1. Adeyl Khan, Faculty, BBA, NSU Better Quality, Higher Productivity, Lower Costs, Quick Response

2. Adeyl Khan, Faculty, BBA, NSU Glossary  Competitiveness:  How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services  Distinctive Competence (Ch1)  The special attributes or abilities that give an organization a competitive edge 2-2

3. Adeyl Khan, Faculty, BBA, NSU Identifying consumer wants and needs Make decision using this info Pricing, Advertising and promotion (inform buyers) Businesses compete using marketing Product and service design ~ achieve match Cost ~ pricing, profit, productivity Location ~ cost, convenience Quality ~ satisfy intended purpose Quick response ~ satisfaction … Flexibility ~ volume, mix Inventory management ~ matching supply & demand Supply chain management ~ time, cost Service and service quality ~ delivery, setup, VA Managers and workers ~ competent & motivated Operations make businesses competitive 2-3

4. Adeyl Khan, Faculty, BBA, NSU 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  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 2-4 Determine customer wants or need Directing efforts toward meeting (exceeding) them Determine customer wants or need Directing efforts toward meeting (exceeding) them

5. Adeyl Khan, Faculty, BBA, NSU 2-5 The reason for existence for an organization Mission States the purpose of an organization Basis for org. goal- Mission Statement Provide detail and scope of mission Goals Plans for achieving organizational goals Timeframe- Long term, Intermediate term, Short term Strategies The methods and actions taken to accomplish strategies Tactics See Table 2.1

6. Adeyl Khan, Faculty, BBA, NSU It is all about timeframeMissionStrategyTactics 2-6 How does mission, strategies and tactics relate to decision making and distinctive competencies?

7. Adeyl Khan, Faculty, BBA, NSU Planning and Decision Making 2-7 Mission Goals Organizational Strategies Functional Goals Finance Strategies Marketing Strategies Operations Strategies Tactics Operating procedures

8. Adeyl Khan, Faculty, BBA, NSU Strategy | Example 1  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 2-8 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

9. Adeyl Khan, Faculty, BBA, NSU Examples of Competitive Strategies Low cost Scale-based strategies Specialization Flexible operations High qualityService … Combinations 2-9 Table 2.1

10. Adeyl Khan, Faculty, BBA, NSU Examples of Operations Strategies 2-10 Banks, ATMsConvenienceLocation Disneyland Nordstroms Superior customer serviceService Burger King Supermarkets Variety VolumeFlexibility Express Mail, Fedex, One-hour photo, UPS Rapid delivery On-time delivery Time Sony TV Lexus, Cadillac Pepsi, Kodak, Motorola High-performance design or high quality Consistent qualityQuality U.S. first-class postage Motel-6, Red Roof Inns Low CostPrice Table 2.2

11. Adeyl Khan, Faculty, BBA, NSU Strategic advantage- Distinctive Competencies  Distinctive Competencies  The special attributes or abilities that give an organization a competitive edge.  Examples include Price, Quality, Time, Flexibility, Service, Location  Do a SWOT analysis before formulating strategies  Example: Xerox  Modular design  Bottom up pricing strategy! 2-11

12. Adeyl Khan, Faculty, BBA, NSU Operations Strategy  The approach, consistent with the organizational strategy, that is used to guide the operations functions.  Narrow scope  Shorter span  Vs. Marketing S., Financial S.  Table 2.3  Comparison of mission, org. strategy and op. strategy 12

13. Adeyl Khan, Faculty, BBA, NSU Strategic OM Decisions Decision AreaAffects Product and service designCosts, quality liability and environmental CapacityCost structure, flexibility Process selection and layoutCosts, flexibility, skill level, capacity Work designQuality of work life, employee safety, productivity LocationCosts, visibility QualityAbility to meet or exceed customer expectations InventoryCosts, shortages MaintenanceCosts, equipment reliability, productivity SchedulingFlexibility, efficiency Supply chainsCosts, quality, agility, shortages, vendor relations ProjectsCosts, new products, services, or operating systems 2-13

14. Adeyl Khan, Faculty, BBA, NSU Strategy Formulation  Distinctive competencies  Environmental scanning  Competitors- current and future plans  SWOT  Internal SW and External OT  Consider Order qualifiers and Order winners 2-14 Order qualifiers 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 Price Reliability Speed Quality

15. Adeyl Khan, Faculty, BBA, NSU 2-15 Key External Factors Key Internal Factors Economic conditions Political conditions Legal environment Technology Competition Markets Human Resources Facilities and equipment Financial resources Customers Products and services Technology Suppliers Strategy of Mr. Dell- Inventory of computer parts Growth of Boston Market and absorption by MacDonald

16. Adeyl Khan, Faculty, BBA, NSU Quality-based strategies 2-16  Focuses on maintaining or improving the quality of an organization’s products or services  Quality at the source

17. Adeyl Khan, Faculty, BBA, NSU Time-based Strategies 2-17 JANFEBMARAPRMAYJUN Planning Processing Changeover On time! Designing Delivery Focuses on reduction of time needed to accomplish tasks Time-based strategies

18. Adeyl Khan, Faculty, BBA, NSU Productivity  Productivity  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 2-18 Output Input Productivity Current Period Productivity – Previous Period Productivity Previous Period Productivity Productivity Growth =

19. Adeyl Khan, Faculty, BBA, NSU Measures of Productivity 2-19 Table 2.4 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 Partial measures output/(single input) Multi-factor measures output/(multiple inputs) Total measure output/(total inputs)

20. Adeyl Khan, Faculty, BBA, NSU Ex: Partial Productivity Measures 2-20 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 machine hour Machine Productivity Units of output per labor hour Units of output per shift Value-added per labor hour Labor Productivity

21. Adeyl Khan, Faculty, BBA, NSU 2-21 Example 3 7040 Units Produced Cost of labor of $1,000 Cost of materials: $520 Cost of overhead: $2000 What is the multifactor productivity?

22. Adeyl Khan, Faculty, BBA, NSU Example 3 Solution 2-22 MFP =Output Labor + Materials + Overhead MFP =(7040 units) $1000 + $520 + $2000 MFP =2.0 units per dollar of input

23. Adeyl Khan, Faculty, BBA, NSU 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 2-23

24. Adeyl Khan, Faculty, BBA, NSU 2-24 Key Factors Affecting Productivity Capital Quality Technology Management Other Factors Standardization Quality ? Use of Internet Computer viruses Searching for lost or misplaced items Scrap rates New workers Safety Other Factors Shortage of IT workers Layoffs Labor turnover Design of the workspace Incentive plans that reward productivity

25. Adeyl Khan, Faculty, BBA, NSU 2-25 Improving Productivity Develop productivity measures Determine critical (bottleneck) operations Develop methods for productivity improvements Establish reasonable goals Get management support Measure and publicize improvements Don’t confuse productivity with efficiency

26. Adeyl Khan, Faculty, BBA, NSU Taking advantage of productivity - Outsourcing  Higher productivity in another company is a key reason organizations outsource work  Improving productivity may reduce the need for outsourcing 2-26

27. Adeyl Khan, Faculty, BBA, NSU 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 2-27

28. Adeyl Khan, Faculty, BBA, NSU

29. 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. 2-29

30. Adeyl Khan, Faculty, BBA, NSU 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. 2-30