Prepared by: PN NURWAHIDA

FUAD OPM 533 1

  28% - Operations Management
 18% - Marketing/distribution
 17% - Momentum/name recognition
 16% - Quality/service
 14% - Good management
 4% - Financial resources
 3% - Other

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-2
  28% Operations Management
 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

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-3
 One must understand:
 Strengths & weaknesses of competitors and
new entrants into the market
 Current and prospective environmental, legal,
and economic issues
 The notion of product life cycle
 Resources available with the firm and within
the OM function
 Integration of OM strategy with company
strategy and with other functions.

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-4
 Changes in the organization
 Stages in the product life cycle
 Changes in the environment

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FUAD OPM 533 2-5
 Introduction
Growth

Growth
rate

Maturity

Decline

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FUAD OPM 533 2-6
 Introduction
 Company Best period to increase market share
Strategy & R&D engineering are critical
Issues
Product design and development are critical
Frequent product and process design changes
Over-capacity
 Short production runs
OM
High skilled-labor content
Strategy & High production costs
Issues Limited number of models
Utmost attentions to quality
Quick elimination of market-revealed design
defects
Prepared by: PN NURWAHIDA
FUAD OPM 533 2-7
 Growth

Company Practical to change prices or quality image

Strategy Marketing is critical
Strengthen niche
& Issues
Forecasting is critical
OM Strategy Product and process reliability
& Issues Competitive product improvements and
options
Shift toward product oriented
Enhance distribution

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-8
 Maturity
Poor time to increase market share
Company Competitive costs become critical
Strategy Poor time to change price, image, or quality
Defend position via fresh promotional and
& Issues distribution approaches

Standardization
Less rapid product changes and more minor annual
OM Strategy model changes
& Issues Optimum capacity
Increasing stability of manufacturing process
Lower labor skills
Long production runs
Attention to product improvement and cost cutting
Re-examination of necessity of design compromises
Prepared by: PN NURWAHIDA
FUAD OPM 533 2-9
 Decline

Company Strategy Cost control critical to market share

& Issues

OM Strategy Little product differentiation

& Issues Cost minimization
Overcapacity in the industry
Prune line to eliminate items not returning
Good margin
Reduce capacity

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-10
Prepared by: PN NURWAHIDA
FUAD OPM 533 2-11
 Identify critical success factors
 Build and staff the organization

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-12
  Environmental
Environmental Analysis
Analysis

Determine Corporate Mission

Form a Strategy
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FUAD OPM 533 2-13
 Mission

Internal External
Strengths Opportunities
Strategy

Internal External
Weaknesses Threats
Competitive
Advantage
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FUAD OPM 533 2-14
Marketing Finance/Accounting Production/Operations
Service Leverage
Distribution Cost of capital
Promotion Working capital
Channels of distribution Receivables
Product positioning Payables
(image, functions) Financial control
Lines of credit

Decisions Sample Option Chapter

Product Customized, or standardized 5
Quality Define customer expectations and how to achieve them 6, S6
Process Facility size, technology, capacity 7, S7
Location Near supplier or customer 8
Layout Work cells or assembly line 9
Human resource Specialized or enriched jobs 10, S10
Supply chain Single or multiple source suppliers
11, S11
Inventory When to reorder, how much to keep on hand 12, 14,16
Schedule Stable or fluctuating productions rate 13, 15
Maintenance Repair as required or preventive maintenance 17
Prepared by: PN NURWAHIDA
FUAD OPM 533 2-15
 Courteous, but
limited passenger
service
Short haul, point-to-
Lean,
point routes, often to
productive Competitive Advantage: secondary airports
employees Low Cost

High Frequent,
aircraft reliable
utilization Standardized fleet
schedules
of Boeing 737
aircraft
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FUAD OPM 533 2-16
 Courteous, but
limited passenger
service

No seat assignments
No baggage transfers
Automated ticketing machines
No meals

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FUAD OPM 533 2-17
 Lower gate costs at
secondary airports
High number of flights, Short haul, point-to-
reduces employee idle time point routes, often to
between flights secondary airports

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-18
 High number of flights reduces
employee idle time between flights
Saturate a city with flights lowering
administrative costs per passenger for
that city

Frequent,
reliable
schedules

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-19
 Pilot training 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

Standardized fleet
of Boeing 737
aircraft
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FUAD OPM 533 2-20
 Flexible employees and standard planes
aids scheduling
Flexible union contracts
Maintenance personnel trained on only
one type of aircraft
20 minute gate turnarounds

High
aircraft
utilization

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-21
 High level of stock ownership
Hire for attitude, then train
High employee compensation
Empowered employees
Automated ticket machines
Lean,
productive
employees

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-22
 Courteous, but
limited passenger
service

Lean, Short haul, point-to-

productive point routes, often to
Competitive Advantage: secondary airports
employees Low Cost

High Frequent,
aircraft reliable
utilization Standardized fleet schedules
of Boeing 737
aircraft
Prepared by: PN NURWAHIDA
FUAD OPM 533 2-23
  Boeing – both sales and production are
worldwide.
 Benetton – moves inventory to stores around
the world faster than its competitor by building
flexibility into design, production, and
distribution
 Sony – purchases components from suppliers
in Thailand, Malaysia, and around the world
 GM is building four similar plants in Argentina,
Poland, China, and Thailand
Prepared by: PN NURWAHIDA
FUAD OPM 533 2-24
 Global Strategic Context
Global Strategic Context
 Differentiation
-Differentiation
 Cost
-Cost leadership
leadership
-Response
 Response

Supply Chain Location Logistics

Management Decisions Managemen
t

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-25
 Sourcing
 Vertical integration
 Make-or-buy decisions
 Partnering

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FUAD OPM 533 2-26
 Country-related issues
 Product-related issues
 Government policy/political risk
 Organizational issues

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FUAD OPM 533 2-27
 Flow of materials
 Transportation options and speed
 Inventory levels
 Packaging
 Storage

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FUAD OPM 533 2-28
  International business - engages in cross-border
transactions
 Multinational Corporation - has extensive
involvement in international business, owning or
controlling facilities in more than one country
 Global company - integrates operations from
different countries, and views world as a single
marketplace
 Transnational company - seeks to combine the
benefits of global-scale efficiencies with the benefits
of local responsiveness
Prepared by: PN NURWAHIDA
FUAD OPM 533 2-29
Tangible

 Reduce costs (labor, taxes, tariffs, etc.)

 Improve the supply chain
 Provide better goods and services
 Attract new markets
 Learn to improve operations
Intangible
 Attract and retain global talent

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-30
  Maquiladoras - Mexican factories located along the
U.S.-Mexico border that receive preferential tariff
treatment
 GATT - an international treaty that helps promote
world trade by lowering barriers to the free flow of
goods across borders
 NAFTA - a free trade agreement between Canada,
Mexico, and the United States
 AFTA – a free trade agreement among the Asian
countries

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-31
 Free trade may
take us into the era of the floating factory - a
six person crew will take a factory from
port to port in order to obtain the best
market, material, labor and tax
advantages

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-32
 Global product design
 Global process design and technology
 Global factory location analysis
 Impact of Culture and Ethics

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-33
 Remember social and cultural differences
 packaging and marketing can help make product
seem “domestic” but -
▪ “liter” versus “quart”
▪ “sweetness” and “taste”

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-34
  Information technology enables
management of integrated, globally
dispersed operation
 Texas Instruments: 50 plants in 19
countries
 Hewlett-Packard - product development
teams in U.S., Japan, Great Britain, and
Germany
 Reduces time-to-market

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-35
 Using CSFs for Country Selection
 Select CSFs based on parent
organization;’s strategic or operations
objectives
 Obtain country-specific information on the
CSFs
 Evaluate each country’s CSFs using a 1
(bad) to 5 (good) rating scale
 Sum the ratings
Prepared by: PN NURWAHIDA
FUAD OPM 533 2-36
   work ethic
national literacy rate  tax rates
 rate of innovation  inflation
 rate of technology  availability of raw materials
change  interest rates
 number of skilled  population
 number of miles of highway
workers
 stability of government
 product liability laws
 export restrictions
 similarity in language

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-37
 Cultures differ! Some accept/expect:
 variations in punctuality
 long lunch hours
 expectation of thievery
 bribery
 little protection of intellectual property

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-38
 Determine if sufficient people or facilities
exist to support the service
 Identify foreign markets that are open - not
controlled by governments
 Determine what services are of most interest
to foreign customers
 Determine how to reach global customers

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-39
Must take a different perspective on
 Capacity planning
 Location Planning
 Facilities design and layout
 Scheduling

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-40
  International business
 A firm that engages in cross-border
transactions.
 Multinational Corporation (MNC)
 A firm that has extensive involvement
in international business, owning or
controlling facilities in more than one
country

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-41
  International Strategy: uses exports and licenses to
penetrate the global area
 Multidomestic Strategy: uses decentralized
authority with substantial autonomy at each
business
 Global Strategy: Uses a high degree of
centralization, with headquarters coordinating to
seek standardization and learning between plants
 Transnational Strategy: Exploits economies of scale
and learning, as well as pressure for responsiveness,
by recognizing that core competencies reside
everywhere in the organization

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-42
Prepared by: PN NURWAHIDA
FUAD OPM 533 2-43
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FUAD OPM 533 44
  Arrow shirts 1. Volkswagen
 Braun Household Appliances 2. Bidermann International
 Burger King
 Firestone Tires 3. Bridgestone
 Godiva Chocolate 4. Campbell Soup
 Haagen_dazs Ice Cream 5. Credit Lyonnais
 Jaguar Autos
 MGM Movies 6. Ford Motor Company
 Lamborghini Autos 7. Gillette
 Goodrich Tires

8. Grand Metropolitan
Alpo Petfoods
9. Michelin
10. Nestlé

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-45
  Arrow shirts 1. France
 Braun Household Appliances 2. Great Britain
 Burger King
 Firestone Tires 3. Germany
 Godiva Chocolate 4. Japan
 Haagen_Dazs Ice Cream 5. United States
 Jaguar Autos
 MGM Movies 6. Switzerland
 Lamborghini Autos
 Goodrich Tires
 Alpo Petfoods

Prepared by: PN NURWAHIDA

FUAD OPM 533 2-46