1. Chapter 17: International Operations Management
International Business, 4th Edition
Griffin & Pustay
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2. Chapter Objectives_1
Describe the nature of international operations management
Analyze the supply chain management and vertical integration decisions facing international production managers
Analyze the meaning of productivity and discuss how international firms work to improve it
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3. Chapter Objectives_2
Explain how firms control quality and discuss total quality management in international business
Analyze how international firms control the information their managers need to make effective decisions
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4. International Operations Management
Operations Management: the set of activities an organization uses to transform different kinds of inputs into final goods and services
International Operations Management: the transformation-related activities of an international firm
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5. Figure 17.1 The International Operations Management Process
Strategic Context
Differentiation
Cost leadership
Focus
Standardized vs. Customized
Production
Acquisition of
Resources
Supply Chain
Management
Vertical Integration
Make-or-buy decision
Location Decisions
Country-related issues
Product-related issues
Government policies
Organizational issues
Logistics and
Materials
Management
Flow of materials
Transportation options
Inventory levels
Packaging
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6. Complexities of International Operations Management
Resources
Location
Logistics
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7. Production Management
Supply chain management: set of processes and steps a firm uses to acquire the various resources it needs to create its products
Vertical integration: extent to which a firm either provides its own resources or obtains them from other sources
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8. Figure 17.2 Basic Make-or-Buy Options
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9. Influence Factors for the Make-or-Buy Decision
Size
Scope of operations
Technological expertise
Nature of product
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10. Figure 17.3 Competitive Advantage versus Strategic Vulnerability in the Make-or-Buy Decisions
Potential for Competitive Advantage
Strategic
Control
Moderate
Low
Low High
High Low
Degree of Strategic Vulnerability
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11. Necessary Trade-offs in Make-or-Buy Decision
Cost
Control
Risk
Investment
Flexibility
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12. Factors affecting Location Decisions
Country-Related Issues
Product-Related Issues
Government Policies
Organizational Issues
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13. Country-Related Issues
Resource availability
Cost
Infrastructure
Country-of-origin effects
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14. Country-related issues play key roles in location decisions for manufacturers
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15. Product-Related Issues
Value-to-weight ratio
Technology
Importance of customer feedback
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16. Government Policies Stability of political process
National trade policies
Economic development incentives
Existence of foreign trade zones (FTZ)
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17. Organizational Issues
Business strategy
Cost leadership
Differentiation
Organizational structure
Inventory management policies
Just-in-time (JIT) inventory management system
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18. International Logistics and Materials Management
International logistics: management of the
flow of materials, parts, supplies, and other resource from suppliers to the firm
flow of materials, parts, supplies, and other resources within and between units of the firm itself
flow of finished products, services, goods from the firm to customers
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19. Differences in Domestic and International Materials Management
Distance involved in shipping
Number of transport modes
Complexity of regulatory context
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20. International Service Operations
International Service Business: firm that transforms resources into an intangible output that creates utility for its customers
Characteristics:
Intangible
Not storable
Require customer participation
Tied to the purchase of other products
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21. This BP Connect store allows customers to buy BP petroleum products, coffees from South America, and to access the Internet from the pump
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22. Productivity
Economic measure of efficiency that summarizes the value of outputs relative to the value of inputs used to create the outputs
Helps to determine firm’s overall success
Contributes to long-term survival
Contributes to overall standard of living
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23. Strategies for Enhancing Productivity
Spend more on research and development
Improve operations
Increase employee involvement
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24. Managing Quality in International Business
Quality: totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs
American Society for Quality Control
ISO 9000: 2000
International set of quality guidelines
Basis for quality certification
International Organization for Standardization
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25. Figure 17.4 The Essential Components of Total Quality Management
Strategic Commitment
To Quality
Employee
Involvement
High Quality
Materials
Up-to-Date
Technology
Effective
Methods
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26. Total Quality Management
TQM: Integrated effort to systematically and continuously improve the quality of an organization’s products and/or services
Statistical process control: family of mathematically based tools for monitoring and controlling quality
Benchmarking: process of legally and ethically studying how other firms do something in a high-quality way and then either imitating or improving on their methods
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