Chapter 2: Competitiveness, Strategy and Productivity.
Competitiveness- relates to the effectiveness of an organization in the marketplace relative to other
organizations that offers similar product or services Competitiveness- how effectively an organization meets the wants and needs of customers relative to others that offer similar good and services. Strategy- relates to the plans that determine how an organization pursues its goal. Productivity- relates to the effective use of resources and it has a direct impact on competitiveness. Marketing influences competitiveness in several ways: 1. Identifying consumer wants and/or needs.-The ideal is to achieve a perfect match between those wants and needs and the organizations goods and services. 2. Pricing- it is important to understand the trade-off decision consumers make between price and other aspects of a product or service such as quality. 3. Advertising and Promotion are ways organizations can inform potential customers about features of their products or services and attract buyers. Operation influences competitiveness through: 1. Product and service design should reflect joint efforts of many areas of the firm to achieve a match between financial resources, operations capabilities, supply chain capabilities and consumer wants and needs. 2. Cost cost of an organizations output is a key variable that affects pricing decisions and profits. Cost-reduction efforts are generally ongoing in business organization. 3. Location- can be important in terms of cost and convenience for customers. Location near inputs can result in lower input cost.\ 4. Quality- refers to materials, workmanship, design and services. It is the ability to consistently meet or exceed the customer expectation. 5. Quick response- how organization is quickly bringing new or improved product or services to the market. 6. Flexibility- is the ability to respond to changes. 7. Inventory Management- Effectively matching supplies of goods with demand. 8. Supply Chain management- Involves coordinating internal and external operation( buyers and suppliers) to achieve timely and cost effective delivery of goods through the system 9. Service- might involve after sale activities like Jollibee delivery follow up call after delivery. 10. Managers and Workers- Great people are hired by great company because people are the heart and soul of an organization.
Reason why some Organization fails: 1. Neglecting Operation strategy 2. Failing to take advantage of the strengths and opportunities. 3. Putting too much emphasis on short-term financial performance. 4. Placing too much emphasis on product and service design not enough on product design and improvement 5. Neglecting investments in capital and human resources 6. Failing to establish good internal communications 7. Failing to consider customer wants and needs.
Mission the reason for the existence of an organization. Mission Statement- States the purpose of an organization Goals- Provide details and scope of the mission and serve as a foundation for the development of organizational strategies. Strategies- are plans for achieving organizational goals. Tactics are the methods and actions used to accomplish strategies. Operation strategy- is narrow in scope and dealing primarily with the operation aspect of the organization. Core Competencies- The special attributes or abilities that give an organization a competitive edge. Some strategies an organization may choose: 1. Low cost example out -sourcing in Asian countries due to low labor cost. e.g Call center industry . 2. Scale based- Strategies- Use of intensive method to achieve high output volume and low unit cost 3. Specialization- Focus on narrow product lines or limited service to achieve high quality. 4. Newness- Focus on innovation to create new products or services. 5. Flexible Operations- Focus on quick response and/or customization 6. High quality Focus on achieving higher quality than competitors 7. Service- focus on how employee treats their customers based on courteousness, helpfulness and reliability. 8. Sustainability- Focus on Environmental- friendly and energy- efficient operations.
Organization Strategy Operations Strategy Example Low price Low cost Cebu pacific- piso fare High quality High-performance design and /or high quality processing/consistent quality Sony TV, gardenia processing Short time Quick response McDonald restaurant and LBC Newness Innovation Nokia, Apple Variety Flexibility/ volume Handy man,SM supermarket Service Superior Customer Services 5 star hotels and Disneyland Location Convenience Seven Eleven, Atm
Strategy formulation Steps in Strategy formulation (POM) 1. Link strategy directly to the organizations Mission or vision statement 2. Assess Strengths, weakness, and threats and opportunities 3. Identify Order winners and Order qualifiers Order winners- are those characteristics of an organizations goods or services that cause them to be perceived as better than the competitors. Order qualifiers- are those Characteristics that potential customer perceive as minimum standards of acceptability for a product to be considered for purchase. 4. Select one or two Strategies( e.g low cost and speed)
Environmental Scanning- is the considering of events and trends that present either threats or opportunities in the organization. Strategy formulation ( Dr. Eduardo Morato jr.) VMOKRApiSpatres Quality based- Strategies- Focus on maintaining or improving the quality of an organizations product or services. Time- Based Strategies- Focus on reducing the time required to accomplish various activities and minimizing the time to produce goods and services. Productivity is a measure of effective use of resources, usually expressed in ration of output over input. Productivity= Output/Input Productivity growth is the increased in productivity from one period to the next relative to the productivity in the proceeding period. Productivity growth= current productivity- previous productivity X 100 Previous productivity Partial measures output/(single input) Multi-factor measures output/(multiple inputs) Total measure output/(total inputs) Factors affecting productivity 1. capital 2. Quality 3. Technology 4. Management Other Factors Affecting Productivity Standardization Quality Use of Internet Computer viruses Searching for lost or misplaced items Scrap rates New workers Safety Shortage of IT workers Layoffs Labor turnover Design of the workspace Incentive plans that reward productivity Improving Productivity Develop productivity measures Determine critical (bottleneck) operations Develop methods for productivity improvements Establish reasonable goals Get management support Measure and publicize improvements Dont confuse productivity with efficiency
CHAPTER 3: FORECASTING
FORECAST: A statement about the future value of a variable of interest such as demand. Forecasting is used to make informed decisions. Long-range Short-range
Forecasting- The act of anticipating or predicting the future value of interest such as demand.
Uses of Forecasts
Accounting Cost/profit estimates Finance Cash flow and funding Human Resources Hiring/recruiting/training Marketing Pricing, promotion, strategy MIS IT/IS systems, services Operations Schedules, MRP, workloads Product/service design New products and services
Features of Forecasts Assumes causal system past ==> future (future are cause by the past decision) Forecasts rarely perfect because of randomness Forecasts more accurate for groups vs. individuals Forecast accuracy decreases as time horizon increases Steps in the Forecasting Process 1. Determine the purpose of the forecast 2. Establish a time horizon 3. Select a forecasting technique 4. Obtain, Clean and Analyze data 5. Make the forecast 6. Monitor the forecast
Types of Forecasts A.Judgmental - uses subjective inputs 1. Executive opinions 2. Sales force opinions 3. Consumer surveys 4. Outside opinion 5. Delphi method a. Opinions of managers and staff b. Achieves a consensus forecast B.Time series - uses historical data assuming the future will be like the past 1. Trend - long-term movement in data 2.Seasonality - short-term regular variations in data 3.Cycle wavelike variations of more than one years duration 4.Irregular variations - caused by unusual circumstances 5.Random variations - caused by chance C. Associative models - uses explanatory variables to predict the future 1. Predictor variables - used to predict values of variable interest 2.Regression - technique for fitting a line to a set of points 3.Least squares line - minimizes sum of squared deviations around the line Kindly send this lecture to all your classmates. Good luck to the exam. EXAMINATION SCHEDULE 4A- AUG 24, 2012- Friday 4B- AUG 24, 2012- FRIDAY- ( TIME AND ROOM TO BE ANNOUNCED) 4C- AUG 23, 2012- THURSDAY 4D- AUG 22, 2012- WED 4E-AUG 23, 2012- Thursday 4F- AUG 23, 2012 THURSDAY( TIME AND ROOM TO BE ANNOUNCED)