This document discusses competitiveness, strategy, and productivity. It defines key terms like strategy, tactics, and productivity. Strategy is important for competitiveness and involves setting goals and plans to achieve an organization's mission. Operations strategy must be linked to overall organizational strategy. Time-based and quality strategies are discussed. Productivity is defined as a ratio of outputs to inputs and can be improved through methods like developing measures, determining bottlenecks, and setting reasonable goals.

1. Competitiveness, Strategy,
and Productivity
2-1

2. 2-2
Learning ObjectivesLearning Objectives
 List and briefly discuss the primary ways
that business organizations compete.
 List five reasons for the poor
competitiveness of some companies.
 Define the term strategy and explain why
strategy is important for competitiveness.
 Contrast strategy and tactics.

3. 2-3
Learning ObjectivesLearning Objectives
 Discuss and compare organization strategy
and operations strategy, and explain why it is
important to link the two.
 Describe and give examples of time-based
strategies.
 Define the term productivity and explain why
it is important to organizations and to
countries.
 List some of the reasons for poor productivity
and some ways of improving it.

4. 2-4
Competitiveness:Competitiveness:
How effectively an organization meets the
wants and needs of customers relative to
others that offer similar goods or services

5. 2-5
Businesses Compete UsingBusinesses Compete Using
MarketingMarketing
 Identifying consumer wants and needs
 Pricing
 Advertising and promotion

6. 2-6
Businesses Compete UsingBusinesses Compete Using
OperationsOperations
 Product and service design
 Cost
 Location
 Quality
 Quick response

7. 2-7
Businesses Compete UsingBusinesses Compete Using
OperationsOperations
 Flexibility
 Inventory management
 Supply chain management
 Service and service quality
 Managers and workers

8. 2-8
Why Some Organizations FailWhy 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 threats

9. 2-9
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

10. 2-10
Mission/Strategy/TacticsMission/Strategy/Tactics
How does mission, strategies and tactics relate to
decision making and distinctive competencies?
StrategyStrategy TacticsTacticsMissionMission

11. 2-11
StrategyStrategy
 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

12. 2-12
Planning and Decision MakingPlanning and Decision Making
Mission
Goals
Organizational Strategies
Functional Goals
Finance
Strategies
Marketing
Strategies
Operations
Strategies
Tactics Tactics Tactics
Operating
procedures
Operating
procedures
Operating
procedures
Figure 2.1

13. 2-13
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

14. 2-14
Examples of StrategiesExamples of Strategies
 Low cost
 Scale-based strategies
 Specialization
 Flexible operations
 High quality
 Service

15. 2-15
Strategy and TacticsStrategy and Tactics
 Distinctive Competencies
The special attributes or abilities that give an
organization a competitive edge.
 Strategy Factors
 Price
 Quality
 Time
 Flexibility
 Service
 Location

16. 2-16
Banks, ATMsConvenienceLocationLocation
Disneyland
Nordstroms
Superior customer
service
ServiceService
Burger King
Supermarkets
Variety
Volume
FlexibilityFlexibility
Express Mail, Fedex,
One-hour photo, UPS
Rapid delivery
On-time delivery
TimeTime
Sony TV
Lexus, Cadillac
Pepsi, Kodak, Motorola
High-performance design
or high quality Consistent
quality
QualityQuality
U.S. first-class postage
Motel-6, Red Roof Inns
Low CostPricePrice
Examples of Operations StrategiesExamples of Operations Strategies
Table 2.2

17. 2-17
Global StrategyGlobal 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, cultural, and economic
differences

18. 2-18
Strategy FormulationStrategy Formulation
 Distinctive competencies
 Environmental scanning
 SWOT
 Order qualifiers
 Order winners

19. 2-19
Strategy FormulationStrategy 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

20. 2-20
 Economic conditions
 Political conditions
 Legal environment
 Technology
 Competition
 Markets
Key External FactorsKey External Factors

21. 2-21
 Human Resources
 Facilities and equipment
 Financial resources
 Customers
 Products and services
 Technology
 Suppliers
Key Internal FactorsKey Internal Factors

22. 2-22
Operations StrategyOperations Strategy
 Operations strategy – The approach,
consistent with organization strategy,
that is used to guide the operations
function.

23. 2-23
Strategic OM DecisionsStrategic OM Decisions
Decision Area Affects
Product and service design Costs, quality liability and environmental
Capacity Cost structure, flexibility
Process selection and layout Costs, flexibility, skill level, capacity
Work design Quality of work life, employee safety, productivity
Location Costs, visibility
Quality Ability to meet or exceed customer expectations
Inventory Costs, shortages
Maintenance Costs, equipment reliability, productivity
Scheduling Flexibility, efficiency
Supply chains Costs, quality, agility, shortages, vendor relations
Projects Costs, new products, services, or operating systems
Table 2.4

24. 2-24
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

25. 2-25
Time-based StrategiesTime-based Strategies
JAN FEB MAR APR MAY JUN
Planning
Processing
Changeover On time!
Designing
Delivery

26. 2-26
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

27. 2-27
ProductivityProductivity
 Partial measures
 output/(single input)
 Multi-factor measures
 output/(multiple inputs)
 Total measure
 output/(total inputs)
Productivity =
Outputs
Inputs

28. 2-28
Productivity GrowthProductivity Growth
Current Period Productivity – Previous Period Productivity
Previous Period Productivity
Productivity Growth =

29. 2-29
Measures of ProductivityMeasures of Productivity
Table 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

30. 2-30
Units of output per kilowatt-hour
Dollar value of output per kilowatt-hour
Energy
Productivity
Units of output per dollar input
Dollar value of output per dollar input
Capital
Productivity
Units of output per machine hour
machine hour
Machine
Productivity
Units of output per labor hour
Units of output per shift
Value-added per labor hour
Labor
Productivity
Examples of Partial Productivity MeasuresExamples of Partial Productivity Measures
Table 2.5

31. 2-31
Example 3Example 3
7040 Units Produced
Cost of labor of $1,000
Cost of materials: $520
Cost of overhead: $2000
What is the multifactor productivity?
Ans. 2.0 units per dollar of input

32. 2-32
Example 3 SolutionExample 3 Solution
MFP = Output
Labor + Materials + Overhead
MFP = (7040 units)
$1000 + $520 + $2000
MFP = 2.0 units per dollar of input

33. 2-33
Process YieldProcess 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

34. 2-34
Factors Affecting ProductivityFactors Affecting Productivity
Capital Quality
Technology Management

35. 2-35
 Standardization
 Quality
 Use of Internet
 Computer viruses
 Searching for lost or misplaced items
 Scrap rates
 New workers
Other Factors Affecting ProductivityOther Factors Affecting Productivity

36. 2-36
 Safety
 Shortage of IT workers
 Layoffs
 Labor turnover
 Design of the workspace
 Incentive plans that reward productivity
Other Factors Affecting ProductivityOther Factors Affecting Productivity

37. 2-37
OutsourcingOutsourcing
 Higher productivity in another company is a
key reason organizations outsource work
 Improving productivity may reduce the need
for outsourcing

38. 2-38
Improving ProductivityImproving 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