Creating global operations strategy

A global operations strategy is a comprehensive plan that a company develops to enter and compete in the global marketplace. The goal of a global strategy is to increase sales, expand market reach, and build an international presence. It often encompasses different approaches, including standardization, international, and multinational strategies.

Key Components of a Global Operations Strategy

1. Manufacturing

• Manufacturing globally is one of the most common forms of commercial globalization.
• By setting up manufacturing facilities in regions with lower labor costs, companies can produce goods at reduced expenses while maintaining or even improving quality.
• This approach can also benefit the host nation by creating jobs and contributing to the local economy.

2. Supplying

• Sourcing components and raw materials from abroad can significantly reduce operational costs.
• Global suppliers provide access to unique resources and materials not available domestically, enhancing product quality and diversity.
• However, companies need to carefully navigate trade regulations, tariffs, and other bureaucratic hurdles involved in import-export to maintain efficiency.

3. Production

• In a global production strategy, a company maintains its primary control center in its home country but outsources the production processes abroad.
• This approach offers advantages over using foreign suppliers by giving the company more direct control over operations, quality standards, and timelines.
• It also reduces dependency on foreign market conditions, allowing more predictable and consistent production output.

4. Distribution

• Expanding distribution networks to reach foreign markets allows companies to grow beyond the limits of their domestic markets.
• A well-executed distribution strategy helps a company establish its products and brand in new regions, but it requires careful planning to address cultural, regulatory, and logistical challenges in these markets.
• Successful global distribution can significantly boost revenue by accessing new customer bases worldwide.

Summary

A global operations strategy allows companies to leverage international resources, optimize costs, and tap into new markets. With the right approach to manufacturing, supplying, production, and distribution, companies can achieve sustainable growth on a global scale. However, each component requires careful consideration of costs, regulations, quality control, and the local market environment to ensure long-term success.