heizer omawe ch02
TRANSCRIPT
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2The Global Environment and Operations Strategy
PowerPoint presentation to PowerPoint presentation to accompany accompany Heizer, Render, and Al-Zu’biHeizer, Render, and Al-Zu’biOperations Management, Operations Management, Arab World EditionArab World EditionOriginal PowerPoint slides by Jeff Heyl, Adapted by Zu’bi Al-Zu’bi
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OutlineOutline
• Company Profile: Emaar Properties
• A Global View of Operations
• Cultural and Ethical Issues
• Developing Missions And Strategies
• Mission
• Strategy
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Outline – ContinuedOutline – Continued
• Achieving Competitive Advantage Through Operations - Competing On Differentiation - Competing On Cost - Competing On Response• Ten Strategic OM Decisions• Issues in Operations Strategy
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Outline – ContinuedOutline – Continued
• Strategy Development and Implementation
• Key Success Factors and Core Competencies
• Build and Staff the Organization
• Integrate OM with Other Activities
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Outline – ContinuedOutline – Continued
• Global Operations Strategy Options
- International Strategy
- Multidomestic Strategy
- Global Strategy
- Transnational Strategy
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Learning ObjectivesLearning Objectives
1. Define mission and strategy2. Identify and explain three strategic
approaches to competitive advantage
3. Identify and define the 10 decisions of operations management
When you complete this chapter you When you complete this chapter you should be able to:should be able to:
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Learning ObjectivesLearning Objectives
4. Understand the significance of key success factors and core competencies
5. Identify and explain four global operations strategy options
When you complete this chapter you When you complete this chapter you should be able to:should be able to:
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Some EMAAR contractors in the Burj Khalifa projectSome EMAAR contractors in the Burj Khalifa project
Firm Country ComponentSkidmore, Owings U.S.A. Architecture & Merrill LLP
Besix Belgium Construction
Samsung Engineering South Korea Engineering& Construction
Arabtec U.A.E. Construction
Turner U.S.A. Construction
Hyder UK Consulting
Grocon Australia Construction
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Some EMAAR contractors in Burj Khalifa projectSome EMAAR contractors in Burj Khalifa project
Firm Country ComponentOtis U.S.A. Elevators and escalators
Lerch Bates from U.S.A. Consulting
Far East Aluminum Hong Kong Glazing
Arabian Aluminum U.A.E. Aluminum
White Aluminum U.A.E. Insulation
Bauer AG Germany Foundations
Middle East Foundations U.A.E Geo-technical services
Cox Australia Window Cleaning
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Global StrategiesGlobal Strategies
• Saudi Oger Ltd – carries out complex and technologically advanced construction projects all over Europe, Middle East, Asia, and Africa, driven from their focus on global operations and expertise.
• Almarai plc – moves inventory to stores around the Middle East faster than its competition by building flexibility into design, production, and distribution.
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Global StrategiesGlobal Strategies
• Patchi – purchases components from suppliers in Côte d’Ivoire, Brazil, Indonesia, and elsewhere around the world to produce the finest chocolates.
• Free Trade Zones encourage firms from around the world to relocate their operations to that area by offering a wide range of facilities provided by the local authorities.
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Reasons to GlobalizeReasons to Globalize
Reasons to GlobalizeReasons to Globalize1. Reduce costs (labor, taxes, tariffs, etc.)2. Improve supply chain3. Provide better goods and services4. Understand markets5. Learn to improve operations6. Attract and retain global talent
Tangible Reasons
Intangible Reasons
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Reduce CostsReduce Costs
• Foreign locations with lower wage rates can lower direct and indirect costs
- World Trade Organization (WTO)
- North American Free Trade Agreement (NAFTA)
- European Union (EU)
- Gulf Cooperation Council (GCC)
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Improve the Supply ChainImprove the Supply Chain
• Locating facilities closer to unique resources
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Provide Better Goods Provide Better Goods and Servicesand Services
• Objective and subjective characteristics of goods and services
• On-time deliveries
• Cultural variables
• Improved customer service
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Understand MarketsUnderstand Markets
• Interacting with foreign customers and suppliers can lead to new opportunities- Cell phone design from
Europe- Cell phone fads
from Japan- Extend the
product life cycle
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Learn to Improve OperationsLearn to Improve Operations
• Remain open to the free flow of ideas
• General Motors partnered with a Japanese auto manufacturer to learn new approaches to production and inventory control
• Equipment and layout have been improved using Scandinavian ergonomic competence
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Attract and Retain Global TalentAttract and Retain Global Talent
• Offer better employment opportunities
• Better growth opportunities and insulation against unemployment
• Relocate unneeded personnel to more prosperous locations
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Cultural and Ethical IssuesCultural and Ethical Issues
• Cultures can be quite different
• Attitudes can be quite different towards
• Punctuality
• Lunch breaks
• Environment
• Intellectual property
• Thievery
• Bribery
• Child labor
• Wasta
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Companies Want To ConsiderCompanies Want To Consider
• National literacy rate
• Rate of innovation
• Rate of technology change
• Number of skilled workers
• Political stability
• Product liability laws
• Export restrictions
• Variations in language
• Work ethic
• Tax rates
• Inflation
• Availability of raw materials
• Interest rates
• Population
• Number of miles of highway
• Phone system
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Match Product & ParentMatch Product & Parent
• Braun Household Appliances• Manchester City FC• Godiva Chocolate• Haagen-Dazs Ice Cream• Harrods• MGM Movies• Lamborghini Autos• Alpo Petfoods
1. Volkswagen2. Abu Dhabi Group3. Campbell Soup4. Qatar Investment5. Proctor and Gamble6. Nestlé7. Pillsbury8. Sony
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Match Product & ParentMatch Product & Parent
• Braun Household Appliances
• Manchester City FC• Godiva Chocolate• Haagen-Dazs Ice
Cream• Harrods• MGM Movies• Lamborghini Autos• Alpo Petfoods
1. Volkswagen2. Abu Dhabi Group3. Campbell Soup4. Qatar Investment5. Proctor and Gamble6. Nestlé7. Pillsbury8. Sony
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Match Product & CountryMatch Product & Country
• Braun Household Appliances• Manchester City FC• Godiva Chocolate• Haagen-Dazs Ice Cream• Harrods• MGM Movies• Lamborghini Autos• Alpo Pet Foods
1. UAE2. Germany3. Japan4. United States5. Switzerland6. Qatar
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Match Product & CountryMatch Product & Country
• Braun Household Appliances
• Manchester City FC• Godiva Chocolate• Haagen-Dazs Ice
Cream• Harrods• MGM Movies• Lamborghini Autos• Alpo Pet Foods
1. UAE2. Germany3. Japan4. United States5. Switzerland6. Qatar
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Developing Missions and StrategiesDeveloping Missions and Strategies
MissionMission statements tell an organization where it is going
The strategystrategy tells the organization how to get there
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MissionMission
Mission - where are you going?
- Organization’s purpose for being
- Answers ‘What do we provide society?’
- Provides boundaries and focus
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AramexAramex
To be recognized as one of the top five global logistics and transportation
companies by enabling and facilitating regional and global trade and commerce.
Figure 2.1
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University of JordanUniversity of Jordan
The provision of quality education at both the undergraduate and graduate levels through the adoption of the principle of
democracy in the education and decision-making processes whilst encouraging
interaction among students with the local community, and at the international level
to support goal-oriented research.
Figure 2.1
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Burj KhalifaBurj Khalifa
To be the world’s most luxurious hotel with a team dedicated to
outstanding personalized service, surpassing guest expectations by
providing the ultimate Arabian hospitality experience
Figure 2.1
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Benefit to Society
Mission
Factors Affecting MissionFactors Affecting Mission
Philosophy and Values
Profitability and GrowthEnvironment
Customers Public Image
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Sample MissionsSample Missions
Sample Company Mission
To manufacture and service an innovative, growing, and profitable worldwide microwave communications business that exceeds our customers’ expectations.
Sample Operations Management Mission
To produce products consistent with the company’s mission as the worldwide low-cost manufacturer.
Figure 2.2
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Sample MissionsSample Missions
Figure 2.2
Sample OM Department MissionsProduct design To design and produce products and services with outstanding
quality and inherent customer value.
Quality management To attain the exceptional value that is consistent with our company mission and marketing objectives by close attention to design, procurement, production, and field service operations
Process design To determine, design, and produce the production process and equipment that will be compatible with low-cost product, high quality, and good quality of work life at economical cost.
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Sample MissionsSample Missions
Figure 2.2
Sample OM Department Missions
Location To locate, design, and build efficient and economical facilities that will yield high value to the company, its employees, and the community.
Layout design To achieve, through skill, imagination, and resourcefulness in layout and work methods, production effectiveness and efficiency while supporting a high quality of work life.
Human resources To provide a good quality of work life, with well-designed, safe, rewarding jobs, stable employment, and equitable pay, in exchange for outstanding individual contribution from employees at all levels.
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Sample MissionsSample Missions
Figure 2.2
Sample OM Department Missions
Supply-chain management
To collaborate with suppliers to develop innovative products from stable, effective, and efficient sources of supply.
Inventory To achieve low investment in inventory consistent with high customer service levels and high facility utilization.
Scheduling To achieve high levels of throughput and timely customer delivery through effective scheduling.
Maintenance To achieve high utilization of facilities and equipment by effective preventive maintenance and prompt repair of facilities and equipment.
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Strategic ProcessStrategic Process
Marketing Operations Finance/ Accounting
Functional Area Missions
Organization’s Mission
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StrategyStrategy
• Action plan to achieve mission
• Functional areas have strategies
• Strategies exploit opportunities and strengths, neutralize threats, and avoid weaknesses
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Strategies for Competitive AdvantageStrategies for Competitive Advantage
• Differentiation – better, or at least different
• Cost leadership – cheaper
• Response – rapid response
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Competing on DifferentiationCompeting on Differentiation
Uniqueness can go beyond both the physical characteristics and service
attributes to encompass everything that impacts customer’s perception of value
Safeskin gloves – leading edge products
Ferrari World Abu Dhabi – experience differentiation
TcheTche Cafe – dining differentiation
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Competing on CostCompeting on Cost
Provide the maximum value as perceived by customer. Does not imply low quality.• Air Arabia – no frills service, efficient utilization of equipment
• Lulu Hypermarkets – small overhead, shrinkage, distribution costs
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Competing on ResponseCompeting on Response
• Flexibility is responding to the rapidly changing market needs with high-quality solutions
– Rubicon-Jordan• Reliability is meeting schedules
• German machine industry• Timeliness is quickness in design,
production, and delivery• Apple, Tazaj, Motorola
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OM’s Contribution to StrategyOM’s Contribution to Strategy
Product
Quality
Process
Location
Layout
Human resource
Supply chain
Inventory
Scheduling
Maintenance
DIFFERENTIATIONInnovative design … Burj Khalifa Broad product line … Arab Bank’s Financial
Services After-sales service …Petra’s heavy equipment
service Experience … Ferrari World
COST LEADERSHIP Low overhead …Great stores, Saudi
Arabia Effective capacity use … Air Arabia
Inventory management …Carrefour, Saudi Arabia
RESPONSE Flexibility … Rubicon’s response to
different market needs Reliability … Arab Bridge Ferries Quickness … Aramex Express
Figure 2.3
10 Operations CompetitiveDecisions Approach Example Advantage
Response(faster)
Cost leadership(cheaper)
Differentiation(better)
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10 Strategic OM Decisions10 Strategic OM Decisions
1. Goods and service design
2. Quality 3. Process and
capacity design4. Location
selection5. Layout design
6. Human resources and job design
7. Supply-chain management
8. Inventory
9. Scheduling
10. Maintenance
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Goods and Services and Goods and Services and the 10 OM Decisionsthe 10 OM Decisions
OperationsOperationsDecisionsDecisions GoodsGoods ServicesServicesGoods and service design
Product is usually tangible
Product is not tangible
Quality Many objective standards
Many subjective standards
Process and capacity design
Customers not involved Customer may be directly involved
Capacity must match demand
Table 2.1
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Goods and Services and Goods and Services and the 10 OM Decisionsthe 10 OM Decisions
OperationsOperationsDecisionsDecisions GoodsGoods ServicesServicesLocation selection
Near raw materials and labor
Near customers
Layout design Production efficiency Enhances product and production
Human resources and job design
Technical skills, consistent labor standards, output- based wages
Interact with customers, labor standards vary
Table 2.1
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Goods and Services and Goods and Services and the 10 OM Decisionsthe 10 OM Decisions
OperationsOperationsDecisionsDecisions GoodsGoods ServicesServicesSupply chain Relationship critical to
final productImportant, but may not be critical
Inventory Raw materials, work-in-process, and finished goods may be held
Cannot be stored
Scheduling Level schedules possible
Meet immediate customer demand Table 2.1
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Goods and Services and Goods and Services and the 10 OM Decisionsthe 10 OM Decisions
OperationsOperationsDecisionsDecisions GoodsGoods ServicesServicesMaintenance Often preventive and
takes place at production site
Often “repair” and takes place at customer’s site
Table 2.1
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Managing Global Service OperationsManaging Global Service Operations
Requires a different perspective on:Requires a different perspective on:
• Capacity planning
• Location planning
• Facilities design and layout
• Scheduling
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Process DesignProcess Design
Low Moderate HighVolume
High
Moderate
Low
Varie
ty o
f Pro
duct
s
Process-focusedJOB SHOPS
(Print shop, emergency room, machine shop,
fine-diningrestaurant)
Repetitive (modular) focus
ASSEMBLY LINE(Cars, appliances,
TVs, fast-food restaurants) Product focused
CONTINUOUS(Steel, paper,
bread, institutional kitchen)
Mass CustomizationCustomization at high
volume(Dell Computer’s PC,
cafeteria)
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Operations Strategies of Two Drug Operations Strategies of Two Drug CompaniesCompanies
Brand Name Drugs, Inc.Brand Name Drugs, Inc. Generic Drug Corp.Generic Drug Corp.
Competitive Competitive AdvantageAdvantage Product DifferentiationProduct Differentiation Low CostLow Cost
Product Selection and Design
Heavy R&D investment; extensive labs; focus on development in a broad range of drug categories
Low R&D investment; focus on development of generic drugs
Quality Major priority, exceed regulatory requirements
Meets regulatory requirements on a country-by-country basis
Table 2.2
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Operations Strategies of Two Drug Operations Strategies of Two Drug CompaniesCompanies
Brand Name Drugs, Inc.Brand Name Drugs, Inc. Generic Drug Corp.Generic Drug Corp.
Competitive Competitive AdvantageAdvantage Product DifferentiationProduct Differentiation Low CostLow Cost
Process Product and modular process; long production runs in specialized facilities; build capacity ahead of demand
Process focused; general processes; “job shop” approach, short-run production; focus on high utilization
Location Still located in the city where it was founded
Recently moved to low-tax, low-labor-cost environment
Table 2.2
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Operations Strategies of Two Drug Operations Strategies of Two Drug CompaniesCompanies
Brand Name Drugs, Inc.Brand Name Drugs, Inc. Generic Drug Corp.Generic Drug Corp.
Competitive Competitive AdvantageAdvantage Product DifferentiationProduct Differentiation Low CostLow Cost
Human Resources
Hire the best; nationwide searches
Very experienced top executives; other personnel paid below industry average
Layout Layout supports automated product-focused production
Layout supports process-focused “job shop” practices
Table 2.2
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Operations Strategies of Two Drug Operations Strategies of Two Drug CompaniesCompanies
Brand Name Drugs, Inc.Brand Name Drugs, Inc. Generic Drug Corp.Generic Drug Corp.
Competitive Competitive AdvantageAdvantage Product DifferentiationProduct Differentiation Low CostLow Cost
Supply Chain Long-term supplier relationships
Tends to purchase competitively to find bargains
Inventory High finished goods inventory to ensure all demands are met
Process focus drives up work-in-process inventory; finished goods inventory tends to be low
Table 2.2
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Operations Strategies of Two Drug Operations Strategies of Two Drug CompaniesCompanies
Brand Name Drugs, Inc.Brand Name Drugs, Inc. Generic Drug Corp.Generic Drug Corp.
Competitive Competitive AdvantageAdvantage Product DifferentiationProduct Differentiation Low CostLow Cost
Scheduling Centralized production planning
Many short-run products complicate scheduling
Maintenance Highly trained staff; extensive parts inventory
Highly trained staff to meet changing demand
Table 2.2
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Issues In Operations StrategyIssues In Operations Strategy
• Resources view
• Value-chain analysis
• Porter’s Five Forces model
• Operating in a system with many external factors
• Constant change
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Product Life CycleProduct Life Cycle
Best period to increase market share
R&D engineering is critical
Practical to change price or quality image
Strengthen niche
Poor time to change image, price, or quality
Competitive costs become criticalDefend market position
Cost control critical
Introduction Growth Maturity Decline
Com
pany
Str
ateg
y/Is
sues
Figure 2.4
Internet search engines
Sales
Drive-through restaurants
CD-ROMs
Analog TVs
iPods
Boeing 787
LCD & plasma TVs
Avatars
Xbox 360
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Product Life CycleProduct Life Cycle
Product design and development criticalFrequent product and process design changesShort production runsHigh production costsLimited modelsAttention to quality
Introduction Growth Maturity Decline
OM
Str
ateg
y/Is
sues
Forecasting criticalProduct and process reliabilityCompetitive product improvements and optionsIncrease capacityShift toward product focusEnhance distribution
StandardizationFewer product changes, more minor changesOptimum capacityIncreasing stability of processLong production runsProduct improvement and cost cutting
Little product differentiationCost minimizationOvercapacity in the industryPrune line to eliminate items not returning good marginReduce capacity
Figure 2.4
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Strategy
Analysis
SWOT Analysis SWOT Analysis
Internal Strengths
Internal Weaknesses
External Opportunities
External Threats
Mission
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Strategy Development ProcessStrategy Development Process
Determine the Corporate MissionState the reason for the firm’s existence and identify the
value it wishes to create.
Form a StrategyBuild a competitive advantage, such as low price, design, or
volume flexibility, quality, quick delivery, dependability, after-sale service, broad product lines.
Analyze the EnvironmentIdentify the strengths, weaknesses, opportunities, and threats.
Understand the environment, customers, industry, and competitors.
Figure 2.5
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Strategy Development and ImplementationStrategy Development and Implementation
• Identify key success factors and core competencies• Build and staff the organization• Integrate OM with other activities
The operations manager’s job is to implement an OM strategy, provide competitive advantage, and increase productivity
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Key Success FactorsKey Success Factors
Production/Operations
Figure 2.6
Marketing
ServiceDistributionPromotionChannels of distributionProduct positioning (image, functions)
Finance/Accounting
LeverageCost of capitalWorking capitalReceivablesPayablesFinancial controlLines of credit
Decisions Sample Options Chapter
ProductQualityProcessLocationLayoutHuman resourceSupply chainInventoryScheduleMaintenance
Customized, or standardizedDefine customer expectations and how to achieve themFacility size, technology, capacityNear supplier or near customerWork cells or assembly lineSpecialized or enriched jobsSingle or multiple suppliersWhen to reorder, how much to keep on handStable or fluctuating production rateRepair as required or preventive maintenance
56
7, S789
1011, S11
12, 14, 1613, 15
17
Support a Core Competence and Implement Strategy by Identifying and Executing the Key Success Factors in the Functional Areas
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Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.7
Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
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Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.7
Automated ticketing machines
No seat assignmentsNo baggage transfersNo meals (peanuts)
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Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.7
No meals (peanuts)Lower gate costs at secondary airports
High number of flights reduces employee idle time
between flights
Competitive Advantage:Low Cost
2 - 64© 2013 Pearson Education
Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.7
High number of flights reduces employee idle time between flights
Saturate a city with flights, lowering administrative costs per passenger
for that cityPilot training required on only one
type of aircraftReduced maintenance inventory
required because of only one type of aircraft
Competitive Advantage:
Low Cost
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Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Competitive Advantage:Low Cost
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.7
Pilot training required on only one type of aircraftReduced maintenance
inventory required because of only one type of aircraftExcellent supplier relations
with Boeing has aided financing
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Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.7
Reduced maintenance inventory required because of only one type of
aircraftFlexible employees and standard planes
aid schedulingMaintenance personnel trained only one
type of aircraft20-minute gate turnarounds
Flexible
union contra
cts
Competitive Advantage:Low Cost
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Activity Mapping atActivity Mapping atSouthwest AirlinesSouthwest Airlines
Courteous, but Limited Passenger
Service
Standardized Fleet of Boeing
737 Aircraft
Lean, Productive Employees
Short Haul, Point-to-Point Routes, Often to
Secondary Airports
High Aircraft
Utilization
Frequent, Reliable
Schedules
Figure 2.7
Automated ticketing machinesEmpowered employees
High employee compensationHire for attitude, then train
High level of stock ownershipHigh number of flights reduces
employee idle time between flights
Competitive Advantage:
Low Cost
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Four International Operations StrategiesFour International Operations StrategiesC
ost R
educ
tion
Con
side
ratio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
Figure 2.8
Import/export or license existing product
Examples:Jordan’s CementMorocco's Phosphates Co.
International Strategy
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Four International Operations StrategiesFour International Operations StrategiesC
ost R
educ
tion
Con
side
ratio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
International Strategy
Import/export or license existing product
Examples:Jordan’s CementMorocco's Phosphates
Co.
Figure 2.8
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Four International Operations StrategiesFour International Operations StrategiesC
ost R
educ
tion
Con
side
ratio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
Figure 2.8
Standardized product Economies of scale Cross-cultural learning
Examples:Petra IndustriesAl Zamil GroupAramex
Global Strategy
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Four International Operations StrategiesFour International Operations StrategiesC
ost R
educ
tion
Con
side
ratio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
Standardized product Economies of scale Cross-cultural learning
Examples:Petra IndustriesAl-Zamil GroupAramex
Global Strategy
International Strategy
Import/export or license existing product
Examples:Jordan Cement
Morocco’s Phosphates Co.
Figure 2.8
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Four International Operations StrategiesFour International Operations StrategiesC
ost R
educ
tion
Con
side
ratio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
Standardized product Economies of scale Cross-cultural learning
Examples:Texas InstrumentsCaterpillarOtis Elevator
Global Strategy
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
Figure 2.8
Use existing domestic model globally
Franchise, joint ventures, subsidiaries
Examples:TazajTcheTcheAfia
Multidomestic Strategy
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Four International Operations StrategiesFour International Operations StrategiesC
ost R
educ
tion
Con
side
ratio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
Standardized product Economies of scale Cross-cultural learning
Examples:Texas InstrumentsCaterpillarOtis Elevator
Global Strategy
International Strategy
Import/export or license existing product
Examples:Jordan CementMorocco’s Phosphates Co.
Multidomestic Strategy Use existing
domestic model globally Franchise, joint ventures,
subsidiaries
Examples:TazajTcheTcheAfia
Figure 2.8
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Four International Operations StrategiesFour International Operations StrategiesC
ost R
educ
tion
Con
side
ratio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
Standardized product Economies of scale Cross-cultural learning
Examples:Texas InstrumentsCaterpillarOtis Elevator
Global Strategy
International Strategy
Import/export or license existing product
ExamplesU.S. SteelHarley Davidson
Multidomestic Strategy Use existing
domestic model globally Franchise, joint ventures,
subsidiaries
ExamplesHeinz The Body ShopMcDonald’s Hard Rock Cafe
Figure 2.8 Move material,
people, ideas across national boundaries
Economies of scale Cross-cultural
learning
Examples:AlmaraiRani Beverage’s
Transnational
Strategy
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Four International Operations StrategiesFour International Operations StrategiesC
ost R
educ
tion
Con
side
ratio
ns
High
Low
HighLowLocal Responsiveness Considerations
(Quick Response and/or Differentiation)
Standardized product Economies of scale Cross-cultural learning
Examples:Petra IndustriesAl Zamil GroupAramex
Global Strategy Transnational Strategy Move material, people, ideas
across national boundaries Economies of scale Cross-cultural learning
Examples:AlmaraiRani Beverages
International Strategy
Import/export or license existing product
Examples:Jordan CementMorocco’s Phosphate Co.
Multidomestic Strategy Use existing
domestic model globally Franchise, joint ventures,
subsidiaries
Examples: Tazaj TcheTche Afia
Figure 2.8