1. © 2006 Prentice Hall, Inc.2 – 1 Operations Management Operations Strategy in a Global Environment © 2006 Prentice Hall, Inc. Alan D. Smith

2. © 2006 Prentice Hall, Inc.2 – 2 Outline  Global Company Profile: Boeing  A Global View of Operations  Cultural and Ethical Issues  Developing Missions And Strategies  Mission  Strategy

3. © 2006 Prentice Hall, Inc.2 – 3 Outline – Continued  Achieving Competitive Advantage Through Operations  Competing On Differentiation  Competing On Cost  Competing On Response  Ten Strategic OM Decisions

4. © 2006 Prentice Hall, Inc.2 – 4 Outline – Continued  Issues In Operations Strategy  Research  Preconditions  Dynamics  Strategy Development And Implementation  Identify Critical Success Factors  Build and Staff the Organization  Integrate OM with Other Activities

5. © 2006 Prentice Hall, Inc.2 – 5 Outline – Continued  Global Operations Strategy Options  International Strategy  Multidomestic Strategy  Global Strategy  Transnational Strategy

6. © 2006 Prentice Hall, Inc.2 – 6 Learning Objectives  Mission  Strategy  Ten decisions of OM  Multinational corporation When you complete this chapter, you should be able to: Identify or Define:

7. © 2006 Prentice Hall, Inc.2 – 7 Learning Objectives  Specific approaches used by OM to achieve strategies  Differentiation  Low cost  Response When you complete this chapter, you should be able to: Describe or Explain:

8. © 2006 Prentice Hall, Inc.2 – 8 Learning Objectives  Four global operations strategies  Why global issues are important When you complete this chapter, you should be able to: Describe or Explain:

9. © 2006 Prentice Hall, Inc.2 – 9 Global Strategies  Boeing – sales and production are worldwide  Benetton – moves inventory to stores around the world faster than its competition by building flexibility into design, production, and distribution  Sony – purchases components from suppliers in Thailand, Malaysia, and around the world

10. © 2006 Prentice Hall, Inc.2 – 10 Global Strategies  Volvo – considered a Swedish company but it is controlled by an American company, Ford. The current Volvo S40 is built in Belgium and shares its platform with the Mazda 3 built in Japan and the Ford Focus built in Europe.  Haier – A Chinese company, produces compact refrigerators (it has one-third of the US market) and wine cabinets (it has half of the US market) in South Carolina

11. © 2006 Prentice Hall, Inc.2 – 11 Some Multinational Corporations % Sales% Assets OutsideOutside HomeHomeHome% Foreign CompanyCountryCountryCountryWorkforce CiticorpUSA3446NA Colgate-USA7263NA Palmolive Dow USA6050NA Chemical GilletteUSA6253NA HondaJapan6336NA IBMUSA574751

12. © 2006 Prentice Hall, Inc.2 – 12 Some Multinational Corporations % Sales% Assets OutsideOutside HomeHomeHome% Foreign CompanyCountryCountryCountryWorkforce ICIBritain7850NA NestleSwitzerland989597 PhilipsNetherlands948582 Electronics SiemensGermany51NA38 UnileverBritain &957064 Netherlands

13. © 2006 Prentice Hall, Inc.2 – 13 Boeing Suppliers (787) FirmCountryComponent DassaultFranceDesign and PLM software PLM software Messier-BugattiFranceLanding gear ThalesFranceElectrical power conversion system conversion system and integrated and integrated standby flight display standby flight display DiehlGermanyInterior lighting FR-HiTempUKFuel pumps and valves and valves Smiths AerospaceUKCentral computer system system

14. © 2006 Prentice Hall, Inc.2 – 14 Boeing Suppliers (787) FirmCountryComponent BAE SYSTEMSUKElectronics Alenia AeronauticsItalyUpper center fuselage & fuselage & horizontal stabilizer horizontal stabilizer Toray IndustriesJapanCarbon fiber for wing and tail units wing and tail units Fuji Heavy JapanCenter wing box Industries Industries Kawasaki Heavy JapanForward fuselage, Industries fixed section of wing, Industries fixed section of wing, landing gear well landing gear well

15. © 2006 Prentice Hall, Inc.2 – 15 Boeing Suppliers (787) FirmCountryComponent Teijin SeikiJapanHydraulic actuators Mitsubishi Heavy JapanWing box Industries Industries Chengdu Aircraft ChinaRudder Group Hafei AviationChinaParts

16. © 2006 Prentice Hall, Inc.2 – 16 3-14 $20,000 Pontiac LeMans About $6,000 heads to South Korea for auto’s assemblyAbout $6,000 heads to South Korea for auto’s assembly $3,500 goes to Japan for engines, axles, and electronics$3,500 goes to Japan for engines, axles, and electronics $1,500 goes to Germany for design$1,500 goes to Germany for design $800 goes to Taiwan, Singapore, and Japan for smaller parts$800 goes to Taiwan, Singapore, and Japan for smaller parts $500 heads to England for marketing$500 heads to England for marketing $100 goes to Ireland for information technology$100 goes to Ireland for information technology the rest  $7,600, goes to GM and its US bankers, insurance agents, and attorneys.the rest  $7,600, goes to GM and its US bankers, insurance agents, and attorneys.

17. © 2006 Prentice Hall, Inc.2 – 17 Reasons to Globalize  Reduce costs (labor, taxes, tariffs, etc.)  Improve supply chain  Provide better goods and services  Understand markets  Learn to improve operations  Attract and retain global talent Tangible Reasons Intangible Reasons Figure 2.1

18. © 2006 Prentice Hall, Inc.2 – 18 Reduce Costs  Foreign locations with lower wage rates can lower direct and indirect costs  Maquiladoras  World Trade Organization (WTC)  North American Free Trade Agreement (NAFTA)  APEC, SEATO, MERCOSUR  European Union (EU)

19. © 2006 Prentice Hall, Inc.2 – 19 Improve the Supply Chain  Locating facilities closer to unique resources  Auto design to California  Athletic shoe production to China  Perfume manufacturing in France

20. © 2006 Prentice Hall, Inc.2 – 20 Provide Better Goods and Services  Objective and subjective characteristics of goods and services  On-time deliveries  Cultural variables  Improved customer service

21. © 2006 Prentice Hall, Inc.2 – 21 Understand Markets  Interacting with foreign customer and suppliers can lead to new opportunities  Cell phone design from Europe  Cell phone fads from Japan  Extend the product life cycle

22. © 2006 Prentice Hall, Inc.2 – 22 Learn to Improve Operations  Remain open to the free flow of ideas  General Motors partnered with a Japanese auto manufacturer to learn  Scandinavian design ideas have been used to improve equipment design and layout

23. © 2006 Prentice Hall, Inc.2 – 23 Attract and Retain Global Talent  Offer better employment opportunities  Better growth opportunities and insulation against unemployment  Relocate unneeded personnel to more prosperous locations  Incentives for people who like to travel

24. © 2006 Prentice Hall, Inc.2 – 24 Cultural and Ethical Issues  Cultures can be quite different  Attitudes can be quite different towards  Punctuality  Lunch breaks  Environment  Intellectual property  Thievery  Bribery  Child labor

25. © 2006 Prentice Hall, Inc.2 – 25 You May Wish 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

26. © 2006 Prentice Hall, Inc.2 – 26 Match Product & Parent  Braun Household Appliances  Firestone Tires  Godiva Chocolate  Haagen-Dazs Ice Cream  Jaguar Autos  MGM Movies  Lamborghini Autos  Alpo Petfoods 1.Volkswagen 2.Bridgestone 3.Campbell Soup 4.Ford Motor Company 5.Gillette 6.Nestlé 7.Pillsbury 8.Sony

27. © 2006 Prentice Hall, Inc.2 – 27 Match Product & Parent  Braun Household Appliances  Firestone Tires  Godiva Chocolate  Haagen-Dazs Ice Cream  Jaguar Autos  MGM Movies  Lamborghini Autos  Alpo Petfoods 1.Volkswagen 2.Bridgestone 3.Campbell Soup 4.Ford Motor Company 5.Gillette 6.Nestlé 7.Pillsbury 8.Sony

28. © 2006 Prentice Hall, Inc.2 – 28 Match Product & Country  Braun Household Appliances  Firestone Tires  Godiva Chocolate  Haagen-Dazs Ice Cream  Jaguar Autos  MGM Movies  Lamborghini Autos  Alpo Petfoods 1.Great Britain 2.Germany 3.Japan 4.United States 5.Switzerland

29. © 2006 Prentice Hall, Inc.2 – 29 Match Product & Country  Braun Household Appliances  Firestone Tires  Godiva Chocolate  Haagen-Dazs Ice Cream  Jaguar Autos  MGM Movies  Lamborghini Autos  Alpo Petfoods 1.Great Britain 2.Germany 3.Japan 4.United States 5.Switzerland

30. © 2006 Prentice Hall, Inc.2 – 30 Developing Missions and Strategies Mission statements tell an organization where it is going The Strategy tells the organization how to get there

31. © 2006 Prentice Hall, Inc.2 – 31 Mission  Mission - where are you going?  Organization’s purpose for being  Answers ‘What do we provide society?’  Provides boundaries and focus

32. © 2006 Prentice Hall, Inc.2 – 32 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. Figure 2.2

33. © 2006 Prentice Hall, Inc.2 – 33 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 Figure 2.2

34. © 2006 Prentice Hall, Inc.2 – 34 Hard Rock Café Our Mission: 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. Figure 2.2

35. © 2006 Prentice Hall, Inc.2 – 35 Arnold Palmer Hospital Arnold Palmer Hospital is a healing environment providing family-centered care with compassion, comfort and respect… when it matters the most. Figure 2.2

36. © 2006 Prentice Hall, Inc.2 – 36 Benefit to Society Mission Factors Affecting Mission Philosophy and Values Profitability and Growth Environment CustomersPublic Image

37. © 2006 Prentice Hall, Inc.2 – 37 Strategic Process MarketingOperations Finance/ Accounting Functional Area Missions Organization’s Mission

38. © 2006 Prentice Hall, Inc.2 – 38 Strategy  Action plan to achieve mission  Functional areas have strategies  Strategies exploit opportunities and strengths, neutralize threats, and avoid weaknesses

39. © 2006 Prentice Hall, Inc.2 – 39 Strategies for Competitive Advantage  Differentiation – better, or at least different  Cost leadership – cheaper  Quick response – more responsive

40. © 2006 Prentice Hall, Inc.2 – 40 Competing 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  Walt Disney Magic Kingdom – experience differentiation  Hard Rock Cafe – theme experience

41. © 2006 Prentice Hall, Inc.2 – 41 Competing on Cost Provide the maximum value as perceived by customer. Does not imply low quality.  Southwest Airlines – secondary airports, no frills service, efficient utilization of equipment  Wal-Mart – small overheads, shrinkage, distribution costs  Franz Colruyt – no bags, low light, no music, doors on freezers

42. © 2006 Prentice Hall, Inc.2 – 42 Competing on Response  Flexibility is matching market changes in design innovation and volumes  Institutionalization at Hewlett-Packard  Reliability is meeting schedules  German machine industry  Timeliness is quickness in design, production, and delivery  Johnson Electric, Bennigan’s, Motorola

43. © 2006 Prentice Hall, Inc.2 – 43 OM’s Contribution to Strategy Product Quality Process Location Layout Human resource Supply-chain Inventory Scheduling Maintenance FLEXIBILITY Sony’s constant innovation of new products………………………………....Design HP’s ability to follow the printer market………………………………Volume Southwest Airlines No-frills service……..…..LOW COST DELIVERY Pizza Hut’s five-minute guarantee at lunchtime…………………..…..……..Speed Federal Express’s “absolutely, positively on time”………………………..….Dependability QUALITY Motorola’s automotive products ignition systems…………………………......Conformance Motorola’s pagers………………………..….Performance IBM’s after-sale service on mainframe computers……....AFTER-SALE SERVICE Fidelity Security’s broad line of mutual funds………….BROAD PRODUCT LINE Figure 2.4 OperationsSpecificCompetitive DecisionsExamplesStrategy UsedAdvantage Response (Faster) Cost leadership (Cheaper) Differentiation (Better)

44. © 2006 Prentice Hall, Inc.2 – 44 10 Strategic OM Decisions  Goods and service design  Quality  Process and capacity design  Location selection  Layout design  Human resource and job design  Supply-chain management  Inventory  Scheduling  Maintenance

45. © 2006 Prentice Hall, Inc.2 – 45 Goods and Services and the 10 OM Decisions Operations Decisions GoodsServices Goods 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

46. © 2006 Prentice Hall, Inc.2 – 46 Goods and Services and the 10 OM Decisions Operations Decisions GoodsServices Location selection Near raw materials and labor Near customers Layout design Production efficiency Enhances product and production Human resources and job design Technical skills, constant labor standards, output based wages Interact with customers, labor standards vary Table 2.1

47. © 2006 Prentice Hall, Inc.2 – 47 Goods and Services and the 10 OM Decisions Operations Decisions GoodsServices Supply- chain mgmt Relationship critical to final product Important, 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

48. © 2006 Prentice Hall, Inc.2 – 48 Goods and Services and the 10 OM Decisions Operations Decisions GoodsServices Maintenance Often preventive and takes place at production site Often “repair” and takes place at customer’s site Table 2.1

49. © 2006 Prentice Hall, Inc.2 – 49 Process Design LowModerateHigh Volume HighModerateLow Variety of Products Process-focused JOB SHOPS (Print shop, emergency room, machine shop, fine dining Repetitive (modular) focus ASSEMBLY LINE (Cars, appliances, TVs, fast-food restaurants) Product focused CONTINUOUS (steel, beer, paper, bread, institutional kitchen) Mass Customization Customization at high Volume (Dell Computer’s PC)

50. © 2006 Prentice Hall, Inc.2 – 50 Operations Strategies for Two Drug Companies Brand Name Drugs, Inc. Generic Drug Corp. Competitive Advantage Product Differentiation Low Cost Product Selection and Design Heavy R&D; labs; focus on development in a broad range of drug categories Low R&D; focus on development of generic drugs Quality Major priority, exceed regulatory requirements Meets regulatory requirements on a country by country basis Table 2.2

51. © 2006 Prentice Hall, Inc.2 – 51 Operations Strategies for Two Drug Companies Brand Name Drugs, Inc. Generic Drug Corp. Competitive Advantage Product Differentiation Low 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 production runs; 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

52. © 2006 Prentice Hall, Inc.2 – 52 Operations Strategies for Two Drug Companies Brand Name Drugs, Inc. Generic Drug Corp. Competitive Advantage Product Differentiation Low Cost Scheduling Centralized production planning Many short-run products complicate scheduling Layout Layout supports automated product- focused production Layout supports process-focused job shop practices Table 2.2

53. © 2006 Prentice Hall, Inc.2 – 53 Operations Strategies for Two Drug Companies Brand Name Drugs, Inc. Generic Drug Corp. Competitive Advantage Product Differentiation Low Cost Human Resources Hire the best; nationwide searches Very experienced top executives; other personnel paid below industry average Supply Chain Long-term supplier relationships Tends to purchase competitively to find bargains Table 2.2

54. © 2006 Prentice Hall, Inc.2 – 54 Operations Strategies for Two Drug Companies Brand Name Drugs, Inc. Generic Drug Corp. Competitive Advantage Product Differentiation Low Cost 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 Maintenance Highly trained staff; extensive parts inventory Highly trained staff to meet changing demand Table 2.2

55. © 2006 Prentice Hall, Inc.2 – 55 Managing Global Service Operations  Capacity planning  Location planning  Facilities design and layout  Scheduling Probably requires a different perspective on:

56. © 2006 Prentice Hall, Inc.2 – 56 Characteristics of High ROI Firms  High quality product  High capacity utilization  High operating effectiveness  Low investment intensity  Low direct cost per unit From the PIMS program of the Strategic Planning Institute

57. © 2006 Prentice Hall, Inc.2 – 57 Strategic Options to Gain a Competitive Advantage 28% - Operations Management 18% - Marketing/distribution 17% - Momentum/name recognition 16% - Quality/service 14% - Good management 4% - Financial resources 4% - Financial resources 3% - Other 3% - Other

58. © 2006 Prentice Hall, Inc.2 – 58 Elements of Operations Management Strategy  Low-cost product  Product-line breadth  Technical superiority  Product characteristics/differentiation  Continuing product innovation  Low-price/high-value offerings  Efficient, flexible operations adaptable to consumers  Engineering research development  Location  Scheduling

59. © 2006 Prentice Hall, Inc.2 – 59 Preconditions  Strengths and weaknesses of competitors and possible new entrants into the market  Current and prospective environmental, technological, legal, and economic issues  The product life cycle  Resources available within the firm and within the OM function  Integration of OM strategy with company’s strategy and with other functional areas One must understand:

60. © 2006 Prentice Hall, Inc.2 – 60 Dynamics of Strategic Change  Changes within the organization  Personnel  Finance  Technology  Product life  Changes in the environment

61. © 2006 Prentice Hall, Inc.2 – 61 Product 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 critical Defend market position Cost control critical IntroductionGrowthMaturityDecline Company Strategy/Issues Internet Flat-screen monitors Sales DVD CD-ROM Drive-through restaurants Fax machines 3 1/2” Floppy disks Color printers Figure 2.5

62. © 2006 Prentice Hall, Inc.2 – 62 Product Life Cycle Product design and development critical Frequent product and process design changes Short production runs High production costs Limited models Attention to quality IntroductionGrowthMaturityDecline OM Strategy/Issues Forecasting critical Product and process reliability Competitive product improvements and options Increase capacity Shift toward product focus Enhance distribution Standardization Less rapid product changes – more minor changes Optimum capacity Increasing stability of process Long production runs Product improvement and cost cutting Little product differentiation Cost minimization Overcapacity in the industry Prune line to eliminate items not returning good margin Reduce capacity Figure 2.5

63. © 2006 Prentice Hall, Inc.2 – 63 Strategy Development and Implementation  Identify critical success factors  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

64. © 2006 Prentice Hall, Inc.2 – 64 Strategy Development Process Determine Corporate Mission State the reason for the firm’s existence and identify the value it wishes to create. Form a Strategy Build a competitive advantage, such as low price, design, or volume flexibility, quality, quick delivery, dependability, after- sale service, broad product lines. Environmental Analysis Identify the strengths, weaknesses, opportunities, and threats. Understand the environment, customers, industry, and competitors. Figure 2.6

65. © 2006 Prentice Hall, Inc.2 – 65 Strategy Analysis SWOT Analysis Internal Strengths Internal Weaknesses External Opportunities External Threats Mission

66. © 2006 Prentice Hall, Inc.2 – 66 Critical Success Factors DecisionsSample OptionsChapter ProductCustomized, or standardized5 QualityDefine customer expectations and how to achieve them6, S6 ProcessFacility size, technology, capacity7, S7 LocationNear supplier or near customer8 LayoutWork cells or assembly line9 Human resourceSpecialized or enriched jobs10, S10 Supply chainSingle or multiple suppliers11, S11 InventoryWhen to reorder, how much to keep on hand12, 14, 16 ScheduleStable or fluctuating production rate13, 15 Maintenance Repair as required or preventive maintenance17 MarketingServiceDistributionPromotion Channels of distribution Product positioning (image, functions) (image, functions) Finance/AccountingLeverage Cost of capital Working capital ReceivablesPayables Financial control Lines of credit Production/Operations Figure 2.7

67. © 2006 Prentice Hall, Inc.2 – 67 Activity Mapping 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 2.8

68. © 2006 Prentice Hall, Inc.2 – 68 Activity Mapping 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 2.8 Automated ticketing machines No seat assignments No baggage transfers No meals (peanuts)

69. © 2006 Prentice Hall, Inc.2 – 69 Activity Mapping 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 2.8 No meals (peanuts) Lower gate costs at secondary airports High number of flights reduces employee idle time between flights

70. © 2006 Prentice Hall, Inc.2 – 70 Activity Mapping 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 2.8 High number of flights reduces employee idle time between flights Saturate a city with flights, lowering administrative costs (advertising, HR, etc.) per passenger for that city Pilot training required on only one type of aircraft Reduced maintenance inventory required because of only one type of aircraft

71. © 2006 Prentice Hall, Inc.2 – 71 Activity Mapping 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 2.8 Pilot training required on only one type of aircraft Reduced maintenance inventory required because of only one type of aircraft Excellent supplier relations with Boeing has aided financing

72. © 2006 Prentice Hall, Inc.2 – 72 Activity Mapping 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 2.8 Reduced maintenance inventory required because of only one type of aircraft Flexible employees and standard planes aid scheduling Maintenance personnel trained only one type of aircraft 20-minute gate turnarounds Flexible union contracts

73. © 2006 Prentice Hall, Inc.2 – 73 Activity Mapping 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 2.8 Automated ticketing machines Empowered employees High employee compensation Hire for attitude, then train High level of stock ownership High number of flights reduces employee idle time between flights

74. © 2006 Prentice Hall, Inc.2 – 74 Four International Operations Strategies Cost Reduction Considerations HighLow HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation)   Import/export or license existing product Examples U.S. Steel Harley Davidson International Strategy

75. © 2006 Prentice Hall, Inc.2 – 75 Four International Operations Strategies Cost Reduction Considerations HighLow HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation) International Strategy   Import/export or license existing product Examples U.S. Steel Harley Davidson

76. © 2006 Prentice Hall, Inc.2 – 76 International Strategy   Import/export or license existing product Examples U.S. Steel Harley Davidson Four International Operations Strategies Cost Reduction Considerations HighLow HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation)   Standardized product   Economies of scale   Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global Strategy

77. © 2006 Prentice Hall, Inc.2 – 77 Four International Operations Strategies Cost Reduction Considerations HighLow HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation)   Standardized product   Economies of scale   Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global Strategy International Strategy   Import/export or license existing product Examples U.S. Steel Harley Davidson

78. © 2006 Prentice Hall, Inc.2 – 78   Standardized product   Economies of scale   Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global Strategy International Strategy   Import/export or license existing product Examples U.S. Steel Harley Davidson Four International Operations Strategies Cost Reduction Considerations HighLow HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation)   Use existing domestic model globally   Franchise, joint ventures, subsidiaries Examples Heinz McDonald’s The Body Shop Hard Rock Cafe Multidomestic Strategy

79. © 2006 Prentice Hall, Inc.2 – 79 Four International Operations Strategies Cost Reduction Considerations HighLow HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation)   Standardized product   Economies of scale   Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global Strategy International Strategy   Import/export or license existing product Examples U.S. Steel Harley Davidson Multidomestic Strategy   Use existing domestic model globally   Franchise, joint ventures, subsidiaries Examples HeinzThe Body Shop McDonald’sHard Rock Cafe

80. © 2006 Prentice Hall, Inc.2 – 80 International Strategy   Import/export or license existing product Examples U.S. Steel Harley Davidson Multidomestic Strategy   Use existing domestic model globally   Franchise, joint ventures, subsidiaries Examples HeinzThe Body Shop McDonald’sHard Rock Cafe   Standardized product   Economies of scale   Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global Strategy Four International Operations Strategies Cost Reduction Considerations HighLow HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation)   Move material, people, ideas across national boundaries   Economies of scale   Cross-cultural learning Examples Coca-Cola Nestlé Transnational Strategy

81. © 2006 Prentice Hall, Inc.2 – 81 Four International Operations Strategies Cost Reduction Considerations HighLow HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation)   Standardized product   Economies of scale   Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global StrategyTransnational Strategy   Move material, people, ideas across national boundaries   Economies of scale   Cross-cultural learning Examples Coca-Cola Nestlé International Strategy   Import/export or license existing product Examples U.S. Steel Harley Davidson Multidomestic Strategy   Use existing domestic model globally   Franchise, joint ventures, subsidiaries Examples HeinzThe Body Shop McDonald’sHard Rock Cafe

82. © 2006 Prentice Hall, Inc.2 – 82 Ranking Corruption RankCountry2004 CPI Score (out of 10) 1Finland9.7 2New Zealand9.6 5Singapore9.3 7Switzerland9.1 9Australia8.8 11United Kingdom8.6 12Canada8.5 15Germany8.2 16Hong Kong8.0 17Ireland7.5 17USA7.5 24Japan6.9 35Taiwan5.6 64Mexico3.6 71China3.4 Good Not So Good