Operations Strategy In A Global Environment

World Trade Organization (WTO)

international organization that promotes world trade by lowering barriers to the free flow of goods across borders (reduced tariffs from 40% in 1940 to 3% today)

Strategy

organization's action plan to achieve the mission

North American Free Trade Agreement (NAFTA)

phase out all trade and tariff barriers among Canada, Mexico, an the U.S.

Core Competencies

set of unique skills, talents, and capabilities that a firm does at a world-class level

Global Strategy

strategy in which decisions are centralized with headquarters coordinating the organization to seek standardization and learning between plants/facilities

Mission

the purpose or rationale for an organization's existence

Resources View

thinking in terms of the financial, physical, human, and technological resources available and ensuring that the potential strategy is compatible with those resources to achieve competitive advantage

Outsourcing

transferring activities that have traditionally been internal to external suppliers

International Strategy

uses exports and licenses to penetrate the global arena

Key Success Factors (KSF's)

activities that are necessary for a firm to achieve its goals; often they are extremely important to helping a company survive

Five Forces Model

analyzing potential competing forces as immediate rivals, potential entrants, customers, suppliers, and substitute products

International Business

any firm that engages in international trade or investment

Differentiation

going beyond both physical characteristics and service attributes to encompass everything about the product or service that influences the value that the customers derive from it

Multidomestic Strategy

has decentralized authority with substantial autonomy at each business

Value-Chain Analysis

identify activities that represent strengths, or potential strengths and may be opportunities for developing competitive advantage

Theory of Comparative Advantage

if an external provider regardless of location, can perform activities more productively than the purchasing firm, the external provider should do the work

Competitive Advantage

implies the creation of a system that has a unique advantage over competitors

Response

including the entire range of values related to timely product development and delivery, as well as reliable scheduling and flexible performance

Experience Differentiation

engage the customer to use people's five senses so they become immersed, or even an active participant in the product

Transnational Strategy

exploits the economies of scale and learning as well as pressure for responsiveness, by recognizing that core competence does not reside in just the "home" country but can exist anywhere in the organization

Multinational Corporation (MNC)

firm with extensive international business involvement

SWOT Analysis

formal review of internal strengths and weaknesses and external opportunities and threats

Maquiladoras

free trade zones that allow manufacturers to cut their costs to cut costs by paying only on the value added by mexican workers

Advantages of Outsourcing

1. Cost Savings 2. Gaining outside expertise 3. Improving operations and service 4. Maintaining a focus on core competencies 5. Accessing outside technology

How Firms Achieve Their Mission

1. Differentiation 2. Cost Leadership 3. Response

Reasons Domestic Business Operations decide to change to some form of international operation

1. Improve the supply chain 2. Reduce costs (labor, taxes, tariffs, etc.) 3. Improve Operations 4. Understand Markets 5. Improve products 6. Attract and retain global talent

Risks of Outsourcing

1. Increased logistics and inventory costs 2. Loss of control (quality, delivery, etc.) 3. Potential creation of future competition 4. Negative impact on employees 5. Risks may not manifest themselves for years

European Union (EU)

27 member states that reduce trade barriers among all nations through standardization and a common currency (euro)...placing lot of restrictions on products sold

International Operations Strategies

Transnational: move material across national boundaries, economies of scale, cross cultural learning (High cost, Low Local Responsiveness) International: import/export or license existing product, (Low on Both) Multidomestic: use existing domestic model globally, franchise, joint ventures, subsidiaries (Low Cost reduction, High Local Responsiveness)

Activity Map

a graph that links competitive advantage, key success factors, and supporting activities

Low-Cost Leadership

achieving maximum value as defined (perceived) by your customer