Competitiveness,

Strategy, and
Productivity
 Competitiveness
How effectively an organization meets the wants and needs of customers relative to
others that offer similar goods or services.
1. Competitiveness Marketing influences competitiveness
2. Mission and Strategies
3. Operations Strategy
4. Implications of • Identifying consumer wants and/or needs
Organization Strategy • Price and quality
for Operations
Management
• Advertising and promotion
5. Transforming Strategy
into Action: The
Balanced Scorecard
Operations has a major influence on competitiveness through
6. Productivity
1. Product and service design 7. Inventory management
• innovation 8. Supply chain management
• time-to-market 9. Service
2. Cost • Service quality
• Productivity 10. Managers and workers
3. Location
4. Quality
5. Quick response
6. Flexibility
 Why Some Organizations Fail

1. Neglecting operations strategy.

2. Failing to take advantage of strengths and opportunities, and/or failing to recognize
1. Competitiveness
2. Mission and Strategies competitive threats.
3. Operations Strategy 3. Putting too much emphasis on short-term financial performance at the expense of research
4. Implications of and development.
Organization Strategy
for Operations
4. Placing too much emphasis on product and service design and not enough on process
Management design and improvement.
5. Transforming Strategy 5. Neglecting investments in capital and human resources.
into Action: The 6. Failing to establish good internal communications and cooperation among different
Balanced Scorecard
6. Productivity functional areas.
7. Failing to consider customer wants and needs.

Two basic issues

First: What do the customers want?
Second: What is the best way to satisfy those wants?
 Mission
The reason for the existence of an organization.
Mission statement
1. Competitiveness States the purpose of an organization. basis for organizational goals
2. Mission and Goals
Strategies Provide detail and scope of the mission.
3. Operations Strategy Strategies
4. Implications of Plans for achieving organizational goals.
Organization Strategy
for Operations
Management Three basic business strategies:
5. Transforming Strategy • Low cost
into Action: The • Responsiveness
Balanced Scorecard
6. Productivity
• Differentiation from competitors

Mission Statements
Microsoft To help people and businesses throughout the world to realize their full potential.
Verizon To help people and businesses communicate with each other.
Starbucks To inspire and nurture the human spirit—one cup and one neighborhood at a time.
U.S. Dept. of Education To promote student achievement and preparation for global competitiveness and
fostering educational excellence and ensuring equal access.
 Strategies and Tactics
• organizational strategies
• functional strategies
1. Competitiveness
2. Mission and Tactics
Strategies • The methods and actions taken to accomplish strategies.
3. Operations Strategy • more specific than strategies
4. Implications of
Organization Strategy • guidance and direction for carrying out actual operations,
for Operations • Involve the most specific and detailed plans and decision making in an
Management organization.
5. Transforming Strategy
into Action: The
Balanced Scorecard Rita is a high school student in Southern California. She would like to have a career in
6. Productivity
business, have a good job, and earn enough income to live comfortably.

A possible scenario for achieving her goals might look something like this:
Mission: Live a good life.
Goal: Successful career, good income.
Strategy: Obtain a college education.
Tactics: Select a college and a major; decide how to finance college.
Operations: Register, buy books, take courses, study.
 Planning and decision making

1. Competitiveness
2. Mission and
Strategies
3. Operations Strategy
4. Transforming Strategy
into Action: The
Balanced Scorecard
5. Productivity
 Common strategies

• Low cost
1. Competitiveness
• Scale-based strategies
2. Mission and • Specialization
Strategies •
3. Operations Strategy
Newness
4. Transforming Strategy • Flexible operations
into Action: The • High quality
Balanced Scorecard • Service
5. Productivity
• Sustainability
Core competencies
The special attributes or abilities that give an organization a competitive edge.

• merely matching a competitor is usually not sufficient to gain market share.

• necessary to exceed the quality level of the competitor or gain an edge by
excelling in one or more other dimensions.
1. Competitiveness
2. Mission and
Strategies
3. Operations Strategy
4. Implications of
Organization Strategy
for Operations
Management
5. Transforming Strategy
into Action: The
Balanced Scorecard
6. Productivity
 Strategy Formulation

• SWOT
1. Competitiveness • Analysis of strengths, weaknesses, opportunities, and threats.
2. Mission and
Strategies • Order qualifiers
3. Operations Strategy • Characteristics that customers perceive as minimum standards of
4. Implications of acceptability to be considered as a potential for purchase.
Organization Strategy
for Operations
Management • Order winners
5. Transforming Strategy • Characteristics of an organization’s goods or services that cause it to be
into Action: The
perceived as better than the competition.
Balanced Scorecard
6. Productivity
• Environmental scanning
The monitoring of events and trends that present threats or opportunities for
a company.
 Strategy Formulation

key external factors:

1. Competitiveness
2. Mission and 1. Economic conditions
Strategies 2. Political conditions
3. Operations Strategy 3. Legal environment
4. Implications of 4. Technology
Organization Strategy
for Operations 5. Competition
Management 6. Customers
5. Transforming Strategy 7. Suppliers
into Action: The
Balanced Scorecard
8. Markets
6. Productivity
key Internal factors (strengths and weaknesses):

1. Human resources
2. Facilities and equipment
3. Financial resources
4. Products and services
5. Technology
6. Other (patents, labor relations, company or product image, access to resources /markets etc.).
 Strategy Formulation

Key steps
1. Competitiveness • Link strategy directly to the organization’s mission statement
2. Mission and • Assess SWOT
Strategies • Identify order winners and order qualifiers
3. Operations Strategy • Select one or two strategies (low cost, speed, customer service etc.) to focus on
4. IMPLICATIONS OF
ORGANIZATION
STRATEGY FOR
OPERATIONS
MANAGEMENT
5. Transforming Strategy
into Action: The
Balanced Scorecard
6. Productivity
 Operations strategy
• The approach, consistent with the organization strategy, that is used to guide
the operations function.
1. Competitiveness • relates to products, processes, methods, operating resources, quality,
2. Mission and Strategies costs, lead times, and scheduling.
3. Operations
Strategy
4. Transforming Strategy Comparison of mission, organization strategy, and operations strategy
into Action: The
Balanced Scorecard
5. Productivity

Operations strategy can have a major influence on the competitiveness of an organization.

 Strategic Operations Management Decision Areas

Strategic operations management decisions

1. Competitiveness
2. Mission and Strategies
3. Operations
Strategy
4. Implications of
Organization Strategy
for Operations
Management
5. Transforming Strategy
into Action: The
Balanced Scorecard
6. Productivity

Traditional strategies
• cost minimization
• or product differentiation.
But focus also on
• strategies based on quality and/or time.
 Strategic Operations Management Decision Areas
• Quality-based strategies
Strategy that focuses on quality in all phases of an organization.
1. Competitiveness
2. Mission and Strategies • Time-based strategies
3. Operations Strategies that focus on the reduction of time needed to accomplish tasks.
Strategy • focus on reducing the time needed to conduct the various activities in a
4. Implications of process.
Organization Strategy
for Operations reduction of time can be achieved in some of the following:
Management • Planning time: to react to a competitive threat, to develop strategies and select tactics, to
5. Transforming Strategy
into Action: The
approve proposed changes to facilities, to adopt new technologies, and so on.
Balanced Scorecard • Product/service design time: to develop and market new or redesigned products or services.
6. Productivity • Processing time: to produce goods or provide services (scheduling, repairing equipment,
methods used, inventories, quality, training, and the like).
• Changeover time: to change from producing one type of product or service to another (new
equipment settings and attachments, different methods, equipment, schedules, or materials).
• Delivery time: to fill orders.
• Response time for complaints:
• from customer complaints about quality, timing of deliveries, and incorrect shipments.
• from employees about working conditions (e.g., safety, lighting, heat or cold), equipment
problems, or quality problems.
 IMPLICATIONS OF ORGANIZATION STRATEGY FOR OPERATIONS MANAGEMENT

1. Competitiveness
2. Mission and Strategies
3. Operations Strategy
4. Implications of
Organization
Strategy for
Operations
Management
5. Transforming Strategy
into Action: The
Balanced Scorecard
6. Productivity
 TRANSFORMING STRATEGY INTO ACTION:
THE BALANCED SCORECARD The Balanced Scorecard

• The balanced scorecard (BSC) is a top-

1. Competitiveness down management system that
2. Mission and Strategies organizations can use to clarify their
3. Operations Strategy
4. Implications of vision and strategy and transform them
Organization Strategy into action.
for Operations • Moving away from purely financial
Management
prospective, managers develop
5. Transforming
objectives, and identify links among
Strategy into
various prospective.
Action: The
Balanced
Scorecard
6. Productivity
 Balanced scorecard factors (examples)
1. Competitiveness
2. Mission and Strategies
3. Operations Strategy
4. Implications of
Organization Strategy
for Operations
Management
5. Transforming
Strategy into
Action: The
Balanced
Scorecard
6. Productivity

The Balanced Scorecard helps focus managers’ attention on strategic issues and the implementation of
strategy, but do not deal with suppliers and government regulations, and community, environmental, and
sustainability issues.
 PRODUCTIVITY

• a measure of the effective use of resources, usually expressed as the ratio of output to
input.
1. Competitiveness
2. Mission and Strategies • an index that measures output (goods and services) relative to the input (labor, materials,
3. Operations Strategy energy, and other resources) used to produce it.
4. Implications of
Organization Strategy • expressed as the ratio of output to input:
for Operations
Management
5. Transforming Strategy
into Action: The • the higher the productivity, the lower the cost of the output.
Balanced Scorecard
6. Productivity • computed for a single operation, a department, an organization, or an entire country.
• productivity ratios are used for planning workforce requirements, scheduling equipment,
financial analysis, and other important tasks.
• the rate of productivity growth is of great importance. Productivity growth is the increase
in productivity from one period to the next relative to the productivity in the preceding
period.
 Computing Productivity
• partial productivity (single input),
• multifactor productivity (more than one input), or
1. Competitiveness • total productivity (all inputs).
2. Mission and Strategies
3. Operations Strategy
4. Implications of
Organization Strategy
for Operations
Management
5. Transforming Strategy
into Action: The
Balanced Scorecard
6. Productivity
 Strategy Formulation

Determine the productivity for these cases:

a) Four workers installed 720 square yards of carpeting in eight hours.
1. Competitiveness
2. Mission and Strategies b) A machine produced 70 pieces in two hours. However, two pieces were unusable.
3. Operations Strategy
4. Implications of Determine the multifactor productivity for the combined input of labor and machine time
Organization Strategy using the following data:
for Operations
Management
Output: 7,040 units
5. Transforming Strategy Input:
into Action: The Labor: $1,000
Balanced Scorecard Materials: $520
6. Productivity Overhead: $2,000
 Factors that Affect Productivity
Misconception
workers are the main determinant of productivity (getting employees to work harder).
1. Competitiveness
2. Mission and Strategies • factors affect productivity: methods, capital, quality, technology, and management.
3. Operations Strategy
4. Implications of
• Without careful planning, technology can actually reduce productivity, especially if
Organization Strategy
for Operations • it leads to inflexibility, high costs, or mismatched operations.
Management
5. Transforming Strategy • employees’ use of computers or smartphones for non-work-related activities
into Action: The (playing games or checking stock prices or sports scores on the internet or
Balanced Scorecard smartphones, and texting friends and relatives).
6. Productivity
• Other factors that affect productivity include the following:
• Standardizing processes and • A shortage of technology-savvy workers
procedures • Layoffs
• Quality differences • Labor turnover
• Use of the internet • Design of the workspace
• Computer viruses • Incentive plans
• Scrap rates • equipment breakdowns
• New workers • Shortages of parts or material
• Safety
 Improving Productivity

• Develop productivity measures for all operations. Measurement is the first step
1. Competitiveness in managing and controlling an operation.
2. Mission and Strategies • Look at the system as a whole in deciding which operations are most critical.
3. Operations Strategy
4. Implications of Managers need to reflect on the value of potential productivity improvements
Organization Strategy before okaying improvement efforts.
for Operations
Management
• Develop methods for achieving productivity improvements, such as soliciting
5. Transforming Strategy ideas from workers (perhaps organizing teams of workers, engineers, and
into Action: The managers), studying how other firms have increased productivity, and
Balanced Scorecard
reexamining the way work is done.
6. Productivity
• Establish reasonable goals for improvement.
• Make it clear that management supports and encourages productivity
improvement.
• Measure improvements and publicize them.
 Questions
• The manager of a crew that installs carpeting has tracked the crew’s output over the past several weeks,
obtaining these figures:
1. Competitiveness Week Crew Size Yards Installed
2. Mission and Strategies 1 4 96
3. Operations Strategy 2 3 72
4. Implications of 3 4 92
Organization Strategy 4 2 50
for Operations 5 3 69
Management 6 2 52
5. Transforming Strategy Compute the labor productivity for each of the weeks. On the basis of your calculations, what can you
into Action: The conclude about crew size and productivity?
Balanced Scorecard
6. Productivity • A company that makes shopping carts for supermarkets and other stores recently purchased some new equipment
that reduces the labor content of the jobs needed to produce the shopping carts. Prior to buying the new equipment,
the company used five workers, who produced an average of 80 carts per hour. Workers receive $10 per hour, and
machine cost was $40 per hour. With the new equipment, it was possible to transfer one of the workers to another
department, and equipment cost increased by $10 per hour, while output increased by four carts per hour.
a) Compute labor productivity under each system. Use carts per worker per hour as the measure of labor
productivity.
b) Compute the multifactor productivity under each system. Use carts per dollar cost (labor plus equipment) as
the measure.
c) Comment on the changes in productivity according to the two measures, and on which one you believe is the
more pertinent for this situation.
1. Competitiveness
2. Mission and Strategies
3. Operations Strategy
4. Implications of
Organization Strategy
for Operations
Management
5. Transforming Strategy
into Action: The
Balanced Scorecard
6. Productivity
 Strategy Formulation

• S
1. Competitiveness
2. Mission and Strategies
3. Operations Strategy
4. Implications of
Organization Strategy
for Operations
Management
5. Transforming Strategy
into Action: The
Balanced Scorecard
6. Productivity