Competitiveness,

Strategy, and
Productivity

McGraw-Hill/Irwin

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

 You should be able to:

1. List the three primary ways that business organizations
compete
2. Explain five reasons for the poor competitiveness of some
companies
3. Define the term strategy and explain why strategy is important
4. Discuss and compare organization strategy and operations
strategy, and explain why it is important to link the two
5. Describe and give examples of time-based strategies
6. Define the term productivity and explain why it is important to
organizations and countries
7. Provide some reasons for poor productivity and some ways of
improving it

Student Slides

2-2

Competitiveness:
How effectively an organization meets the

wants and needs of customers relative to others

that offer similar goods or services
Organizations compete through some
combination of their marketing and operations
functions
What do customers want?
How can these customer needs best be satisfied?

Student Slides

2-3

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Product and service design

Cost
Location
Quality
Quick response
Flexibility
Inventory management
Supply chain management
Service
Managers and workers

Student Slides

2-4

Mission
Goals
Organizational Strategies
Functional Strategies
Tactics
Student Slides

2-5

 Mission
The reason for an organizations existence

Goals
Provide detail and the scope of the mission
Goals can be viewed as organizational destinations

Strategy
A plan for achieving organizational goals
Serves as a roadmap for reaching the organizational
destinations

Student Slides

2-6

Core Competencies

The special attributes or abilities that give an

organization a competitive edge
To

be effective core competencies and strategies

need to be aligned

Student Slides

2-7

Effective strategy formulation requires taking

into account:

Core competencies
Environmental scanning
SWOT

Successful strategy formulation also requires

taking into account:

Order qualifiers
Order winners

Student Slides

2-8

 Operations strategy
The approach, consistent with organization strategy, that is

used to guide the operations function.

Decision Area

What the Decisions Affect

Product and service design

Costs, quality, liability, and environmental issues

Capacity

Cost, structure, flexibility

Process selection and

layout

Costs, flexibility, skill level needed, 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

Student Slides

2-9

Decision Area

What the Decisions Affect

Product and service design

Costs, quality, liability, and environmental issues

Capacity

Cost, structure, flexibility

Process selection and

layout

Costs, flexibility, skill level needed, 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

Student Slides

2-10

 Time-based strategies
Strategies that focus on the reduction of time needed to
accomplish tasks
It is believed that by reducing time, costs are lower,
quality is higher, productivity is higher, time-to-market is
faster, and customer service is improved
Quality-based strategy
Strategy that focuses on quality in all phases of an
organization
Pursuit of such a strategy is rooted in a number of factors:
Trying to overcome a poor quality reputation
Desire to maintain a quality image
A desire to catch up with the competition
A part of a cost reduction strategy

Student Slides

2-11

Productivity
A measure of the effective use of resources,

usually expressed as the ratio of output to input

Productivity measures are useful for
Tracking an operating units performance over

time
Judging the performance of an entire industry or
country

Student Slides

2-12

Productivity =

Output
Input

PartialMeasures

Output
Ouput Output
;
;
SingleInput
Labor
Capital

MultifactorMeasures

TotalMeasure

Student Slides

Output
Ouput
Output
;
;
MultipleInputs Labor + Machine Labor + Capital + Energy

Goodsorservicesproduced
Allinputsusedtoproducethem

2-13

Methods

Capital

Technology

Student Slides

Quality

Management

2-14

1.

Develop productivity measures for all operations

2.

Determine critical (bottleneck) operations

3.

Develop methods for productivity improvements

4.

Establish reasonable goals

5.

Make it clear that management supports and encourages

productivity improvement

6.

Measure and publicize improvements

Dont confuse productivity with efficiency

Student Slides

2-15