1. 2 - 1© 2011 Pearson Education 2 2 The Global Environment and Operations Strategy PowerPoint presentation to accompany Heizer and Render Operations Management, 10e, Global Edition Principles of Operations Management, 8e, Global Edition PowerPoint slides by Jeff Heyl

2. 2 - 2© 2011 Pearson Education Outline  Global Company Profile: Boeing  A Global View of Operations  Developing Missions And Strategies  Achieving Competitive Advantage Through Operations strategy (differentiation,cost,and response)  Ten Strategic OM Decisions  Strategy Development and Implementation  Global Operations Strategy options (international – multinational – global - transnational )

3. 2 - 3© 2011 Pearson Education Learning Objectives 1.Define mission and strategy 2.Identify and explain three strategic approaches to competitive advantage 3.Identify and define the 10 decisions of OM 4.Understand the significant key success factors and core competencies 5.Identify and explain four global operations strategy options By the end of this chapter you should be able to:

4. 2 - 4© 2011 Pearson Education Global company Some Boeing Suppliers (787) FirmCountryComponent LatecoereFrancePassenger doors LabinelFranceWiring DassaultFranceDesign and PLM software Messier-BugattiFranceElectric brakes ThalesFranceElectrical power conversion system and integrated standby flight display Messier-DowtyFranceLanding gear structure DiehlGermanyInterior lighting

5. 2 - 5© 2011 Pearson Education Some Boeing Suppliers (787) FirmCountryComponent CobhamUKFuel pumps and valves Rolls-RoyceUKEngines Smiths AerospaceUKCentral computer system BAE SYSTEMSUKElectronics Alenia AeronauticsItalyUpper center fuselage & horizontal stabilizer Toray IndustriesJapanCarbon fiber for wing and tail units

6. 2 - 6© 2011 Pearson Education Some Boeing Suppliers (787) FirmCountryComponent Fuji HeavyJapanCenter wing box Industries Kawasaki HeavyJapanForward fuselage, Industries fixed section of wing, landing gear well Teijin SeikiJapanHydraulic actuators Mitsubishi Heavy JapanWing box Industries Hafei AviationChinaParts

7. 2 - 7© 2011 Pearson Education Some Boeing Suppliers (787) FirmCountryComponent Korean AviationSouthWingtips Korea SaabSwedenCargo access doors

8. 2 - 8© 2011 Pearson Education Global Strategies  Benetton – moves inventory to stores around the world faster than its competitors by building flexibility into design, production, and distribution  Sony – purchases components from suppliers in Thailand, Malaysia, and around the world  Volvo – considered a Swedish company but until recently was controlled by an American company ( Ford).

9. 2 - 9© 2011 Pearson Education 35 – 30 – 25 – 20 – 15 – 10 – 5 – 0 – ||||||||||| 19601965197019751980198519901995200020052010(est*) Year Percent Growth of World Trade Figure 2.1 Collapse of the Berlin Wall

10. 2 - 10© 2011 Pearson Education Reasons to Globalize 1.Reduce costs (labor, taxes, tariffs, etc.) 2.Improve supply chain 3.Provide better goods and services 4.Understand markets 5.Learn to improve operations 6.Attract and retain global talent 7.Cultural and Ethical Issues Tangible Reasons Intangible Reasons

11. 2 - 11© 2011 Pearson Education Reduce Costs  Foreign locations with lower wage rates can lower direct and indirect costs (salary-electricity ….etc)

12. 2 - 12© 2011 Pearson Education Improve the Supply Chain  Locating facilities closer to unique resources  Auto design to California  Sport shoe production to China  Perfume manufacturing in France

13. 2 - 13© 2011 Pearson Education Provide Better Goods and Services  Satisfy the different needs of goods and services  On-time deliveries  Cultural variation  Improved customer service

14. 2 - 14© 2011 Pearson Education Understand Markets  Interacting with foreign customers and suppliers can lead to new opportunities  Cell phone design from Europe  Cell phone fads from Japan  Extend the product life cycle

15. 2 - 15© 2011 Pearson Education Learn to Improve Operations  Remain open to the free flow of ideas  General Motors partnered with a Japanese auto manufacturer to learn new approaches for production and inventory control

16. 2 - 16© 2011 Pearson Education Cultural and Ethical Issues  Cultures and attitude can be quite different towards  Child labor  Lunch breaks  Environment  Intellectual property

17. 2 - 17© 2011 Pearson Education Many factors must be Considered Many factors must be Considered  National literacy rate  Rate of innovation  Rate of technology change  Number of skilled workers  Political stability  Product liability laws  Export restrictions  Variations in language  Work ethic  Tax rates  Inflation  Availability of raw materials  Interest rates  Population  Phone system

18. 2 - 18© 2011 Pearson Education Developing Missions and Strategies The Mission The Mission statements tell an organization where it is going Strategy While The Strategy tells the organization how to get there

19. 2 - 19© 2011 Pearson Education Mission  Mission - where are you going?  Organization’s purpose for being  Answers ‘What do we provide society?’

20. 2 - 20© 2011 Pearson Education Merck Our mission is to provide society with superior products and services— innovations and solutions that improve the quality of life and satisfy customer needs—to provide employees with meaningful work and advanced opportunities and investors with a superior rate of return. Figure 2.2

21. 2 - 21© 2011 Pearson Education Palmer Hospital Palmer Hospital for Children - provides state-of-the-art, family centred healthcare focused on restoring the joy of childhood in an environment of compassion, healing, and hope. Figure 2.2

22. 2 - 22© 2011 Pearson Education Benefit to Society Mission Factors Affecting Mission Philosophy and Values Profitability and Growth Environment CustomersPublic Image

23. 2 - 23© 2011 Pearson Education Sample Missions Company Mission To manufacture and service an innovative, growing, and profitable worldwide successful communications business that exceeds our customers’ expectations. Operations Management Mission To produce products consistent with the company’s mission as the worldwide low-cost manufacturer. Figure 2.3

24. 2 - 24© 2011 Pearson Education Sample Missions Figure 2.3 Sample OM Department Missions Product designTo design and produce products and services with outstanding quality and inherent customer value. Quality managementTo attain the exceptional value that is consistent with our company mission and marketing objectives by close attention to design, production, and field service operations Process designTo determine, design, and produce the production process and equipment that will be compatible with low-cost product, high quality, and good quality of work life at economical cost.

25. 2 - 25© 2011 Pearson Education Sample Missions Figure 2.3 Sample OM Department Missions LocationTo locate, design, and build efficient and economical facilities that will yield high value to the company, its employees, and the community. Layout designTo achieve, through skill, imagination, and resources in layout and work methods, production effectiveness and efficiency while supporting a high quality of work life. Human resourcesTo provide a good quality of work life, with well-designed, safe, rewarding jobs, stable employment, and equitable pay, in exchange for outstanding individual contribution from employees at all levels.

26. 2 - 26© 2011 Pearson Education Sample Missions Figure 2.3 Sample OM Department Missions Supply-chain management To collaborate with suppliers to develop innovative products from stable, effective, and efficient sources of supply. InventoryTo achieve low investment in inventory consistent with high customer service levels and high facility utilization. SchedulingTo achieve high levels of productivity and timely customer delivery through effective scheduling. MaintenanceTo achieve high utilization of facilities and equipment by effective maintenance of facilities and equipment.

27. 2 - 27© 2011 Pearson Education Strategic Process MarketingOperations Finance/ Accounting Functional Area Missions Organization’s Mission

28. 2 - 28© 2011 Pearson Education Strategy  Action plan to achieve mission  Functional areas have strategies  Strategies exploit opportunities and strengths, neutralize threats, and avoid weaknesses

29. 2 - 29© 2011 Pearson Education Strategies for Competitive Advantage  Differentiation – better, or at least different  Cost leadership – cheaper  Flexibility -rapid response

30. 2 - 30© 2011 Pearson Education Competing on Differentiation Uniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts customer’s perception of value  Safe skin innovative gloves – leading edge products  Walt Disney Magic Kingdom – experience differentiation  Hard Rock Cafe – dining experience

31. 2 - 31© 2011 Pearson Education Competing on Cost Provide the maximum value as perceived by customer. Does not imply low quality.  Southwest Airlines – secondary airports, no frills service, efficient utilization of equipment  Wal-Mart – small overhead, shrinkage, distribution costs  Franz Colruyt – no bags, low light, no music, doors on freezers

32. 2 - 32© 2011 Pearson Education Competing on flexibility  Flexibility is matching market changes in design innovation and volumes  A way of life at Hewlett-Packard  Reliability is meeting schedules  German machine industry  Timeliness is quickness in design, production, and delivery  Pizza Hut, Motorola

33. 2 - 33© 2011 Pearson Education OM’s Contribution to Strategy Product Quality Process Location Layout Human resource Supply chain Inventory Scheduling Maintenance DIFFERENTIATION Innovative design …Safeskin’s innovative gloves Broad product line …Fidelity Security’s mutual funds After-sales service …Caterpillar’s heavy equipment service Experience …Hard Rock Café’s dining experience COST LEADERSHIP Low overhead …Franz-Colruyt’s warehouse-type stores Effective capacity use …Southwest Airline’s aircraft utilization Inventory management …Wal Mart’s sophisticated distribution system RESPONSE Flexibility …Hewlett-Packard’s response to volatile world market Reliability …FedEx’s “absolutely, positively, on time” Quickness …Pizza Hut’s 5-minute guarantee at lunchtime Figure 2.4 10 OperationsCompetitive DecisionsApproachExampleAdvantage Response (faster) Cost leadership (cheaper) Differentiation (better)

34. 2 - 34 Ten strategic OM decisions conceptOM decision Designing goods and services defines much of the transformation process ; it usually determine the lower limits of cost and the upper limits of quality Product design The customer’s quality expectation must be determined so that policies and procedures established to identify and achieve that quality Quality Process decision commit management to specific technology, quality, human resources use, and maintenance, that expenses determine much of the firm’s basic cost Process & Capacity design this decision may determine the firm’s ultimate success Any error decision may overwhelm any other efficiencies Location selection Material flows, capacity needs, personnel levels, technology decisions and inventory requirement influence layout layout design

35. 2 - 35 Ten strategic OM decisions © 2011 Pearson Education Providing the quality of work life, determine the talented and skills people Human resources & job design Determine what is to be made and what is to be purchased (quality – delivery - innovation). Mutually trust between buyer and supplier is necessary for effective purchasing Supply chain management Suppliers, production schedules and human resource planning are considered for more inventory efficiency Inventory The demands on human resources and facilities must be determined and controlled for developing the feasible and efficient schedules Scheduling Decisions must be made regarding desired levels of reliability and stability. Systems must be established to maintain that reliability & stability Maintenance

36. 2 - 36© 2011 Pearson Education Goods and Services and the 10 OM Decisions Operations Decisions GoodsServices Product design product is usually tangible product is not tangible QualityMany objective (battery life )standards Many subjective standards (nice colour) Process and capacity design Customers is not involved Capacity may or may not match demand Customer must directly involved Capacity must match demand Table 2.1

37. 2 - 37© 2011 Pearson Education Goods and Services and the 10 OM Decisions Operations Decisions GoodsServices Location selection Near raw materials and labor Near customers Layout design Enhances production efficiency Enhances product and production Human resources and job design Workforce focused on technical skills, consistent labor standards, output - based wages Workforce must be able to interact with customers, labor standards vary depending on customer requirements Table 2.1

38. 2 - 38© 2011 Pearson Education Goods and Services and the 10 OM Decisions Operations Decisions GoodsServices Supply chain management Relationship critical to final product Important, but may not be critical InventoryRaw materials, work-in-process, and finished goods may be inventoried Cannot be stored SchedulingLevel schedules possible Meet immediate customer demand Table 2.1

39. 2 - 39© 2011 Pearson Education Goods and Services and the 10 OM Decisions Operations Decisions GoodsServices MaintenanceOften preventive and takes place at production site Often “repair” and takes place at customer’s site Table 2.1

40. 2 - 40© 2011 Pearson Education Issues In Operations Strategy  Resources view  Value Chain analysis  Porter’s Five Forces model  Organization’s operating system  Constant change

41. 2 - 41 (1)Resource View  a view in which managers thinking in terms of financial,physical, human and technological resources available and ensuring that the potential strategy is compatible with those resources.  Mangers evaluate these resources in order to achieve competitive advantages © 2011 Pearson Education

42. 2 - 42 (2)Value –chain analysis  A way to identify the elements in the products /services chain that uniquely add value.  It is used to identify activities that represent strengths, or opportunities for developing competitive advantages  The areas where the firm can add its unique values through product research, design, human resources, supply chain management, quality management, process innovation © 2011 Pearson Education

43. 2 - 43 (3) Porter’s Five Forces Model  According to Porter there are 5 potential competing forces:- 1.Immediate rivals 2.Potential entrants 3.Customers 4.Suppliers 5.Substitute products © 2011 Pearson Education

44. 2 - 44 ( 4) Organization’s operating system  The firm is operating in a system with many external factors  Political, cultural, legal, product life cycle...etc are in flux  The internal changes combined with the external changes require strategies that are dynamic  As example the following figure shows us how the changes in the product lifecycle can affect the OM strategy © 2011 Pearson Educatione

45. 2 - 45© 2011 Pearson Education Product Life Cycle Best period to increase market share R&D engineering is critical Practical to change price or quality image Strengthen niche Poor time to change image, price, or quality Competitive costs become critical Defend market position Cost control critical IntroductionGrowthMaturityDecline Company Strategy/Issues Figure 2.5 Internet search engines Sales Drive-through restaurants CD-ROMs Ana log TVs iPods Boeing 787 LCD & plasma TVs Twitter Avatars Xbox 360

46. 2 - 46© 2011 Pearson Education Product Life Cycle 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 Fewer 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 Figure 2.5

47. 2 - 47 (5) SWOT Analysis  A method of determine, internal (Strengths& Weakness) and external (Opportunities & Threats)  The purpose of this analysis is to maximize the strengths & opportunity and minimize or avoid the weakness & threats  According to this analysis strategy will be performed as shown by the following figure © 2011 Pearson Education

48. 2 - 48© 2011 Pearson Education Strategy Analysis SWOT Analysis Internal Strengths Internal Weaknesses External Opportunities External Threats Mission

49. 2 - 49© 2011 Pearson Education Strategy Development Process Determine the Corporate Mission State the reason for the firm’s existence and identify the value it wishes to create. Form a Strategy Build a competitive advantage, such as low price, design, or volume flexibility, quality, quick delivery, dependability, after- sale service, broad product lines. Analyze the Environment Identify the strengths, weaknesses, opportunities, and threats. Understand the environment, customers, industry, and competitors. Figure 2.6

50. 2 - 50© 2011 Pearson Education OM Strategy Development and Implementation  Identify key success factors  Build and staff the organization  Integrate OM with other activities The operations manager’s job is to implement an OM strategy, provide competitive advantage, and increase productivity

51. 2 - 51© 2011 Pearson Education Key Success Factors Production/Operations Figure 2.7 Marketing Service Distribution Promotion Channels of distribution Product positioning (image, functions) Finance/Accounting Leverage Cost of capital Working capital Receivables Payables Financial control Lines of credit DecisionsSample OptionsChapter Product Quality Process Location Layout Human resource Supply chain Inventory Schedule Maintenance Customized, or standardized Define customer expectations and how to achieve them Facility size, technology, capacity Near supplier or near customer Work cells or assembly line Specialized or enriched jobs Single or multiple suppliers When to reorder, how much to keep on hand Stable or fluctuating production rate Repair as required or preventive maintenance 5 6, S6 7, S7 8 9 10 11, S11 12, 14, 16 13, 15 17 Support a Core Competence and Implement Strategy by Identifying and Executing the Key Success Factors in the Functional Areas

52. 2 - 52© 2011 Pearson Education Courteous, but Limited Passenger Service Standardized Fleet of Boeing 737 Aircraft Competitive Advantage: Low Cost Lean, Productive Employees Short Haul, Point-to- Point Routes, Often to Secondary Airports High Aircraft Utilization Frequent, Reliable Schedules Figure 2.8 Activity Mapping at Southwest Airlines

53. 2 - 53© 2011 Pearson Education Activity Mapping at Southwest Airlines Courteous, but Limited Passenger Service Standardized Fleet of Boeing 737 Aircraft Competitive Advantage: Low Cost Lean, Productive Employees Short Haul, Point-to- Point Routes, Often to Secondary Airports High Aircraft Utilization Frequent, Reliable Schedules Figure 2.8 Automated ticketing machines No seat assignments No baggage transfers No meals (peanuts)

54. 2 - 54© 2011 Pearson Education Activity Mapping at Southwest Airlines Courteous, but Limited Passenger Service Standardized Fleet of Boeing 737 Aircraft Competitive Advantage: Low Cost Lean, Productive Employees Short Haul, Point-to- Point Routes, Often to Secondary Airports High Aircraft Utilization Frequent, Reliable Schedules Figure 2.8 No meals (peanuts) Lower gate costs at secondary airports High number of flights reduces employee idle time between flights

55. 2 - 55© 2011 Pearson Education Activity Mapping at Southwest Airlines Courteous, but Limited Passenger Service Standardized Fleet of Boeing 737 Aircraft Competitive Advantage: Low Cost Lean, Productive Employees Short Haul, Point-to- Point Routes, Often to Secondary Airports High Aircraft Utilization Frequent, Reliable Schedules Figure 2.8 High number of flights reduces employee idle time between flights Saturate a city with flights, lowering administrative costs (advertising, HR, etc.) per passenger for that city Pilot training required on only one type of aircraft Reduced maintenance inventory required because of only one type of aircraft

56. 2 - 56© 2011 Pearson Education Activity Mapping at Southwest Airlines Courteous, but Limited Passenger Service Standardized Fleet of Boeing 737 Aircraft Competitive Advantage: Low Cost Lean, Productive Employees Short Haul, Point-to- Point Routes, Often to Secondary Airports High Aircraft Utilization Frequent, Reliable Schedules Figure 2.8 Pilot training required 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

57. 2 - 57© 2011 Pearson Education Activity Mapping at Southwest Airlines Courteous, but Limited Passenger Service Standardized Fleet of Boeing 737 Aircraft Competitive Advantage: Low Cost Lean, Productive Employees Short Haul, Point-to- Point Routes, Often to Secondary Airports High Aircraft Utilization Frequent, Reliable Schedules Figure 2.8 Reduced maintenance inventory required because of only one type of aircraft Flexible employees and standard planes aid scheduling Maintenance personnel trained only one type of aircraft 20-minute gate turnarounds

58. 2 - 58© 2011 Pearson Education Activity Mapping at Southwest Airlines Courteous, but Limited Passenger Service Standardized Fleet of Boeing 737 Aircraft Competitive Advantage: Low Cost Lean, Productive Employees Short Haul, Point-to- Point Routes, Often to Secondary Airports High Aircraft Utilization Frequent, Reliable Schedules Figure 2.8 Automated ticketing machines Empowered employees High employee compensation Hire for attitude, then train High level of stock ownership High number of flights reduces employee idle time between flights

59. 2 - 59 International business & A multinational corporation (MNC)  International business is a firm that engage in cross- border transactions.  A multinational corporation (MNC) is a firm with extensive international business involvement  MNCs buy resources, create goods & service and sell the production in a variety of countries  IBM is a good example of an MNC that imports electronic components to the USA from over 50 countries and exports components to over 130 countries, it has facilities in 45 countries and earns more than half its sales and profits abroad © 2011 Pearson Education

60. 2 - 60 International Operations Strategies  According to local responsiveness and cost reduction, four operations strategies have been performed for the global and MNCs 1.International strategy 2.Multinational strategy 3.Global strategy 4.Transnational strategy © 2011 Pearson Education

61. 2 - 61 International Strategy (little local responsiveness and little cost advantages )  It depends on using the exports and license to penetrate the global market  It is the least advantages with little local responsiveness and little cost advantages  It is the easiest strategy © 2011 Pearson Education

62. 2 - 62 Multi-Domestic Strategy (significant local responsiveness but little cost advantages )  Organizationally, these organization are typically subsidiaries, franchise,or joint ventures  The advantages of this strategy is maximizing the responsiveness for the local market  The disadvantages, it has no cost advantages © 2011 Pearson Education

63. 2 - 63 Global Strategy (little local responsiveness but significant cost advantages)  It has a high degree of centralization with headquarters coordinating the organization by which it can achieve the economic of scale  This strategy is appropriate for cost reduction  While it has no recommended when the demand for local responsiveness is high © 2011 Pearson Education

64. 2 - 64 Transnational Strategy (significant local responsiveness and significant cost advantages)  It exploits the economic of scale and learning as well as high responsiveness  Its basic “ core competence doesn’t reside in just the home country but can exist anywhere in the world”  These firms have the potential to pursue all three operation strategies (differentiation- low cost – response ) © 2011 Pearson Education

65. 2 - 65© 2011 Pearson Education Four International Operations Strategies Cost Reduction Considerations High Low HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation) Figure 2.9  Import/export or license existing product Examples U.S. Steel Harley Davidson International Strategy

66. 2 - 66© 2011 Pearson Education Four International Operations Strategies Cost Reduction Considerations High Low HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation) International Strategy  Import/export or license existing product Examples U.S. Steel Harley Davidson Figure 2.9

67. 2 - 67© 2011 Pearson Education Four International Operations Strategies Cost Reduction Considerations High Low HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation) International Strategy  Import/export or license existing product Examples U.S. Steel Harley Davidson Figure 2.9  Standardized product  Economies of scale  Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global Strategy

68. 2 - 68© 2011 Pearson Education Four International Operations Strategies Cost Reduction Considerations High Low HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation)  Standardized product  Economies of scale  Cross-cultural learning Examples: Texas Instruments Caterpillar Otis Elevator Global Strategy International Strategy  Import/export or license existing product Examples U.S. Steel Harley Davidson Figure 2.9

69. 2 - 69© 2011 Pearson Education Four International Operations Strategies Cost Reduction Considerations High Low HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation)  Standardized product  Economies of scale  Cross-cultural learning Examples: Texas Instruments Caterpillar Otis Elevator Global Strategy International Strategy  Import/export or license existing product Examples U.S. Steel Harley Davidson Figure 2.9  Use existing domestic model globally  Franchise, joint ventures, subsidiaries Examples Heinz McDonald’s The Body Shop Hard Rock Cafe Multidomestic Strategy

70. 2 - 70© 2011 Pearson Education Four International Operations Strategies Cost Reduction Considerations High Low HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation)  Standardized product  Economies of scale  Cross-cultural learning Examples: Texas Instruments Caterpillar Otis Elevator Global Strategy International Strategy  Import/export or license existing product Examples U.S. Steel Harley Davidson Multidomestic Strategy  Use existing domestic model globally  Franchise, joint ventures, subsidiaries Examples HeinzThe Body Shop McDonald’sHard Rock Cafe Figure 2.9

71. 2 - 71© 2011 Pearson Education Four International Operations Strategies Cost Reduction Considerations High Low HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation)  Standardized product  Economies of scale  Cross-cultural learning Examples: Texas Instruments Caterpillar Otis Elevator Global Strategy International Strategy  Import/export or license existing product Examples U.S. Steel Harley Davidson Multidomestic Strategy  Use existing domestic model globally  Franchise, joint ventures, subsidiaries Examples HeinzThe Body Shop McDonald’sHard Rock Cafe Figure 2.9  Move material, people, ideas across national boundaries  Economies of scale  Cross-cultural learning Examples Coca-Cola Nestlé Transnational Strategy

72. 2 - 72© 2011 Pearson Education Four International Operations Strategies Cost Reduction Considerations High Low 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 Multidomestic Strategy  Use existing domestic model globally  Franchise, joint ventures, subsidiaries Examples HeinzThe Body Shop McDonald’sHard Rock Cafe Figure 2.9