Professional Documents
Culture Documents
Chapter 02
Chapter 02
Competitiveness,
Strategy,
and Productivity
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.
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Learning Objectives
Discuss and compare organization strategy
and operations strategy, and explain why it is
important to link the two.
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.
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Competitiveness:
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Businesses Compete Using
Operations
Product and service design
Cost
Location
Quality
Quick response
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Businesses Compete Using
Operations
Flexibility
Inventory management
Supply chain management
Service and service quality
Managers and workers
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Why Some Organizations Fail
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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
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Mission/Strategy/Tactics
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Strategy Example
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Examples of Strategies
Low cost
Scale-based strategies
Specialization
Flexible operations
High quality
Service
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Strategy and Tactics
Distinctive Competencies
The special attributes or abilities that give an
organization a competitive edge.
Strategy Factors
Price
Quality
Time
Flexibility
Service
Location
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Examples of Operations Strategies
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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
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Strategy Formulation
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
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Operations Strategy
Operations strategy – The approach,
consistent with organization strategy,
that is used to guide the operations
function.
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Strategic OM Decisions
Decision Area Affects
Product and service design Costs, quality, reliability and environmental
Capacity Cost structure, flexibility
Process selection and layout Costs, flexibility, skill level, capacity
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
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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
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Garments produced 100,000 shirts [100 TAKA PER SHIRT]
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Product A (produced 10,000 units)
Input:
raw material 1 (500 kg used), @ 2tk/kg
raw material 2 (2500 kg used), @1tk/kg
Overhead (5000 taka spent),
Labor (125 labor hours used), @5tk/LH
Machine (50 hours)
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What is labor+RM productivity?
Prod = output / input
=10,000 units / (125 LH+500kg RM1+2500kg RM2)
=10,000 units / (625tk LH+1000tk RM1+2500tk RM2)
=10,000 units / 4125tk input costs
= 2.42 unit per tk input cost
Partial measures
output/(single input)
Multi-factor measures
output/(multiple inputs)
Total measure
output/(total inputs)
Outputs
Productivity =
Inputs
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Productivity Growth
Productivity Growth =
Current Period Productivity – Previous Period Productivity
Previous Period Productivity
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2019= 2.50
2020= 3.00
20%
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Measures of Productivity
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Examples of Partial Productivity Measures
MFP = Output
Labor + Materials + Overhead
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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 number of students admitted to the
number of students applied
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Factors Affecting Productivity
Capital Quality
Technology Management
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Other Factors Affecting Productivity
Standardization
Quality
Use of Internet
Computer viruses
Searching for lost or misplaced items
Scrap rates
New workers
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Other Factors Affecting Productivity
Safety
Shortage of IT workers
Layoffs
Labor turnover
Design of the workspace
Incentive plans that reward productivity
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Improving Productivity
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REVIEW QUESTIONS
Define
Competitiveness, Core Competencies, Competitive
Advantage, Strategic Advantage, Environmental
Scanning, Operations Strategy, Productivity.
Differentiate
Competitive Advantage vs. Core Competencies
Order Qualifiers vs. Order Winners
Quality Based Strategy vs. Time Based Strategy
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REVIEW QUESTIONS
Short Questions
What are the factors that affect Productivity? (page 60)
How can you improve productivity? (page 61-62)
What are the factors that affect Competitiveness? (page 42)
Why do organizations fail? (page 43)
Maths
Examples: 2 & 3 (Page 58-59)
Solved Problems: 1 to 4 (page 63-64)
Practice Problems: 1 to 9 (page 65-66)
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