1. Competitiveness, Strategy, and Productivity
Chapter 2
Competitiveness, Strategy, and Productivity
McGraw-Hill/Irwin
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Chapter 2: Learning Objectives
You should be able to:
List the three primary ways that business organizations compete
Explain five reasons for the poor competitiveness of some companies
Define the term strategy and explain why strategy is important
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 countries
Provide some reasons for poor productivity and some ways of improving it
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3. Competitiveness Competitiveness:
How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services
Organizations compete through some combination of their marketing and operations functions
What do customers want?
How can these customer needs best be satisfied?
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4. Businesses Compete Using Operations
Product and service design
Cost
Location
Quality
Quick response
Flexibility
Inventory management
Supply chain management
Service
Managers and workers
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5. Hierarchical Planning
Mission
Goals
Organizational Strategies
Tactics
Functional Strategies
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6. Mission, Goals, and Strategy
The reason for an organization’s existence
Goals
Provide detail and the scope of the mission
Goals can be viewed as organizational destinations
Strategy
A plan for achieving organizational goals
Serves as a roadmap for reaching the organizational destinations
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7. Core Competencies Core Competencies
The special attributes or abilities that give an
organization a competitive edge
To be effective core competencies and strategies need to be aligned
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8. Strategy Formulation
Effective strategy formulation requires taking into account:
Core competencies
Environmental scanning
SWOT
Successful strategy formulation also requires taking into account:
Order qualifiers
Order winners
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9. Operations Strategy Operations strategy
The approach, consistent with organization strategy, that is used to guide the operations function.
Decision Area
What the Decisions Affect
Product and service design
Costs, quality, liability, and environmental issues
Capacity
Cost, structure, flexibility
Process selection and layout
Costs, flexibility, skill level needed, capacity
Work design
Quality of work life, employee safety, productivity
Location
Costs, visibility
Quality
Ability to meet or exceed customer expectations
Inventory
Costs, shortages
Maintenance
Costs, equipment reliability, productivity
Scheduling
Flexibility, efficiency
Supply chains
Costs, quality, agility, shortages, vendor relations
Projects
Costs, new products, services, or operating systems
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10. Strategic OM Decision Areas
What the Decisions Affect
Product and service design
Costs, quality, liability, and environmental issues
Capacity
Cost, structure, flexibility
Process selection and layout
Costs, flexibility, skill level needed, capacity
Work design
Quality of work life, employee safety, productivity
Location
Costs, visibility
Quality
Ability to meet or exceed customer expectations
Inventory
Costs, shortages
Maintenance
Costs, equipment reliability, productivity
Scheduling
Flexibility, efficiency
Supply chains
Costs, quality, agility, shortages, vendor relations
Projects
Costs, new products, services, or operating systems
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11. Time- and Quality-Based Strategies
Time-based strategies
Strategies that focus on the reduction of time needed to accomplish tasks
It is believed that by reducing time, costs are lower, quality is higher, productivity is higher, time-to-market is faster, and customer service is improved
Quality-based strategy
Strategy that focuses on quality in all phases of an organization
Pursuit of such a strategy is rooted in a number of factors:
Trying to overcome a poor quality reputation
Desire to maintain a quality image
A desire to catch up with the competition
A part of a cost reduction strategy
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12. Productivity Productivity Productivity measures are useful for
A measure of the effective use of resources, usually expressed as the ratio of output to input
Productivity measures are useful for
Tracking an operating unit’s performance over time
Judging the performance of an entire industry or country
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13. Productivity Measures
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14. Factors Affecting Productivity
Methods
Capital
Quality
Technology
Management
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15. Improving Productivity
Develop productivity measures for all operations
Determine critical (bottleneck) operations
Develop methods for productivity improvements
Establish reasonable goals
Make it clear that management supports and encourages productivity improvement
Measure and publicize improvements
Don’t confuse productivity with efficiency
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