International Operations Management
Operations Management in the
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| Operations Management in the International Arena It has been argued that the world has become a global village”—a term often used to refer to the production and marketing of goods and services worldwide. The world indeed feels smaller today than before. Fifty years ago it was very expensive and time-consuming for people to travel abroad, something that also had an effect on companies which were considering crossing the boundaries of their home country. Today, it is much easier and faster for people to move from one country to another—something that also applies to managers who conduct business internationally. Advances in computer technology and particularly the World Wide Web (WWW) with its main applications—e-mail and the Internet—have also had an important effect on organizations, particularly on how they perform their operations. Before the days of the Internet, people would have to visit their bank in order to carryout some basic transactions, such as money transfer from a current to a savings account or payment of bills. Today, customers can perform these operations themselves on the Internet without having to talk to a personal banker. In the same way, customers can buy their theater tickets, book a summer holiday, or do their weekly shopping on the Internet and pay for these products electronically. All this has a significant effect on the way an organization is performing its operations. As it was explained in previous chapters, globalization is the term used to describe the fact that people around the globe are more connected to each other than ever before information and money flow more quickly than ever goods and services produced in one part of the world are increasingly available in all parts of the world and international communication is commonplace. Globalization has two main components the globalization of markets and the globalization of production. They both affect the way in which organizations perform their operations and the jobs of operations managers. The globalization of production, for example, refers to the tendency among firms to source goods and services from locations around the globe to take advantage of national differences in the cost of the production. Boeing, for instance, has contracted more than half of its work outside the ............................................................................. ............................................................................. Elsevier US Job code KIB Chapter: Ch11-H7983 6-12-2006 9:22 p.m. Page:367 Trimsize:7.25 in in Fonts used Sabon & Frutiger Margins:Top:36 pt Gutter:66 pt Font Size pt Text Width PC Depth:43 Lines International Operations Management 367 United States, a savings of $600 million per year. The company claims that it is impossible to export planes without sending a significant number of jobs overseas. When a foreign nation now agrees to buy planes from Boeing, it typically does soon condition that some work will be done in that country. 10 It is impossible to ignore the impact that the emerging global marketplace and free trade are having on organizations and their operations. The North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT, for example, are designed to reduce or eliminate tariffs and other trade restrictions. They are increasing the opportunities for countries to focus on areas of trade and commerce where they have a relative advantage. For example, before these agreements, Chrysler’s Jeep assembly plant shipped unassembled Jeeps to some countries. The jeeps would be assembled there because these countries had laws that limited the amount of foreign content on imported products. Now, the jeeps can be assembled in the United States and shipped abroad, thus adding jobs for Chrysler’s workers. Under NAFTA and GATT, it would be increasingly common for finished products to have components from many different countries. Global sourcing and production of goods and services will become more common. 11 Operations management is a dynamic field, which is adapting to the new era of globalization and a changing global economy. In this new environment, operations managers are faced with the following challenges. Global focus. The vast decline in communication and transportation costs has made markets global. But at the same time, resources in the form of materials, talent, and labor have also become global. Operations managers are responding with innovations that generate and move ideas, parts, and finished goods rapidly, wherever and whenever needed. Just-in-time performance. Vast financial resources are committed to inventory, making it costly. Inventory also impedes response to rapid changes in the marketplace. Operations managers are viciously cutting inventories at every level, from raw materials to finished goods. Supply-chain partnering. Shorter product life cycles, as well as rapid changes in material and process technology, require more participation by suppliers. Suppliers usually supply over half of the value of products. Consequently, operations managers are building long-term partnerships with critical players in the supply chain. Rapid product development. Rapid international communication of news, entertainment, and lifestyles is dramatically chopping away at the lifespan of products. Operations managers are responding with technology and alliances (partners) that are faster and management that is more effective. ............................................................................. ............................................................................. Elsevier US Job code KIB Chapter: Ch11-H7983 6-12-2006 9:22 p.m. Page:368 Trimsize:7.25 in in Fonts used Sabon & Frutiger Margins:Top:36 pt Gutter:66 pt Font Size pt Text Width PC Depth:43 Lines 368 International Business. Mass customization. Once we begin to consider the world as a marketplace, then the individual differences become quite obvious. Cultural differences compounded by individual differences, in a world where consumers are increasingly aware of options, place substantial pressure on firms to respond. Operations managers are responding with production processes that are flexible enough to cater to the individual whims of consumers. The goal is to produce individual products, whenever and wherever needed. Empowered employees. Knowledge explosion and a more technical workplace have combined to require more competence at the workplace. Operations managers are responding by moving more decision- making to the individual worker. Environmentally sensitive production. The operations manager’s continuing battle to improve productivity is increasingly concerned with designing products and processes that are environmentally friendly. 12 The next section presents the case of a European organization that performs its operations in such away as to get maximum advantage of the new era of globalization. Download 340.14 Kb. Share with your friends:
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