Strategy International Operations

Topics: Management, Strategic management, Organization Pages: 11 (544 words) Published: February 18, 2015
Strategic Management

Strategy & International Operations

1

Strategic Management

The Nature of International
Operations
Materials
Labor
Information

Transformation
Activities

Product / Service

Closely linked with both quality and productivity
Continuous adaptation (change) is a requirement
The Strategic Context & Complexity of International
Operations Management

The firms overall strategy drives many operational management decision Decisions occur in three areas:
• Resources - where and how to obtain them
• Location - where to build, how to design facilities
• Logistics - modes of transportation and inventory control 2

Conceptual Framework for Strategic Planning

Expand

Stabilize

Retrench

Corporate Level Strategy

Vertical
Diversification
Integration

Strategic
Alliances

Business / Industry Level Strategy

Overall Cost
Leadership

Differentiation

Focus

Functional Level Strategy

“Value-Added” Policies & Procedures
Global Operating Strategy

International / Global / Multi-domestic / Transnational
3

Strategic Management

Production Management
From a strategic level, the 3 important dimensions of
international production management:

International sourcing
International facilities location
International logistics

Sourcing and Vertical Integration
Procuring Provide your own resources
resources or obtain from others
• The make-or-buy decision
Balance between competitive advantage and strategic vulnerability Other factors influencing make-buy:
Control - quality / schedule / changes / costs / contract enforcement Risk - operational, financial & political
Investment - buying frees up capital, reduces training
Flexibility - buying retains flexibility
4

Strategic Management

5

Strategic Management
Location Decisions
After a make decision, factors to be considered:
• Country-Related Issues
Resource availability (Heckscher-Ohlin theory)
Infrastructure support
Country-of-origin effects
• Product-Related Issues
Value-to-weight ratio - (transportation cost)
Required production technology - efficient sizing of production Importance of customer feedback - response to market trends
• Government Policies
Political stability
National trade policies
Economic development incentives
Foreign Trade Zones
• Organization Issues
Business strategy & organization structure
Inventory management - distance / JIT / opportunity cost
6

Strategic Management
International Logistics & Materials
Management
Materials management
The flow of materials, parts, supplies, and other resources from suppliers to the firm, and within and between units of the firm Differs from domestic in three ways:
1. Distance involved in shipping
2. Sheer number of transport modes available
3. The regulatory context
Some subtle logistics issues:
Packaging protection
Package weight
Package handling
Communication
Border controls
Perishable goods
7

Strategic Management

International Service
Operations

Dealing in “intangibles”
Characteristics of International Services
• Quality is often difficult to assess
• Services cannot be “stored” - capacity planning is key • Often requires customer participation
• Often tied to purchase of other products - product support service The Role of Government in International Services Trade
• Often subject to regulation - e.g., banking & airlines
• “Local protection” - e.g., medicine, law & accounting Managing Service Operations
• Capacity planning
• Location planning
• Facilities design & layout
• Operations scheduling
8

Strategic Management

Strategic Commitment
To Quality
• Quality: totality of features and characteristics of a
product or service that bear on its ability to satisfy
stated or implied needs
– American Society for Quality Control
• ISO 9000: 2000
– International set of quality guidelines
– Basis for quality certification
– International Organization for...
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