Competitiveness, Strategy, and Productivity. Competitiveness: How effectively an organization meets the wants and needs of customers relative to others.

Competitiveness, Strategy, and Productivity

Competitiveness:Competitiveness:

How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services

Businesses Compete Using MarketingBusinesses Compete Using Marketing

Identifying consumer wants and needs Pricing Advertising and promotion

Businesses Compete Using OperationsBusinesses Compete Using Operations

Product and service design Cost Location Quality Quick response

Businesses Compete Using OperationsBusinesses Compete Using Operations

Flexibility Inventory management Supply chain management Service

Why Some Organizations FailWhy Some Organizations Fail

Too much emphasis on short-term financial performance

Failing to take advantage of strengths and opportunities

Failing to recognize competitive threats Neglecting operations strategy

Why Some Organizations FailWhy Some Organizations Fail

Too much emphasis in product and service design and not enough on improvement

Neglecting investments in capital and human resources

Failing to establish good internal communications

Failing to consider customer wants and needs

Mission/Strategy/TacticsMission/Strategy/Tactics

How does mission, strategies and tactics relate todecision making and distinctive competencies?

StrategyStrategy TacticsTacticsMissionMission

StrategyStrategy

Strategies Plans for achieving organizational goals

Mission The reason for existence for an organization

Mission Statement Answers the question “What business are we in?”

Goals Provide detail and scope of mission

Tactics The methods and actions taken to accomplish strategies

Planning and Decision MakingPlanning and Decision Making

Strategy ExampleStrategy Example

Rita is a high school student. She would like to have a career in business, have a good job, and earn enough income to live comfortably

Mission: Live a good life Goal: Successful career, good income Strategy: Obtain a college education Tactics: Select a college and a major Operations: Register, buy books, take

courses, study, graduate, get job

Example 1

Examples of StrategiesExamples of Strategies

Low cost Scale-based strategies Specialization Flexible operations High quality Service

Strategy and TacticsStrategy and Tactics

Distinctive CompetenciesThe special attributes or abilities that give anorganization a competitive edge. Price Quality Time Flexibility Service Location

Banks, ATMsConvenienceLocationLocation

DisneylandNordstroms

Superior customer service

ServiceService

Burger KingSupermarkets

VarietyVolume

FlexibilityFlexibility

Express Mail, Fedex,One-hour photo, UPS

Rapid deliveryOn-time delivery

TimeTime

Sony TVLexus, CadillacPepsi, Kodak, Motorola

High-performance design or high quality Consistent quality

QualityQuality

U.S. first-class postageMotel-6, Red Roof Inns

Low CostPricePrice

Examples of Distinctive CompetenciesExamples of Distinctive Competencies

Operations StrategyOperations Strategy

Operations strategy – The approach, consistent with organization strategy, that is used to guide the operations function.

Quality and Time StrategiesQuality and Time Strategies

Quality-based strategies Focuses on maintaining or

improving the quality of an organization’s products or services

Quality at the source Time-based strategies

Focuses on reduction of time needed to accomplish tasks

Time-based StrategiesTime-based Strategies

JAN FEB MAR APR MAY JUN

Planning

Processing

Changeover On time!

Designing

Delivery

ProductivityProductivity

Productivity A measure of the effective use of resources,

usually expressed as the ratio of output to input Productivity ratios are used for

Planning workforce requirements Scheduling equipment Financial analysis

ProductivityProductivity

Partial measures output/(single input)

Multi-factor measures output/(multiple inputs)

Total measure output/(total inputs)

Productivity = Outputs

Inputs

Productivity GrowthProductivity Growth

Current Period Productivity – Previous Period ProductivityPrevious Period Productivity

Productivity Growth =

Measures of ProductivityMeasures of ProductivityTable 2.4

Partial Output Output Output Output

measures Labor Machine Capital Energy

Multifactor Output Output

measures Labor + Machine Labor + Capital + Energy

Total Goods or Services Produced

measure All inputs used to produce them

Units of output per kilowatt-hourDollar value of output per kilowatt-hour

Energy Productivity

Units of output per dollar inputDollar value of output per dollar input

Capital Productivity

Units of output per machine hourmachine hour

Machine Productivity

Units of output per labor hourUnits of output per shiftValue-added per labor hour

Labor Productivity

Examples of Partial Productivity Examples of Partial Productivity MeasuresMeasures

Table 2.5

Example 3Example 3

7040 Units Produced

Sold for $1.10/unit

Cost of labor of $1,000

Cost of materials: $520

Cost of overhead: $2000

What is the multifactorproductivity?

Ans. 2.20

Example 3 SolutionExample 3 Solution

MFP = OutputLabor + Materials + Overhead

MFP = (7040 units)*($1.10)$1000 + $520 + $2000

MFP = 2.20

Figure 2-2Figure 2-2

Factors Affecting ProductivityFactors Affecting Productivity

Capital Quality

Technology Management

Standardization Quality Use of Internet Computer viruses Searching for lost or misplaced items Scrap rates New workers

Other Factors Affecting ProductivityOther Factors Affecting Productivity

Safety Shortage of IT workers Layoffs Labor turnover Design of the workspace Incentive plans that reward productivity

Other Factors Affecting ProductivityOther Factors Affecting Productivity

Bottleneck OperationBottleneck Operation

Figure 2.3