Operations Strategy in a Global Environment Part 3

92) The acronym MNC stands for A) Mexican National Committee (for international trade). B) Maquiladora Negates Competition. C) Maytag-Nestlé Corporation. D) Multinational Corporation. E) Mostly-national Corporation. Answer: D 93) Caterpillar and Texas Instruments are two firms that have benefited from the use of A) the multidomestic strategy option. B) the transdomestic corporation strategy. C) the transnational strategy option. D) the maquiladora system in Europe. E) the global strategy option. Answer: E 94) Which of the following is not an example of a transnational firm? A) Nestlé B) Asea Brown Boveri C) Reuters D) Citicorp E) McDonald's Answer: E 95) Boeing found its Dreamliner 787 partners in over a dozen ________. Answer: countries 96) ________ are areas located along the U.S.-Mexico border in which factories receive preferential tariff treatment. Answer: Maquiladoras 97) ________ is a free trade agreement among Canada, Mexico, and the United States. Answer: NAFTA–North American Free Trade Agreement 98) ________ and ________ are two issues where significant cultural differences are large and progress toward global uniformity has been slow. Answer: Bribery; protection of intellectual property 99) The ________ is an organization that has worked to achieve global uniformity in cultural and ethical issues such as bribery, child labour, and environmental regulations. Answer: World Trade Organization 100) In goods-producing organizations, ________, ________, and ________ may be inventoried. Answer: raw materials; work-in-process; finished goods 101) Strategy is not static, but dynamic because of changes in the ________ and ________. Answer: organization; environment 102) ________ is the stage in product life cycle at which it is a poor time to change quality. Answer: Maturity 103) The ________ is how an organization expects to achieve its missions and goals. Answer: strategy 104) The creation of a unique advantage over competitors is called a ________. Answer: competitive advantage 105) Service organizations can immerse the consumer in the service, or have the consumer become a participant in the service, as they practise ________. Answer: experience differentiation 106) Experience differentiation is an extension of ________ differentiation, accomplished by using people's five senses to create an experience rather than simply providing a service. Answer: product 107) Competitive advantage in operations can be achieved by ________, ________, and/or ________. Answer: differentiation; low cost; response 108) A(n) ________ is a firm that has extensive involvement in international business, owning or controlling facilities in more than one country. Answer: MNC–multinational corporation 109) The ________ strategy utilizes a standardized product across countries. Answer: global 110) The ________ strategy uses exports and licences to penetrate globally. Answer: international 111) Firms using the ________ strategy can be thought of as "world companies." Answer: transnational 112) The ________ strategy uses subsidiaries, franchises, or joint ventures with substantial independence. Answer: multidomestic 113) The ________ strategy describes a condition in which material, people, and ideas cross or transgress national boundaries. Answer: transnational 114) Identify five countries from which Boeing's 787 Dreamliner has suppliers. Answer: France, Germany, UK, Italy, Japan, China, South Korea, Sweden, U.S. 115) Identify two innovations in aerospace technology used in Boeing's 787 Dreamliner. Answer: Technological advances include engine technology that contributes to 8% increase in fuel efficiency, electronic maintenance monitoring, superlightweight airframe. 116) How can global operations improve the supply chain? Answer: The supply chain can often be improved by locating facilities in countries where unique resources exist. 117) How do global operations attract new markets? Answer: Since international operations require local interaction with customers, suppliers, and other competitive businesses, international firms inevitably learn about unique opportunities for new products and services. 118) State two examples of cultural and ethical issues that operations managers face in a global environment. Answer: Student responses will vary, but there are several issues on which there are wide differences from country to country, culture to culture. Among those listed in the text are bribery, child labour, slave labour, and intellectual property rights. Students may bring forward from an earlier chapter issues such as environmental regulation or safe work environment, and may raise issues such as product safety. 119) What is the difference between a firm's mission and its strategy? Answer: A firm's mission is its purpose or rationale for an organization's existence, whereas a firm's strategy is how it expects to achieve its mission and goals. 120) Since the early 1990s, residents in a number of developing countries have overcome culture, religious, ethnic, and political productivity barriers. These disappearing barriers coupled with simultaneous advances in technology, reliable shipping, and cheap communication have all led to the growth of what three things? Answer: 1. World trade. 2. Global capital markets. 3. International movement of people. 121) Provide an example of an organization that achieves competitive advantage through experience differentiation. Explain. Answer: Answers will vary, but Disney and Hard Rock Café are illustrated in the text. Competing on experience differentiation implies providing uniqueness to your service offering through immersion of the consumer into the service, with visual or sound elements to turn the service into an experience. 122) With regard to the scheduling decision, how are goods-producing organizations different from service companies? Discuss. Answer: Goods-producing companies: the ability to inventory may allow leveling the output rates; service companies: primarily concerned with meeting the customer's immediate schedule. 123) How do goods and services differ with regard to handling the quality decision? Answer: There are many objective quality standards for goods, whereas there are many subjective quality standards for services. 124) What is the difference between goods and services in terms of their location selection? Answer: Manufacturers of goods may need to be located close to raw materials, or labour force. Services, on the other hand, typically are located close to the customer. 125) How has the Belgian discount food retailer Franz Colruyt achieved low-cost leadership?List three specific examples and describe each briefly. Answer: Several methods are listed in the text. Among these are no shopping bags, dim lighting, no voice mail, conversion of older buildings, and Spartan offices. 126) Define core competencies. Answer: A set of skills, talents, and activities that a firm does particularly well. 127) For what type of organization might the location decision area be the least important of its ten decision areas? For what type of organization might the location decision be the most important of the ten decision areas? Discuss; include examples. Answer: The relationship between the organization and its suppliers or its customers is key. If that relationship is very weak (as in no transportation costs, or customers can reach the firm from any location), location diminishes in importance. If that relationship is strong (uniqueness of site, high transportation costs, customers will not travel far) location increases in importance. "Least" examples: Telemarketing firm, tax help-line, Internet sales. "Most" examples: gold mine, oil well, ski resort. 128) What is SWOT analysis? List its four elements and describe its purpose. Answer: The four elements of SWOT are strengths, weaknesses, opportunities, and threats. Its purpose is to maximize opportunities and minimize threats in the environment, while maximizing the advantages of the organization's strengths and minimizing the weaknesses. Diff: 2 129) Are strategies static or dynamic? What are the forces that lead to this result? Answer: Strategies should be dynamic because of changes within the organization and changes in the environment. 130) Identify and explain the four basic global operations strategies. Give an example of each strategy. Answer: • The multidomestic strategy decentralizes operating decisions to each country to enhance local responsiveness. The primary example from the textbook is McDonald's. • The global strategy centralizes operating decisions, with headquarters coordinating the standardization and learning between facilities. The textbook names Texas Instruments and Caterpillar. • The international strategy uses exports and licences to penetrate the global markets. Students may cite Pier One, Harley-Davidson, or any wine store. • The transnational strategy exploits the economies of scale and learning, as well as pressure for responsiveness, by recognizing that core competence does not reside in just the "home" country, but can exist anywhere in the organization. Examples from the textbook include Coca-Cola and Nestlé. 131) Nike is the world's largest athletic brand. Its innovative and broad product line helps drive sales; however, a large majority of those sales are in the footwear business. Most of Nike's goods are produced overseas in low-cost factories and then imported to the final market. Nike currently has many of the top U.S. athletes under contract (Michael Jordan, Tiger Woods, Dwyane Wade) but international sales are still small in emerging markets. However, many competitors have attempted to copy Nike's business model (high-value branded products manufactured at lowcost), including Adidas and Reebok, while many retailers have attempted to pass on the low-cost pressure of retail consumers. Perform a SWOT analysis for Nike. Answer: Strengths: Innovative products, athletes under contract. Weaknesses: Much of revenue is from footwear; eroding market share could cost Nike its profitability. Opportunities: Sales can be increased in emerging markets using well-known athletes; broad product line can be expanded into high profit sectors (jewelry, sunglasses, golf, etc.). Threats: International business makes Nike vulnerable to currency changes; low-cost pressure from retailers can decrease profit per item; competition could erode existing market share. Athletes' personal lives could weaken Nike's reputation. 132) Starbucks is one of the best known coffeehouse chains in the world. Each store sells a variety of innovative products to complement the array of coffee choices available. However, 75% of current stores are located in the United States and the expensive nature of the coffee leaves Starbucks vulnerable to changes in consumer spending behaviour (such as recessions). Recently Starbucks has begun initiatives to sell its specialty coffee beans for home use, presenting a chance for a large increase in revenue and diversification. However, Starbucks faces fierce competition seeking a piece of its lucrative market share and the threat of consumer behaviour changes, given its reputation rides on a singular product. Perform a SWOT analysis for Starbucks. Answer: Strengths: High profit specialty coffee, well known brand image. Weaknesses: Most stores located in U.S., most profits come from coffee (both indicate a lack of diversification). Opportunities: Emerging market in coffee beans for home use, chance for global expansion. Threats: Intense competition, consumer behaviour changes (less spending during a recession on its luxury coffee, change in beverage preferences). 133) Boeing's 787 Dreamliner is a state-of-the-art airplane reflecting the global nature of business in the 21st century and one of the fastest-selling commercial jets in history. It incorporates the latest in a wide range of aerospace technologies including an innovative electronic monitoring system and advances in engine technology that increased fuel efficiency by 8%. Boeing teamed with more than 20 international systems suppliers from over a dozen countries. These partners not only spread the risk but also bring commitment to the table because countries that have a stake in the 787 are more likely to buy from Boeing. Perform a SWOT analysis of Boeing's 787 Dreamliner. Answer: Strengths: Technological advances (8% increase in fuel efficiency, electronic maintenance monitoring). Weaknesses: Diverse suppliers and assembly locations leave Boeing vulnerable to currency exchange rates and make quality control difficult. Opportunities: One of fastest-selling commercial jets ever gives Boeing a chance to increase market share; Boeing can parlay its use of diverse supplier locations into diversifying customer base. Threats: Competition from Airbus, divestment of the manufacture process risks losing company trade secrets (competitive advantage). 134) Hard Rock opened its first restaurant in London in 1971, making it the granddaddy of theme restaurants. Hard Rock has millions of dollars invested in Rock 'n' Roll memorabilia. It employs an "experience strategy" in its 150 restaurants located in 53 countries. Efficient kitchen layouts, motivated personnel, tight schedules and the right ingredients at the right place and time to delight the customers. Perform a SWOT analysis of Hard Rock Café. Answer: Strengths: Hard Rock's unique coupling of an experience with its menu gives it a competitive advantage, diverse portfolio of stores in 53 countries lowers risk. Weaknesses: Hard Rock is known exclusively for its "experience"; this one-dimensional competitive advantage presents high risk. Opportunities: New "experience" types at restaurants (Blues, Hip-Hop, etc., themes), addition of new stores to the existing 150+ stores. Threats: Hard Rock's exclusive Rock 'n' Roll theme leaves it vulnerable to changes in consumer music preferences; competition in the restaurant business is very tough. 135) Franz Colruyt is a Belgian discount food retailer that is obsessed with cutting costs. Cost cutting measures in its 160 stores include no bags or in-store music, dimly-lit stores, unpaid 5minute coffee breaks for employees, and a spartan headquarters. The resulting 6.5% profit margin dwarfs the 1% to 2% margin typical for the industry. Perform a SWOT analysis for Franz Colruyt. Answer: Strengths: High profit margin of 6.5% from its extreme low-cost competitive advantage. Weaknesses: Lack of bagging, in-store music, dim lighting, and lack of aesthetic in-store appeal all limit potential customer base. Opportunities: Franz Colruyt only operates 160 stores, so there is opportunity for global expansion. Threats: High profit margin might encourage competition to copy Franz Colruyt's low-cost competitive advantage, eroding it. Changes in consumer behaviour (increased prosperity) might decrease customers interested in only a low-cost alternative.