International Business take-home exam

International Operations

BUAD 841 Fall 2017

Kurt Norder, Ph.D.

International Operations and Ecco

Agenda

2

� Today we will… � Cover Admin:

� Quiz 9 opens tomorrow (on Int’l Finance & Accounting Ch 19) � MNE theory � Discuss and integrate topics of international operations � Team exercise and debate on Ecco

International Operations and Ecco

MNE Theory

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� What is an MNE?

� Why do MNEs exist?

� Why not trade?

International Operations and Ecco

An integrated supply chain and operations model

International Operations and Ecco

Global Supply Chain Strategies �Factors in supply chain strategy �Compatibility … matches overall strategic needs

� Efficiency, dependability, quality, innovation, flexibility �Manufacturing Configuration … dispersion

� Centralized, Regional, Multi-domestic �Coordination … links between activities �Control … measured performance for variation

� Who is deciding on purchasing and ops

International Operations and Ecco

Information Technology … timely info

� Electronic Data Interchange (EDI) � Auto-interface between supplier-firm and/or firm-customers

� Enterprise Resource Planning (ERP)/Material Requirements Planning � Sharing info across functions/activities within the firm

� Radio Frequency ID (RFID) � digital inventory tracking

� E-Commerce � web platform

International Operations and Ecco

Quality Management � Total Quality Management

� Customer Satisfaction � Continuous improvement � Employee involvement

� When do customers want the product/svc?

� How do customers want the product/svc?

� How do you decide on what to do?

� How do you do it?

International Operations and Ecco

Quality Management � Just-In-Time

� Exactly when you need it � Helped by Free Trade Zones (hold duty free until domestic use)

� Zero defects vs. Acceptable quality level � Seeking no mistakes

� Economic contribution � Balance cost and willingness to pay

� Lean Six Sigma … with all employees � Process focus to limit waste (time & material)

� Quality Standards … general, industry, firm � ISO 9000 (quality) or ISO 14000 (enviro)

International Operations and Ecco

Which Value Chain Activities? Where? Support Activities

Primary Activities

Firm Infrastructure Human Resource Management

Systems & Solutions Materials & Equipment

Product Design

Operations Distrib. (Outbound Logistics)

Marketing

& Sales Service

9

International Operations and Ecco

How org relates to strategy? External Analysis • Political, Social, Regulatory • Competitive conditions

Internal Analysis • Resources and capabilities • Sources of competitive adv.

Company’s Strategic Situation Strategic

Alternatives • TOWS

Strategy

10

Opportunities and Threats

Key Success Factors

Strengths and Weaknesses

International Operations and Ecco

Comparative Advantage by Activity

Kogut, 1985

International Operations and Ecco

Modes of competition

Kogut, 1985

International Operations and Ecco

Vertical Integration

13

Country 1 (Product Design)

Country 2 (Ops)

Country 3 (Distribution)

Country 4 (Mktg & Sales)

Country 5 (Service)

Tap into location advantages needed for each activity

International Operations and Ecco

Horizontal Integration

14

Country 1 (Product Design)

Country 1 (Ops)

Country 3 (Distribution)

Country 3 (Mktg & Sales)

Country 5 (Service)

Multiple locations for the same activity

Country 2 (Distribution)

Country 4 (Distribution)

Country 2 (Mktg & Sales)

Country 4 (Mktg & Sales)

International Operations and Ecco

Neoclassical Structures A Simplified Network Structure

International Operations and Ecco

Impact of location on operations

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� Where and how you buy? Produce? Distribute?

� Depends on linkages (coordination) between activities � Vernon’s product cycle?

� How does outsourcing affect the MNE? � Knowledge of and across locations and activities � Outsourcing vs. coordination

� Geographical clustering and comparative advantage � Same or sequential activities?

International Operations and Ecco

Ecco Operations

� What op strategy was Ecco pursuing? Support your answer.

� Which generic strategy?

� What does Ecco’s value chain look like?

� What are the core competences? Which activities create the most value (for customers and for the firm … not necessarily the same)?

� How does location create benefits? Challenges?

� What strategic actions do you recommend?