BASIC CONCEPTS OF GLOBAL
OPERATIONS STRATEGY
Chapter 01
PREPARED BY, GROUP 1
▪ Israt Jahan Aysha (13-032)
▪ Anika Mahjabeen Rahman Adrita (13-054)
▪ Jannatul Ifty Ema (13-100)
▪ Salma Farhana (13-114)
▪ Zannatur Raiyan Khan (13-122)
STRATEGY, OPERATIONS STRATEGY, GLOBAL
OPERATIONS STRATEGY
• What is Strategy?
- Strategy is “the determination of the basic long-term goals and the
objectives of an enterprise, and the adoption of courses of action and the
allocation of resources necessary for carrying out these goals.
Comes with 3 major
Corporate Strategy Business Strategy Functional Strategy
levels:
Corporate Strategy: What
set of businesses should a
corporate be in?
Business Strategy: How
should a corporate compete
in a given business?
Functional Strategy: How
can this function contribute
to the competitive
advantage of the business?
MANUFACTURING STRATEGY
▪ A good manufacturing strategy should transfer distinctive competence of
business strategy to distinctive competence of functional areas of
manufacturing.
▪ Typical distinctive competencies of a manufacturing system are time,
quality, cost, and flexibility
MANUFACTURING STRATEGIES ARE USUALLY
CLASSIFIED INTO FOUR STAGES:
Internally Externally
neutral neutral
Internally Externally
supportive supportive
FROM MANUFACTURING STRATEGY TO SERVICE
OPERATIONS STRATEGY
Inseparability
and simultaneity
Heterogeneity
The distinction between
product and service:
Intangibility
Perishability
SERVICE CATEGORIES
▪ People-processing service: customers are
integrated with production processes.
▪ Possession-processing service: This type
refers to customer involvement with the
production process without directly
following production, via tangible actions to
a service object to improve the value
▪ Information-processing service: It refers to
creating value by collecting, processing and
transferring information.
SERVICE COMPETENCES
▪ An appropriate service operations strategy should keep alignment with
business strategy in terms of distinctive competences.
▪ Typical distinctive competencies of a service system are as follows:
speed of service, quality, price, flexibility, availability, reliability,
uniqueness, and range of services.
SERVICE CONCEPT
▪ A service concept is a service product bundle including explicit and implicit
services and specific service goods.
SERVICE PACKAGES
Supporting facility
Facilitating goods
Explicit Services
Implicit Services
COMPETITIVE SERVICE STRATEGY FRAMEWORK
Good
Customer-outcome Total Competitive
oriented Strategy
Less-competitive Customer-
Strategy Experience Oriented
Bad
Bad Good
COMPETITIVE SERVICE STRATEGY FRAMEWORK
I. Customer outcome-oriented service strategy: With this strategy, customer
outcome is excellent but customer experience is not good.
II. Customer experience-oriented service strategy: Customer experience-
oriented service strategy refers to a strategy that focuses on customer
experience, but the customer outcome is bad. This is an unstable strategy.
III. Less competitive service strategy: This is an unsuccessful service
strategy.
IV. Total competitive service strategy: Total competitive service strategy
competes with players along both dimensions
SERVICE PROCESSING/SERVICE PACKAGE MATRIX
➢Service process/service package matrix links service process structure
with service package structure.
➢Service process structure is about customer influence on the service
production and service process.
➢Service package structure is featured by the degree of customization of
service package.
FIG. 1.3 ROTH AND VAN DER VELDE
COMPETITIVE SERVICE STRATEGY
FRAMEWORK
SERVICE OPERATIONS
➢ Service operations strategy refers to the plan and approach a company
uses to effectively manage and deliver its services to customers. It
involves making decisions about how services will be designed,
produced, and delivered to meet customer needs and expectations.
Hayes and Upton (1998) identify three operating capabilities which are helpful to
understand operations strategy.
➢Process-based operating capacity
➢Coordination-based operating capacity
➢Organization-based operating capacity
GLOBAL STRATEGY
Dunning eclectic theory
Kogut comparative advantage-based competitive advantage
Ghoshal framework for global strategy
Yip total global strategy
GLOBAL OPERATIONS STRATEGY
Competency- Resource-
based global based global
operations operations
strategy strategy
Integration
Process-
decisions of
based global
global
operations
operations
strategy
strategy
INTEGRATION DECISIONS OF GLOBAL
OPERATIONS STRATEGY
I. Cross-border global operational decisions
II. Cross-function global operational decisions
III. Cross-value global operational decisions
International Operations Management
IOM is a set of activities of an
international organization seeking to
transform kinds of inputs into final
good and services.
Two Dimensions:
• Topic ( Location, Technology,
capacity etc.)
• Scope ( Mono-country, Cross-
country, Global Studies)
Difference between IOM and
Global Operation Strategy
International means multinational and
global means worldwide.
A global Strategy emphasizes an
integrated approach across boarders.
Operations Management and Operations
Strategy
Operations management refers to controlling,
managing and evaluating daily and repetitive
operational practices.
Operations strategy is a set of decisions an
organization makes regarding the production
and delivery of goods.
BASIC PRINCIPLES IN GLOBAL OPERATIONS
STRATEGY
▪ Global Integration Principle
▪ Global Coordination Principle
▪ Global Trade-off principle
▪ Global Focus principle.
Global Integration
Principle
In order to win competitive
advantage and achieve
corporation’s goals integration of
business strategy and operation
strategy is a must.
Global Coordination
Principle
The complexity and difficulty of
coordination are associated with global
strategy and organizational structure.
Young and John summarize five
strategies with an international
organization structure:
• Volume expansion
• Resource Acquisition
• Reciprocity
• Integration
• Complex Global
Volume Expansion
The coordination between product and
outbound logistic and order
management coordination increases.
Resource
Acquisition
To assure reliable
availability of materials
for use in domestic
manufacture the
corporation maty build a
foreign subsidiary.
Reciprocity
In this mode, the
coordination between
product and inbound
logistics and purchasing
management coordination
increases
Integration
In this strategy operations are fully
integrated.
The complexity and difficulty of
coordination
Among demand and order
management, purchasing,
manufacturing and logistics are
high.
Complex Global
A complex interdependence
consisting of collaborative
problem solving, resource
sharing and information
sharing.
Most Common Coordination
mechanism
• Departmentalization of
organizational units.
• Centralization or decentralization
of decision making.
• Formalization and standardization.
• Planning.
• Output & behavior control.
• Cross-departmental relations
• Informal communication.
• Socialization.
Global Trade-off Principle:
Five decision fields which
manager may need to make a
trade-off among:
• Plant & equipment
• Production planning and control
• Labor and staffing
• Product Design and
• Operations management
GLOBAL FOCUS PRINCIPLE
▪ An unfocused strategy may make corporations noncompetitive.
▪ The concept of focused manufacturing suggests that – a factory that
focuses on a narrow product mix for a particular market niche will
outperform the conventional plant, which attempts a broader mission.
▪ The key characteristics of the focused factory are –
-Focused process technologies
-Focused market demand
-Focused product volume
-Focused quality levels
-Focused manufacturing tools
GLOBAL PRODUCT/SERVICE-LOCATION FOCUS
MATRIX
▪ Two dimensions of focus –
1. The number of locations
2. The range of service
BASIC DECISIONS IN GLOBAL OPERATIONS
STRATEGY
▪ Structure Decisions ▪ Infrastructure Decisions
1. Vertical Integration 1. Quality Management
2. Manufacturing Process 2. Production and Inventory
3. Facility Design and Planning Planning
4. Factory Capacity 3. Workforce
STRUCTURE DECISIONS
Vertical Integration
▪ Vertical integration refers to the degree to which a corporation controls
its downstream suppliers and its upstream buyers.
▪ Vertical integration is effective in achieving economies of scale.
▪ But it may lead to higher internal coordination costs, weaker motivation
for good performance, and a rigid organizational structure.
STRUCTURE DECISIONS
Manufacturing Process
▪ A corporation needs to make a decision between high volumes of
homogeneous product and low volumes of differentiated product.
▪ A product-process matrix is suggested to examine market-manufacturing
congruence problem and to help manufacturing process decisions .
PRODUCT – PROCESS MATRIX
STRUCTURE DECISIONS
Facility Design and Planning
▪ Facility design and planning is a set of strategic decisions involving
irreversible and substantial investment.
▪ Facility Location Problem
▪ Facility Layout Problem
STRUCTURE DECISIONS
Factory Capacity
▪ It usually takes a long time to change the manufacturing capacity or
service capacity of a corporation.
▪ Capacity refers to both the quantity and variety of products or services.
▪ There are three basic capacity strategies:
- Lead capacity strategy
- Lag capacity strategy
- Match capacity strategy
INFRASTRUCTURE DECISIONS
Quality Management
▪ Quality as one of the major areas in which corporation can seek a
competitive advantage in manufacturing.
▪ Quality strategy is beyond control and management technologies like
statistical process control and DMAIC (design, measure, analysis,
improve, control).
▪ Some existing quality improvement methodologies are- quality control,
TQM (total quality management), Zero Defects, Six sigma.
INFRASTRUCTURE DECISIONS
Production and Inventory Planning
▪ This is a huge decision set, and only a
part of decisions in production and
inventory planning can impose long-run
strategic influence.
▪ Push Strategy vs Pull Strategy
▪ Centralization vs Decentralization of
manufacturing or service
INFRASTRUCTURE DECISIONS
Work Force
▪ Vital to formulate a global work force
strategy.
▪ Aligning both business strategy and
employees’ personal expectation.
▪ Advantage of global operations rests on
the potential opportunities to utilize
comparative advantages of human
resources in different locations.
Content
Framework of
Global
Operation
Strategy
Triple Triangles book Structure
Any Question?