Competitiveness Strategy and Productivity Learning Objectives List and
Competitiveness, Strategy, and Productivity
Learning 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. 2 -2
Learning 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. 2 -3
Competitiveness: How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services 2 -4
Businesses Compete Using Marketing § Identifying consumer wants and needs § Pricing § Advertising and promotion 2 -5
Businesses Compete Using Operations § Product and service design § Cost § Location § Quality § Quick response 2 -6
Businesses Compete Using Operations § § § Flexibility Inventory management Supply chain management Service and service quality Managers and workers 2 -7
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 threats 2 -8
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 2 -9
Mission/Strategy/Tactics Mission Strategy Tactics How does mission, strategies and tactics relate to decision making and distinctive competencies? 2 -10
Fedex § Mission Statement Fed. Ex will produce superior financial returns for shareowners by providing high value-added supply chain, transportation, business and related information services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. Fed. Ex will strive to develop mutually rewarding relationships with its employees, partners and suppliers. Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical and professional standards. 2 -11
Gilette § Mission Statement We will provide branded products and services of superior quality and value that improve the lives of the world's consumers. As a result, consumers will reward us with leadership sales, profit, and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper. 2 -12
Harley-Davidson § Mission Statement We fulfill dreams through the experience of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles and branded products and services in selected market segments. 2 -13
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 2 -14
Planning and Decision Making Figure 2. 1 Mission Goals Organizational Strategies Functional Goals Finance Strategies Tactics Operating procedures Marketing Strategies Tactics Operating procedures Operations Strategies Tactics Operating procedures 2 -15
Strategy Example 1 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: § Goal: § Strategy: § Tactics: § Operations: Live a good life Successful career, good income Obtain a college education Select a college and a major Register, buy books, take courses, study, graduate, get job 2 -16
Examples of Strategies § § § Low cost Scale-based strategies Specialization Flexible operations High quality Service 2 -17
Strategy and Tactics § Distinctive Competencies The special attributes or abilities that give an organization a competitive edge. § Strategy Factors § § § Price Quality Time Flexibility Service Location 2 -18
Examples of Operations Strategies Table 2. 2 Price Low Cost Airlines, Ginger Hotel Quality High-performance design Sony TV or high quality Consistent Lexus, Cadillac quality Pepsi, Kodak, Motorola Time Rapid delivery On-time delivery Express Mail, Fedex, One-hour photo, UPS Flexibility Variety Volume Burger King Supermarkets Service Superior customer service Disneyland Location Convenience Banks, ATMs 2 -19
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, cultural, and economic differences 2 -20
Strategy Formulation § § § Distinctive competencies Environmental scanning SWOT Order qualifiers Order winners 2 -21
Key External Factors § § § Economic conditions Political conditions Legal environment Technology Competition Markets 2 -22
Key Internal Factors § § § § Human Resources Facilities and equipment Financial resources Customers Products and services Technology Suppliers 2 -23
Operations Strategy § Operations strategy – The approach, consistent with organization strategy, that is used to guide the operations function. 2 -24
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 Toyota Approach § Time-based strategies § § Focuses on reduction of time needed to accomplish tasks Banking Operations: § Axis Bank, HDFC 2 -25
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 2 -26
Productivity § Partial measures § output/(single input) § Multi-factor measures § output/(multiple inputs) § Total measure § output/(total inputs) Outputs Productivity = Inputs 2 -27
Productivity Growth = Current Period Productivity – Previous Period Productivity 2 -28
Measures of Productivity Table 2. 4 Partial measures Multifactor measures Total measure Output Labor Output Machine Capital Output Labor + Machine Output Energy Output Labor + Capital + Energy Goods or Services Produced All inputs used to produce them 2 -29
Examples of Partial Productivity Measures Table 2. 5 Labor Productivity Units of output per labor hour Units of output per shift Value-added per labor hour Machine Productivity Units of output per machine hour Capital Productivity Units of output per dollar input Dollar value of output per dollar input Energy Productivity Units of output per kilowatt-hour Dollar value of output per kilowatt-hour 2 -30
Example 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 2 -31
Example 3 Solution MFP = Output Labor + Materials + Overhead MFP = (7040 units) $1000 + $520 + $2000 MFP = 2. 0 units per dollar of input 2 -32
Process Yield § Measuring productivity for Services § Process yield is the ratio of output of good product to input § Defective product is not included in the output § Service example: § Average occupation of tables in a restaruant § Number of vehicles serviced/ day in a service station 2 -33
Questions? 2 -34
Assignment Problems 1. The Cool-Tech Company produces various types of fans. In May, the company produced 1, 728 window fans at a standard price of $40. 00. The company has 12 direct labor employees whose compensation (including wages and fringe benefits) amounts to $21. 00 per hour. During May, window fans were produced on 9 working days (of 8 hours each), and other products were produced on other days. Determine the labor productivity of the window fans. 2. The Cool-Tech Company (see # 1) also produces desk fans at a standard price of $25. 00. During May, 1, 872 desk fans were produced on 11 working days (of 8 hours each). On one day, two employees called in sick. a. Determine the labor productivity of the desk fans. b. Was productivity higher for the window fans or for the desk fans in May? 2 -35
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