Lecture 10

International Business: A Managerial
Perspective
Ninth Edition
Chapter 10
International Operations
Management
Copyright © 2020, 2015, 2013 Pearson Education, Inc. All Rights Reserved
Learning Objectives
17.1 Describe the nature of international operations management.
17.2 Analyze the supply chain management and vertical
integration decisions facing international operations
managers.
17.3 Discuss international service operations and how they differ
from traditional production management.
17.4 Analyze the meaning of productivity and discuss how
international firms work to improve it.
17.5 Explain how firms control quality and discuss total quality
management in international business.
17.6 Analyze how international firms control the information their
managers need to make effective decisions.
The Nature of International
Operations Management
Figure 17.1 The International Operations Management Process
The Strategic Context of International
• Superior Value
• Business Strategy
• Standardized or Customized Production Processes And
Technologies
Complexities of International
• Resources
• Location
• Logistics
Production Management
• Production Management
– Creation of Tangible Goods
• Service Operations Management
– Creation of Intangible Services
Supply Chain Management and
Vertical Integration (1 of 2)
• Supply Chain Management Impacts

– Product Cost
– Product Quality
– Internal Demands for Capital
• Supply Chain Management Strategy
– Vertical Integration
– Make-or-Buy Decision
Supply Chain Management and
Vertical Integration (2 of 2)
Make-or-Buy Decision
Strategic Considerations
• Size
• Scope of Operations
• Technological Expertise
• Nature of Product
• Cheaper Resources
Other Factors
• Control
• Risk
• Investments
• Flexibility
Location Decisions
• Location Decision
– Country-Related Issues
– Product-Related Issues
– Government Policies
– Organizational Issues
Location Decisions: Country-Related
Issues
• Resource Availability and Cost

• Infrastructure
• Country-of-Origin Effects
Location Decisions: Product-Related
Issues
• Product’s Value-to-Weight Ratio
• Production Technology
Location Decisions: Government
Policies
• Stability of the Political Process

• National Trade Policies
• Economic Development Incentives
• Existence of Foreign Trade Zones
Location Decisions: Organizational
Issues
• Business Strategy
• Organizational Structure
• Inventory Management
International Logistics and Materials
Management (1 of 3)
Management (2 of 3)
• Domestic v s International Materials Management

– Shipments
– Transport Modes
– Regulatory Context
Management (3 of 3)
• Logistical Considerations
– Packaging
– Factory Location
– Information Technology
International Service Operations
• Resources
• Intangible Output
• Utility
Characteristics of International
Services
• Intangible
• Non-Storable
• Customer Participation
• Associated Products
– Product-Support Services
The Role of Government in
International Services Trade
• Government Regulations
• Deregulation and Reductions in Barriers to Service
Trade
– Strategic Alliances,
– Cross-Border Investments
– New Start-up Companies
Managing Service Operations
• Capacity Planning
• Location Planning
• Facilities Design and Layout
• Operations Scheduling
Managing Productivity in
International Business (1 of 2)
• Importance of Productivity
– Helps determine a firm’s overall success
– Contributes to a firm’s long-term survival
– Contributes directly to the overall standard of living
within a particular country
Managing Productivity in
International Business (2 of 2)
• Maintaining and Boosting Productivity
– Increase Research and Development
– Improve Operations and Productivity
– Increase Employee Involvement
Managing Quality in International
Business (1 of 3)
• International Organization for Standardization (I S O)
– Product Testing
– Employee Training
– Record Keeping
– Supplier Relations
– Repair Policies
• Importance of Quality
– Competition
– Productivity
– Customer Loyalty
Business (2 of 3)
Figure 17.2 The Essential Components of Total Quality Management
Business (3 of 3)
• TQ M Techniques
– Statistical Process Control
– Benchmarking
Managing Information in International
Business (1 of 3)
• Understanding, Interacting, And Responding to the
Environment
• Setting Strategic Goals
• Mapping Out and Implementing Strategic Plans
• Meeting Goals and Executing Plans
Business (2 of 3)
• Related Diversification
• Centralized
• Unrelated Diversification
• Decentralized
Business (3 of 3)
• Information System
– Gather Data
– Assemble Data
– Provide Data
Review Questions
• How does a firm’s corporate strategy affect its operations
management?
• How do production management and service operations
management differ?
• What is supply chain management? What is vertical
integration?
• What basic set of factors must a firm consider when
selecting a location for a production facility?
• What basic factors must be addressed when managing
international service operations?
• Why is it important for organizations to control
productivity?
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International Business: A Managerial

• Supply Chain Management Impacts

• Resource Availability and Cost

• Stability of the Political Process

• Domestic v s International Materials Management

This work is protected by United States copyright laws and is

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