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Operations Strategy PPT _ BEC DOMS

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					Operations Strategy



                      1
             Outline
 GLOBAL COMPANY PROFILE: BOEING
 DEVELOPING MISSIONS AND
  STRATEGIES
   Mission
   Strategy
 ACHIEVING COMPETITIVE
  ADVANTAGE THROUGH OPERATIONS
   Competing on Differentiation
   Competing on Cost
   Competing on Response        2
 TEN STRATEGIC OM DECISIONS
        Outline - Continued
 ISSUES IN OPERATIONS STRATEGY
   Research
   Preconditions
   Dynamics
 STRATEGY DEVELOPMENT AND
  IMPLEMENTATION
   Identify Critical Success Factors
   A Global view of Operations Cultural
    and Ethical Issues
                                           3
   Build and Staff the Organization
     Outline - Continued
 GLOBAL OPERATIONS STRATEGY
  OPTIONS
   International Strategy
   Multidomestic Strategy
   Global Strategy
   Transnational Strategy



                               4
        Learning Objectives
When you complete this chapter, you
 should be able to :
Identify or Define:
    Mission
    Strategy
    Ten Decisions of OM
    Multinational Corporations


                                      5
       Learning Objectives -
            Continued
Describe or Explain:
   Specific approaches used by OM to
     achieve strategies
      Differentiation
      Low Cost
      Response
   Four Global Operations Strategies
   Why Global Issues are Important


                                        6
 Examples of Global Strategies
 Boeing – both sales and production are
  worldwide.
 Benetton – moves inventory to stores around
  the world faster than its competitor by building
  flexibility into design, production, and
  distribution
 Sony – purchases components from suppliers
  in Thailand, Malaysia, and around the world
 GM is building four similar plants in
  Argentina, Poland, China, and Thailand          7
       Boeing Suppliers (777)
Firm                Country          Parts
Alenia              Italy            Wing flaps
AeroSpace           Australia        Rudder
Technologies
CASA                Spain            Ailerons
Fuji                Japan            Landing gear
                                     doors, wing section
GEC Avionics        United Kingdom   Flight computers
Korean Air          Korea            Flap supports
Menasco Aerospace   Canada           Landing gears
Short Brothers      Ireland          Landing gear doors
Singapore           Singapore        Landing gear doors
Aerospace
                                                           8
            The Role of
 Maquiladoras
 World Trade Organization (WTC)
 North American Free Trade Agreement
  (NAFTA)
 European Union (EU)



                                        9
          Management Issues in
           Global Operations
Global Strategic Context
       Differentiation
       Cost leadership
       Response




    Supply Chain           Location    Logistics
    Management             Decisions   Management




                                                    10
    Supply-Chain Management
   Sourcing
   Vertical integration
   Make-or-buy decisions
   Partnering




                              11
         Location Decisions
   Country-related issues
   Product-related issues
   Government policy/political risk
   Organizational issues




                                       12
       Materials Management
   Flow of materials
   Transportation options and speed
   Inventory levels
   Packaging
   Storage



                                       13
    Defining Global Operations
   International business - engages in cross-border
    transactions
   Multinational Corporation - has extensive involvement
    in international business, owning or controlling
    facilities in more than one country

   Global company - integrates operations from different
    countries, and views world as a single marketplace
   Transnational company - seeks to combine the benefits
    of global-scale efficiencies with the benefits of local
    responsiveness
                                                          14
            Some Multinational
              Corporations
Company      Home      % Sales   % Assets   % Foreign
             Country   Outside   Outside    Workforce
                       Home      Home
                       Country   Country
 Citicorp     USA       34           46         NA
 Colgate-     USA       72           63         NA
 Palmolive
 Dow          USA       60           50         NA
 Chemical
 Gillette     USA       62           53         NA
 Honda        Japan     63           36         NA

 IBM          USA       57           47         51

                                                        15
            Some Multinational
              Corporations
Company        Home            % Sales   % Assets   % Foreign
               Country         Outside   Outside    Workforce
                               Home      Home
                               Country   Country
 ICI             Britain         78          50          NA

 Nestlé          Switzerland     98          95          97

 Philips         Netherlands     94          85          82
 Electronics
 Siemens         Germany         51          NA          38
 Unilever        Britain &       95          70          64
                 Netherlands

                                                                16
Pontiac - the LeMans Included
         the Following
   About $6,000 heads to South Korea for auto’s
    assembly
   $3,500 goes to Japan for engines, axles, and electronics
   $1,500 goes to Germany for design
   $800 goes to Taiwan, Singapore, and Japan for smaller
    parts
   $500 heads to England for marketing
   $100 goes to Ireland for information technology
   the rest  $7,600, goes to GM and its US bankers,
    insurance agents, and attorneys.
                                                          17
             Reasons to Globalize
                 Operations
 Reduce
Tangible     costs (labor, taxes, tariffs, etc.)
   Improve the supply chain
   Provide better goods and services
   Attract new markets
   Learn to improve operations
   Attract and retain global talent
Intangible

                                                   18
          Trade and Tariff
 Maquiladoras - Mexican factories
  located along the U.S.-Mexico border
  that receive preferential tariff treatment
 GATT - an international treaty that helps
  promote world trade by lowering barriers
  to the free flow of goods across borders
 NAFTA - a free trade agreement between
  Canada, Mexico, and the United States
                                          19
                 Trade Pays
             GDP (PPP*) per Person
              1990 Growth Rates, %
5                      *PPP – Purchasing Power Parity
4

3

2

1

0

-1   More globalized     Rich         Less globalized
     poor countries    countries      poor countries
                                                        20
                Free trade may
take us into the era of the floating factory -
  a six person crew will take a factory from
    port to port in order to obtain the best
        market, material, labor and tax
                  advantages


                                            21
    Achieving Global Operations
       -Four Considerations-
   Global product design
   Global process design and technology
   Global factory location analysis
   Impact of Culture and Ethics




                                           22
                Global
             Product Design
 Remember social and cultural differences
   packaging and marketing can help make
    product seem “domestic” but -
      “liter” versus “quart”
      “sweetness” and “taste”




                                            23
              Global
         Process Design and
            Technology
 Information technology enables
  management of integrated, globally
  dispersed operation
 Texas Instruments: 50 plants in 19
  countries
 Hewlett-Packard - product development
  teams in U.S., Japan, Great Britain, and
  Germany
 Reduces time-to-market                   24
              Global
    Facility Location Analysis
 Select CSFs for Countryparent
   Using CSFs based on Selection
  organization;’s strategic or operations
  objectives
 Obtain country-specific information on
  the CSFs
 Evaluate each country’s CSFs using a 1
  (bad) to 5 (good) rating scale
 Sum the ratings
                                            25
    You May Wish To Consider
   national literacy rate
                                work ethic
   rate of innovation
                                tax rates
   rate of technology change
                                inflation
   number of skilled workers
                                availability of raw materials
   stability of government
                                interest rates
   product liability laws
                                population
   export restrictions
                                number of miles of highway
   similarity in language


                                                        26
            Global
  Impact of Culture and Ethics
 Cultures differ! Some accept/expect:
     variations in punctuality
     long lunch hours
     expectation of thievery
     bribery
     little protection of intellectual property



                                                   27
          Ranking Corruption
1. Finland                       9.7
2. Denmark & New Zealand (Tie)
…                                9.5
7. Canada
…                                9.0
10. United Kingdom
…                                8.7
16. United States
…                                7.7
18. Germany & Israel (Tie)
…                                7.3
20. Japan
…                                7.1
31. Italy
…                                5.2
59. China
…                                3.5
62. Egypt
…                                3.4
71. India & Russia (Tie)
…                                2.7
101.Nigeria                      1.6
102.Bangladesh                   1.2
                                       28
  To Establish Global Services
 Determine if sufficient people or
  facilities exist to support the service
 Identify foreign markets that are open -
  not controlled by governments
 Determine what services are of most
  interest to foreign customers
 Determine how to reach global
  customers
                                             29
    Managing Global Service
          Operations
Must take a different perspective on
 Capacity planning
 Location Planning
 Facilities design and layout
 Scheduling



                                       30
          Some Definitions
 International business
   A firm that engages in cross-border
    transactions.
 Multinational Corporation (MNC)
   A firm that has extensive involvement in
    international business, owning or
    controlling facilities in more than one
    country

                                               31
        Some Global Strategies
   International Strategy: uses exports and licenses to
    penetrate the global area
   Multidomestic Strategy: uses decentralized authority
    with substantial autonomy at each business
   Global Strategy: Uses a high degree of centralization,
    with headquarters coordinating to seek standardization
    and learning between plants
   Transnational Strategy: Exploits economies of scale
    and learning, as well as pressure for responsiveness, by
    recognizing that core competencies reside everywhere
    in the organization

                                                          32
       Match Product & Parent
                                 1. Volkswagen
   Arrow shirts                 2. Bidermann International
   Braun Household Appliances
                                 3. Bridgestone
   Burger King
                                 4. Campbell Soup
   Firestone Tires
   Godiva Chocolate             5. Credit Lyonnais
   Haagen_dazs Ice Cream        6. Ford Motor Company
   Jaguar Autos                 7. Gillette
   MGM Movies                   8. Grand Metropolitan
   Lamborghini Autos            9. Michelin
   Goodrich Tires               10. Nestlé
   Alpo Petfoods


                                                              33
     Match Product & Country
                                 1. France
   Arrow shirts                 2. Great Britain
   Braun Household Appliances
                                 3. Germany
   Burger King
                                 4. Japan
   Firestone Tires
                                 5. United States
   Godiva Chocolate
   Haagen_Dazs Ice Cream        6. Switzerland
   Jaguar Autos
   MGM Movies
   Lamborghini Autos
   Goodrich Tires
   Alpo Petfoods


                                                    34
Developing Missions and
      Strategies




                          35
                           Mission

Mission - where are you
  going?
Organization’s purpose for being
Provides boundaries & focus
Answers ‘What do we provide
   society?’




                                     36
         Mission of FedEx
 FedEx 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.
                                                      37
     Sample Mission - Merck
The 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 return




                                                        38
Mission of the Hard Rock Café
 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.




                                                     39
  Factors Affecting Mission
              Philosophy &
                  Values

                             Profitability
Environment
                              & Growth
                 Mission


 Customers                   Public Image
                Benefit to
                 Society


                                             40
          Mission/Strategy
 Mission - where you are going

 Strategy - how you are going to get there;
  an action plan




                                          41
                  Strategy

Action plan to achieve
  mission
Shows how mission will
  be achieved
Company has a business
  strategy
Functional areas have
  strategies

                             42
        Strategy Process
              Company
              Mission

               Business
               Strategy

            Functional Area
            Functional Area
            Strategies


Marketing     Operations      Fin./Acct.
Decisions     Decisions       Decisions

                                           43
   Strategies for Competitive
           Advantage
 Differentiation

 Cost leadership

 Quick response




                                44
Competing on Differentiation
  Uniqueness can go beyond both the
   physical characteristics and service
 attributes to encompass everything that
 impacts customer’s perception of value




                                           45
        Competing on Cost
Provide the maximum value as perceived by
                 customer

 Does not imply low value or low quality




                                           46
     Competing on Response
 Flexibility
 Reliability
 Timeliness




                             47
 Competing, Regardless of the
           Basis,
Requires the institutionalization within the
  firm of the ability to change, and to adapt




                                            48
     OM’s Contribution to Strategy
 Operations                                                                Specific            Competitive
 Decisions         Examples                                             Strategy Used          Advantage
Quality                                                                 FLEXIBILITY
               Sony’s constant innovation of new products               Design
Product         HP’s ability to follow the printer market               Volume

Process           Southwest Airlines No-frills service                    LOW COST

Location                                                                     DELIVERY
                   Pizza Hut’s five-minute guarantee at lunchtime           Speed
Layout             Federal Express’s “absolutely, positively on time”       Dependability      Differentiation
                                                                                                   (Better)
Human Resource
                                                                             QUALITY
                  Motorola’s automotive products ignition systems          Conformance                     Response
Supply Chain                                                                                   Cost         (Faster)
                  Motorola’s pagers                                      Performance        leadership
                                                                                             (Cheaper)
Inventory
                 IBM’s after-sale service on mainframe computers    AFTER-SALE SERVICE
Scheduling
               Fidelity Security’s broad line of mutual funds   BROAD PRODUCT LINE
Maintenance


                                                                                                             49
    10 Strategic OM Decisions
   Goods & service design
     Quality
        Process & capacity design
           Location selection
              Layout design
                 Human resource and job design
                    Supply-chain management
                       Inventory
                           Scheduling
                              Maintenance

                                                  50
  Goods & Services and the 10
        OM Decisions
Operations           Goods                    Services
Decisions
Goods &      Product is usually      Product is usually
services     tangible                intangible
decisions
Quality      Objective quality       Subjective quality
             standards               standards
Process      Customer not involved   Customer may be directly
and          in most of process      involved in process.
capacity                             Capacity must match
design                               demand to avoid lost sales
                                                                  51
  Goods & Services and the 10
  OM Decisions – Continued
Operations             Goods                       Services
Decisions
Location     May need to be near raw       Product is usually
Selection    materials or labor force      intangible
Layout       Layout can enhance            Subjective quality
Design       production efficiency         standards
Human        Workforce focused on          Customer may be directly
Resources    technical skills.             involved in process.
and Job      Labor standards consistent.   Capacity matches
Design       Output-based wage system.     demand to avoid lost
                                           sales

                                                                 52
 Goods & Services and the 10
 OM Decisions – Continued
O perations             G oods                        S ervices
D ecisions
S upply chain S upply-chain            S upply-chain relationships
m anagem ent relationships critical to im portant, not necessarily
                final product              critical
Inventory       R aw m aterials, w ork -   M ost services can not be
                in-process, and            stored
                finished goods
S cheduling     A bility to convert        P rim arily concerned w ith
                inventory m ay allow       m eeting the custom er's
                leveling of production     im m ediate schedule
                rates                                                    53
Goods & Services and the 10
OM Decisions – Continued
 p ra n
O e tio s         od
                 Go s                e ic s
                                    S rv e
 e is n
D c io s
M in n n e M in n n eiso n
 a te a c   a te a c    fte     a te a c    fte
                               M in n n eiso n
             re e tiv n k s "re a a dta e p c a
            p v n ea dta e      p ir" n k s la e t
             la e t e ro u tio  e u to e ite
            p c a th p d c n th c s m r'ss
            site




                                                     54
                                     Process Design
                                                                                  Customization at high
                      High      Process-focused                                         Volume
                                 Job Shops                                      Mass Customization
                             (Print shop, emergency
                                                                                  (Dell Computer’s PC)
                              room , machine shop,
                                                       Repetitive (modular)
                                    fine dining
                                                               focus
                                                        Assembly line
Variety of Products




       Moderate                                       (Cars, appliances, TVs,
                                                       fast-food restaurants)        Product-focused
                                                                                      Continuous
                                                                                    (steel, beer, paper,
                                                                                    bread, institutional
                                                                                          kitchen)
                      Low
                              Low                        Moderate                              High
                                                            Volume
                                                                                                           55
   Operations Strategies for Two
         Drug Companies
              Brand Name Drugs,          Generic Drug Corp.
                     Inc.
Product    Heavy R & D;             Low R & D investment; focus on
Selection  Extensive labs; focus    development of generic drugs
and Design on development in
             broad range of \drug
             categories
Quality      Quality is a major     Meets regulatory requirements on
             priority;              a country-by-country basis as
             Standards exceed       necessary
             regulatory
             requirements

                                                                 56
     Operations Strategies for Two
     Drug Companies - Continued
              Brand Name Drugs,                  Generic Drug Corp.
                     Inc.
Process    Product & modular          Process focused
           production processes       General production processes;
           Long product runs in       “Job Shop” approach, short run;
           specialized facilities     Focus on high utilization
           Build capacity ahead of
           demand
Location   Still located in city in   Recently moved to low tax, low labor cost
           which it was founded       environment
Scheduling Central production         Many short run products complicate
           planning                   scheduling



                                                                                  57
  Operations Strategies for Two
  Drug Companies - Continued
            Brand Name Drugs,             Generic Drug Corp.
                   Inc.
Human       Hires the best; nation-   Very experienced top executives
Resources   wide searches             provide direction; other
                                      personnel paid below average
Supply      Long term supplier        Tends to purchase competitively
Chain       relationship              to find bargains
Inventory   Maintains high finished   Process focus drives up WIP
            goods inventory,          inventory.
            primarily to ensure all   Finished goods inventory tends
            demands are met           to be low

                                                                  58
  Operations Strategies for Two
  Drug Companies - Continued
               r dae
                a
              B n Nm              e ei D Cr .
                                        u
                                 Gnrc r g op
               r s n.
                u
              D g,I c
 a e a c ig ly r in d t f;
Mi t nne H h t a e saf
  n                           ig ly r in d t f o e t
                             H h t a e sa t mef
            xe s e at
           Et niv p rs        h lle g g e a d
                             c a n in d mn s
             vn y
                o
           ine t r




                                                       59
    Characteristics of High ROI
               Firms
   High quality product
   High capacity utilization
   High operating effectiveness
   Low investment intensity
   Low direct cost per unit

          From the PIMS study of the Strategic
          Planning Institute

                                                 60
    Strategic Options Managers
     Use to Gain Competitive
             Advantage
   28% - Operations Management
   18% - Marketing/distribution
   17% - Momentum/name recognition
   16% - Quality/service
   14% - Good management
    4% - Financial resources
    3% - Other
                                      61
  Strategic Options Managers
   Use to Gain Competitive
           Advantage
 28% Operations Management
   Low- cost product
   Product-line breadth
   Technical superiority
   Product characteristics/differentiation
   Continuing product innovation
   Low-price/high-value offerings
   Efficient, flexible operations adaptable to
    consumers
   Engineering research development
   Location
   Scheduling                                    62
        Preconditions -
    To Implement a Strategy
One must understand:
   Strengths & weaknesses of competitors and
    new entrants into the market
   Current and prospective environmental,
    legal, and economic issues
   The notion of product life cycle
   Resources available with the firm and
    within the OM function
   Integration of OM strategy with company
                                             63
    strategy and with other functions.
  Impetus for Strategy Change
 Changes in the organization
 Stages in the product life cycle
 Changes in the environment




                                     64
              Stages in the Product Life
                        Cycle
              Introduction
Growth rate




                             Growth

                                      Maturity

                                                 Decline




                                                           65
      Strategy & Issues During
            Product Life
                    Introduction
   Company Strategy & Issues
                   Best period to increase market share
                   R&D engineering are critical

                 Product design and development are critical
                Frequent
    OM Strategy & Issues product and process design changes
                 Over-capacity
                 Short production runs
                 High skilled-labor content
                 High production costs
                 Limited number of models
                 Utmost attentions to quality
                 Quick elimination of market-revealed design
                    defects
                                                               66
       Strategy & Issues During
             Product Life
              Growth
Company Strategy
 & Issues        Practical to change prices or quality image
                     Marketing is critical
                     Strengthen niche
OM Strategy
 & Issues            Forecasting is critical
                     Product and process reliability
                     Competitive product improvements and
                        options
                     Shift toward product oriented
                     Enhance distribution


                                                               67
        Strategy & Issues During
              Product Life
                 Maturity
Company StrategyPoor time to increase market share
 & Issues       Competitive costs become critical
                    Poor time to change price, image, or quality
                    Defend position via fresh promotional and distribution
                       approaches

                    Standardization
OM Strategy
                    Less rapid product changes and more minor annual
 & Issues               model changes
                    Optimum capacity
                    Increasing stability of manufacturing process
                    Lower labor skills
                    Long production runs
                    Attention to product improvement and cost cutting
                    Re-examination of necessity of design compromises
                                                                        68
       Strategy & Issues During
             Product Life
              Decline
Company Strategy
 & Issues        Cost control critical to market share


OM Strategy
 & Issues            Little product differentiation
                     Cost minimization
                     Overcapacity in the industry
                     Prune line to eliminate items not returning
                     Good margin
                     Reduce capacity


                                                                   69
Strategy and Issues During a
       Product’s Life




                               70
    Strategy Development and
          Implementation
 Identify critical success factors
 Build and staff the organization




                                      71
SWOT Analysis Process
   Environmental Analysis




 Determine Corporate Mission


      Form a Strategy
                               72
SWOT Analysis to Strategy
     Formulation

               Mission

  Internal                   External
 Strengths                 Opportunities
              Strategy

 Internal                    External
Weaknesses                   Threats
             Competitive
             Advantage
                                           73
                     Identifying
              Critical Success Factors
Marketing                      Finance/Accounting           Production/Operations
Service                        Leverage
Distribution                   Cost of capital
Promotion                      Working capital
Channels of distribution       Receivables
Product positioning            Payables
(image, functions)             Financial control
                               Lines of credit

  Decisions                Sample Option                                        Chapter
  Product                  Customized, or standardized                              5
  Quality                  Define customer expectations and how to achieve them    6, S6
  Process                  Facility size, technology, capacity                    7, S7
  Location                 Near supplier or customer                                 8
  Layout                   Work cells or assembly line                               9
  Human resource           Specialized or enriched jobs                          10, S10
  Supply chain             Single or multiple source suppliers                   11, S11
  Inventory                When to reorder, how much to keep on hand            12, 14,16
  Schedule                 Stable or fluctuating productions rate                13, 15
  Maintenance              Repair as required or preventive maintenance             17

                                                                                            74
 Activity Mapping: Southwest
Airline’s Low Cost Competitive
           Advantage
            Courteous, but limited
                         passenger service

                                                 Short haul, point-to-point
Lean, productive
                                                routes, often to secondary
  employees
                   Competitive Advantage:                 airports
                        Low Cost
 High aircraft                                      Frequent, reliable
  utilization                                          schedules
                        Standardized fleet of
                         Boeing 737 aircraft

                                                                      75
 Activity Mapping: Southwest
Airline’s Low Cost Competitive
           Advantage
           Courteous, but limited
            passenger service


          No seat assignments
          No baggage transfers
          Automated ticketing machines
          No meals




                                         76
 Activity Mapping: Southwest
Airline’s Low Cost Competitive
           Advantage
     Lower gate costs at
     secondary airports         Short haul, point-to-point
                               routes, often to secondary
     High number of flights,
                                         airports
     reduces employee idle
     time between flights




                                                    77
 Activity Mapping: Southwest
Airline’s Low Cost Competitive
           Advantage

    High number of flights reduces
    employee idle time between
    flights
    Saturate a city with flights
    lowering administrative costs    Frequent, reliable
    per passenger for that city         schedules



                                                      78
 Activity Mapping: Southwest
Airline’s Low Cost Competitive
           Advantage
       Pilot training on only one type of
       aircraft
       Reduced maintenance inventory
       required because of only one type
       of aircraft
       Excellent supplier relations with
       Boeing has aided financing

                Standardized fleet of
                 Boeing 737 aircraft

                                            79
 Activity Mapping: Southwest
Airline’s Low Cost Competitive
           Advantage
                 Flexible employees and
                 standard planes aids scheduling
                 Flexible union contracts
                 Maintenance personnel trained
                 on only one type of aircraft
                 20 minute gate turnarounds
 High aircraft
  utilization



                                                   80
 Activity Mapping: Southwest
Airline’s Low Cost Competitive
           Advantage
                   High level of stock ownership
                   Hire for attitude, then train
                   High employee compensation
Lean, productive   Empowered employees
  employees        Automated ticket machines




                                                   81
 Activity Mapping: Southwest
Airline’s Low Cost Competitive
           Advantage
            Courteous, but limited
                         passenger service


Lean, productive                                 Short haul, point-to-point
  employees                                     routes, often to secondary
                   Competitive Advantage:                 airports
                        Low Cost

 High aircraft                                      Frequent, reliable
  utilization                                          schedules
                        Standardized fleet of
                         Boeing 737 aircraft

                                                                      82
Southwest Airline’s Low Cost
  Competitive Advantage




                               83
 Vanguard’s Activity System
                  A broad array of mutual
                funds excluding some fund
                        categories
   Very low
                                               Efficient investment
  expenses
                                            management approach
 passed on to
                                            offering good consistent
    client
                                                   performance
                      Strict cost
                       control

   Direct                                    Straightforward client
distributions                                 communication and
                                                   education

                                                                      84
              How It Works
If competitive                      Distinctive
advantage, leads to   Company
                                    competencies affect
achieving              Mission

                       Business
                       Strategy

                  Functional Area
                     Strategies

  Marketing           Operations     Fin./Acct.
  Decisions           Decisions      Decisions

                                                   85
Four International Operations
          Strategies




                                86
      Multidomestic Strategy
Operating decisions are decentralized to
  each country to enhance local
  responsiveness




                                           87
        Global Strategy
Operating decisions are centralized and
      headquarters coordinates the
  standardization and learning between
                facilities




                                          88
  Transnational Strategies
Combines the benefits of global-scale
 efficiencies with the benefits of local
            responsiveness




                                           89

				
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