Chapter 2: Globalization
of Operation
Group Description
ID Name
13-002 Rahima Aktar
13-010 Tahmina Akter
13-014 Tazrean Islam Tashin
13-048 Md. Rabby Khan
13-130 Sanjida Afrose
Batch: 13th
Section: B
Department: Management Information Systems
University: University of Dhaka
Globalization of a firm
Refers to the spread of the flow of products, goods, technology and information
across national borders and cultures.
Globalization approaches
Acquisition: A firm can enter the global market by acquiring an existing
Firm or a unit.
Internal development: A firm can enter the market organically through
internal development and build wholly owned subsidiaries.
Joint venturing: A firm can enter a market by setting up a joint venture with
another existing firm.
Licensing: A firm can enter a market through a licensing agreement with
other existing firms.
Partnership: A firm can enter a market through a long-term supplier
relationship.
Globalization stages
Uppsala Globalization stages:
1. No regular export activities.
2. Export via agents.
3. Establishment of foreign sales subsidiary.
4. Foreign production and manufacturing units.
The product life cycle theory:
1. New product,
2. Maturing product,
3. Standardized products.
Globalization components
Developing core strategy
Internationalizing
Globalizing the international strategy
Globalization directions
From developed countries to developing countries: they enter developing
countries for market, raw materials, labor or to overcome trading barriers.
Advantages: technology, advanced management experiences, product
quality etc.
From developing countries to developed countries: they enter developed
countries for market, technology and talent.
Advantages: low-cost resources or special natural resources etc.
Coca Cola
a. In 1886, John Pemberton developed coca cola in Atlanta.
b. Went global by increasing product mixes to respond to local customers
throughout the world.
c. Production and distribution are globalized with a franchising mode.
d. Sells concentrates, beverage bases and syrups to bottlers.
e. Bottlers package, merchandize and distribute to customers and retail
partners.
f. Retailers sell to the consumers.
So, coca cola went global in two dimensions:
1. Relevance to franchising business.
2. Operation in 6 different regions (Eurasia, Africa, Europe, Latin America,
North America, the Pacific region).
Globalization of Operational Competencies, Resources, and Processes
Globalization of Operational Competencies
· Cost
· Flexibility
· Quality
· Time
Cost
• Globalization brings new cost challenges in transportation, tariff, tax, and duty.
•Globalization provides new solutions also:
-new resources like low-cost labor and raw materials,
-new technologies to reduce production costs,
-new facilities to reduce manufacturing and logistics costs, and
-new management skills such as tax-aligned supply chain management to reduce total
landed cost.
Flexibility
•The ability to change manufacturing products and services to respond to fluctuations of global
demand in the dimensions of both time and scope.
•On the one hand, a global operations strategy needs the construction of flexibility to exploit
uncertainty over future changes
• On the other hand, market heterogeneity and region differences impose higher requirements
on the scope flexibility of products and services.
Quality
• Maintaining a significantly high level of quality among competitive products or services
worldwide.
• Quality is another challenge from the perspective of quality:
1. Since international competitors can easily enter any marketplace, it is more difficult to
achieve quality competency on a global scale
2. Food and healthcare products pose risks for the safety and quality of ingredients.
3. Reduces product heterogeneity for some products such as laptops and cameras
Time
Challenges:
•longer shipping time,
•physical distance between agents, and
•longer manufacturing time from manufacturing configuration complexity hinders
achieving time competency
Strategy: Overcoming these difficulties and addressing competitiveness in speedy
uniqueness can help sustain a firm’s strategic advantage in a dynamic environment.
Globalization of Operational Resources
• The resource-based view of global operations strategy is to tailor global real assets
in a global environment.
•The resources are globalized in:
• Sizes
• Times
• Types
• Locations
Globalization of Operational Process
•The supply chain is globalized to meet the dynamic needs of growing markets and new
consumer segments, to balance risks caused by economic and political uncertainties, and to
manage cost complexity.
•Revenue management companies use the global service chain, vertical integration,
horizontal integration, and sector integration to provide global platforms for global revenue
management.
•Product development and R&D processes are globalized, driven by market or technology
factors across regions.
•Firms are struggling to manage the complexities of global risks by coordinating global supply
management, demand management financial management, information management, and
product management.
Globalization of Manufacturing Operations
Globalized Manufacturing :
The diminution of international trade regulations and free trade agreements facilitates
manufacturing. New communication and transportation technologies, and decreasing
tariffs and taxes stimulate the development of global manufacturing. In the case of BMW
Global Manufacturing.
Key Operational Elements:
Several operational elements are important for the success of global manufacturing.
As shown by-
•Total Landed Cost
•Global Quality Control
•Global Product Planning
•Technology
•Workforces
Basic Manufacturing Globalization Modes
Classified along two dimensions -
1. Control Level
• Wholly Owned production units with the strongest control
• Joint Venturing Manufacturing Units
• Outsourcing with the least control on manufacturing activities
2. Motivations of International Production
• Resource Seeking
• Market Seeking
• Efficiency Seeking
• Asset Seeking
Globalization of service operations
Expanding and integrating service activities across national borders to capitalize on global
opportunities, gain efficiency, and deliver services to customers in different countries or
regions. It involves establishing a global presence, leveraging economies of scale, accessing
new markets, and coordinating service delivery on a global scale.
Globalization Services:
1. Hotel services
2. Tourism services
3. Travel services
4. Management consulting
5. Accounting
6. Offshoring hospitals
7. Project management
8. Quality evaluation & Audit
9. Risk analysis & management
[Link] service
Key operational elements for Service Operations
1. Customization
2. Cultural adaptation
3. Information intensity
4. Service unbundling
5. labor intensity
6. Service innovation
Basic Service Globalization Modes
1. Movement of Service
❖ Movement of service organization by Multi-site Expansion.
Example: Pizza Hut, Starbuck, KFC
❖ Movement of service organization by Joint venturing or Wholly owned
Subsidiaries.
Example: Huawei
❖ Movement of individual service staff or a service team
2. Movement of Customer
Example: “Hub & Spoke” Air system, Europa Park (Germany), other theme parks
3. No Physical Movement
• Cross-border communication
4. Movement of both Consumers and Services
Example: Franck Bistrot