Chapter 6

THE GLOBAL
ENVIRONMENT
AND
OPERATIONS
STRATEGY
OBJECTIVES:
After completing the chapter, the students shall be able
to:
1. Illustrate global view of operations.
2. Identify reasons for changing from domestic to
international operations.
3. Name cultural and ethical issues that challenges
globalization.
4. Discuss the three concepts of strategies that will help
organization in attaining their missions.
5. Describe the different operations decisions that support
missions and implementation of a strategy.
6. Discuss the development and implementation of a
strategy.
7. Compare the different operations strategies used by
international business.
 t is Wh
h a n ? O p at i s
W zatio era
al i S tr tio
ob at e n
Gl gy?

What is a t i s
h
W ba l
Foreign l o
G ess?
Market? s i n
Bu
GLOBAL STRATEGIES
★ Boeing - sales and supply chain are worldwide.
★ Benetton - moves inventory to stores around
the world faster than its competition by
building flexibility into design, production, and
distribution.
★ Sony - procures components from suppliers in
Thailand, Malaysia, and around the world.
★ Volvo - consider a Swedish company, purchased
by Chinese company, Geely. The current Volvo
is S40 is assembled in Belgium and Malaysia on
a platform shared with Mazda 3 (built in Japan)
and the Ford Focus (built in six countries
including the U.S.).
REASONS TO GLOBALIZE
 Reduce cost (labor, taxes, tariffs, etc.)
 Improve the supply chain
 Provide better goods and services
 Understand markets
 Learn to improve operations
 Attract and retain global talent
REDUCE COSTS

➔ Foreign locations with lower wages rates

can lower direct and indirect costs.
➔ Trade agreements can lower tariffs
❏ Maquiladoras
❏ World Trade Organization (WTO)
❏ North American Free Trade
Agreement (NAFTA)
❏ APEC, SEATO, MERCOSUR, CAFTA,
❏ European Union
IMPROVE THE SUPPLY CHAIN

➔Locating facilities closer to

unique resources
● Auto design to California
● Athletic shoe production
to China
● Perfume manufacturing
in France
BETTER GOODS AND SERVICES
Objective and measurable
like number of on-time
deliveries
Subjective and less measurable
like sensitivity to culture
UNDERSTANDING MARKETS
Interacting with foreign customers,
suppliers, competition can lead to
new opportunities
● Cell phone design moved from
Europe to Japan
● Extend the product life cycle
IMPROVE OPERATIONS
Understand differences between how
business is handled in other countries
Japanese - inventory management
Scandinavians - ergonomics
International operations can improve
response time and customer service
ATTRACT & RETAIN GLOBAL
TALENT
➔Offer better employment
opportunities
● Better growth opportunities
and insulation against
unemployment
● Relocate unneeded
personnel to more
prosperous locations
CULTURAL AND ETHICAL
ISSUES
Cultures can be quite
different
Attitudes can be different
towards
Punctuality
Lunch breaks
Environment
Intellectual property
Thievery
DEVELOPING MISSION AND STRATEGIES

Mission statement tells an

organization where it is going

The Strategy tells the organization how

to get there.
OM’s CONTRIBUTION TO STRATEGY
1. Goods and service design
2. Quality
3. Process and capacity design
4. Location selection
5. Layout design
6. Human resources and job design
7. Supply-chain management
8. Inventory
9. Scheduling
10. Maintenance