MT220 – UNIT 9

 1) Lower costs, and  2) Add value for the customer? WHERE? Let’s take it step by step…

Internal control Receipt of material from suppliers

 Inventory Control: LIFO & FIFO  Lean manufacturing- JIT

Receipt of Materials from Suppliers Inventory Control Manufacturing Process Distribution Customers The Supply Chain Procurement and Physical transmission of materials from suppliers through to end customer = logistics (Hill, 2009, Glossary section)

 Increased competition from two new companies entering your market  Your one supplier has been delivering the raw materials late to the plant What can you do?

 Cut production/labor costs  Have several suppliers  Institute Six Sigma  or ISO 9000 Increase quality

 W. Edward Deming- defect free output in Japan  Six Sigma- a statistically based program to boost productivity, reduce defects, eliminate waste and reduce costs  ISO 9000-An EU quality standard- A Firm’s manufacturing and products must be certified under the standard to do business in the EU.

 Instituting a six sigma process: Receipt of Materials from Suppliers Inventory Control Manufacturing Process Quality Control Marketing/ Distribution Customers Warranty and Service Reduced defects & costs

 Initially cheap labor manufacturing sites Transitioned to thinking of these being future market economies due to projected population growth and growth of the middle class as consumers According to the U.S. Bureau of the Census (2010): currently China has the largest population, followed by India and then the U.S. By 2050, India will be first, China second and the U.S. third (IDB section).

India size versusChina’s size What does this tell you about the future in India versus China? Prime Meridian

 Location economies: Labor pool, Resources and Supporting industries Route 128 outside Boston, Mass.- IT hub Dulles Airport-outside Wash., DC IT hub –AOL

China India Singapore Vietnam South Korea Location economies:

 Country factors  Technological factors  Fixed cost – how much will start up costs be  Minimum Efficient Scale – maxed out  Flexible manufacturing and mass customization

 Advantages of Make  Facilitating specialized investments  Protecting proprietary product technology  Improving scheduling  Advantages of Buy  Strategic flexibility  Lower costs  Offsets – capture more foreign business

 Role of just-in-time inventory  Role of information technology and the internet

 Understand Global organizational structures  Understand how firms can profit by expanding globally  Be familiar with different strategies for competing globally and their pros and cons  Explain the pros and cons of using strategic alliances to support global strategies

 Discussion Question:  What kind of strategy (p ) is evident at IKEA?  Global Standardization  Localization  Transnational  International

 Assignment  Then decide what structure the two types of turbine companies have; Functional, Matrix, Divisional, Team or Networking, etc.? Explain what characteristics each company has that make you think it is the type you specified?  Are they centralized or decentralized?

 Explain the three basic steps that firms contemplating foreign expansion must make: which markets to enter, when to enter those markets, and on what scale  Outline the advantages and disadvantages of the different modes that firms use to enter foreign markets  Identify the factors that influence a firm’s choice of entry mode  Evaluate the pros and cons of acquisitions versus Greenfield ventures as an entry strategy

 Modes (table on page 426)  Exporting  Turnkey projects  Licensing  Franchising  Joint ventures  Wholly owned subsidiaries

 Discussion question  ING chose to enter the U.S. financial services market via acquisitions rather than Greenfield ventures.  What do you think are the advantages and disadvantages to ING of doing this? What about the timing, scale, and mode involved?  Does this strategy make sense, why or why not?  What are the disadvantages of Turnkey projects and Licensing? For what kind of businesses are these two forms of entry mode most advantageous and why?

 Assignment  What did you think about the power point process  How did you compare the Indian family life to Mexican family life as well as comparing prices.

 This is the last work week  The final week is a week of reflection  What you have learned  How will you use what you have learned in your future classes and upcoming career

 Looks like the hour is about up. You all have a great week and weekend. I wish you the best holiday season and good luck to you in y0ur future classes and up coming career.  Let me know when you graduate. I attend the January graduations in Florida. Hope to see you walk across the stage.