Global Operations Strategy

Chapter 1 mainly addresses the question “what is global operation strategy?” This chapter starts by introducing the evolving process of global operations strategy. We define key concepts in global operations strategy and discuss the difference between international operations management and global operations strategy. Then we present principles and discuss basic decisions in global operations strategy. Finally, this chapter presents a content framework of global operations strategy and a book structure of “triple triangles”. We explain concepts, principles and decisions of global operations strategy with case examples including Global Operations of IKEA, HSBC, INSEAD, Global Manufacturing of Volkswagen, and a case Public Storage/Shurgard.

In this chapter, we introduce the methods of operational globalization, mainly answering the question “how are operations globalized?” This chapter starts by introducing background knowledge of a firm’s globalization and studies the globalization of operations strategy from three views including competency, resource, and process-based views. Then we discuss the globalization of manufacturing and basic manufacturing globalization modes, and the globalization of service operations and basic services globalization modes. Several case examples including Globalization of Coca-Cola, Operational Globalization of Lenovo, BMW Global Manufacturing, KFC Global Service, and a case Globalization of Huawei illustrate the globalization of operations.

Chapter 3 introduces the rationale behind operational globalization to help readers understand operational globalization, mainly addressing the question “why are operations globalized?” This chapter introduces the global strategy theories relevant to operational globalization analysis and presents the primary global strategy frameworks relevant to operational globalization analysis. We further explain the drivers of operational globalization, address the benefits of operational globalization, and identify the risks of global operations. We use case examples including PSA Peugeot Citroën, L’Oreal, Haier Goes Global, Louis Vuitton, Japanese Earthquake and the Global Supply Chain, and a case Foxconn and Apple to explain the rationale behind operational globalization.

This chapter starts with the evolution of operational competencies and presents a competency-based view of global operations strategy. After introducing concepts of global operational competencies, including time, quality, cost, flexibility and value-based competencies, we discuss the roles of competencies in global operations strategy and address approaches to achieving competencies. We use case examples including Toyota, Ryanair Airline, Mass Customization in Starbucks, Quality Excellence in Bosch, Time-based Competency of Zara, Grameen Bank, Kiva Systems and Amazon, and a case Samsung versus Apple Battle to explain competency-based fundamentals.

This chapter addresses the resource-based view (RBV) of global operations strategy. We first discuss resources of a firm, investigate the relationship between resource and competitive advantages, present RBV theory in the field of strategic management, and introduce concepts in resource-based global operations strategy. Second, we introduce global resource size problem in a global environment. Third, we introduce resource type problems and discuss resource flexibility in production input, production capacity, and products. Fourth, we study global location strategy and discuss location strategies in global manufacturing, global service operations, global R&D and sustainable global operations. Finally we study global dynamic capacity management and investigate the relationship between dynamic capacity and capability lifecycles. In this chapter, we use case examples including Best Buy, Shipbuilding Overcapacity Crisis, Apple versus Dell Laptops, IBM, Yahoo and Google, and a case Carrefour Expansion in China to illustrate resource-based fundamentals.

Chapter 6 introduces concepts of global business process, business process design, business process reengineering, and business process management, to present a process-based view of global operation strategy and to introduce the primary processes of global operation strategy. First, we discuss global supply chain strategy, including its concepts, global sourcing strategy, global internal supply chain strategy, global distribution strategy, global supply chain coordination, global supply chain strategic alliances, and global sustainable supply chain strategy. Second, we introduce concepts of global revenue management strategy, present its globally evolving process, and discuss strategies for global revenue management. Third, we discuss global technology strategy, including its concepts, global product development strategy, R&D internationalization modes, global R&D coordination and communication, global R&D sourcing strategy, and technology strategies for global sustainable operations. Finally, we discuss global risk management strategy, including its concepts, basic operational strategies, basic approaches and the operational risk management framework. In this chapter, we use case examples including Etam Distribution Center, Global Supply Chain of H&M, SkyTeam Alliance, Microsoft Research Worldwide, Mattel’s Global Risks and Supply Chains, and a case Tiffany to illustrate process-based fundamentals.

This chapter addresses practice across various borders. First, we study the global operations strategy across political separation. Second, we discuss types of cultural separation and study global operations strategy across cultural separation. Third, we analyze costs from physical separation and study global operations strategy across physical separation. Fourth, we analyze global operations strategy across developmental separation. Finally, we discuss global operations strategy across relational separation. In this chapter, we use case examples including Microsoft’s Political Road in China, Culture Separation and DaimlerChrysler, Physical Separation of Airbus, Tata across Developmental Separation, Guanxi and Operations in China, and a case Subway across Borders to illustrate cross-border global operational practice.

In this chapter, we study the concept and taxonomy of cross-functional integration, introduce interlinked performance management, present three generations of balanced scorecards, and discuss challenges to cross-functional practice. First, after introducing global marketing strategy and its links to operations, we discuss integration practice across global operation strategy (GOS) and marketing. Second, we introduce global finance strategy and its links to operations, present an integrative framework between finance and GOS, and address cross-functional practice between global operations strategy and finance. Third, we introduce global taxation strategy and its links to operations, discuss approaches to integrating GOS and taxation, and present a tax aligned global supply chain framework. Fourth, we introduce global human resources and its links to operations, discuss cross-functional practice between GOS and human resources, and introduce an integrative framework of international human resource management. Finally, we address cross-functional integration problems between global operations strategy and information management, discuss global information management and competitive advantages, and present an integrative framework between information management and GOS. In this chapter, we use case examples including Philips Electronics and Balanced Scorecard, Apple’s Operation and Marketing Strategy, Air France-KLM Fuel Hedge Strategy, Tax Restructuring Strategies of GE, P&G Greater China, Walmart Satellite Communication Network, and a case McKinsey & Company to illustrate cross-function global operational practice.

Chapter 9 introduces triple bottom line theory, the basic concept of value integration, and basic practice across values. First, we address environmentally friendly global operational practice, focusing on the link and value integration between economic value and environmental value. Second, we address socially responsible global operational practice, investigating the link and value integration between economic value and social value. Third, we analyze sustainable operations and global sustainable operational strategies, considering the link and full integration among economic value, environmental value, and social value. In this chapter, several case examples including Green Logistics in Fujitsu, GoGreen at DHL, Walmart’s Global Direct Farm, UPS Sustainability Strategy, and a case Creating Shared Value at Nestlé illustrate cross-value global operational practice.