Recap Productivity definition Single factor productivity Productivity Measurement

Recap • • Productivity definition • • Single factor productivity • • Productivity Measurement • Problems Factors effecting productivity Multifactor productivity Productivity analysis in enterprises IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 1

Lecture 3 COMPETITIVENESS and STRATEGY IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 2

Lecture Outline u Competitiveness u u u u Dimension of Competitiveness Important Concepts Strategy Elements of Strategy Competitive advantage OM contribution to strategy Operations Strategy IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 3

Competitiveness is process by which one entity strives to outperform another. u The allocation of resources to obtain the organization's long term objectives in the most efficient and effective way. u Competitiveness depends on productivity IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 4

Dimensions of Competitiveness u How Organization Compete against each other Fl ex Price ibi lity Quality Di ffe ren tia Managers and Workers Time tio n IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 5

Indicators of Competitiveness Productivity: Productivity is efficiency and effectiveness with which goods & services are produced & provided. Innovation involves the creation of product, service or process that is new to an organization • • • Product Innovation Process Innovation Incremental Radical Technological Innovation IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 6

New Competitiveness Paradigm Change in competitiveness focus all over world from: Product competitiveness to process competitiveness From process competitiveness to structure/society competitiveness n IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 7

Competitive Advantage u. Types of competitive advantages a nation's companies enjoy must shift from comparative advantage (low cost labor or natural resources) to competitive advantages due to unique products or processes. IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 8

Low Competitiveness -Drawbacks Lack of competitiveness is leading to: n reducing sales n Stagnation in business n Underutilization of Capacities & low productivity. . IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 9

Important Concepts u Policy-Guideline for decision making u Rule-Dos and Donts u Strategy-Comprehension plan to achieve mission u Procedure-Steps in chronological order to achieve u Mission – The reason for existence for an organization – A clear statement of purpose u Vision-Where you want to see your organization in future IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 10

Elements of Strategy u Scope u Goals/Objectives u Resource Deployment u Synergy u Sustainable Competitive Advantage IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 11

Strategy, Tactics and Operations u Strategy (To do) – Plan for achieving organizational goals – Long term focus (road map) – Organizational vs. functional (Hierarchical) u Tactics (How to) – Actions and methods to accomplish strategies – Short term focus u Operations (Doing) – Day-to-day execution IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 12

Strategy Example You are a business student at COMSATS Institute of Information Technology. You would like to have a career in business, have a good job, and earn enough income to live comfortably Mission: u. Goal: u. Strategy: u. Tactics: u. Operations: Live a good life Successful career, good income. Obtain a Business Degree from COMSATS Select a business field of your interest and high market value. Register Buy books Take courses Study Graduate Apply & get job IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 13

Quality and Time Strategies u Quality-based strategies – Focuses on quality in all phases of an organization – Quality at the source u Time-based strategies – Focuses on reduction of time needed to accomplish tasks IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 14

OM Strategic Fit for synergy Organization’s Strategy Functional Area Strategies Marketing Strategy Operations Strategy IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 Finance Strategy 15

SWOT Analysis to Strategy Formulation Mission Internal Strengths External Opportunities Strategy Internal Weaknesses © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 16 a Times Mirror Higher Education Group, Inc. company, 1996 Power. Point presentation to accompany Operations 2 -16 Management, 6 E (Heizer & Render) Competitive Advantage External Threats IRWIN

10 Strategic OM Decisions 1. 2. 3. 4. 5. Goods and service design Quality Process and capacity design Location selection Layout design 6. Human resources and job design 7. Supply chain management 8. Inventory 9. Scheduling 10. Maintenance IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 17

Achieving Competitive Advantage through Operations þ þ þ Differentiation – better, or at least different (uniqueness in physical characteristics or service attributes Cost leadership – cheaper (doesn’t imply low quality) Response – (Flexibility, Reliability, rapid response) IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 18

OM’s Contribution to Strategy Operations Decisions Examples Quality Product Process FLEXIBILITY Sony’s constant innovation of new products Design Compaq Computer’s ability to follow the PC market Volume Southwest Airlines No-frills service Location LOW COST Pizza Hut’s five-minute guarantee at lunchtime Speed Dependability Federal Express’s “absolutely, positively on time” Human Resource Maintenance Differentiation (Better) QUALITY Conformance Motorola’s automotive products ignition systems Motorola’s pagers Performance Inventory Scheduling Competitiv e Advantage DELIVERY Layout Supply Chain Specific Strategy Used Cost leadership (Cheaper) Response (Faster) IBM’s after-sale service on mainframe computers AFTER-SALE SERVICE BROAD PRODUCT LINE Fidelity Security’s broad line of mutual funds Power. Point presentation to accompany Operations 2 -19 Management, 6 E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Preconditions To Implement a Strategy One must understand: – Competitors and new entrants – Environmental, legal, and economic issues – The notion of product life cycle – Available resources plus distinctive competencies – Integration of OM strategy with company strategy and other functions © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. Power. Point presentation to accompany Operations IRWIN 07458 Management, 6 E (Heizer & Render) 20 a Times Mirror Higher Education Group, Inc. company, 1996 2 -20

Impetus for OM Strategy Change u Changes in the organization u Stages in the product life cycle u Changes in the environment © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. Power. Point presentation to accompany Operations IRWIN 07458 Management, 6 E (Heizer & Render) 21 a Times Mirror Higher Education Group, Inc. company, 1996 2 -21

Strategy Development and Implementation u Environmental (SWOT) analysis u Distinctive competencies Ø Special attributes or abilities Ø Give organization competitive edge u Critical success factors u Build and staff the organization u Deployment - Integration/linkage/alignment © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. Power. Point presentation to accompany Operations IRWIN 07458 Management, 6 E (Heizer & Render) 22 a Times Mirror Higher Education Group, Inc. company, 1996 2 -22

Operations Strategy u Functional u Linkage Focus and Alignment IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 23

Forthcoming lecture- Managing Quality IRWIN a Times Mirror Higher Education Group, Inc. company, 1996 24