OPERATIONS MANAGEMENT IN TOURISM

AND HOSPITALITY MANAGEMENT

CHAPTER 3
Globalization and production
strategy
Objectives:
1. Define globalization
2. Know the history of globalization
3. Know the importance of globalization to the society.
4. Learn how does globalization impact the society
5. Define production strategy
6. Learn the importance of product strategy
GLOBALIZATION
Globalization refers to the process of
integration across societies and
economies. The phenomenon
encompasses the flow of products,
services, labor, finance, information,
and ideas moving across national
borders. The frequency and intensity
of the flows relate to the upward or
downward direction of globalization
as a trend.
The History of Globalization
Globalization is not a new concept.
Traders traveled vast distances in
ancient times to buy commodities that
were rare and expensive for sale in
their homelands. The Industrial
Revolution brought advances in
transportation and communication in
the 19th century that eased trade
across borders.
The History of Globalization
Some lay importance to the Age of
Exploration, when Europeans in the
1400s set sail across the Atlantic,
looking for shorter spice routes to
China and India. Many mark the
voyages of Christopher Columbus
and other sea-faring captains for
opening up commercial trade
routes across the world as the
beginning of globalization
What Is Globalization and Why Is it Important?
In essence, globalization is about the world
becoming increasingly interconnected.
Countries today are more connected than ever
before, due to factors such as air travel,
containerized sea shipping, international trade
agreements and legal treaties, and the Internet.
In the world of business, globalization is
associated with trends such as outsourcing, free
trade, and international supply chains.
Globalization is important as it increases the
size of the global market, and allows more and
different goods to be produced and sold for
cheaper prices.
 How Does Globalization Impact Society?
Globalization has had a large impact on
societies around the world, leading to
massive migrations from rural to
industrial or urban areas, leading to the
rapid growth of cities and trade hubs.
While this has led to an overall increase
in incomes and a higher standard of
living in general, it has also led to
problems of urbanization including
crime, domestic violence,
homelessness, and poverty.
 What is global strategy
- A global strategy is a strategy that a company develops to expand into
the global market. The purpose of developing a global strategy is to
increase sales across the world. The term "global strategy" includes
standardization, and international and multinational strategies.
Developing a global strategy can benefit your company in many ways,
including making sales in new markets, increasing your global brand
awareness and more.
- To develop a global strategy, it's important to consider how your
business's products can perform in global markets. Global strategy
creation also involves analyzing your competitors, global customers,
production sites and other components of your business to help you
ensure that your business succeeds in the global market.
 Types of global strategies
Standardization
- A standardization strategy is a strategy that a company develops to expand its operations
into the global market. In a standardization strategy, you sell the same products in every
location. A standardization strategy is characterized by keeping control centralized rather
than delegating decisions to local markets. Some of the benefits of a standardization
strategy include the ability to develop products more quickly and easily coordinate
activities across locations.
Example: Imagine that you want to create a standardization strategy for your luxury purse
company. In this case, you would create a strategy to sell essentially the same purses in every
location. This would allow you to keep your products consistent across locations.
 Types of global strategies
International
- An international strategy involves importing and exporting products. Using an international
strategy can allow you to work with foreign suppliers and sell to customers around the world
while keeping your physical premises within your home country. Typically, international
strategies still focus mainly on the company's home market while doing some business
overseas.

Example: Using the same scenario, imagine that you decided to create an international strategy for
your luxury purse company instead. Your international strategy would still focus on your home
country, but you would do some business overseas. For example, your physical production would still
occur in your home country, but you could export some purses overseas.
 Types of global strategies
Multinational
- When you use a multinational strategy, you can cater your products to each individual local
market. You can also have physical business locations and staff based in various locations. The
key benefit of using a multinational strategy is the ability to cater your business to individual
locations.

Example: Consider that your luxury purse company wanted to create a multinational strategy. In a
multinational strategy, you could create different luxury purses for each location that you sell in. This
would allow you to cater your business to its different markets.
 Types of international strategies
Multidomestic Strategy

A firm using a multidomestic strategy sacrifices efficiency in favor

of emphasizing responsiveness to local requirements within each of
its markets.

Similarly, food company H. J. Heinz adapts its products to match

local preferences. Because some Indians will not eat garlic and
onion, for example, Heinz offers them a version of its signature
ketchup that does not include these two ingredients.
 Types of international strategies
Global Strategy

A firm using a global strategy sacrifices responsiveness to local requirements

within each of its markets in favor of emphasizing efficiency. This strategy is the
complete opposite of a multidomestic strategy. Some minor modifications to
products and services may be made in various markets, but a global strategy stresses
the need to gain economies of scale by offering essentially the same products or
services in each market.

Microsoft, for example, offers the same software programs around the world but
adjusts the programs to match local languages.
Types of international strategies
Transnational Strategy

A firm using a transnational strategy seeks a middle ground between a multidomestic

strategy and a global strategy. Such a firm tries to balance the desire for efficiency with
the need to adjust to local preferences within various countries. For example, large
fast-food chains such as McDonald’s and KFC rely on the same brand names and the
same core menu items around the world. These firms make some concessions to local
tastes too. In France, for example, wine can be purchased at McDonald’s. This approach
makes sense for McDonald’s because wine is a central element of French diets.
Production strategy
What is a Product Strategy?
A product strategy is a high-level
plan describing what a business hopes
to accomplish with its product and
how it plans to do so. The strategy
should answer key questions such as
who the product will serve
(personas), how it will benefit those
personas, and the company’s goals for
the product throughout its life cycle.
Why is Product Strategy Important?
1. A product strategy provides clarity for your company.
- Your team will be in a better position to deliver their best work when you draft and communicate a clear and
well-thought-out strategy for your organization.

2. It helps you prioritize your product roadmap.

- After you’ve earned stakeholder agreement for your proposal, it will be time to translate that strategy into a
high-level action plan and then build a compelling product roadmap.
- When you start with a strategy, you have a clearer picture of what you hope to accomplish with your product and
translate it into a more strategically sound product roadmap.

3. A product strategy improves your team’s tactical decisions.

- When you and your team have a clear product strategy as a reference point, you can make smarter strategic
decisions about adjusting your plans, especially if you lose resources or need to change your estimated
timetables.
10 Strategic operation management decision
1. Goods and services: This includes
looking for ways to implement
consistency in costs, quality, and
resources across all business divisions.

2. Quality Management: Be clear on the

customer’s demands and then meet those
expectations. Use market research to
determine customer needs and batch quality
assurance testing on products and services in
production.
3. Process and Capacity Design: Design strategies
which support all production goals including
technology and resources. A value stream map can
help determine what processes are necessary and
how to keep them running efficiently.

4. Location: In developing a location strategy

consider supply chain and how the location will
receive supplies, the movement of goods and
services internally and to customers, and the role of
marketing and public relations in the location
choice.
5. Layout Design and Strategy:
Consider the placement of desks,
workstations, and how materials are
delivered and used.

6. Human Resources and Job Design:

Implement continuous improvement programs
with regular reviews, provide continuous
training for employees, and institute employee
satisfaction programs to achieve success in
this area.
7. Supply Chain Management:
Determine the best strategies to
streamline, be cost effective, and
to develop trusted partners.

8. Inventory: Different markets mean

different challenges when it comes to
inventory but all need to strategize and
plan their inventory control. Weather,
supply shortages, and labor all
influence how an organization
maintains its inventory.
9. Scheduling: Consider both production and
people. Ask questions such as how much
product is required to be produced for the
customer in the required time? How many
people and how many machines are required to
do the job effectively and efficiently? This
differs among industries and business
departments.

10. Maintenance: This includes

maintaining people and machines, as well
as, process. What do you need to do to
maintain quality and keep resources
reliable and stable?
ACTIVITY NO. 1 ( GROUP)
Understanding globalization
1. Look in your bag, at the tags on your clothing, at your cell phone, etc. For each person
in the group, try to identify where at least one object you have with you was made. Do
some research about this object. Chart your discoveries on a piece of paper.
● Each group presents their discoveries
● What do we know about each of the countries/regions where these objects were made?
● For those not made in the United States, why do you think these objects were made
overseas?
● Who profits from these objects being made in another country but sold here?
● Who suffers or is exploited?
● Why do you think our economy is set up in this way?
 CHAPTER 3
https://www.referenceforbusiness.com/management/Ex-Gov/Globalization.html
https://www.investopedia.com/terms/g/globalization.asp
https://www.productplan.com/glossary/product-strategy/
https://online.kettering.edu/news/2016/09/21/10-critical-decisions-operations-management
https://www.indeed.com/career-advice/career-development/global-strategy
https://opentextbc.ca/strategicmanagement/chapter/types-of-international-strategies/#:~:text=
Multinational%20corporations%20choose%20from%20among,and%20responding%20to%20local
%20needs.