SPECIAL THANKS

TO
MS. BEENISH
Because of her favorable and kind
consideration as she allowed this
bunch of students to participate,
gather knowledge and present this
topic.
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 PRESENTED BY:

•S4hil

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 CONCEPT OF STRATEGY
“PLANS AND PATTERN”

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CONCEPT OF STRATEGY
“PLANS AND PATTERN”

Strategy as plan (vision)

“What top management says”

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Strategy as Pattern
(action pattern)

Total production system with

consistency on completion is by itself
as “Strategy as pattern”

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Production Strategy:

• Corporate strategy
(company wide strategy)
• Business strategy
(competitive strategy)
• Functional strategy
(production, marketing, technology, etc)

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Manufacturing Strategy:

• Pattern of decision making with certain

consistency regarding to production
(consistency on maintenance /
enhancement of competitiveness)

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Backward Integration:

• It is form of vertical integration that

involves the purchases of suppliers in order
to reduce dependency.
– Example:
If a bakery business bought a wheat firm
in order to reduce the risk associated
with the dependency on flour.

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Forward Integration:

• Forward integration is whereby activities

are expended to include control of the
direct distribution of its product.
– Example:
A good example is when a farmer sells his/her
crops at the local market rather than to a
distribution center.

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Horizontal Integration:

• When a company expands its business

into different that are similar to current
lines.
– Example:
A hot dog vendors expanding into selling
hamburgers would be an example of horizontal
integration.

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Vertical Integration:

• When a company expands its business

into areas that are at different points of
the same production path.
– Example:
A car company that expands into tire
manufacturing would be good example.

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Research development and
innovation
• Production strategy do not begin with
manufacturing, in past many MNEs
focused on the aspects of operation,
rather than focusing on the new product
development.

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Quotation:

“Knowledge is the foundation of generating

wealth in developed countries, and
research and development are the
foundation of such knowledge, but it is
innovation that a means to transform into
economic development can be found”

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New products / Service
development:
• Most of the companies focus on
introducing new product and services
– Example:
Nokia, Toyota, Sony.

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New products / Service
Development:

• Some of the companies are forming

alliances to produce and market new
products jointly.
– Example:
• Alcatel and Fujistu developing 3G mobile
• Coca-Cola and Procter & Gamble teamed up to
develop a new world wide Juice and Snacks
company.

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 Speed to Market:
• It is the strategy that how firstly and
efficiently MNE develop and get new
product to market, and recent studies has
proved that speed to market strategy can
be extremely profitable.

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 THE COST OF ARRIVING LATE TO MARKET
(AND STILL BE ON BUDGET)

If the company is late to market by:

6 Months 5 months 4 months 3 months 2 months 1 month

Gross potential profit is reduced by:

-33% -25% -18% -12% -7% -3%

If time to market is improved profit will go up by:

-11.9% 9.3% 7.3% 5.7% 4.3% 3.1%

For revenues of @ 100 Million, annual gross profit will increase by:

$ 400,000 $ 350,000 $ 1,200,000 $ 1,000,000 $ 800,000 $ 600,000

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 FEW STRATEGIES ARE
APPLIED TO ENSURE SPEED TO
MARKET

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Time Market Accelerators:

• Factors that help reduce errors and ensure

product quality and performance.

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Modular Integrated Robotized
System:
• A software based production process that
relies entirely on robots.

– Example:
Pirelli the French tire maker unveiled its
modular integrated robotized system.

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Concurrent Engineering:
• The process of having design, engineering and
manufacturing people working together to create a
product, in contrast to working in a sequential manner.

– Reasons:
If the product is carefully design, there are
fewer changes required later

Cost associated with changes increase as the

product gets closer to completion; it is almost twice
expensive to correct product design.

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Generation of Goods and
Services:
• Most people think of the production process as one in
which physical goods are produced however the process
can also be used in generating services

– Example:
General motors manufactures cars but the
company also offers auto maintenance and repair
service.

Sheraton hotels offer quality food along with it

fascinating accommodation and services.

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Global Sourcing:

• The use of suppliers anywhere in the

world chosen on the basis of their
efficiency.

– Reasons:
Cost is the most main reason for global
sourcing

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Pressure on the suppliers:

• There is a great deal of pressure on the

suppliers in terms of maintaining quality
performance, however if it fails to do so, the
MNE will eventually terminate the relationship.

Example:
KFC using K&N as a supplier.

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 However at the same the same suppliers often
provide goods and services to other firms as
well.

– Reason:
This helps them to maintain their competitive edge
by forcing them to innovate, adapt, and remain
cost effective.

– Example:
Leather footwear industry in Italy, manufacturers
regularly interacts with leather suppliers, designers,
and producers of other leather goods, in order to
keep themselves aware regarding technology,
production, and fashion trends.
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Manufacturing of Goods:

• Cost
• Quality
• Efficient production system

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COST:
• Four approaches are being used in cost
• Control cost by increasing the efficiency of production
processes.

• Tap low-cost labors sources

• Develop new methods used to cut cost

• Costing product not on an individual basis but as a

part of a portfolio related to goods.

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QUALITY:

• Product are expected to be nearly perfect

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KAIZEN:

• A Japanese term which means continuous

improvement
– Example:
Toyota motors, which has reduced cost and
improved its performance.

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Production System:

• A group of related activities designed to

create value in terms of goods and
services.

• It includes
• Location
• Layout
• Material

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Material Handling:

• The careful planning of when, where, and

how much inventory will be available to
ensure maximum production efficiency.

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Process mapping:

• A flow chart of every step that goes into

producing a product.

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Inventory control:

• It has received a great deal of attention in

recent years because design inventory
strategy has dramatic effects.

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Just-in-time inventory:

• The delivery of parts and supplies just

they are needed.

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Demand - Flow Technology
(DFT):
• A production process that is flexible to
demand changes.

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Developing a strong service
orientation
• MNE will do two things

– Consider whether their strategy needs to be

oriented lowered a product, a service or a
combination of the two

– Determine the ideal degree of service to

provide

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Service product balance

• Developing a strong service orientation:

• Many products have a service
element associated with them
•Determining the product/service balance
• Providing the right amount of service

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 International Logistics

International logistics is the

design and management of a
system that controls the forward
and reverse flow of materials,
services, and information into,
through, and out of the international
corporation.

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Origin.

• The term "logistics" originates from the

ancient Greek .
• Logistics is considered to have originated
in the military's need to supply themselves
with arms, ammunition and rations as they
moved from their base to a forward
position.

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 International Logistics
(cont.)

• Through the implementation of international

logistics, the firm can implement cost-saving
programs such as just-in-time (JIT), electronic
data interchange (EDI), and early supplier
involvement (ESI).
• The two phases of the movement of materials
include:
– materials management, or the timely movement of
materials, parts, and supplies.
– physical distribution, or the movement of the firm’s
physical product to its customers.

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Transportation Infrastructure
• A firm’s logistics platform is determined
by a location’s ease and convenience of
market reach under favorable cost
circumstances.
• The public sector’s investment
priorities, safety regulations, tax
incentives, and transport policies can
have major effects on the logistics
decisions of firms.
• The logistics manager must learn about
existing and planned infrastructures
abroad and at home and factor them
into the firm’s strategy.
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Vessels Used in Ocean Shipping

Liner Service

Bulk Service Tramp Service

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Airfreight
• Airfreight is available to and from most
countries, including the developing world.
• International airfreight is expected to grow
to 190 billion tons in 2005, compared to only
70 billion tons in 1995.
• Forty percent of the world’s manufactured
travel by air.
• Items that are high-value or high in density
tend to travel by air.
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Considerations for Selecting
a Mode of Transport

Transit Time Predictability

Cost Non-economic
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International Packaging Issues

• Packaging is instrumental in getting the merchandise

to the destination in a safe, presentable condition.
• Because of the added stress of international shipping,
packaging that is adequate for domestic shipping may
be inadequate for international shipping.
• Packaging considerations that should be taken into
account are environmental conditions and weight.
• One solution to the packaging problem has been the
development of inter-modal containers.
• Cost attention must be paid to international
packaging.
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 Storage Facilities
• A stationary period is involved when merchandise
becomes inventory stored in warehouses.
• The location decision addresses how many
distribution centers to have and where to locate
them.
• Storage facilities abroad can differ in availability and
quality.
• The logistician should analyze international product
sales and then rank order products according to
warehousing needs.

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 Special Trade Zones

• Foreign trade zones are areas

where foreign goods may be held or
processed and then re-exported
without incurring duties.
• Trade zones can be useful as
transshipment points to reduce
logistics cost and redesign marketing
approaches.
• Governments and firms benefit from
foreign trade zones.
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Strategic management and
production strategy.
• Three strategies are mainly used

– Technology and design

– Continues improvement of operations

– The use of strategic alliances and acquisitions

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