocolate
Haagen_Dazs Ice Cream
Jaguar Autos
MGM Movies
Lamborghini Autos
Goodrich Tires
Alpo Petfoods
1.
2.
3.
4.
5.
6.
France
Great Britain
Germany
Japan
United States
Switzerland
Developing Missions
and Strategies
10 Strategic OM Decisions
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Goods & service design
Quality
Process & capacity design
Location selection
Layout design
Human resource and job
design
Supply-chain management
Inventory
Scheduling
Maintenance
Goods & Services and the 10
OM Decisions
Operations
Decisions
Goods
Services
Goods &
services
decisions
Quality
Product is usually
tangible
Product is usually
intangible
Objective quality
standards
Subjective quality
standards
Process
and
capacity
design
Customer not involved
in most of process
Customer may be directly
involved in process.
Capacity must match
demand to avoid lost sales
Goods & Services and the 10
OM Decisions – Continued
Operations
Decisions
Location
Selection
Layout
Design
Human
Resources
and Job
Design
Goods
Services
May need to be near raw
materials or labor force
Product is usually
intangible
Layout can enhance
production efficiency
Subjective quality
standards
Workforce focused on
technical skills.
Labor standards consistent.
Output-based wage system.
Customer may be directly
involved in process.
Capacity matches
demand to avoid lost
sales
Goods & Services and the 10
OM Decisions – Continued
Operations
Decisions
Goods
Services
Supply-chain relationships
Supply chain Supply-chain
management relationships critical to important, not necessarily
final product
critical
Inventory
Raw materials, workin-process, and
finished goods
Most services cannot be
stored
Scheduling
Ability to convert
inventory may allow
leveling of production
rates
Primarily concerned with
meeting the customer's
immediate schedule
Goods & Services and the 10
OM Decisions – Continued
Operations
Decisions
Goods
Maintenance Maintenance is often
Services
Maintenance is often
preventive and takes "repair" and takes place at
place at the production the customer's site
site
Process Design
High
Customization at high Volume
Process-focused
Job Shops
Variety of Products
(Print shop, emergency
room , machine shop,
fine dining
Mass Customization
(Dell Computer’s PC)
Repetitive (modular)
focus
Assembly line
(Cars, appliances, TVs,
fast-food restaurants)
Moderate
Product-focused
Continuous
(steel, beer, paper,
bread, institutional
kitchen)
Low
Low
Moderate
Volume
High
Operations Strategies for
TwoBrand
Drug
Companies
Name Drugs,
Generic Drug Corp.
Inc.
Heavy R & D;
Product
Extensive labs; focus
Selection
and Design on development in
Low R & D investment; focus on
development of generic drugs
Quality
Meets regulatory requirements on
a country-by-country basis as
necessary
broad range of \drug
categories
Quality is a major
priority;
Standards exceed
regulatory
requirements
Operations Strategies for
Two Drug Companies Brand Name Drugs,
Generic Drug Corp.
Continued
Inc.
Process
Product & modular
production processes
Long product runs in
specialized facilities
Build capacity ahead of
demand
Still located in city in
Location
which it was founded
Scheduling Central production
planning
Process focused
General production processes;
“Job Shop” approach, short run;
Focus on high utilization
Recently moved to low tax, low labor cost
environment
Many short run products complicate
scheduling
Operations Strategies for
Two Drug Companies Brand Name Drugs,
Generic Drug Corp.
Continued
Inc.
Human
Resources
Supply
Chain
Inventory
Hires the best; nationwide searches
Very experienced top executives
provide direction; other
personnel paid below average
Long term supplier
Tends to purchase competitively
relationship
to find bargains
Maintains high finished Process focus drives up WIP
goods inventory,
inventory.
primarily to ensure all
Finished goods inventory tends
demands are met
to be low
Operations Strategies for
Two Drug Companies Brand Name
Generic Drug Corp.
Continued
Drugs, Inc.
Maintenance Highly trained staff;
Extensive parts
inventory
Highly trained staff to meet
challenging demands
How It Works
If competitive
advantage, leads to
achieving
Company
Mission
Distinctive
competencies affect
Business
Strategy
Functional Area
Strategies
Marketing
Decisions
Operations
Decisions
Fin./Acct.
Decisions
Four International
Operations Strategies
Multidomestic Strategy
Operating decisions are decentralized to
each country to enhance local
responsiveness
Global Strategy
Operating decisions are centralized and
headquarters coordinates the
standardization and learning between
facilities
Transnational Strategies
Combines the benefits of global-scale
efficiencies with the benefits of local
responsiveness
International Strategy
Global markets are penetrated using
exports and licenses