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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 vs. Regional Strategies
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Global vs. Regional Strategies
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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