Operations Strategy in a Global Environment

Operations Management

Chapter 2 Operations Strategy in a Global Environment 2006 Prentice Hall, Inc.PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 6eOperations Management, 8e 2006 Prentice Hall, Inc.2 #1OutlineGlobal Company Profile: BoeingA Global View of OperationsCultural and Ethical IssuesDeveloping Missions And StrategiesMissionStrategy 2006 Prentice Hall, Inc.2 #2Outline ContinuedAchieving Competitive Advantage Through OperationsCompeting On DifferentiationCompeting On CostCompeting On ResponseTen Strategic OM Decisions 2006 Prentice Hall, Inc.2 #3Outline ContinuedIssues In Operations StrategyResearchPreconditionsDynamicsStrategy Development And ImplementationIdentify Critical Success FactorsBuild and Staff the OrganizationIntegrate OM with Other Activities 2006 Prentice Hall, Inc.2 #4Outline ContinuedGlobal Operations Strategy OptionsInternational StrategyMultidomestic StrategyGlobal StrategyTransnational Strategy 2006 Prentice Hall, Inc.2 #5Learning ObjectivesMissionStrategyTen decisions of OMMultinational corporationWhen you complete this chapter, you should be able to:Identify or Define: 2006 Prentice Hall, Inc.2 #6Learning ObjectivesSpecific approaches used by OM to achieve strategiesDifferentiationLow costResponseWhen you complete this chapter, you should be able to:Describe or Explain: 2006 Prentice Hall, Inc.2 #7Learning ObjectivesFour global operations strategiesWhy global issues are importantWhen you complete this chapter, you should be able to:Describe or Explain: 2006 Prentice Hall, Inc.2 #8Global StrategiesBoeing sales and production are worldwideBenetton moves inventory to stores around the world faster than its competition by building flexibility into design, production, and distributionSony purchases components from suppliers in Thailand, Malaysia, and around the world 2006 Prentice Hall, Inc.2 #9Global StrategiesVolvo considered a Swedish company but it is controlled by an American company, Ford. The current Volvo S40 is built in Belgium and shares its platform with the Mazda 3 built in Japan and the Ford Focus built in Europe.Haier A Chinese company, produces compact refrigerators (it has one-third of the US market) and wine cabinets (it has half of the US market) in South Carolina 2006 Prentice Hall, Inc.2 #10Some Multinational Corporations% Sales% AssetsOutsideOutsideHomeHomeHome% ForeignCompanyCountryCountryCountryWorkforceCiticorpUSA3446NAColgate-USA7263NAPalmoliveDow USA6050NAChemicalGilletteUSA6253NAHondaJapan6336NAIBMUSA574751 2006 Prentice Hall, Inc.2 #11This slide can be used to further explore the characteristics of multinational companiesSome Multinational Corporations% Sales% AssetsOutsideOutsideHomeHomeHome% ForeignCompanyCountryCountryCountryWorkforceICIBritain7850NANestleSwitzerland989597PhilipsNetherlands948582ElectronicsSiemensGermany51NA38UnileverBritain &957064Netherlands 2006 Prentice Hall, Inc.2 #12Boeing Suppliers (787)FirmCountryComponent

DassaultFranceDesign and PLM software

Messier-BugattiFranceLanding gear

ThalesFranceElectrical power conversion system and integrated standby flight display

DiehlGermanyInterior lighting

FR-HiTempUKFuel pumps and valves

Smiths AerospaceUKCentral computer system 2006 Prentice Hall, Inc.2 #13Boeing Suppliers (787)FirmCountryComponent

BAE SYSTEMSUKElectronics

Alenia AeronauticsItalyUpper center fuselage & horizontal stabilizer

Toray IndustriesJapanCarbon fiber for wing and tail units

Fuji Heavy JapanCenter wing box Industries

Kawasaki Heavy JapanForward fuselage, Industries fixed section of wing, landing gear well 2006 Prentice Hall, Inc.2 #14Boeing Suppliers (787)FirmCountryComponent

Teijin SeikiJapanHydraulic actuators

Mitsubishi Heavy JapanWing box Industries

Chengdu Aircraft ChinaRudderGroup

Hafei AviationChinaParts 2006 Prentice Hall, Inc.2 #15Reasons to GlobalizeReasons to GlobalizeReduce costs (labor, taxes, tariffs, etc.)Improve supply chainProvide better goods and servicesUnderstand marketsLearn to improve operationsAttract and retain global talentTangible ReasonsIntangible ReasonsFigure 2.1 2006 Prentice Hall, Inc.2 #16Reduce CostsForeign locations with lower wage rates can lower direct and indirect costsMaquiladorasWorld Trade Organization (WTC)North American Free Trade Agreement (NAFTA)APEC, SEATO, MERCOSUR European Union (EU) 2006 Prentice Hall, Inc.2 #17Improve the Supply ChainLocating facilities closer to unique resourcesAuto design to CaliforniaAthletic shoe production to ChinaPerfume manufacturing in France 2006 Prentice Hall, Inc.2 #18Provide Better Goods and ServicesObjective and subjective characteristics of goods and servicesOn-time deliveriesCultural variablesImproved customer service 2006 Prentice Hall, Inc.2 #19Understand MarketsInteracting with foreign customer and suppliers can lead to new opportunitiesCell phone design from EuropeCell phone fads from JapanExtend the product life cycle 2006 Prentice Hall, Inc.2 #20Learn to Improve OperationsRemain open to the free flow of ideasGeneral Motors partnered with a Japanese auto manufacturer to learnScandinavian design ideas have been used to improve equipment design and layout 2006 Prentice Hall, Inc.2 #21Attract and Retain Global TalentOffer better employment opportunitiesBetter growth opportunities and insulation against unemploymentRelocate unneeded personnel to more prosperous locationsIncentives for people who like to travel 2006 Prentice Hall, Inc.2 #22Cultural and Ethical IssuesCultures can be quite differentAttitudes can be quite different towards

PunctualityLunch breaksEnvironmentIntellectual propertyThieveryBriberyChild labor 2006 Prentice Hall, Inc.2 #23You May Wish To ConsiderNational literacy rateRate of innovationRate of technology changeNumber of skilled workersPolitical stabilityProduct liability lawsExport restrictionsVariations in language

Work ethicTax ratesInflationAvailability of raw materialsInterest ratesPopulationNumber of miles of highwayPhone system 2006 Prentice Hall, Inc.2 #24Match Product & ParentBraun Household AppliancesFirestone TiresGodiva ChocolateHaagen-Dazs Ice CreamJaguar AutosMGM MoviesLamborghini AutosAlpo PetfoodsVolkswagenBridgestoneCampbell SoupFord Motor CompanyGilletteNestlPillsburySony 2006 Prentice Hall, Inc.2 #25Match Product & ParentBraun Household AppliancesFirestone TiresGodiva ChocolateHaagen-Dazs Ice CreamJaguar AutosMGM MoviesLamborghini AutosAlpo PetfoodsVolkswagenBridgestoneCampbell SoupFord Motor CompanyGilletteNestlPillsburySony 2006 Prentice Hall, Inc.2 #26Match Product & CountryBraun Household AppliancesFirestone TiresGodiva ChocolateHaagen-Dazs Ice CreamJaguar AutosMGM MoviesLamborghini AutosAlpo Petfoods

Great BritainGermanyJapanUnited StatesSwitzerland 2006 Prentice Hall, Inc.2 #27Match Product & CountryBraun Household AppliancesFirestone TiresGodiva ChocolateHaagen-Dazs Ice CreamJaguar AutosMGM MoviesLamborghini AutosAlpo Petfoods

Great BritainGermanyJapanUnited StatesSwitzerland 2006 Prentice Hall, Inc.2 #28Developing Missions and StrategiesMission statements tell an organization where it is goingThe Strategy tells the organization how to get there 2006 Prentice Hall, Inc.2 #29

MissionMission - where are you going?Organizations purpose for beingAnswers What do we provide society?Provides boundaries and focus 2006 Prentice Hall, Inc.2 #30FedExFedEx is committed to our People-Service-Profit philosophy. We will produce outstanding financial returns by providing total reliable, competitively superior, global air-ground transportation of high priority goods and documents that require rapid, time-certain delivery. Equally important, positive control of each package will be maintained using real time electronic tracking and tracing systems. A complete record of each shipment and delivery will be presented with our request for payment. We will be helpful, courteous, and professional to each other and the public. We will strive to have a completely satisfied customer at the end of each transaction.Figure 2.2 2006 Prentice Hall, Inc.2 #31MerckThe mission of Merck 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 advancement opportunities and investors with a superior rate of returnFigure 2.2 2006 Prentice Hall, Inc.2 #32Hard Rock CafOur 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.Figure 2.2 2006 Prentice Hall, Inc.2 #33Arnold Palmer HospitalArnold Palmer Hospital is a healing environment providing family-centered care with compassion, comfort and respect when it matters the most.Figure 2.2 2006 Prentice Hall, Inc.2 #34Benefit to SocietyMissionFactors Affecting MissionPhilosophy and ValuesProfitability and GrowthEnvironmentCustomersPublic Image 2006 Prentice Hall, Inc.2 #35Strategic ProcessMarketingOperationsFinance/ AccountingFunctional Area MissionsOrganizations Mission 2006 Prentice Hall, Inc.2 #36

StrategyAction plan to achieve missionFunctional areas have strategiesStrategies exploit opportunities and strengths, neutralize threats, and avoid weaknesses 2006 Prentice Hall, Inc.2 #37Strategies for Competitive AdvantageDifferentiation better, or at least differentCost leadership cheaperQuick response more responsive 2006 Prentice Hall, Inc.2 #38Competing on DifferentiationUniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts customers perception of valueSafeskin gloves leading edge productsWalt Disney Magic Kingdom experience differentiationHard Rock Cafe theme experience 2006 Prentice Hall, Inc.2 #39Competing on CostProvide the maximum value as perceived by customer. Does not imply low quality.Southwest Airlines secondary airports, no frills service, efficient utilization of equipmentWal-Mart small overheads, shrinkage, distribution costsFranz Colruyt no bags, low light, no music, doors on freezers 2006 Prentice Hall, Inc.2 #40Competing on ResponseFlexibility is matching market changes in design innovation and volumesInstitutionalization at Hewlett-PackardReliability is meeting schedulesGerman machine industryTimeliness is quickness in design, production, and deliveryJohnson Electric, Bennigans, Motorola 2006 Prentice Hall, Inc.2 #41OMs Contribution to StrategyProductQualityProcessLocationLayoutHuman resourceSupply-chainInventorySchedulingMaintenanceFLEXIBILITYSonys constant innovation of new products....Design HPs ability to follow the printer marketVolume

Southwest Airlines No-frills service....LOW COST

DELIVERY Pizza Huts five-minute guarantee at lunchtime......Speed Federal Expresss absolutely, positively on time...Dependability

QUALITY Motorolas automotive products ignition systems......Conformance Motorolas pagers...Performance

IBMs after-sale service on mainframe computers....AFTER-SALE SERVICE

Fidelity Securitys broad line of mutual funds.BROAD PRODUCT LINEFigure 2.4OperationsSpecificCompetitiveDecisionsExamplesStrategy UsedAdvantageResponse(Faster)Cost leadership(Cheaper)Differentiation(Better) 2006 Prentice Hall, Inc.2 #4210 Strategic OM DecisionsGoods and service design Quality Process and capacity designLocation selectionLayout designHuman resource and job designSupply-chain managementInventorySchedulingMaintenance 2006 Prentice Hall, Inc.2 #43Goods and Services and the 10 OM DecisionsOperationsDecisionsGoodsServicesGoods and service designProduct is usually tangibleProduct is not tangibleQualityMany objective standardsMany subjective standardsProcess and capacity designCustomers not involvedCustomer may be directly involvedCapacity must match demandTable 2.1 2006 Prentice Hall, Inc.2 #44Goods and Services and the 10 OM DecisionsOperationsDecisionsGoodsServicesLocation selectionNear raw materials and laborNear customersLayout designProduction efficiencyEnhances product and productionHuman resources and job designTechnical skills, constant labor standards, output based wagesInteract with customers, labor standards varyTable 2.1 2006 Prentice Hall, Inc.2 #45Goods and Services and the 10 OM DecisionsOperationsDecisionsGoodsServicesSupply-chain mgmtRelationship critical to final productImportant, but may not be criticalInventoryRaw materials, work-in-process, and finished goods may be heldCannot be storedSchedulingLevel schedules possibleMeet immediate customer demandTable 2.1 2006 Prentice Hall, Inc.2 #46Goods and Services and the 10 OM DecisionsOperationsDecisionsGoodsServicesMaintenanceOften preventive and takes place at production siteOften repair and takes place at customers siteTable 2.1 2006 Prentice Hall, Inc.2 #47Process DesignLowModerateHighVolumeHighModerateLowVariety of ProductsProcess-focusedJOB SHOPS(Print shop, emergency room, machine shop, fine diningRepetitive (modular) focusASSEMBLY LINE(Cars, appliances, TVs, fast-food restaurants)Product focusedCONTINUOUS(steel, beer, paper, bread, institutional kitchen)Mass CustomizationCustomization at high Volume(Dell Computers PC) 2006 Prentice Hall, Inc.2 #48Operations Strategies for Two Drug CompaniesBrand Name Drugs, Inc.Generic Drug Corp.Competitive AdvantageProduct DifferentiationLow CostProduct Selection and DesignHeavy R&D; labs; focus on development in a broad range of drug categoriesLow R&D; focus on development of generic drugsQualityMajor priority, exceed regulatory requirementsMeets regulatory requirements on a country by country basisTable 2.2 2006 Prentice Hall, Inc.2 #49Operations Strategies for Two Drug CompaniesBrand Name Drugs, Inc.Generic Drug Corp.Competitive AdvantageProduct DifferentiationLow CostProcessProduct and modular process; long production runs in specialized facilities; build capacity ahead of demandProcess focused; general processes; job shop approach, short production runs; focus on high utilizationLocationStill located in the city where it was foundedRecently moved to low-tax, low-labor-cost environmentTable 2.2 2006 Prentice Hall, Inc.2 #50Operations Strategies for Two Drug CompaniesBrand Name Drugs, Inc.Generic Drug Corp.Competitive AdvantageProduct DifferentiationLow CostSchedulingCentralized production planningMany short-run products complicate schedulingLayoutLayout supports automated product-focused productionLayout supports process-focused job shop practicesTable 2.2 2006 Prentice Hall, Inc.2 #51Operations Strategies for Two Drug CompaniesBrand Name Drugs, Inc.Generic Drug Corp.Competitive AdvantageProduct DifferentiationLow CostHuman ResourcesHire the best; nationwide searchesVery experienced top executives; other personnel paid below industry averageSupply ChainLong-term supplier relationshipsTends to purchase competitively to find bargainsTable 2.2 2006 Prentice Hall, Inc.2 #52Operations Strategies for Two Drug CompaniesBrand Name Drugs, Inc.Generic Drug Corp.Competitive AdvantageProduct DifferentiationLow CostInventoryHigh finished goods inventory to ensure all demands are metProcess focus drives up work-in-process inventory; finished goods inventory tends to be lowMaintenanceHighly trained staff; extensive parts inventoryHighly trained staff to meet changing demandTable 2.2 2006 Prentice Hall, Inc.2 #53Managing Global Service OperationsCapacity planningLocation planningFacilities design and layoutSchedulingProbably requires a different perspective on: 2006 Prentice Hall, Inc.2 #54Characteristics of High ROI FirmsHigh quality product High capacity utilizationHigh operating effectivenessLow investment intensityLow direct cost per unitFrom the PIMS program of the Strategic Planning Institute 2006 Prentice Hall, Inc.2 #55Strategic Options to Gain a Competitive Advantage28% - Operations Management18% - Marketing/distribution17% - Momentum/name recognition16% - Quality/service14% - Good management 4% - Financial resources 3% - Other 2006 Prentice Hall, Inc.2 #56Elements of Operations Management StrategyLow-cost productProduct-line breadthTechnical superiorityProduct characteristics/differentiationContinuing product innovationLow-price/high-value offeringsEfficient, flexible operations adaptable to consumersEngineering research developmentLocationScheduling 2006 Prentice Hall, Inc.2 #57PreconditionsStrengths and weaknesses of competitors and possible new entrants into the marketCurrent and prospective environmental, technological, legal, and economic issuesThe product life cycleResources available within the firm and within the OM functionIntegration of OM strategy with companys strategy and with other functional areasOne must understand: 2006 Prentice Hall, Inc.2 #58Dynamics of Strategic ChangeChanges within the organizationPersonnelFinanceTechnologyProduct lifeChanges in the environment 2006 Prentice Hall, Inc.2 #59Product Life CycleBest period to increase market share

R&D engineering is criticalPractical to change price or quality image

Strengthen nichePoor time to change image, price, or quality

Competitive costs become criticalDefend market positionCost control criticalIntroductionGrowthMaturityDeclineCompany Strategy/IssuesInternetFlat-screen monitorsSalesDVDCD-ROMDrive-through restaurantsFax machines3 1/2 Floppy disksColor printersFigure 2.5 2006 Prentice Hall, Inc.2 #60Product Life CycleProduct design and development criticalFrequent product and process design changesShort production runsHigh production costsLimited modelsAttention to qualityIntroductionGrowthMaturityDeclineOM Strategy/IssuesForecasting criticalProduct and process reliabilityCompetitive product improvements and optionsIncrease capacityShift toward product focusEnhance distributionStandardizationLess rapid product changes more minor changesOptimum capacityIncreasing stability of processLong production runsProduct improvement and cost cuttingLittle product differentiationCost minimizationOvercapacity in the industryPrune line to eliminate items not returning good marginReduce capacityFigure 2.5 2006 Prentice Hall, Inc.2 #61Strategy Development and ImplementationIdentify critical success factorsBuild and staff the organizationIntegrate OM with other activitiesThe operations managers job is to implement an OM strategy, provide competitive advantage, and increase productivity 2006 Prentice Hall, Inc.2 #62Strategy Development ProcessDetermine Corporate MissionState the reason for the firms existence and identify the value it wishes to create.Form a StrategyBuild a competitive advantage, such as low price, design, or volume flexibility, quality, quick delivery, dependability, after-sale service, broad product lines.Environmental AnalysisIdentify the strengths, weaknesses, opportunities, and threats. Understand the environment, customers, industry, and competitors.Figure 2.6 2006 Prentice Hall, Inc.2 #63StrategyAnalysisSWOT Analysis Internal StrengthsInternal WeaknessesExternal OpportunitiesExternal ThreatsMission 2006 Prentice Hall, Inc.2 #64Critical Success FactorsDecisionsSample OptionsChapter

ProductCustomized, or standardized5QualityDefine customer expectations and how to achieve them6, S6ProcessFacility size, technology, capacity7, S7LocationNear supplier or near customer8LayoutWork cells or assembly line9Human resourceSpecialized or enriched jobs10, S10Supply chainSingle or multiple suppliers11, S11InventoryWhen to reorder, how much to keep on hand12, 14, 16ScheduleStable or fluctuating production rate13, 15Maintenance Repair as required or preventive maintenance17Marketing

ServiceDistributionPromotionChannels of distributionProduct positioning (image, functions)Finance/Accounting

LeverageCost of capitalWorking capitalReceivablesPayablesFinancial controlLines of creditProduction/OperationsFigure 2.7 2006 Prentice Hall, Inc.2 #65Activity MappingCourteous, but Limited Passenger ServiceStandardized Fleet of Boeing 737 AircraftCompetitive Advantage:Low CostLean, Productive EmployeesShort Haul, Point-to-Point Routes, Often to Secondary AirportsHigh Aircraft UtilizationFrequent, Reliable SchedulesFigure 2.8 2006 Prentice Hall, Inc.2 #66Activity MappingCourteous, but Limited Passenger ServiceStandardized Fleet of Boeing 737 AircraftCompetitive Advantage:Low CostLean, Productive EmployeesShort Haul, Point-to-Point Routes, Often to Secondary AirportsHigh Aircraft UtilizationFrequent, Reliable SchedulesFigure 2.8Automated ticketing machinesNo seat assignmentsNo baggage transfersNo meals (peanuts) 2006 Prentice Hall, Inc.2 #67Activity MappingCourteous, but Limited Passenger ServiceStandardized Fleet of Boeing 737 AircraftCompetitive Advantage:Low CostLean, Productive EmployeesShort Haul, Point-to-Point Routes, Often to Secondary AirportsHigh Aircraft UtilizationFrequent, Reliable SchedulesFigure 2.8No meals (peanuts)Lower gate costs at secondary airportsHigh number of flights reduces employee idle time between flights 2006 Prentice Hall, Inc.2 #68Activity MappingCourteous, but Limited Passenger ServiceStandardized Fleet of Boeing 737 AircraftCompetitive Advantage:Low CostLean, Productive EmployeesShort Haul, Point-to-Point Routes, Often to Secondary AirportsHigh Aircraft UtilizationFrequent, Reliable SchedulesFigure 2.8High number of flights reduces employee idle time between flightsSaturate a city with flights, lowering administrative costs (advertising, HR, etc.) per passenger for that cityPilot training required on only one type of aircraftReduced maintenance inventory required because of only one type of aircraft 2006 Prentice Hall, Inc.2 #69Activity MappingCourteous, but Limited Passenger ServiceStandardized Fleet of Boeing 737 AircraftCompetitive Advantage:Low CostLean, Productive EmployeesShort Haul, Point-to-Point Routes, Often to Secondary AirportsHigh Aircraft UtilizationFrequent, Reliable SchedulesFigure 2.8Pilot training required on only one type of aircraftReduced maintenance inventory required because of only one type of aircraftExcellent supplier relations with Boeing has aided financing 2006 Prentice Hall, Inc.2 #70Activity MappingCourteous, but Limited Passenger ServiceStandardized Fleet of Boeing 737 AircraftCompetitive Advantage:Low CostLean, Productive EmployeesShort Haul, Point-to-Point Routes, Often to Secondary AirportsHigh Aircraft UtilizationFrequent, Reliable SchedulesFigure 2.8Reduced maintenance inventory required because of only one type of aircraftFlexible employees and standard planes aid schedulingMaintenance personnel trained only one type of aircraft20-minute gate turnaroundsFlexible union contracts 2006 Prentice Hall, Inc.2 #71Activity MappingCourteous, but Limited Passenger ServiceStandardized Fleet of Boeing 737 AircraftCompetitive Advantage:Low CostLean, Productive EmployeesShort Haul, Point-to-Point Routes, Often to Secondary AirportsHigh Aircraft UtilizationFrequent, Reliable SchedulesFigure 2.8Automated ticketing machinesEmpowered employeesHigh employee compensationHire for attitude, then trainHigh level of stock ownershipHigh number of flights reduces employee idle time between flights 2006 Prentice Hall, Inc.2 #72Four International Operations StrategiesCost Reduction ConsiderationsHighLowHighLowLocal Responsiveness Considerations(Quick Response and/or Differentiation)Import/export or license existing product

ExamplesU.S. SteelHarley DavidsonInternational Strategy 2006 Prentice Hall, Inc.2 #73Four International Operations StrategiesCost Reduction ConsiderationsHighLowHighLowLocal Responsiveness Considerations(Quick Response and/or Differentiation)International StrategyImport/export or license existing product

ExamplesU.S. SteelHarley Davidson 2006 Prentice Hall, Inc.2 #74International StrategyImport/export or license existing product

ExamplesU.S. SteelHarley DavidsonFour International Operations StrategiesCost Reduction ConsiderationsHighLowHighLowLocal Responsiveness Considerations(Quick Response and/or Differentiation)Standardized productEconomies of scaleCross-cultural learning

ExamplesTexas InstrumentsCaterpillarOtis ElevatorGlobal Strategy 2006 Prentice Hall, Inc.2 #75Four International Operations StrategiesCost Reduction ConsiderationsHighLowHighLowLocal Responsiveness Considerations(Quick Response and/or Differentiation)Standardized productEconomies of scaleCross-cultural learning

ExamplesTexas InstrumentsCaterpillarOtis ElevatorGlobal StrategyInternational StrategyImport/export or license existing product

ExamplesU.S. SteelHarley Davidson 2006 Prentice Hall, Inc.2 #76Standardized productEconomies of scaleCross-cultural learning

ExamplesTexas InstrumentsCaterpillarOtis ElevatorGlobal StrategyInternational StrategyImport/export or license existing product

ExamplesU.S. SteelHarley DavidsonFour International Operations StrategiesCost Reduction ConsiderationsHighLowHighLowLocal Responsiveness Considerations(Quick Response and/or Differentiation)Use existing domestic model globallyFranchise, joint ventures, subsidiaries

ExamplesHeinzMcDonaldsThe Body ShopHard Rock CafeMultidomestic Strategy 2006 Prentice Hall, Inc.2 #77Four International Operations StrategiesCost Reduction ConsiderationsHighLowHighLowLocal Responsiveness Considerations(Quick Response and/or Differentiation)Standardized productEconomies of scaleCross-cultural learning

ExamplesTexas InstrumentsCaterpillarOtis ElevatorGlobal StrategyInternational StrategyImport/export or license existing product

ExamplesU.S. SteelHarley DavidsonMultidomestic StrategyUse existing domestic model globallyFranchise, joint ventures, subsidiaries

ExamplesHeinzThe Body ShopMcDonaldsHard Rock Cafe 2006 Prentice Hall, Inc.2 #78International StrategyImport/export or license existing product

ExamplesU.S. SteelHarley DavidsonMultidomestic StrategyUse existing domestic model globallyFranchise, joint ventures, subsidiaries

ExamplesHeinzThe Body ShopMcDonaldsHard Rock CafeStandardized productEconomies of scaleCross-cultural learning

ExamplesTexas InstrumentsCaterpillarOtis ElevatorGlobal StrategyFour International Operations StrategiesCost Reduction ConsiderationsHighLowHighLowLocal Responsiveness Considerations(Quick Response and/or Differentiation)Move material, people, ideas across national boundariesEconomies of scaleCross-cultural learning

ExamplesCoca-ColaNestlTransnational Strategy 2006 Prentice Hall, Inc.2 #79Four International Operations StrategiesCost Reduction ConsiderationsHighLowHighLowLocal Responsiveness Considerations(Quick Response and/or Differentiation)Standardized productEconomies of scaleCross-cultural learning

ExamplesTexas InstrumentsCaterpillarOtis ElevatorGlobal StrategyTransnational StrategyMove material, people, ideas across national boundariesEconomies of scaleCross-cultural learning

ExamplesCoca-ColaNestlInternational StrategyImport/export or license existing product

ExamplesU.S. SteelHarley DavidsonMultidomestic StrategyUse existing domestic model globallyFranchise, joint ventures, subsidiaries

ExamplesHeinzThe Body ShopMcDonaldsHard Rock Cafe 2006 Prentice Hall, Inc.2 #80Ranking CorruptionRankCountry2004 CPI Score (out of 10)1Finland9.72New Zealand9.65Singapore9.37Switzerland9.19Australia8.811United Kingdom8.612Canada8.515Germany8.216Hong Kong8.017Ireland7.517USA7.524Japan6.935Taiwan5.664Mexico3.671China3.4GoodNot So Good 2006 Prentice Hall, Inc.2 #81CPI is the Corrupt Perceptions Index calculated by Transparency International, an organization dedicated to fighting business corruption. The Index is calculated from up to 13 different individual scores. For details and the methodology, see www.transparency.org