Central Luzon State University

Science City of Muñoz 3120

Nueva Ecija, Philippines

Instructional Module for the Course

MNGT 3108: Operations Management

Module 2

Competitiveness, Strategy, and

Productivity

In this module, we will study about the different ways

companies compete and why some firms do a very good job of
competing. You will learn how effective strategies can lead to
competitive organizations, and you will learn what productivity is,
why it is important, and what organizations can do to improve it.

Objectives:
Upon completion of this module, you are expected to:
1. Explain the impact of competitive advantage in the
marketplace
2. Describe the concept of strategy in exploiting opportunities
and strengths, neutralizing threats, and avoid weaknesses.
3. Compute the productivity measurement.

A. Competitiveness

Stevenson (2012) defined competitiveness as it relates to the effectiveness

of an organization meets the wants and needs of customers relative to others
that offer similar goods or services (p. 41).

Business organizations compete through some combination of their

marketing and operations functions. Marketing influences competitiveness in
several ways, including identifying consumer wants and needs, pricing, and
advertising and promotion.
1. Identifying consumer wants and/or needs is a basic input in an
organization’s decision making process, and central to competitiveness.

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The ideal is to achieve a perfect match between those wants and needs
and the organization’s goods and/or services;
2. Price and quality are key factors in consumer buying decisions. It is
important to understand the trade-off decision consumers make
between price and quality;
3. Advertising and promotion are ways organizations can inform potential
customers about features of their products or services, and attract
buyers (p. 42).

Operations has a major influence on competitiveness through product and

service design, cost, location, quality, response time, flexibility, inventory and
supply chain management, and service. Many of these are interrelated.
1. Product and service design should reflect joint efforts of many areas of
the firm to achieve a match between financial resources, operations
capabilities, supply chain capabilities, and consumer wants and needs.
2. Cost of an organization’s output is a key variable that affects pricing
decisions and profits.
3. Location can be important in terms of cost and convenience for
customers.
4. Quality refers to materials, workmanship, design, and service.
Consumers judge quality in terms of how well they think a product or
service will satisfy its intended purpose.
5. Quick response can be a competitive advantage. One way is quickly
bringing new or improved products or services to the market. Another
is being able to quickly deliver existing products and services to a
customer after they are ordered, and still another is quickly handling
customer complaints.
6. Flexibility is the ability to respond to changes. Changes might relate to
alterations in design features of a product or service, or to the volume
demanded by customers, or the mix of products or services offered by
an organization.
7. Inventory management can be a competitive advantage by effectively
matching supplies of goods with demand.
8. Supply chain management involves coordinating internal and external
operations to achieve timely and cost-effective delivery of goods
throughout the system.
9. Service might involve after-sale activities customers perceive as value-
added, such as delivery, setup, warranty work, and technical support.
Or it might involve extra attention while work is in progress, such as
courtesy, keeping the customer informed, and attention to details.
Service quality can be a key differentiator; and it is one that is often
sustainable. Moreover, businesses rated highly by their customers for
service quality tend to be more profitable, and grow faster, than
businesses that are not rated highly.

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10. Managers and workers are the people at the heart and soul of an
organization, and if they are competent and motivated, they can provide
a distinct competitive edge by their skills and the ideas they create. One
often overlooked skill is answering the telephone. How complaint calls
or requests for information are handled can be a positive or a negative.
If a person answering is rude or not helpful, that can produce a negative
image. Conversely, if calls are handled promptly and cheerfully, that can
produce a positive image and, potentially, a competitive advantage. (p.
42).

B. Strategy

Strategy is a set of goal-directed actions a firm takes to gain and sustain

superior performance relative to competitors. (Rothaermel, 2017, p. 6)

The mission and goals often relate to how an organization wants to be

perceived by the general public, and by its employees, suppliers, and
customers. Goals serve as a foundation for the development of organizational
strategies while the mission is the reason for its existence, which provide more
detail and describe the scope of the mission (Stevenson, 2012, p. 44).

With the mission established, strategy and its implementation can begin.
Strategy is an organization’s action plan to achieve the mission. Each functional
area has a strategy for achieving its mission and for helping the organization
reach the overall mission. These strategies exploit opportunities and strengths,
neutralize threats, and avoid weaknesses.
a. Differentiation - Distinguishing the offerings of an organization in a way
that the customer perceives as adding value;
b. Low-cost leadership - Achieving maximum value, as perceived by the
customer;
c. Response - A set of values related to rapid, flexible, and reliable
performance (Heizer & Render, 2014, p. 36).

C. Productivity

Productivity is the measure of the effective use of resources, expressed as

the ratio of output to input. (Stevenson, 2012, p. 56). Heizer & Render (2014).
The more efficiently we make this change, the more productive we are and the
more value is added to the good or service provided.

Productivity is the ratio of outputs divided by the inputs.

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a. Single-factor Productivity - indicates the ratio of goods and services

produced to one resource.

Units Produced
𝑆𝑖𝑛𝑔𝑙𝑒 𝑓𝑎𝑐𝑡𝑜𝑟 =
Inputs Used

b. Multifactor Productivity - indicates the ratio of goods and services

produced to many or all resources (p.14).

Output
𝑀𝑢𝑙𝑡𝑖𝑓𝑎𝑐𝑡𝑜𝑟 =
Labor + Material + Energy + Capital + Miscellaneous

References

Heizer, J., & Render, B. (2014). Operations Management, Sustainability and Supply
Chain Management Global Edition (11th ed.). Pearson Education Inc.

Rothaermel, F.T. (2017). Strategic Management (3rd ed.). McGraw-Hill Education

Stevenson, W. (2012). Operations Management (11th ed.). McGraw-Hill

Companies, Inc.

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