chapter 7 and 8 ib
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Why are international companies organized into functions?
benefit from specialization of activities
List the key functions in an international company.
accounting, administration and legal, finance, human resource management, management information systems/information technology, marketing, production and operations management, and research and development.
Rank four strategies (e.g., global) in terms of the need for coordination (L)
localization, international, global standardization, transnational
international division structure
When firms expand internationally, they often group all of their international activities into an international division. The result could be that firms with a functional structure at home would replicate the functional structure in every country in which they do business and firms with a divisional structure would replicate the divisional structure in every country in which they do business
Worldwide Area Structure
favored by firms with low degree of diversification and a domestic structure based on function, divides the world into autonomous geographic areas, decentralizes operational authority, facilitates local responsiveness, can result in a fragmentation of the organization, consistent with a localization strategy
Worldwide product division structure
adopted by firms that are reasonably diversified, allows for worldwide coordination of value creation activities of each product division, helps realize location and experience curve economies, facilitates the transfer of core competencies, does not allow for local responsiveness
Global Matrix Structure
attempt to minimize the limitations of the worldwide area structure and the worldwide product divisional structure, allows for differentiation along product division and geographic area, has dual decision–making - product division and geographic area have equal responsibility for operating decisions, can result in conflict between areas and product divisions and finger-pointing between divisions when something goes wrong
Identify the key differences between the manufacturing sector and the service sector.
service is different from goods with (1) intangibility, (2) inseparability, (3) variability, and (4) perishability
Why is manufacturing of goods and services shifting to less industrialized countries?
to compete successfully in the international market place. That may offer a reasonably skilled labor force at a fraction of the cost in their own countries
identify the nine major decisions to be made in POM.
location, product, process, quality, layout, scheduling, purchasing, inventory, and human resources.
What are the critical factors used by international companies in deciding on a location?
worker productivity rates; local tax rate; distance to suppliers; distance to markets; logistics; availability of utilities
What is (1) upstream distribution and (2) downstream distribution?
Upstream distribution deals with supply of materials and other components used by manufacturing plants and service centers. Downstream distribution handles the supply of finished goods and services to the marketplace.
How is the breakeven analysis approach used for location decisions?
both fixed and variable costs are estimated by location, and the selection is made on the basis of the lowest unit cost. Cost may include the overhead, total variable, and the total cost of production.
Discuss the factor-weights method of selecting locations for setting up foreign operations.
the international company first identifies the critical factors in its operations and then assigns weights based on the importance of each of the critical factors and arrives at a score that reflects the importance of each factor.
What is process management?
The process function brings together people, material, machines and technology in the transformation of products and services for use by customers.
Discuss vertical integration.
Integration is the extent to which a company processes all its required material, parts, and components. Integrating activities that precede or follow the manufacture of goods/services is called vertical integration, can be in two directions, backward and forward. The more processes in the supply chain that an organization performs itself, the more vertically integrated it is.
What is TQM, and how is it applied?
total quality management in controlling defects and reducing costs, an organization-wide approach to continuously improving the quality of an organization’s product and processes that are important to the customers. There was recognition that product and service quality was important for customer satisfaction, top management involvement was necessary to achieve quality, quality has to be applied to all systems.
Why is the Six Sigma approach to quality useful to companies?
disciplined methodology that uses data to measure and improve a company’s operational performance by identifying and eliminating defects. Six Sigma eliminated almost all of the defects. The Six Sigma approach has resulted in higher quality output at Motorola and GE, improving customer satisfaction and reducing costs for both the companies.
How do layout choices affect operations management?
arrangements of machines, work centers, and flow of materials designed to transform inputs into finished goods/services most efficiently, increase productivity and reduce costs
Discuss make-or-buy decisions.
international companies purchase materials and other components from outside suppliers to focus on their core competencies, most companies end up purchasing materials rather than making them internally.
What are some of the newer developments in manufacturing?
In lean manufacturing, resources needed to complete a process are reduced considerably: fewer workers, less inventory, and little space. Flexible manufacturing is a system that allows production facilities to respond more quickly to varying demand patterns. This system integrates the core competencies of supply chain members to respond to market shifts and helps the introduction of customization at a mass level
Explain the just-in-time (JIT) system of inventory management.
In this system there is no inventory that is held but materials and parts are brought in when they are required. The exact number of parts, therefore, arrives at the factor exactly when they are needed. This system has been greatly successful in Japan (lean manufacturing). Goals—avoid all disruptions along the production process, flexible that it could accommodate quick changeovers, reduce setup times, minimize inventory and eliminate waste. It assumes that the design is optimal the machines are in good condition, the workers are well trained
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