CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY Productivity, Competitiveness, and Strategy

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management Inputs Land Labor Capital Transformation/ Conversion process Outputs Goods Services Control Feedback

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management Measures of Productivity Table 2-1 Partial Output Output Output Output measures Labor Machine Capital Energy Multifactor Output Output measures Labor + Machine Labor + Capital + Energy Total Goods or Services Produced measure All inputs used to produce them

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management Why is productivity important at the national level? Why is productivity important at the firm level?

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management Example 10,000 units produced in a period Sold for $10/unit 500 labor hours required during the period Labor rate: $9/hr Cost of raw material for the units produced : $5,000 Cost of purchased material for the units produced: $25,000 What is the labor productivity?

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management Example--Labor Productivity

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management CapitalQuality TechnologyManagement Factors Affecting Productivity

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management Improving Productivity Develop productivity measures Determine critical operations, e.g., bottlenecks Develop methods for productivity improvements Establish reasonable goals Get management support Measure and publicize improvements Don’t confuse productivity with efficiency

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management Operation Bottleneck Operation Bottleneck Operation Figure units /hour 30 units /hour An Example of a Bottleneck Operation

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management Quality Price Time Flexibility Differentiation Competitiveness

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management Value This what the customer wants

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management How does mission, strategies and tactics relate to decision making and distinctive competencies? StrategyTacticsMission Mission/Strategy/Tactics

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management Strategy Mission Mission Statement Strategy Tactics

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management Strategy Example 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: Live a good life Goal: Successful career, good income Strategy: Obtain a college education Tactics: Select a college and a major Operations: Register, buy books, take courses, study, graduate, get job Example 3

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management Mission Goals Organizational strategy Functional strategies FinanceMarketingOperations Tactics Finance operations Marketing operations Operations operations Figure 2-3 Planning and Decision Making Hierarchy

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management Strategy Formulation Order Qualifiers Order Winners Distinctive Competencies Environmental Scanning

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management Examples of Strategies Traditional Strategies –Cost minimization –Product differentiation New 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

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management JANFEBMARAPRMAYJUN Planning Processing Changeover On time! Designing Delivery Time-based Strategies

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management Company Strategy to be Supported Operations Strategy Quality Product Process Location Layout Human resources Purchasing and JIT Inventory Scheduling Maintenance Marketing Strategy Service Distribution Promotion Price Channels of distribution Product positioning Finance Strategy Leverage Cost of capital Working capital Receivables Payables Financial Control Lines of Credit Implementing Strategy via Specific Functional Strategies

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management Operations Strategy Considerations Consistent with –Company strategy –Environmental demands –Competitive demands –Product life cycle Identifies and organizes the POM tasks Makes the necessary choices within the POM function Creates competitive advantage

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management Introductory Growth Mature Decline Home Computer Sales Volume Time Smart Phones Color TV Black & White TV Stereo TV Phases Product Life Cycle

CHAPTER TWO PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY MTSU Management