OPERATIONS, PRODUCTIVITY AND BUSINESS

COMPETITIVENESS

Productivity A measure of efficiency.

The amount of output produced compared to the amount of input required in production.

Competitiveness

Organisations that improve productivity will become more competitive.

Competitive Advantage occurs when an organisation is able to produce goods or services better than its competitors.

Competitive Advantage may be obtained by providing a product or service faster, better or cheaper than rival organisations.

Organisations essentially compete in two ways: Cost – lower prices Differentiation – value in terms of service (flexibility, speed, quality)

or added feature compared to competitors.

Areas of Operational Competitiveness - Cost

Competing on cost means offering a good or service at a cheaper cost, this means that LSOs need to reduce their operating costs.

This can be achieved by: Achieve economies of scale Bulk buy inputs Eliminate waste Produce standardised products Produce high volume output Use automated production systems

Areas of Operational Competitiveness – Quality

Competing on quality means that LSOs aim to produce the best product or service available to the marketplace. For example, Apple Ipad.

Organisations that compete on quality: View quality as a competitive weapon Publicly communicate an organisation-wide commitment to

quality. Immediately respond to customer needs. Reduce defect rates in the production process. Strictly comply with design specifications. ‘Tailor’ products to customers. Use technology to produce large numbers of customised

products to varying specifications. Market themselves as a quality business.

Areas of Operational Competitiveness – Speed of Delivery

Some LSOs compete on the ability to deliver their goods and services to customers more quickly than others.

Organisations that compete on speed of delivery:

Promote a sense of urgency within the organisation. Reduce the problems associated with bureaucracy. Quickly identify and act on trends. Respond quickly to changes in demand. Often have flatter management structures. Maintain a corporate culture expecting ongoing and

radical change.