INT. MANUFACTURING & TECHNOLOGY MANAGEMENT

8/14/2019 INT. MANUFACTURING & TECHNOLOGY MANAGEMENT

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INTERNATIONAL MANUFACTURING

& QUALITY MANAGEMENT

Neeraj Lal


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Subjects covered -

Strategic Manufacturing Management in Global

Organizations

Choice of Technology & Technology Management Global Purchase & Procurement

Global Coordination of Production Operations

Quality Assurance & Quality Control Legal Aspects of Production and Quality


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Strategic Manufacturing Management

in Global Organizations


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P&G Japan Case Summary

P & G Products


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P&G Japan Case Summary

Each affiliate country has a strategic role thatinfluences strategy, structure, and the role of the

country manager. The strategic role of the

country also influences which functions are

duplicated within the country (e.g., R&D, mfg.,

etc.). A lead market must have R&D.

The country managers role is a function of the

strategic role of the country in the multinationalfirms overall strategy:

- Access new markets with existing products

(Implementer)


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- Develop new markets and adapt and develop

new products for those markets (Local Manager)

- Develop lead markets from which to learn

and transfer knowledge to other relevant

markets (Global Network Manager)

There are numerous potential competitive

advantages that MNCs can realize by thinking

about their firm as a global network of resources

and capabilities.


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P&G Update: Performance in Asia

Opened technical center in Kobe in 1993; 3 mfg. plants Now sell 20 brands with market leadership in 1/3 of those.

P&G views Japan as one of the top two markets in Asia.

The Japanese market is made up of very discriminating

consumers, intense competition, and a need for constantproduct innovation. If P&G can do well in Japan, P&G can

do well in any other market.

We take the Japnese market very seriously; although I

wouldnt consider it a major growth market, I wouldconsider it a market that we want to maintain market

leadership in.

We use what we learn in one market to succeed in others


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STRATEGY

Strategic Management

Approaches to Strategic Planning

Global vs. Regional Strategies

Elements of Strategic Planning

Specialized Strategies


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Strategic Management

Strategic management

Determining the firms basic mission and long-

term objectives, and developing and

implementing an appropriate plan of action

Where are we going?

How are we going to get there?

Strategic management growing in importancebecause of the need to coordinate and integrate

diverse operations


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Approaches to Strategic Planning

Economic

Imperative

Quality

Imperative

Political

Imperative

Administrative

Coordination


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Economic Imperative

Strategy based on cost leadership, differentiation,

and segmentation

Product mix

Value added in the upstream activities of the

industrys value chain

generic good (not name brand or support

service dependent)

Global sourcing to shorten the production or

buying cycle


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Political Imperative

Strategy country- responsive and designed to

protect local market niches

Success of the product or service depends heavily

on marketing, sales or service

Customer or client-focused

Approach most often used by MNCs pursuing a

country-centered or multidomestic strategy.


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Quality Imperative

Two possible paths

Change in attitudes to raise expectation for service

quality

Implementation of practices to make qualityimprovement an ongoing process

Total quality management (TQM)

Cross-training personnel

Process re-engineering

Reward systems designed to reinforce quality


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Administrative Coordination

Decision making based on the merits of the

individual situation rather than a predetermined

economic or political strategy

Coordination of global supply chains

Localized marketing of products and services

Least common approach given the pressures on

MNCs to coordinate strategy both regionally andglobally


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Global Integration

Products and services homogeneous in terms

of type and quality

Customers have common taste preferences

National Responsiveness

Segmented regional markets

Need to respond to differing nationalstandards and regulations

Adaptation of tools and techniques to manage

local workforces


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Four Strategic Options

Global

strategy

International

strategy

Transnational

strategy

Multi-domestic

strategy

National responsiveness

Low High

Globalintegration

Low

High

Adapted from Figure 81: Global Integration vs. National Responsiveness


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Choosing an Option

The right strategy is tailored to particular countryand industry characteristics

Reasons to choose each strategy

Global: low-cost strategy, commodification

Multi-domestic: products and services differentiated

by market

International: core competencies set the MNC apart

from local competitors

Transnational:

Require management of contradictory pressures for

cost reductions and differentiation

Successful firms engage in globalization, localizing

their activities while maintaining a global focus


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Elements of Strategic Planning for

International Management


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Elements of Strategic Planning for

International Management

External Environmental

Scanning for MNC

Opportunities and Threats

Internal Resource

Analysis of MNC

Strengths and

Weaknesses

Strategic Planning

Goals

IMPLEMENTATION

Adapted from Figure 82: Basic Elements of Strategic Planning for International Management


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Environmental Scanning

Provide management with accurate forecastsof trends that relate to external changes in

geographic areas where the firm is currently

doing business or considering setting up

operations

These changes relate to the economy,

competition, political stability, technology, and

demographic consumer data


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Internal Resource Analysis

Evaluate managerial, technical, material, andfinancial strengths and weaknesses

Determine ability to take advantage of international

market opportunities

Match external opportunities (environmental scan)with internal capabilities (internal resource

analysis)

Key question: Do we have the people and

resources that can help us to develop andsustain the necessary KFSs, or can we acquire

them?


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Strategic Planning Goals

Goal formulation often precedes the first twosteps

However, more specific goals come out of

external scanning and internal analysis Typically serve as an umbrella for subsidiaries and

international operations

Profitability and marketing goals almost always

dominate Once set, the MNC will develop specific operational

goals and controls for the subsidiary or affiliate level


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Implementation

Selecting a country and location Country factors: market openness, infrastructure,

labor market flexibility

Location: incentives, workforce, costs

Functional areas

Marketing: usually country specific

Production: domestic to foreign, foreign to domestic,

or foreign to foreign, dispersed or coordinated Finance: local sources, centralized control,

international markets, or barter trade


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SPECIALIZED STRATEGIES

First-Mover Strategies

Bottom of the Pyramid Strategies

Born-Global Strategies


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First-Mover Strategies

Useful in rapidly changing markets Market opening in developing economies

Market reforms in transition economies

Privatization of state-operated enterprises

Advantages and risks Capture benefits of learning

Form alliances with attractive local partners

Uncertain pace of reform

Opportunity costs of premature entry


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Base of the Pyramid Strategies

Targeting emerging market

People making less than $2,000 p/year (4

billion)

Marketing requires smaller-scale strategies

Building relationships with local governments,

small entrepreneurs, and nonprofits

Less dependence on central governments andlarge local companies


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Born-Global Firms

Engage in significant international activity a short

time after being established

Successful firms leverage a distinctive mix of

orientations and strategies Global technological competence

Unique-products development

Quality focus Leveraging of foreign distributor competences


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Strategic objectives

Lower costs

Disperse manufacturing

activities to efficient global

locations

Increase productivity

Using Total Quality Management

(W. Edward Demming)


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Accommodate demands for local responsiveness decentralize production

Respond quickly to shifts on customer demand

time-based competition

extremely important


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Where to manufacture?

Country

Factors

TechnologicalFactors

Product

Factors

Locating

Manufacturing

Facilities


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Country factors

Optimum economic, political, and cultural

conditions

Externalities

Skilled labor pools

Supporting industries

Formal and informal trade barriers

Exchange rate


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Technological factors

Fixed costs

Minimum efficient scale

Flexible manufacturing

reduce setup times for complex

equipment

increase machine utilization

improve quality control

flexible machine cells to perform a variety of

operations

Masscustomization

Low cost

Product

customization


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Manufacturing location

Fixed costs are substantial

Minimum efficient scale is high

Flexible manufacturing technologies available

Fixed costs are low

Minimum efficient scale is low

Flexible manufacturing technologies unavailable

Trade barriers and transportation costs remainmajor impediments


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Product factors and location strategies

Two product features affect location decisions:

Value to weight ratio.

Product serves universal needs

Two basic strategies Concentrating in a centralized location and serving the

world market

Decentralizing them in various regional or national

locations close to major markets when oppositeconditions exist


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CHOICE OF TECHNOLOGY &

TECHNOLOGY MANAGEMENT


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Role of information technology and the

internet

Track component parts across the globe to anassembly plant Optimize and adjust production scheduling

Electronic data interchange (EDI) Used to coordinate flow of materials between

suppliers ,firm, shippers and customers

Communicate without time delay

Increases flexibility and responsiveness of thewhole global system

Paperwork decreased

Significant competitive advantage


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Information Technology Developments

E-Business

Agility, Flexibility

Business Strategies

Supply Chain

Total Quality

Suppliers Business Partners

Customer Value

Responsiveness

Accountability

Lower costs Global and enterprise

computing; intranets

IT infrastructure


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The e-Business Organization

Traditional

Organization

E-Organization

Organization Structure Hierarchical Horizontal, Networked

Leadership Centralized focus Everyone is leader

People & Culture Vertical decisionmaking, Individuals

rewarded

Delegated Authority,Collaboration rewarded

Coherence Internal Relevance Customer relevance

Knowledge Individualistic Institutional

Alliances Ally with distant

Partners

Ally with competitors,

customers and

suppliers, Create new

value

Governance Top-down Distributed


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IT Strategic Planning Management

E-Business

Application

Development &

Deployment

E-Business IT

Strategies and

Architecture

E-Business

Strategies and

Models

Customer and

BusinessValue Visioning

Key Insights

Key Objectives

PrioritiesMore Questions

Feedback

Feedback


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Benefits Derived from Company IT

Planning

Reduced support costs

Reduced complexity

Expertise portability

Interoperability

Volume discounts

Reduced training costs

Information sharing


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Global e-Business Technology

Management

SystemsDevelopment

DataResource

Management

Internet-basedTechnologyPlatforms

e-BusinessApplicationPortfolios

e-Business/ITStrategies

Global ITManagement

Cultural, Political,

and Geo-economicsChallenges


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Global e-Business Strategies

Transactional

-Virtual e-Businesses

-World Markets-Transparent

Manufacturing

-Global Supply Chain

-Global Alliances

International

-Autonomous

operations-Region Specific

-Vertical Integration

-Specific Customers

-Captive

Manufacturing

Global

-Global Sourcing

-Multiregional-Horizontal Integration

-Some transparency of

customers and

production


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Business Drivers for Global e-Business

Global Customers

Global Products

Global Operations

Global Resources

Global Collaboration

Business

Driversfor Global

e-Business


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Global IT Platform Issues

Global Systems Development

Local vs. Global RequirementsMultilingual Needs

Standardization of Data

Scheduling Global Activities

Global Infrastructure

Global Data AccessRegulated Access

Trans border Data Flows

Global Computing Facilities

Hardware acquisitionsImport restrictions

Software compatibility

Local service

Balancing workloads

Lack of spare parts


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e-Business technologies are changing thedistribution, relationships, resources, and

responsibilities of managers.

High-quality information system performance isdependent on extensive and meaningful

management and user involvement in the

governance and development of IT applications.

The organizational structure and roles of e-business companies are undergoing majorchange as they strive to become customer-focused.

i i b i h h


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Managing IT in an e-business has three

major objectives:

Managing the joint development and

implementation of e-business IT strategies.

Managing the development of e-business

applications and the research andimplementation of new technologies.

Managing IT processes, professionals, and

subunits within the company.

Managing global e business


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Managing global e-business

technologies includes:

Dealing with cultural, political, and geo-

economics challenges posed by various

countries.

Developing appropriate business and IT

strategies.

Developing a portfolio of global e-business and

e-commerce applications and an Internet-based technology platform to support them.


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Many businesses are becoming globalcompanies and moving towards

transnational e-business strategies in

which they integrate the globalbusiness activities of their subsidiaries

and headquarters.


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INT. MANUFACTURING & TECHNOLOGY MANAGEMENT

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