Cost, diff, responce
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Cost, diff, responce

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Cost, diff, responce Cost, diff, responce Presentation Transcript

  • Competitiveness, Strategy,and Productivity
  • Competitiveness How effectively anorganization meets the wants and needs of customers relative toothers that offer similar goods or services
  • Competitiveness Strategies Differentiation – better or at least different Cost - cheaper Quick response – more responsive
  • Businesses Compete Using Marketing Identifying consumer wants and needs Pricing Advertising and promotion
  • Businesses Compete Using Operations Product and service design Cost Location Quality Quick response
  • Businesses Compete Using Operations (cont.) Flexibility Inventory management Supply chain management Service and service quality Managers and workers
  • Why Some Organizations Fail Too much emphasis on short-term financial performance Failing to take advantage of strengths and opportunities Neglecting operations strategy Failing to recognize competitive threatsSWOT = Strengths, Weaknesses, Opportunities and Threats
  • Why 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/Tactics Mission Strategy TacticsHow does mission, strategies and tactics relate to decision making and distinctive competencies?
  • Strategy Mission  The reason for existence for an organization Mission Statement  States the purpose of an organization Goals  Provide detail and scope of mission Strategies  Plans for achieving organizational goals Tactics  The methods and actions taken to accomplish strategies
  • Planning and Decision Making Mission Goals Organizational Strategies Functional Goals Finance Marketing Operations Strategies Strategies Strategies Tactics Tactics Tactics Operating Operating Operating procedures procedures procedures
  • Strategy Example Ratana is a high school student. She would like to have a career in business, have a good job, and earn enough income to live comfortablyMission: 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
  • Examples of Strategies Low cost - outsourcing Scale-based strategies - capital intensive method for high volume production Specialization - focus on narrow product line for higher quality Flexible operations - customization High quality – focus on higher quality than competitors Services – focus on various aspect of services
  • Strategy and Tactics Strategy Factors  Price – low cost  Quality – consistent quality, high quality  Time – rapid delivery, on-time delivery  Flexibility – variety, volume  Service – customer services  Location - convenience Distinctive Competencies The special attributes or abilities that give an organization a competitive edge.
  • Strategy Formulation Distinctive competencies Environmental scanning SWOT Order qualifiers Order winners
  • Strategy Formulation Order qualifiers  Characteristics that customers perceive as minimum standards of acceptability to be considered as a potential purchase Order winners  Characteristics of an organization’s goods or services that cause it to be perceived as better than the competition
  • Key External Factors Economic conditions Political conditions Legal environment Technology Competition Markets
  • Key Internal Factors Human Resources Facilities and equipment Financial resources Customers (loyalty, understanding) Products and services Technology Suppliers
  • Strategic OM Decisions Decision Area AffectsProduct and service design Costs, quality liability and environmentalCapacity Cost structure, flexibilityProcess selection and layout Costs, flexibility, skill level, capacityWork design Quality of work life, employee safety, productivityLocation Costs, visibilityQuality Ability to meet or exceed customer expectationsInventory Costs, shortagesMaintenance Costs, equipment reliability, productivityScheduling Flexibility, efficiencySupply chains Costs, quality, agility, shortages, vendor relationsProjects Costs, new products, services, or operating systems
  • Quality 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 StrategiesJAN FEB MAR APR MAY JUNPlanning Designing Processing Changeover On time! Delivery
  • Global Strategy Strategic decisions must be made with respect to globalization What works in one country may not work in another Strategies must be changed to account for these differences Other issues  Political, social, legal, cultural and economic differences
  • Four International Operations Strategies High InternationalCost Reduction Considerations Strategy  Import/export or license existing product Examples U.S. Steel Harley Davidson Low Low High Local Responsiveness Considerations (Quick Response and/or Differentiation)
  • Four International Operations High StrategiesCost Reduction Considerations International Strategy  Import/export or license existing product Examples U.S. Steel Harley Davidson Low Low High Local Responsiveness Considerations (Quick Response and/or Differentiation)
  • Four International Operations Strategies Global High Strategy  StandardizedCost Reduction Considerations product  Economies of scale  Cross-cultural learning Examples International Strategy  Import/export or Texas Instruments license existing product Examples Caterpillar Harley Davidson Elevator Otis U.S. Steel Low Low High Local Responsiveness Considerations (Quick Response and/or Differentiation)
  • Four International Operations Strategies High Global Strategy  Standardized productCost Reduction Considerations  Economies of scale  Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator International Strategy  Import/export or license existing product Examples U.S. Steel Harley Davidson Low Low High Local Responsiveness Considerations (Quick Response and/or Differentiation)
  • Four International Operations Multidomestic Strategies Strategy High  Use existing Global Strategy domestic model  Standardized productCost Reduction Considerations  Economies of scale globally  Cross-cultural learning Texas  Franchise, joint Examples Instruments Caterpillar Otis Elevatorventures, subsidiaries International Strategy Examples  Import/export or Heinz license existing product Examples McDonald’s U.S. Steel The Body Shop Harley Davidson Low Hard Rock Cafe Low High Local Responsiveness Considerations (Quick Response and/or Differentiation)
  • Four International Operations Strategies High Global Strategy  Standardized productCost Reduction Considerations  Economies of scale  Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator International Strategy Multidomestic Strategy  Use existing  Import/export or domestic model globally license existing  Franchise, joint ventures, product subsidiaries Examples Examples U.S. Steel Heinz The Body Shop Harley Davidson McDonald’s Hard Rock Cafe Low Low High Local Responsiveness Considerations (Quick Response and/or Differentiation)
  • Four International Operations Strategies Transnational High Strategy  Move material, Global Strategy  Standardized productCost Reduction Considerations people, ideas  Economies of scale  Cross-cultural learning Examples across national Texas Instruments Caterpillar boundaries Otis Elevator  Economies of scale  Cross-cultural International Strategy Multidomestic Strategy learning  Import/export or  Use existing domestic model globally license existing  Franchise, joint ventures, product subsidiaries Examples Examples Examples Coca-Cola U.S. Steel Harley Davidson Heinz The Body Shop McDonald’s Hard Rock Cafe Low Nestlé Low High Local Responsiveness Considerations (Quick Response and/or Differentiation)
  • Four International Operations Strategies High Global Strategy Transnational Strategy  Standardized product  Move material, people, ideasCost Reduction Considerations  Economies of scale across national boundaries  Cross-cultural learning  Economies of scale  Cross-cultural learning Examples Texas Instruments Examples Caterpillar Coca-Cola Otis Elevator Nestlé International Strategy Multidomestic Strategy  Use existing  Import/export or domestic model globally license existing  Franchise, joint ventures, product subsidiaries Examples Examples U.S. Steel Heinz The Body Shop Harley Davidson McDonald’s Hard Rock Cafe Low Low High Local Responsiveness Considerations (Quick Response and/or Differentiation)
  • Productivity 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
  • Productivity Partial measures  output/(single input) Multi-factor measures  output/(multiple inputs) Total measure  output/(total inputs) Outputs Productivity = Inputs
  • Productivity GrowthProductivity Growth =Current Period Productivity – Previous Period Productivity Previous Period Productivity
  • Input Output - Input Labor Machine Output Raw materials ProductsElectricity / water / etc. Processes Or Services Capital Inventory Others
  • Measures of ProductivityPartial Output Output Output Outputmeasures Labor Machine Capital EnergyMultifactor Output Outputmeasures Labor + Machine Labor + Capital + EnergyTotal Goods or Services Producedmeasure All inputs used to produce them
  • Examples of Partial Productivity Measures Labor Units of output per labor hour Units of output per shift Productivity Value-added per labor hour Machine Units of output per machine hour machine hour Productivity Capital Units of output per capital input Money value of output per money input Productivity Energy Units of output per kilowatt-hour money value of output per kilowatt-hour Productivity
  • Example 3 7040 Units Produced Cost of labor of $1,000 Cost of materials: $520 Cost of overhead: $2000What is the multifactor productivity?
  • Example 3 SolutionMFP = Output Labor + Materials + OverheadMFP = (7040 units) $1000 + $520 + $2000MFP = 2.0 units per dollar of input
  • Process Yield Process yield is the ratio of output of good product to input Defective product is not included in the output Service example:  Ratio of cars rented to cars available to rent
  • Factors Affecting Productivity Capital QualityTechnology Management
  • Other Factors Affecting Productivity Standardization Quality Use of Internet Computer viruses Searching for lost or misplaced items Scrap rates New workers
  • Other Factors Affecting Productivity Safety Shortage of IT workers Layoffs Labor turnover Design of the workspace Incentive plans that reward productivity Outsourcing
  • Outsourcing Higher productivity in another company is a key reason organizations outsource work Improving productivity may reduce the need for outsourcing
  • Improving Productivity Develop productivity measures Determine critical (bottleneck) operations Develop methods for productivity improvements Establish reasonable goals Get management support Measure and publicize improvements Don’t confuse productivity with efficiency