© Ana G. Méndez University System, All rights reserved. W © Ana G. Méndez University System, All rights reserved.

 A Global View of Operations  Developing Mission Statements and Strategies  Achieving a Competitive Advantage Through Operations  Ten Strategic OM Decisions  Strategy Development and Implementation  Goods and Services Selection  Product Development  Defining a Product  Service Design 2 Perfil

© Ana G. Méndez University System, All rights reserved. At the end of Workshop Two, the student will be able to: 1.Develop a mission statement and strategy 2.Identify and explain three strategic approaches to competitive advantage 3.Identify and define the 10 decisions of operation management 4.Understand the significance of key success factors and core competencies 5.Identify and explain four global operation strategy options 3 Objetivos Especificos

© Ana G. Méndez University System, All rights reserved. At the end of Workshop Two, the student will be able to: 6. Describe product development system 7. Describe how time-base competition is implemented 8. Understand how products and services are defined 9.Apply decision trees to product issues 10. Describe customer participation in the design and production of services 4 Objetivos Especificos

© Ana G. Méndez University System, All rights reserved. “Processes by which goods, services, capital, people, information, and ideas flow across national borders.” (Grewal/Levy) “Trend toward greater economic, cultural, political, and technological interdependence among national institutions and economies.” (Wild/Wild/Han) Grewal, D., & Levy, M. (2009). Marketing. New York: McGraw-Hill Companies, Inc. Wild, J., Wild, K., & Han, J. (2008). International Business: The Challenges of Globalization. Upper Saddle River, NJ: Pearson Prentice Hall. 5Prepared by Gilberto Clavell Objetivos Especificos

© Ana G. Méndez University System, All rights reserved. Wild, J., Wild, K., & Han, J. (2008). International Business: The Challenges of Globalization. Upper Saddle River, NJ: Pearson Prentice Hall. 6 Objetivos Especificos Wild, J., Wild, K., & Han, J. (2008). International Business: The Challenges of Globalization. Upper Saddle River, NJ: Pearson Prentice Hall.

© Ana G. Méndez University System, All rights reserved. 7 Reasons to Globalize are: 1.Reduce costs (labor, taxes, tariffs, etc.) 2.Improve the supply chain 3.Provide better goods and services 4.Understand markets 5.Learn to improve operations 6.Attract and retain global talent Tangible Reasons Intangible Reasons

© Ana G. Méndez University System, All rights reserved. Michael Porter suggested four "generic" business strategies that could be adopted in order to gain a competitive advantage. The four strategies relate to the extent to which the scope of a businesses' activities are narrow versus broad and the extent to which a business seeks to differentiate its products. 8 The four strategies are summarized in the figure below:

© Ana G. Méndez University System, All rights reserved. 9 An economic system in which goods and services are exchanged for one another or money, on the basis of their perceived worth. Every business requires some form of investment and a sufficient number of customers to whom its output can be sold at profit on a consistent basis.

© Ana G. Méndez University System, All rights reserved. 10 Mission statements tell an organization where it is going. The Strategy tells the organization how to get there.

© Ana G. Méndez University System, All rights reserved. 11 Our Mission: To spread the spirit of Rock ‘n’ Roll by delivering an exceptional entertainment and dining experience. We are committed to being an important, contributing member of our community and offering the Hard Rock family a fun, healthy, and nurturing work environment while ensuring our long-term success.

© Ana G. Méndez University System, All rights reserved. 12 Benefit to Society Mission Philosophy and Values Profitability and Growth Environment CustomersPublic Image

© Ana G. Méndez University System, All rights reserved. 13  Action plan to achieve mission  Functional areas have strategies  Strategies exploit opportunities and strengths, neutralize threats, and avoid weaknesses

© Ana G. Méndez University System, All rights reserved. 14  Differentiation – better, or at least different  Cost leadership – cheaper  Response – rapid response

© Ana G. Méndez University System, All rights reserved. 15 OperationsSpecificCompetitive DecisionsExamplesStrategy UsedAdvantage Product Quality Process Location Layout Human resource Supply chain Inventory Scheduling Maintenance FLEXIBILITY: Sony’s constant innovation of new products………………………………....Design HP’s ability to lead the printer market………………………………Volume Southwest Airlines No-frills service……..…..LOW COST DELIVERY: Pizza Hut’s 5-minute guarantee at lunchtime…………………..…..………………….Speed Federal Express’s “absolutely, positively on time”………………………..….Dependability QUALITY: Motorola’s HDTV converters….…… Conformance Motorola’s pagers………………………..….Performance Caterpillar’s after-sale service on heavy equipment……………....AFTER-SALE SERVICE Fidelity Security’s broad line of mutual funds………….BROAD PRODUCT LINE Response (Faster) Cost leadership (Cheaper) Differentiation (Better)

© Ana G. Méndez University System, All rights reserved. 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 16

© Ana G. Méndez University System, All rights reserved. 17 Cost Reduction Considerations HighLow HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation)  Standardized product  Economies of scale  Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global StrategyTransnational Strategy  Move material, people, ideas across national boundaries  Economies of scale  Cross-cultural learning Examples Coca-Cola Nestlé International Strategy  Import/export or license existing product Examples U.S. Steel Harley Davidson Multi-domestic Strategy  Use existing domestic model globally  Franchise, joint ventures, subsidiaries Examples HeinzThe Body Shop McDonald’sHard Rock Cafe

© Ana G. Méndez University System, All rights reserved. 18 Goods and Services Selection

© Ana G. Méndez University System, All rights reserved. 19  The goods or services the organization provides society  Top organizations typically focus on core products  Customers buy satisfaction, not just a physical good or particular service  Fundamental to an organization's strategy with implications throughout the operations function

© Ana G. Méndez University System, All rights reserved. 20  Differentiation  Shouldice Hospital  Low cost  Taco Bell  Rapid response  Toyota

© Ana G. Méndez University System, All rights reserved. 21 IntroductionGrowthMaturityDecline Sales, cost, and cash flow Net revenue (profit) Sales revenue Cost of development and production Cash flow Negative cash flow Loss Cash flow

© Ana G. Méndez University System, All rights reserved. 22 Product design and development critical Frequent product and process design changes Short production runs High production costs Limited models Attention to quality IntroductionGrowthMaturityDecline OM Strategy/Issues Forecasting critical Product and process reliability Competitive product improvements and options Increase capacity Shift toward product focus Enhance distribution Standardization Less rapid product changes – more minor changes Optimum capacity Increasing stability of process Long production runs Product improvement and cost cutting Little product differentiation Cost minimization Overcapacity in the industry Prune line to eliminate items not returning good margin Reduce capacity

© Ana G. Méndez University System, All rights reserved. 23 Introduction  Fine tuning may warrant unusual expenses for  Research  Product development  Process modification and enhancement  Supplier development Growth  Product design begins to stabilize  Effective forecasting of capacity becomes necessary  Adding or enhancing capacity may be necessary

© Ana G. Méndez University System, All rights reserved. 24 Maturity  Competitors now established  High volume, innovative production may be needed  Improved cost control, reduction in options, paring down of product line Decline  Unless product makes a special contribution to the organization, must plan to terminate offering

© Ana G. Méndez University System, All rights reserved Understanding the customer’s needs 2.Economic change 3.Sociological and demographic change 4.Technological change 5.Political/legal change 6.Market practice, professional standards, suppliers, distributors Brainstorming is a useful tool

© Ana G. Méndez University System, All rights reserved. 26 Scope of product development team Scope for design and engineering teams Evaluation Introduction Test Market Functional Specifications Design Review Product Specifications Customer Requirements Ability Ideas

© Ana G. Méndez University System, All rights reserved. 27  Robust design  Modular design  Computer-aided design (CAD)  Computer-aided manufacturing (CAM)  Virtual reality technology  Value analysis  Environmentally friendly design

© Ana G. Méndez University System, All rights reserved. 28  First definition is in terms of functions  Rigorous specifications are developed during the design phase  Manufactured products will have an engineering drawing  Bill of material (BOM) lists the components of a product

© Ana G. Méndez University System, All rights reserved. 29  Service typically includes direct interaction with the customer  Increased opportunity for customization  Reduced productivity  Cost and quality are still determined at the design stage  Delay customization  Modularization  Reduce customer interaction, often through automation

© Ana G. Méndez University System, All rights reserved. 30 ( c) Customer participation in design and delivery such as counseling, college education, financial management of personal affairs, or interior decorating (a) Customer participation in design such as pre-arranged funeral services or cosmetic surgery (b) Customer participation in delivery such as stress test for cardiac exam or delivery of a baby

© Ana G. Méndez University System, All rights reserved. Activities 31