Operations Management Operations Strategy in a Global Environment Chapter 2 PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-1 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Outline A GLOBAL VIEW OF OPERATIONS DEVELOPING MISSIONS AND STRATEGIES ACHIEVING COMPETITIVE ADVANTAGE THROUGH OPERATIONS Differentiation, Cost, Response ISSUES IN OPERATIONS STRATEGY Research, Preconditions, Dynamics STRATEGY DEVELOPMENT AND IMPLEMENTATION PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-2 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Outline - Continued GLOBAL OPERATIONS STRATEGY OPTIONS International Strategy Multidomestic Strategy Global Strategy Transnational Strategy PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-3 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Learning Objectives When you complete this chapter, you should be able to : Identify or Define: Mission Strategy Ten Decisions of OM Multinational Corporations PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-4 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Learning Objectives - Continued Describe or Explain: Specific approaches used by OM to achieve strategies Differentiation Low Cost Response Four Global Operations Strategies Why Global Issues are Important PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-5 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Examples of Global Strategies 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 PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-6 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Boeing Suppliers (777) Firm Country Parts Alenia Italy Wing flaps AeroSpace Technologies CASA Fuji Australia Rudder Spain Japan GEC Avionics Korean Air Menasco Aerospace United Kingdom Korea Canada Ailerons Landing gear doors, wing section Flight computers Flap supports Landing gears Short Brothers Ireland Landing gear doors Singapore Aerospace Singapore Landing gear doors PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-7 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Global Organizations, Agreements Free trade zones receive preferential tariff treatment. World Trade Organization (WTC) lowers barriers to free flow of goods across borders. North American Free Trade Agreement (NAFTA): a free trade agreement between Canada, Mexico, USA. European Union (EU)-customs union PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-8 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 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 Attract and retain global talent Intangible PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-9 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Improve SC: locating facilities in countries where unique resources, i.e., expertise, labor, raw material exist. Provide better goods and services -better understanding of culture leads to more efficient customization -reduce response time to meet customer’s changing product and service requirements. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-10 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Attract new markets-international firms find opportunities for new products and services. -increase sales -diversify their customer base -add production flexibility to switch b/w good and bad economies. -expand life cycle PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-11 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 To Establish Global Services Determine if sufficient people or facilities exist to support the service Identify foreign markets that are open - not controlled by governments Determine what services are of most interest to foreign customers Determine how to reach global customers PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-12 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 You May Wish To Consider work ethic tax rates inflation availability of raw materials interest rates population number of miles of highway national literacy rate rate of innovation rate of technology change number of skilled workers stability of government product liability laws export restrictions similarity in language PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-13 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Cultural and Ethical Issues Cultures differ! Some accept/expect: variations in punctuality long lunch hours expectation of thievery Bribery, child labor little protection of intellectual property Requirement for common laws and regulations for global uniformity. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-14 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Developing Missions and Strategies PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-15 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Mission Where are we going? What do we provide society? What’s our purpose? What’s our reason for being? •Provides boundaries & focus for organizations •Functional areas have supporting missions for the company mission. •Supporting missions for 10 OM functions PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-16 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Mission of FedEx FedEx is committed to our People-Service-Profit philosophy. We will produce outstanding financial returns by providing total reliable, competitively superior, global air-ground transportation of high priority goods and documents that require rapid, time-certain delivery. Equally important, positive control of each package will be maintained using real time electronic tracking and tracing systems. A complete record of each shipment and delivery will be presented with our request for payment. We will be helpful, courteous, and professional to each other and the public. We will strive to have a completely satisfied customer at the end of each transaction. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-17 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Sample Mission - Merck The mission of Merck is to provide society with superior products and services - innovations and solutions that improve the quality of life and satisfy customer needs - to provide employees with meaningful work and advancement opportunities and investors with a superior rate of return PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-18 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Mission of the Hard Rock Café To spread the spirit of Rock ‘n’ Roll by delivering an exceptional entertainment and dining experience. We are committed to being an important, contributing member of our community and offering the Hard Rock family a fun, healthy, and nurturing work environment while ensuring our long-term success. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-19 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Strategy Mission - where are we going? Strategy - how can we get there? Provides an action plan PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-20 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Strategy Process Company Mission Business Strategy Functional Area Functional Area mission/strategies Marketing Decisions PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e Operations Decisions 2-21 Fin./Acct. Decisions © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Concepts of a mission Firms achieve mission in 3 conceptual ways: 1) Product Differentiation 2) Low cost 3) Quick response PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e Competitive advantage 2-22 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Competing on Differentiation Differentiation is providing uniqueness Uniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts customer’s perception of value Limited by imagination Ex: “Experience differentiation” in Magic Kingdom, Hard Rock Cafe, Migros PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-23 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Competing on Cost Provide the maximum value as perceived by customer Does not imply low value or low quality Effective use of resources to decrease costs Ex: Reduced warehousing costs, direct shipment from manufacturer in Wallmart PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-24 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Competing on Response Flexible response: is the ability to match design/volume changes in market ex: HP Reliability of scheduling: ex: German M/C industry Quickness in design, production, delivery Requires institutionalization within the firm of the ability to respond PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-25 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 10 Strategic OM Decisions Goods & service design Quality Process & capacity design Location selection Layout design Human resource and job design Supply-chain management Inventory Scheduling Maintenance PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-26 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 OM’s Contribution to Strategy Operations Decisions Specific Strategy Used Examples Product Quality FLEXIBILITY Sony’s constant innovation of new products HP’s ability to follow the printer market Process Design Volume Southwest Airlines No-frills service LOW COST Location DELIVERY Pizza Hut’s five-minute guarantee at lunchtime Federal Express’s “absolutely, positively on time” Layout Human Resource Supply Chain Speed Dependability Maintenance Differentiation (Better) QUALITY Motorola’s automotive products ignition systems Motorola’s pagers Conformance Performance Inventory Scheduling Competitive Advantage IBM’s after-sale service on mainframe computers Fidelity Security’s broad line of mutual funds PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-27 Cost leadership (Cheaper) Response (Faster) AFTER-SALE SERVICE BROAD PRODUCT LINE © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 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 PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-28 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 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 May need to be near customer Layout can enhance production efficiency Layout can enhance production and product Workforce focused on technical skills. Labor standards consistent. Output-based wage system. Customer may directly interact with customer. Standards vary depending on customer requirements PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-29 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 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 Raw materials, workin-process, and finished goods Most services cannot be stored Ability to convert inventory may allow leveling of production PowerPoint presentation to accompanyrates Heizer/Render – 2-30 Primarily concerned with meeting the customer's immediate schedule Inventory Scheduling Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Goods & Services and the 10 OM Decisions – Continued Operations Decisions Goods Services Maintenance Maintenance is often Maintenance is often preventive and takes "repair" and takes place at place at the production the customer's site site PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-31 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Ex: How to find Process Design Strategy? 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 PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e Moderate Volume 2-32 High © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Operations Strategies for Two Drug Companies Brand Name Drugs, Inc. Generic Drug Corp. 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 PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-33 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Operations Strategies for Two Drug Companies - Continued Brand Name Drugs, Inc. 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 PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e Generic Drug Corp. 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 2-34 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Operations Strategies for Two Drug Companies - Continued Brand Name Drugs, Inc. Human Resources Supply Chain Inventory Generic Drug Corp. 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 PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-35 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Operations Strategies for Two Drug Companies - Continued Brand Name Drugs, Inc. Maintenance Highly trained staff; Extensive parts inventory PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-36 Generic Drug Corp. Highly trained staff to meet challenging demands © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Some Multinational Corporations Company Home Country % Sales Outside Home Country % Assets Outside Home % Foreign Workforce Country Citicorp USA 34 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 PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-37 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 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 PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-38 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Issues in Operations Strategy Characteristics that impact strategic OM decisions Preconditions that should exist to develop an operations strategy Dynamics of developed strategies: strategies change PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-39 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Characteristics of high ROI firms From the PIMS study of the Strategic Planning Institute High quality product High capacity utilization High operating efficiency (expected/actual employee productivity) Low investment intensity (capital required/produce 1 dollar sales) Low direct cost per unit (relative to the competitors’ value) PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-40 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Preconditions To Implement a Strategy Operations manager must understand that the firm is operating in an open system. Strengths & weaknesses of competitors and new entrants into the market Current and prospective environmental, legal, and economic issues The notion of product life cycle Resources available with the firm and within the OM function Integration of OM strategy with company strategy and with other functions. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-41 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Dynamics Strategies change because of two reasons: Changes in the organization: personnel, finance, technology, product life Changes in the environment Ex: Microsoft, impact of internet, changing demand PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-42 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Strategy and Issues During a Product’s Life PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-43 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Strategy & Issues During Product Life Introduction Company Strategy & Issues OM Strategy & Issues Best period to increase market share R&D engineering are critical Product design and development are critical Frequent product and process design changes Over-capacity Short production runs High skilled-labor content High production costs Limited number of models Utmost attentions to quality Quick elimination of market-revealed design defects PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-44 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Strategy & Issues During Product Life Growth Company Strategy & Issues OM Strategy & Issues Practical to change prices or quality image Marketing is critical Strengthen niche Forecasting is critical Product and process reliability Competitive product improvements and options Shift toward product oriented Enhance distribution PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-45 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Strategy & Issues During Product Life Maturity Company Strategy & Issues Poor time to increase market share Competitive costs become critical Poor time to change price, image, or quality Defend position via fresh promotional and distribution approaches OM Strategy & Issues Standardization Less rapid product changes and more minor annual model changes Optimum capacity Increasing stability of manufacturing process Lower labor skills Long production runs Attention to product improvement and cost cutting Re-examination of necessity of design compromises PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-46 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Strategy & Issues During Product Life Decline Company Strategy & Issues OM Strategy & Issues Cost control critical to market share Little product differentiation Cost minimization Overcapacity in the industry Prune line to eliminate items not returning Good margin Reduce capacity PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-47 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Strategy Development Process Environmental Analysis Identify SWOT. Understand environment, customer, industry, competitors Determine Corporate Mission Form a Strategy Build a strategy such as low price, flexibility, quick delivery, dependability, after sale service, broad product lines PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-48 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 SWOT Analysis to Strategy Formulation Mission Internal Strengths External Opportunities Strategy Internal Weaknesses PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e Competitive Advantage 2-49 External Threats © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Identifying Critical Success Factors Marketing Finance/Accounting Service Distribution Promotion Channels of distribution Product positioning (image, functions) Leverage Cost of capital Working capital Receivables Payables Financial control Lines of credit Production/Operations Decisions Sample Option Product Quality Process Location Layout Human resource Supply chain Inventory Schedule Maintenance Customized, or standardized 5 Define customer expectations and how to achieve them 6, S6 Facility size, technology, capacity 7, S7 Near supplier or customer 8 Work cells or assembly line 9 Specialized or enriched jobs 10, S10 Single or multiple source suppliers 11, S11 When to reorder, how much to keep on hand 12, 14,16 Stable or fluctuating productions rate 13, 15 Repair as required or preventive maintenance 17 PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e Chapter 2-50 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Southwest Airline’s Low Cost Competitive Advantage PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-51 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 How It Works Company Mission t Business Strategy Functional Area Strategies Marketing Decisions PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e Operations Decisions 2-52 Fin./Acct. Decisions © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Global Operations Strategy Options International Strategy Multidomestic Strategy Global Strategy Transnational Strategy PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-53 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Four International Operations Strategies PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-54 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 International Strategy Global markets are penetrated using exports and licenses Least advantageous with little local responsiveness (expost from home country) little cost advantage (use existing facility in home country). PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-55 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Multidomestic Strategy Operating decisions are decentralized to each country to enhance local responsiveness Advantage is to maximize competitive response for the local market. But no cost advantage. Ex: Mc Donald’s call itself multilocal PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-56 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Global Strategy Operating decisions are centralized and headquarters coordinates the standardization and learning between facilities. Appropriate when strategic focus is cost reduction. Not recommended when there is also concerns about high responsiveness. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-57 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Transnational Strategies Combines the benefits of global-scale efficiencies with the benefits of local responsiveness. Recognizes that core competence is not only in the local country. Material, people and ideas cross national boundaries! Firms can pursue all strategies of cost, response and differentiation. Neither centralized, nor decentralized Resources and activities are dispersed, but specialized in a flexible interdependent network. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e 2-58 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458