Operations Strategy in

a Global Environment
Lecture Notes for Operation Management
By Fahmy Radhi
Management Issues in
Global Operations
Global Strategic
Context
 Differentiation
 Cost leadership
 Response

Supply Chain Location Logistics

Management Decisions Management
 Corporate Strategic
Company
Vision
Mission

Business
Strategy

Functional
Functional Area
Area
Strategies

Marketing Operations Fin./Acct.

Decisions Decisions Decisions
 Vision

 3M: “Be innovative and satisfy our

customers”
 Microsoft: “Information at your fingertips”
 GE: To be number one or two in every
business”
 Federal Express: “When it absolutely,
positively, must get there overnight, use
FedEx”
 Mission
Polaroid Corp. (late 1970s)
 Polaroid manufactures and sell photographic products based ion
inventions of the company in the field of one-step instants
photography and light polarizing products, utilizing the company’s
inventions in the field of polarized light. The company considers
itself to be engaged in one line of business

Polaroid Corp. (mid 1980s)

 Polaroid designs, manufactures, and markets worldwide a variety of
products based on inventions, primarily in the photographic field.
These include instant photographic cameras and films, light
polarizing filters and lenses, and diversified chemical, optical, and
commercial products. The principal products of the company are
used in amateur and professional photography, industry, science,
medic, and education
Factors Affecting Mission
Philosophy &
Values
Profitability
Environment
& Growth
Mission

Customers Public Image

Benefit to
Society
SWOT Analysis to Strategy
Formulation

Mission

Internal External
Strengths Opportunities
Strategy

Internal External
Weaknesses Threats
Competitive
Advantage
How It Works
If competitive Distinctive
advantage, leads to Company
competencies affect
Mission
achieving
Business
Strategy

Functional Area
Strategies

Marketing Operations Fin./Acct.

Decisions Decisions Decisions
 The activities of operations
management
ENVIRONMENT
INPUT
TRANSFORMED OPERATIONS
RESOURCES STRATEGY
MATERIALS
INFROMATION
CUSTOMERS
IMPROVEMENT
DESIGN GOODS
INPUT OUTPUT AND
SERVICES
PLANNING AND
FACILITIES CONTROL
STAFF
INPUT
TRASNFORMED
RESOURCES ENVIRONMENT
Stages in the Product Life Cycle

Introduction
Growth rate

Growth

Maturity

Decline
Strategy and Issues During a
Product’s Life
Strategies for
Competitive Advantage
 Differentiation and Diversification

 Cost leadership

 Quick response

 Flexibility
 Competing on
Differentiation
Uniqueness can go beyond both the
physical characteristics and service
attributes to encompass everything
that impacts customer’s perception
of value
Competing on Cost

Provide the maximum value as

perceived by customer

Does not imply low value or low

quality
 Competing on
Response
 Flexibility
 Reliability
 Timeliness

Requires institutionalization within the

firm of the ability to respond
Competing, Regardless of
the Basis

Requires the
institutionalization within the
firm of the ability to change,
and to adapt
 Competitive Priority
1. Competing on Cost by lowering cost operation
2. Competing on quality
 High-Performance Design
 Consistent Quality
3. Competing on Speed (Time-bases Competition)
 Fast Delivery
 On-Time Delivery
 Development Speed for new product
4. Competing on Flexibility
 Customization
 Volume flexibility
 OM’s Contribution to Strategy
Operations Specific Strategy Competitive
Decisions Examples Used Advantage
Quality FLEXIBILITY
Sony’s constant innovation of new products Design
Product HP’s ability to follow the printer market Volume

Process Southwest Airlines No-frills service LOW COST

Location DELIVERY
Pizza Hut’s five-minute guarantee at lunchtime Speed
Layout Federal Express’s “absolutely, positively on time” Dependability Differentiation
(Better)
Human Resource
QUALITY
Motorola’s automotive products ignition systems Conformance Response
Cost leadership
Supply Chain Motorola’s pagers Performance (Faster)
(Cheaper)

Inventory
IBM’s after-sale service on mainframe computers AFTER-SALE SERVICE
Scheduling
Fidelity Security’s broad line of mutual funds BROAD PRODUCT LINE
Maintenance
Four International
Operations Strategies