Chapter 2 Operations Mangement Essay

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1. A GLOBAL VIEW OF OPERATIONS
i. 6 reasons why domestic business operations decide to change to some form of international operation:
1. Reduce Costs: Lower wages, less stringent government regulations, Cut cost of taxes and tariffs.
a. Maquiladoras: Mexican factories located along the U.S.-Mexico border that receive preferential tariff treatment.
b. Moving low-skilled jobs to another country has several potential advantages: reduce costs, frees higher cost workers for more valuable tasks, reducing wage costs allows the savings to be invested in improved products and facilities.
c. Trade agreements also help reduce tariffs and reduce cost of operating facilities in foreign countries.
i. World Trade Organization (WTO): An international organization that promotes world trade by lowering barriers to the free flow of goods across borders. ii. North American Free Trade Agreements (NAFTA): A free trade agreement between Canada, Mexico and the US. iii. European Union: A European trade group that has 27 member states.
2. Improve Supply Chain: by locating facilities where unique resources are available
3. Provide better goods and services
4. Understand Markets
5. Learn to improve Operations
6. Attract and Retain Global Talent
b. Cultural and Ethical Issues- reconciling difference in social and cultural behavior. What one county deems acceptable may be considered unacceptable or illegal in another.
2. DEVELOPING MISSIONS AND STRATEGIES: an effective operations management effort must have a mission so it knows where it is going and a strategy so it knows how to get there
a. Mission: The purpose or rationale for an organization’s existence
b. Strategy: How an organization expects to achieve its mission and goals.
c. The 3 strategic approaches to competitive advantage are:
i. Differentiation ii. Cost leadership iii. Response
3. ACHIEVING COMPETITIVE ADVANTAGE THROUGH OPERATIONS
i. Competitive Advantage- The creation of a unique advantage over competitors.
a. Competing on Differentiation-
a. Differentiation: Distinguishing the offerings of an organization in a way that the customer perceives as adding value
b. Experience Differentiation: Engaging the customer with a product through imaginative use of the five senses, so the customer “Experiences” the product.
c. Differentiation can be attained thought innovative design, by providing a broad product line, by offering excellent after-sale service, or through adding a sensory experience to the product or service offering.
b. Competing on Cost-cost leadership can by attained via low overhead, effective capacity use, or efficient inventory management.
c. Competing on Response-response can be attained by offering a flexible product line, reliable scheduling, or speedy delivery.
4. TEN STRATEGIC ON DECISIONS
a. Operations decisions: The strategic decisions of OM are:
1. Goods and service design
2. Quality
3. Process and capacity design
4. Location selection
5. Layout design
6. Human resources and job design
7. Supply-chain management
8. Inventory
9. Scheduling
10. Maintenance
5. ISSUES IN OPERATIONS STRATEGY
a. Resources view: a method managers use to evaluate the resources at their disposal and manage or alter them to achieve competitive advantage
b. Value Chain analysis: a way to identify those elements in the product/service chain that uniquely add value.
c. Five Forces Model: A method of analyzing the five forces in the competitive environment.
i. The potential competing forces in Porter’s five-forces model are:
1. Immediate rivals
2. Potential entrants
3. Customers
4. Suppliers
5. Substitute products
d. Different issues are emphasized during different stages of the product life cycle
i. Introduction: Company Strategy: Best period to increase market share, R&D Engineering is critical. OM Strategy: Product design and development critical, frequent product and process design changes, short production runs, high production
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