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Chapter 2

Competitiveness, Strategy, and

Productivity
 Learning Objectives
After completing this chapter, you should be able to:

1. List the three primary ways that business organization compete.

2. Explain five reasons for the poor competiveness of some companies.

3. Define the term Strategy and explain why strategy is important.

4. Discuss and compare organization strategy and operations strategy, and

explain why it is important to link the two.

5. Describe and give examples of time based strategies.

6. Define the term productivity and explain why it is important to

organizations and to countries.

7. Provide some of the reasons for poor productivity and some ways of
improving it.
 Competitiveness

 How effectively an organization meets the wants and needs of

customer relative to others that offer similar goods or
services.
 េត្របសិទ�ភាពរបស់អង�ភាពអជីវកម� បំេពញនូវេសចក�ី្រត�វកររប
អតិថិជន ្របសិនេបេ្រប�បេធៀប និងអង�ភាពអជីវកម�ដ៏ៃទេទៀតែ
ផ�ល់នូវទំនិញ ឬេសវកម�
 Businesses Compete Using Marketing

• Identifying consumer wants and/or needs

ភាពដូចគា�រវងអ�កេ្រប្របាស់នូវេសចក� និងត្រម�វក

• Price and quality

ករកំណត់ៃថ

• Advertising and promotion

ផ្សព�ផ្ និងករេឃា
 Businesses Compete Using Operations
• Product and service design
• Cost
• Location
• Quality
• Quick response
• Flexibility
• Inventory management
• Supply chain management
• Service
• Managers and workers
Businesses Compete Using Operations
 Why Some Organizations Fail
1. Neglecting operations strategy
2. Failing to take advantage of strengths and opportunities,
and/or failing to recognize competitive threats
3. Putting too much emphasis on short-term financial
performance at the expense of research and development
4. Placing too much emphasis on product and service design and
not enough on process design and improvement
5. Neglecting investments in capital and human resources
6. Failing to establish good internal communications and
cooperation among different functional areas
7. Failing to consider customer wants and needs.
 Mission, Strategies, and Tactics
• Strategies plans for achieving organization goals.
• Mission the reason for the existence of an organization.
• Mission Statement states the purpose of an organization.
• Goals provide detail and scope of the mission.
• Tactics the methods and actions taken to accomplish
strategies.
There are three basic business strategies:
1. Low cost
2. Responsiveness
3. Differentiation from competitors.
Table 2.1
Selected portions of company mission statements
 Planning and Decision Making
Figure 2.1
Planning and decision making are hierarchical in organizations
 Strategy Example
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.
• 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
 Examples of Strategies

 Low cost
 Scale-based strategies
 Specialization
 Newness
 Flexible operations
 High quality
 Service
 Sustainability
 Strategy Formulation
 SWOT analysis of strengths, weaknesses, opportunities, and
threats.
 Order qualifiers characteristics that customers perceive as
minimum standards of acceptability to be considered as a potential
for purchase.
 Order winners characteristics of an organization’s goods or services
that cause it to be perceived as better than the competition.
 Environmental scanning the monitoring of events and trends that
present threats or opportunities for a company.
 Distinctive competencies the special attributes or abilities that give
an organization a competitive edge.
 Examples of Operations Strategies
Table 2.2
Examples of Companies or
Organization Strategy Operations Strategy
services
U.S first-class postage
Low Price Low Cost Waltmart
Southwest Airlines
Responsiveness Short processing time McDonald’s restaurants
Express mail, UPS, FedEx
One-hour photo
On-time delivery Domino’s Pizza
FedEx
Differentiation: High-performance design and/or Sony TV
High quality high-quality processing Lexus
Disneyland
Five-star restaurants or hotels
Consistent quality Coca-cola, PepsiCo
Kodak, Xerox, Motorola
Electrical power
Differentiation: Innovation 3M, Apple, Google
Newness
Differentiation: Flexibility Burger King (“Have it your way”)
Variety Hospital emergency room
Volume McDonald’s (“Buses welcome”)
 Examples of Operations Strategies (con.)
Table 2.2
Examples of Companies or
Organization Strategy Operations Strategy
services
Supermarkets ((Additional
checkouts)
Disneyland
Differentiation:
Superior customer service Amazon
Service
Hewlett-Packard
IBM
Nordstrom
Supermarkets, dry cleaners
Differentiation:
Convenience Service stations
Location
Banks, ATMs
 Key External Factors

 Economic conditions
 Political conditions
 Legal environment
 Technology
 Competition
 Markets
 Key Internal Factors

o Human Resources
o Facilities and equipment
o Financial resources
o Customers
o Products and services
o Technology
o Suppliers
o Other (patents, labor relation, company or product image,…etc)
 Quality and Time Strategies

 Quality-based strategies
• Focused 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
Time-based Strategies
 Productivity
• Productivity
• A measure of the effective use of resources, usually
expressed as the ratios of output to input.
• Productivity ratios are used for
• Planning workforce requirements
• Scheduling equipment
• Financial analysis
 Productivity

• Partial measures
• Output (single input)
• Multi-factor measures
• Output (multiple inputs)
• Total measure
• Output (total inputs)

𝐎𝐎𝐎𝐎𝐎𝐎
𝐏𝐏𝐏𝐏𝐏𝐏𝐏𝐏𝐏𝐏𝐏𝐏 =
𝐈𝐈𝐈𝐈𝐈
 Productivity Growth

(ផលិតភាពថ�ីេពលបច�ុប្ប − ផលិតភាពេពលកន�ងេ)
អ្រតផលិត =
ផលិតភាពេពលកន�ងេ

(Current Period Productivity − Previous Period Productivity)

Productivity Growth =
Previous Period Productivity
Measures of Productivity
 Examples of Partial Productivity Measures
Figure 2.3
 Example 3

7040 Units Produced

Sold for $1.10/unit
What is the multifactor
Cost of labor of $1,000
productivity?
Cost of materials: $520 Ans. 2.20
Cost of overhead: $2,000
 Example 3 Solution

Output
MFP =
Labor + Materials + Overhead

7040 units x ($1.10)

MFP =
$1000 + $520 + $2000

MFP = $2.20
Factors Affecting Productivity
 Other Factors Affecting Productivity
• Standardization
• Quality/Difference quality
• Use of Internet
• Computer viruses
• Searching for lost or misplaced items
• Scrap rates
• New workers
• Cuts in health benefits
• Safety
• Shortage of IT workers
• Layoffs
• Labor turnover
• Design of the workspace
• Incentive plans that reward productivity
 Bottleneck Operation
• An operation is a sequence of operations whose capacity
is lower than that of the other operations

Figure 2.4
 Improving Productivity

• Develop productivity measure

• Determine critical (bottleneck) operations
• Develop methods for productivity improvements
• Establish reasonable goals
• Get management support
• Measure and publicize improvements
• Don’t confuse productivity with effeciency
 សូមអរគុណ
ចំេពះកយកចិត�ទុកដក!

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