Recap Productivity definition Factors effecting productivity Single factor productivity Multifactor productivity Productivity Measurement Productivity analysis in enterprises Problems

COMPETITIVENESS and STRATEGY Lecture 3 COMPETITIVENESS and STRATEGY

Lecture Outline Competitiveness Dimension of Competitiveness Important Concepts Strategy Elements of Strategy Competitive advantage OM contribution to strategy Operations Strategy

Competitiveness Competitiveness is process by which one entity strives to outperform another. The allocation of resources to obtain the organization's long term objectives in the most efficient and effective way. Competitiveness depends on productivity

Dimensions of Competitiveness How Organization Compete against each other Price Flexibility Managers and Workers Quality Differentiation Time

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

New Competitiveness Paradigm Change in competitiveness focus all over world from: Product competitiveness to process competitiveness From process competitiveness to structure/society competitiveness

Competitive Advantage 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.

Low Competitiveness -Drawbacks Lack of competitiveness is leading to: reducing sales Stagnation in business Underutilization of Capacities & low productivity ..

Important Concepts Policy-Guideline for decision making Rule-Dos and Donts Strategy-Comprehension plan to achieve mission Procedure-Steps in chronological order to achieve Mission The reason for existence for an organization A clear statement of purpose Vision-Where you want to see your organization in future

Elements of Strategy Scope Goals/Objectives Resource Deployment Synergy Sustainable Competitive Advantage

Strategy, Tactics and Operations Strategy (To do) Plan for achieving organizational goals Long term focus (road map) Organizational vs. functional (Hierarchical) Tactics (How to) Actions and methods to accomplish strategies Short term focus Operations (Doing) Day-to-day execution

Strategy Example Mission: Live a good life 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: Live a good life Goal: Successful career, good income. Strategy: Obtain a Business Degree from COMSATS Tactics: Select a business field of your interest and high market value. Operations: Register Buy books Take courses Study Graduate Apply & get job

Quality and Time Strategies Quality-based strategies Focuses on quality in all phases of an organization Quality at the source Time-based strategies Focuses on reduction of time needed to accomplish tasks

OM Strategic Fit for synergy Organization’s Strategy Functional Area Strategies Marketing Strategy Operations Strategy Finance

SWOT Analysis to Strategy Formulation Mission Internal External This slide frames the individual elements of the SWOT analysis process. The notion that SWOT must look at both internal and external issues can be raised here. It may also be worthwhile stressing that the Internal analysis must be: 1. A critical analysis with an honest, open-minded assessment, not politically driven 2. An assessment of strengths and weaknesses in light of the specific corporate mission. S trengths O pportunities Strategy Internal External W eaknesses T hreats Competitive Advantage PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

10 Strategic OM Decisions Goods and service design Quality Process and capacity design Location selection Layout design Human resources and job design Supply chain management Inventory Scheduling Maintenance

Achieving Competitive Advantage through Operations 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)

OM’s Contribution to Strategy Operations Decisions Examples Specific Strategy Used Competitive Advantage Quality Product Process Location Layout Human Resource Supply Chain Inventory Scheduling Maintenance FLEXIBILITY Sony’s constant innovation of new products Design Compaq Computer’s ability to follow the PC market Volume Southwest Airlines No-frills service LOW COST DELIVERY Pizza Hut’s five-minute guarantee at lunchtime Speed Federal Express’s “absolutely, positively on time” Dependability Differentiation (Better) QUALITY Response (Faster) Motorola’s automotive products ignition systems Conformance Cost leadership (Cheaper) Motorola’s pagers Performance IBM’s after-sale service on mainframe computers AFTER-SALE SERVICE Fidelity Security’s broad line of mutual funds BROAD PRODUCT LINE PowerPoint presentation to accompany Operations Management, 6E (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 Make the point here that this is a minimum set of “necessary” issues which must be understood. Understanding these alone does not guarantee success. If you have not done it before, here is where you can begin to prod students into looking at the true complexity faced by the operations manager., PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Impetus for OM Strategy Change Changes in the organization Stages in the product life cycle Changes in the environment You might begin here to raise the notion that change in strategy is not optional - but must occur when any other factor(s) change(s). The Japanese have come to view strategy as being continually adaptive. The next slide lists the stages in the product life cycle. The several slides following that elaborate on strategic issues over the product life cycle. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Strategy Development and Implementation Environmental (SWOT) analysis Distinctive competencies Special attributes or abilities Give organization competitive edge Critical success factors Build and staff the organization Deployment - Integration/linkage/alignment PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Operations Strategy Functional Focus Linkage and Alignment

Forthcoming lecture- Managing Quality