This document discusses key concepts in operations management including competitiveness, strategy, and productivity. It defines competitiveness as how well an organization meets customer needs relative to competitors. Businesses compete using marketing strategies like product design and pricing, as well as operations strategies involving factors like quality, response time, and inventory management. The document also discusses why some organizations fail due to issues like neglecting operations strategy or customer needs. It defines mission, strategy, and tactics, giving an example of how they relate for a student pursuing career goals. Distinctive competencies that give companies competitive advantages are also discussed.

1. Operations Management
Chapter-2
Competitiveness,
strategy, productivity

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

3. 1. Identifying consumer wants and needs
2. Pricing
3. Advertising and promotion
Businesses Compete Using
Marketing

4. 1. Product and service design
2. Cost
3. Location
4. Quality
5. Quick response
6. Flexibility
7. Inventory management
8. Supply chain management
9. Service
Businesses Compete Using
Operations

5. 1. Too much emphasis on short-term financial performance
2. Failing to take advantage of strengths and opportunities
3. Failing to recognize competitive threats
4. Neglecting operations strategy
5. Too much emphasis in product and service design and not
enough on improvement
6. Neglecting investments in capital and human resources
7. Failing to establish good internal communications
8. Failing to consider customer wants and needs
Why Some Organizations Fail

6. Mission/Strategy/Tactics
Strategy Tactics
Mission
How does mission, strategies and tactics relate to
decision making and distinctive competencies?

7. 1. Strategies
Plans for achieving organizational goals
2. Mission
The reason for existence for an organization
3. Mission Statement
Answers the question “What business are we in?”
4. Goals
Provide detail and scope of mission
5. Tactics
The methods and actions taken to accomplish strategies
Strategy

8. 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
Strategy Example

9. Distinctive Competencies
The special attributes or abilities that give an
organization a competitive edge.
 Price
 Quality
 Time
 Flexibility
 Service
 Location
Strategy and Tactics

10. Examples of Distinctive
Competencies
Banks, ATMs
Convenience
Location
Disneyland
Nordstroms
Superior customer
service
Service
Burger King
Supermarkets
Variety
Volume
Flexibility
Express Mail, Fedex,
One-hour photo, UPS
Rapid delivery
On-time delivery
Time
Sony TV
Lexus, Cadillac
Pepsi, Kodak, Motorola
High-performance design
or high quality Consistent
quality
Quality
U.S. first-class postage
Motel-6, Red Roof Inns
Low Cost
Price

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

12. 1. Distinctive competencies
2. Environmental scanning
3. SWOT
4. Order qualifiers
5. Order winners
 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
Strategy Formulation

13. 1. Economic conditions
2. Political conditions
3. Legal environment
4. Technology
5. Competition
6. Markets
Key External Factors

14. 1. Human Resources
2. Facilities and equipment
3. Financial resources
4. Customers
5. Products and services
6. Technology
7. Suppliers
Key Internal Factors

15. Quality-based strategies
Focuses on maintaining or
improving the quality of an
organization’s products or
services.
Time-based strategies
Focuses on reduction of time
needed to accomplish tasks.
Quality and Time Strategies

16. Productivity
A measure of the effective use of resources, usually
expressed as the ratio of output to input
Productivity ratios are used for
1. Planning workforce requirements
2. Scheduling equipment
3. Financial analysis
Productivity

17. 1. Partial measures
output/(single input)
2. Multi-factor measures
output/(multiple inputs)
3. Total measure
output/(total inputs)
Productivity Measurement
Productivity =
Outputs
Inputs

18. Factors Affecting Productivity
Capital Quality
Technology Management

19. 1. Standardization
2. Quality
3. Use of Internet
4. Computer viruses
5. Searching for lost or misplaced items
6. Scrap rates
7. New workers
8. Safety
9. Shortage of IT workers
10. Layoffs
11. Labor turnover
12. Design of the workspace
13. Incentive plans that reward productivity
Other Factors Affecting Productivity

20. 1. Develop productivity measures
2. Determine critical (bottleneck) operations
3. Develop methods for productivity improvements
4. Establish reasonable goals
5. Get management support
6. Measure and publicize improvements
7. Don’t confuse productivity with efficiency
Improving Productivity