Introduction to International Operations Management

This chapter begins with a fundamental question: What are the similarities and differences between operations management and international operations management? International operations management focuses on strategic issues related to purchasing, production, and distribution internationally. In recent years, factors such as exchange rate fluctuations, supply chain disruptions, and country credibility have drawn great attention as well. Global trade activities facilitate the development of international operations management. The remainder of this chapter reviews the mainstream company-based and firm-based theories that explain the importance of trade in the global economy. The country-based theories, such as the classic absolute advantage and comparative advantage, provide justifications for the production advantages in different countries. From a micro perspective, companies exploit these advantages when competing with other companies on a global scale. Porter’s competitive advantage of nations, the product life-cycle theory, specification of production, and first-mover advantage are essential company-based theories rationalizing the international trade activities carried out among companies.