1. Competitiveness, Strategy, and Productivity2
Competitiveness, Strategy, and Productivity

2. Learning Objectives
List and briefly discuss the primary ways that business organizations compete.
List five reasons for the poor competitiveness of some companies.
Define the term strategy and explain why strategy is important for competitiveness.
Contrast strategy and tactics.

3. Learning Objectives
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 to countries.
List some of the reasons for poor productivity and some ways of improving it.

4. NEW PRACTICUM SCHEDULE
SEMESTER SIX (6)
EMPLOYER SUGGESTION
JOB OPPORTUNITIES
STUDENTS WERE OFFERED BUT CANNOT ENTER THE JOB MARKET
SUGGEST PRIVATE ORGANIZATION
COMMENCE IMMEDIATELY
CANCEL IF ARRANGEMENT HAS BEEN

5. RULES FOR STUDENT WEAR ONLY DECENT CLOTHES NO T-SHIRT NO SHORT
NO JEANS
WEAR ONLY SHOES.
NO SANDAL/ SLIPPER
SWITCH OFF HP
ATTENDANCE IS COMPULSORY

6. Competitiveness:
How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services

7. Businesses Compete Using Marketing
Identifying consumer wants and needs
Pricing
Advertising and promotion

8. Businesses Compete Using Operations
Product and service design
Cost
Location
Quality
Quick response

9. Businesses Compete Using Operations
Flexibility
Inventory management
Supply chain management
Service and service quality
Managers and workers

10. Why Some Organizations Fail
Too much emphasis on short-term financial performance
Failing to take advantage of strengths and opportunities
Neglecting operations strategy
Failing to recognize competitive threats

11. Why Some Organizations Fail
Too much emphasis in product and service design and not enough on improvement
Neglecting investments in capital and human resources
Failing to establish good internal communications
Failing to consider customer wants and needs

12. Mission/Strategy/Tactics
How do mission, strategies and tactics relate to
decision making and distinctive competencies?

13. Strategy Mission Mission Statement Goals Strategies Tactics
Explains the existence for an organization
Mission Statement
States the purpose of an organization
Goals
Provide detail and scope of mission
Strategies
Plans for achieving organizational goals
Tactics
The methods and actions taken to accomplish strategies

14. Planning and Decision Making
Figure 2.1
Mission
Organizational
Goals
Organizational Strategies
Functional Goals
Finance Strategies
Marketing Strategies
Operations Strategies
Tactics
Operating Procedures

15. Strategy Example Mission: Live a good life
Jun Hee 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

16. Examples of Strategies
Low cost
Scale-based strategies
Specialization
Flexible operations
High quality
Service

17. Strategy and Tactics Distinctive Competencies Strategy Factors
The special attributes or abilities that give an
organization a competitive edge.
Strategy Factors
Price
Quality
Time
Flexibility
Service
Location

18. Examples of Operations Strategies
Table 2.2
Price
Low Cost
National first-class postage, Carrefour, Jetstar
Quality
High-performance design and/or high quality
Consistent quality
Sony TV, Lexus, Disneyland
Time
Coca-Cola, PepsiCo, Kodak, McDonald’s restaurants, UPS
Pizza Hut, FedEx
Rapid delivery On-time delivery
Flexibility
Variety
Volume
Burger King
McDonald’s
Service
Superior customer service
Disneyland, Hewlett-Packard, IBM
Location
Convenience
Supermarkets, dry cleaners

19. Global Strategy
Strategic decisions must be made with respect to globalization
What works in one country may not work in another
Strategies must be changed to account for these differences
Other issues
Political, social, cultural, and economic differences

20. Strategy Formulation Distinctive competencies Environmental scanning
SWOT
Order qualifiers
Order winners

21. Strategy Formulation Order qualifiers Order winners
Characteristics that customers perceive as minimum standards of acceptability to be considered as a potential purchase
Order winners
Characteristics of an organization’s goods or services that cause it to be perceived as better than the competition

22. Operations Strategy
Operations strategy: The approach consistent with organization strategy, that is used to guide the operations function.

23. Strategic OM Decisions
Table 2.4
Decision Area
Affects
Product and service design
Costs, quality liability and environmental
Capacity
Cost structure, flexibility
Process selection and layout
Costs, flexibility, skill level, 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

24. Quality and Time Strategies
Quality-based strategies
Focuses on maintaining or improving the quality of an organization’s products or services
Quality at the source
Time-based strategies
Focuses on reduction of time needed to accomplish tasks

25. Time-Based Strategies
JAN
FEB
MAR
APR
MAY
JUN
Planning
Processing
Changeover
On time!
Designing
Delivery

26. Productivity Productivity Productivity ratios are used for
A measure of the effective use of resources, usually expressed as the ratio of output to input
Productivity ratios are used for
Planning workforce requirements
Scheduling equipment
Financial analysis

27. Food Processor Inputs Processing Outputs Labor Canned vegetables
Metal sheets
Making cans
Water
Cutting
Energy
Cooking
Packing
Labeling
Cleaning
1-27

28. Productivity Productiv ity = Output Input Partial measures
output/(single input)
Multi-factor measures
output/(multiple inputs)
Total measure
output/(total inputs)
Productiv
ity =
Output
Input

29. Productivity Productiv ity = Output Input
Determine the productivity of the following;
Four workers installed 720 square yards of carpeting in 8 hours.
A machine produced 68 usable pieces in 2 hours.
A company that processes fruits and vegetables is able to produce 400 cases of canned peaches in half hour with 4 workers. What is labour productivity
Productiv
ity =
Output
Input
2-29

30. Productivity Growth Productivity Growth =
Current Period Productivity – Previous Period Productivity
Previous Period Productivity
If Productivity increased from 80 to 84, find the growth rate.

31. Measures of Productivity
Table 2.5
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

32. Examples of Partial Productivity Measures
Table 2.6
Units of output per kilowatt-hour
Dollar value of output per kilowatt-hour
Energy Productivity
Units of output per dollar input
Dollar value of output per dollar input
Capital Productivity
Units of output per machine hour
Dollar value of output per machine hour
Machine Productivity
Units of output per labor hour
Units of output per shift
Value-added per labor hour
Labor Productivity

33. Example
Determine the multifactor productivity using the following data:
7040 Units Produced
Cost of labor: $1,000
Cost of materials: $520
Cost of overhead: $2000
What is the multifactor productivity?
Ans. 2.0 units per dollar of input

34. Example : Solution MFP = Output Labor + Materials + Overhead
MFP = (7040 units)
$ $520 + $2000
MFP = 2.0 units per dollar of input

35. Question
1. A wrapping paper company produced 2,000 rolls of paper one day. Standard price in RM1/roll.
Labour cost was RM160, material cost was RM50, and overhead was RM320. Determine the multifactor productivity
2. Suppose that a company produced 300 standard bookcases last week using 8 workers and it produced 240 standard bookcases this week using 6 workers. In which period was the productivity higher?
2-35

36. Process Yield
Process yield is the ratio of output of good product to input
Defective product is not included in the output
Service example:
Ratio of cars rented to cars available to rent

37. Factors Affecting Productivity
Capital
Quality
Technology
Management

38. Improving Productivity
Develop productivity measures
Determine critical (bottleneck) operations
Develop methods for productivity improvements
Establish reasonable goals
Get management support
Measure and publicize improvements
Do not confuse productivity with efficiency