MAN 6721: Chapter 12

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MAN 6721 Chapter 12

• MANAGING INTERNAL OPERATIONS

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Strategic Allocation of Resources

• Allocating resources in ways to support effective
  strategy execution involves
• Funding strategic initiatives that can makea
  contribution to strategy implementation
• Funding efforts to strengthen competenciesand
  capabilities or to create new ones
• Shifting resources downsizing some
  areas,upsizing others, killing activities no
  longer justified,and funding new activities with
  a critical strategy role

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Creating Strategy-SupportivePolicies and
Procedures

• Role of new policies
• Channel behaviors and decisionsto promote
  strategy execution
• Counteract tendencies ofpeople to resist chosen
  strategy
• Too much policy can be as stifling as
• Wrong policy or as
• Chaotic as no policy
• Often, the best policy is empowering employees,
  letting them operate between the white lines
  anyway they think best

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Instituting Best Practicesand Continuous
Improvement

• Searching out and adopting best practicesis
  integral to effective implementation
• Benchmarking is the backbone of the process of
  identifying, studying, and implementing best
  practices
• Key tools to promote continuous improvement
• TQM (Continuous Improvement)
• Six sigma quality control
• Business process reengineering

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Characteristics of Benchmarking

• Involves determining how well a firm performs
  particular activities and processes when compared
  against
• Best in industry or Best in world performers
• Goal Promote achievement of operating
  excellencein performing strategy-critical
  activities
• Caution Exact duplication of best practicesof
  other firms is not feasible due to differencesin
  implementation situations
• Best approach Best practices of other firms
  need to be modified or adapted to fit a firms
  own specific situation

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What Is Total Quality Management?

• A philosophy of managing a set of business
  practices that emphasizes
• Continuous improvement in all phases of
  operations
• 100 percent accuracy in performing activities
• Involvement and empowermentof employees at all
  levels
• Team-based work design
• Benchmarking and
• Total customer satisfaction

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Implementing a Philosophyof Continuous
Improvement

• Reform the corporate culture
• Instill enthusiasm to do thingsright
  efficiency throughout company
• Strive to achieve incremental stepseach day
  (what the Japanese call kaizen)
• Ignite motivate creativity in employees
  toimprove performance of value-chain activities
• Preach there is no such thing as good enough
  recognize the value of reward avoid the cry
  wolf syndrome

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Six Sigma Quality Control?

• A disciplined, statistics-based system
• DMAIC process (Design, Measure, Analyze, Improve,
  Control)
• An improvement system for existing processes
  falling below specification and needing
  incremental improvement
• DMADV process (Define, Measure, Analyze, Design,
  Verify)
• An improvement system used to develop new
  processes or products at Six Sigma quality levels

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TQM vs. Process Reengineering

• Reengineering
• Aims at quantum gains (i.e., 30 to 50 or more)
• TQM
• Stresses incremental progress
• Techniques are not mutually exclusive
• Reengineering Used to produce a good basic
  design yielding dramatic improvements
• TQM Used to perfect process, gradually
  improving efficiency internal and effectiveness
  external

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Installing Strategy-Supportive Information and
Operating Systems

• Essential to promote successful strategy
  execution
• Types of support systems
• On-line data systems
• Internet and company intranets
• Electronic mail
• E-commerce systems
• Mobilizing information and creating systemsto
  use knowledge effectively can yield
• Competitive advantage

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Exercising Adequate ControlOver Empowered
Employees

• Challenge KEY is not to become stifling
• How to ensure actions of employeesstay within
  acceptable bounds
• Control approaches
• Managerial control
• Establish boundaries on what not todo, allowing
  freedom to act with limits
• Track and review daily operating performance
• Peer-based control

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Gaining Commitment Componentsof an
Effective Reward System

• Monetary Incentives
• Base pay increases
• Performance bonuses
• Profit sharing plans
• Stock options
• Retirement packages
• Piecework incentives

• Non-monetary Incentives
• Praise
• Constructive criticism
• Special recognition
• More, or less, job security
• Stimulating assignments
• More, or less, autonomy
• Rapid promotion

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Linking the Reward Systemto Performance
Outcomes

• Tying rewards to the achievement of strategic and
  financial performance targets is managements
  single most powerful tool to win the commitment
  of company personnel to effective strategy
  execution
• Objectives in designing the reward system
• Generously reward thoseachieving objectives
• Deny rewards to those who dont
• Make the desired strategic and financial
  outcomes the dominant basis for designing
  incentives, evaluating efforts, and handing out
  rewards

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MAN 6721 CHAPTER 7

• Competing in Foreign Markets

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Four Big Strategic Issues in Competing
Multinationally

• Whether to customize a companys offerings in
  each different country market to match
  preferences of local buyers or offer a mostly
  standardized product worldwide
• Whether to employ essentially the samebasic
  competitive strategy in all countriesor modify
  the strategy country by country
• Where to locate a companys production
  facilities,distribution centers, and customer
  service operationsto realize the greatest
  locational advantages
• Whether and how to efficiently transfer
  acompanys resource strengths and capabilities
  fromone country to another to secure competitive
  advantage

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International vs. Global Competition
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Cross-Country Differences in Cultural,
Demographic, and Market Conditions

• Cultures and lifestyles differ among countries
• Differences in market demographics
• Variations in manufacturingand distribution
  costs
• Fluctuating exchange rates
• Differences in host governmenteconomic and
  political demands

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Different Countries Have Different Locational
Appeal

• Manufacturing costs vary from country to country
  based on
• Wage rates
• Worker productivity
• Natural resource availability
• Inflation rates
• Energy costs
• Tax rates
• Quality of the business environment varies from
  country to country

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Fluctuating Exchange Rates Affect a
Companys Competitiveness

• Currency exchange rates are unpredictable
• Competitiveness of a companys operationspartly
  depends on whether exchange ratechanges affect
  costs favorably or unfavorably
• Lessons of fluctuating exchange rates
• Exporters always gain in competitivenesswhen the
  currency of the country wheregoods are
  manufactured grows weaker
• Exporters are disadvantaged whenthe currency of
  the country wheregoods are manufactured grows
  stronger

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Differences in Host Government Trade Policies

• Local content requirements
• Restrictions on exports
• Regulations on prices of imports
• Import tariffs or quotas
• Other regulations
• Technical standards
• Product certification (Tramier Foods US
  standards)
• Prior approval of capital spending projects
• Withdrawal of funds from country
• Ownership (minority or majority) by local citizens

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Characteristics ofMulti-Country Competition

• Market contest among rivals in one country not
  closely connected to market contests in other
  countries
• Buyers in different countries areattracted to
  different product attributes
• Sellers vary from country to country
• Industry conditions and competitive forces
  ineach national market differ in important
  respects

Rival firms battle for national championships
winning in one country does not necessarily
signal the ability to fare well in other
countries!
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Characteristics of Global Competition

• Competitive conditions acrosscountry markets are
  strongly linked
• Many of same rivals compete inmany of the same
  country markets
• A true international market exists
• A firms competitive position in one country is
  affected by its position in other countries
• Competitive advantage is based on a firms
  world-wide operations and overall global standing

Rival firms in globally competitive
industriesvie for worldwide leadership!
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Strategy Evolution Options for Competing in
Foreign Markets

• Exporting
• Licensing
• Franchising strategy
• Multi-country strategy
• Global strategy
• Strategic alliances or joint ventures

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Foreign Market Strategies

• Exporting - involves using domestic plants as a
  production base for exporting to foreign markets
• Excellent initial Strategy to pursue
  international sales
• Licensing when a firm has valuable technical
  know-how or a patented product but does not have
  international capabilities or desires to avoid
  risks associated with entering foreign markets
• Franchising - better suited to global expansion
  efforts of service and retailing enterprises.
  Shifts risk of most cost and establishing foreign
  locations to the franchisee

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Foreign Market Strategies (continued)

• Multi-Country Strategy - Strategy is matched to
  local (when different country strategies are
  required) market needs (such as differences in
  customer needs or demand for product features,
  host government regulations preclude a uniform
  global approach)
• Global Strategy - for competing is similar in all
  country markets allowing for coordinated
  strategic moves selling in many, if not all,
  nations where a significant market exists (best
  when products and buyer requirements are similar
  from country to country)

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Philosophical Perspectives Classifications

• Three Perspectives of Global Decision-making
• 1. Ethnocentric
• 2. Polycentric
• 3. Geocentric
• Global Human Resource Classifications
• 1. Expatriate
• 2. Local Country National (LCN)
• 3. Third Country National

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Building Competencies into a Global Competitive
Advantage

• Transferring competencies, capabilities, and
  resource strengths across borders contributes to
  develop of broader competencies by dominating
  depth in a competitively valuable capabilities
• Aligning Activities located in different
  countries contributes to competitive advantage
  (RD, human resources, technology, operation
  process taking advantage of cost or trade
  advantages)
• Profit sanctuaries are country markets where a
  firm has a strong, protected market position and
  derives substantial profits are a valuable
  competitive asset in global industries!

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Strategy Options for Local Companies in
Competing Against Global Challengers (Figure
5.3)