Total Quality Management MBA650 Dr Pavlos Panayi

1-2 Globalization and Competitiveness Favorable cost Access to international markets Response to changes in demand Reliable sources of supply 14 major trade agreements in 1990s Peak: 26% in 2000 World Trade Compared to World GDP Source: “Real GDP and Trade Growth of OECD Countries, 2001–03,” International Trade Statistics 2003, World Trade Organization, MBA650 - Dr. Pavlos Panayi

1-3 Globalization and Competitiveness (cont.) Hourly Wage Rates for Selected Countries Source: “International Comparisons of Hourly Compensation Costs for Production Workers in Manufacturing,” Bureau of Labor Statistics, U.S. Department of Labor, Updated September 30, Germany: $26.18 USA: $21.33 Taiwan: $5.41 Mexico: $2.38 China: $0.50

MBA650 - Dr. Pavlos Panayi1-4 Globalization and Competitiveness (cont.) Trade with China: Percent of each country‘s trade Source: “Share of China in Exports and Imports of Major Traders, 2000 and 2002,” International Trade Statistics 2003, World Trade Organization,

MBA650 - Dr. Pavlos Panayi1-5 Risks of Globalization Cultural differences Supply chain logistics Safety, security, and stability Quality problems Corporate image Loss of capabilities

MBA650 - Dr. Pavlos Panayi1-6 Competitiveness and Productivity Competitiveness – degree to which a nation can produce goods and services that meet the test of international markets Productivity – ratio of output to input Output – sales made, products produced, customers served, meals delivered, or calls answered Input – labor hours, investment in equipment, material usage, or square footage

MBA650 - Dr. Pavlos Panayi1-7 Measures of Productivity Competitiveness and Productivity (cont.)

MBA650 - Dr. Pavlos Panayi1-8 Changes in Productivity for Select Countries Internet-enabled productivity - Dot com bust - 9/11 terrorist attacks - Dot com bust - 9/11 terrorist attacks Source: “International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends, 2002,” Bureau of Labor Statistics, U.S. Department of Labor, September U.S. figures for 2002–2003 from “Major Sector Productivity and Costs Index,” Bureau of Labor Statistics, U.S. Department of Labor, March 2004

MBA650 - Dr. Pavlos Panayi1-9 Become efficient – output increases with little or no increase in input Expand – both output and input grow with output growing more rapidly Achieve breakthroughs – output increases while input decreases Downsize – output remains the same and input is reduced Retrench – both output and input decrease, with input decreasing at a faster rate Productivity Increase

MBA650 - Dr. Pavlos Panayi1-10 Competitiveness and Productivity Productivity as a Function of Inputs and Outputs, 2001–2002 Source: “International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends, 2002,” Bureau of Labor Statistics, U.S. Department of Labor, September 2003 Breakthrough Performance More Efficient Retrench

MBA650 - Dr. Pavlos Panayi1-11 Global Competitiveness Ranking 1.Finland 2.United States 3.Sweden 4.Denmark 5.Taiwan 6.Singapore 7.Switzerland 8.Iceland 9.Norway 10.Australia Source: Global Competitiveness Report 2003–2004, World Economic Forum, January 2004,

MBA650 - Dr. Pavlos Panayi1-12 Economies of Scale Capital Investment Access to Supply and Distribution Channels Learning Curve Operations–oriented Barriers to Entry

MBA650 - Dr. Pavlos Panayi1-13 Primary Topics in Operations Management

MBA650 - Dr. Pavlos Panayi1-14 Primary Topics in Operations Management (cont.)