MBA IInd SEM POM Chapter 13 Competetiveness

8/14/2019 MBA IInd SEM POM Chapter 13 Competetiveness

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Competitiveness, Strategy,and Productivity


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Learning ObjectivesLearning Objectives

List and briefly discuss the primary waysthat 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 ObjectivesLearning Objectives

Discuss and compare organization strategyand operations strategy, and explain why it isimportant to link the two.

Describe and give examples of time-basedstrategies.

Define the term productivity and explain why

it is important to organizations and tocountries.

List some of the reasons for poor productivity

and some ways of improving it.


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Competitiveness:Competitiveness:

How effectively an organization meets thewants and needs of customers relative toothers that offer similar goods or services


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Businesses Compete UsingBusinesses Compete UsingMarketingMarketing

Identifying consumer wants and needs Pricing

Advertising and promotion


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Businesses Compete UsingBusinesses Compete UsingOperationsOperations

Product and service design Cost

Location

Quality Quick response


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Businesses Compete UsingBusinesses Compete UsingOperationsOperations

Flexibility Inventory management

Supply chain management

Service and service quality Managers and workers


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Why Some Organizations FailWhy Some Organizations Fail

Too much emphasis on short-termfinancial performance

Failing to take advantage of strengths

and opportunities

Neglecting operations strategy

Failing to recognize competitive threats


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Mission/Strategy/TacticsMission/Strategy/Tactics

How does mission, strategies and tactics relate to

decision making and distinctive competencies?

StrategyStrategy TacticsTacticsMissionMission


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Planning and Decision MakingPlanning and Decision Making

Mission

Goals

OrganizationalStrategies

Functional Goals

FinanceStrategies

MarketingStrategies

OperationsStrategies

Tactics Tactics Tactics

Operatingprocedures

Operatingprocedures

Operatingprocedures

Figure 2.1


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Strategy ExampleStrategy Example

Rita is a high school student. She would like to havea career in business, have a good job, and earnenough income to live comfortably

Mission: Live a good lifeGoal: Successful career, good incomeStrategy: Obtain a college educationTactics: Select a college and a majorOperations: Register, buy books, take

courses, study, graduate, getjob

Example 1


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Strategy and TacticsStrategy and Tactics

Distinctive CompetenciesThe special attributes or abilities that give an

organization a competitive edge.

Strategy Factors Price Quality Time

Flexibility Service Location


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Strategy FormulationStrategy Formulation

Distinctive competencies Environmental scanning

SWOT

Order qualifiers Order winners


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Strategic OM DecisionsStrategic OM Decisions

Costs, new products, services, or operating systemsProjects

Costs, quality, agility, shortages, vendor relationsSupply chains

Flexibility, efficiencyScheduling

Costs, equipment reliability, productivityMaintenance

Costs, shortagesInventory

Ability to meet or exceed customer expectationsQuality

Costs, visibilityLocation

Quality of work life, employee safety, productivityWork design

Costs, flexibility, skill level, capacityProcess selection and layout

Cost structure, flexibilityCapacity

Costs, quality liability and environmentalProduct and service designAffectsDecision Area

Table 2.4


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ProductivityProductivity

Partial measures output/(single input)

Multi-factor measures output/(multiple inputs)

Total measure output/(total inputs)

Productivity =Outputs

Inputs


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Measures of ProductivityMeasures of ProductivityTable 2.4

Partial Output Output Output Output

measures Labor Machine Capital Energy

Multifactor Output Output

measures Labor + Machine Labor + Capital + Energy

Total Goods or Services Produced

measure All inputs used to produce them

xamp es o ar a ro uc v yxamp es o ar a ro uc v y


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Units of output per kilowatt-hour

Dollar value of output per kilowatt-hourEnergy

Productivity

Units of output per dollar input

Dollar value of output per dollar inputCapital

Productivity

Units of output per machine hour

machine hourMachine

Productivity

Units of output per labor hour

Units of output per shift

Value-added per labor hour

Labor

Productivity

xamp es o ar a ro uc v yxamp es o ar a ro uc v yMeasuresMeasures

Table 2.5


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Example 3Example 3

7040 Units Produced

Cost of labor of $1,000

Cost of materials: $520

Cost of overhead: $2000

What is the multifactor productivity?

Ans. 2.0 units per dollar of input


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Example 3 SolutionExample 3 Solution

MFP = OutputLabor + Materials + Overhead

MFP = (7040 units)$1000 + $520 + $2000

MFP = 2.0 units per dollar of input


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Process YieldProcess Yield

Process yield is the ratio of output ofgoodproduct to input

Defective product is not included in the

output

Service example:

Ratio of cars rented to cars available to rent


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Factors Affecting ProductivityFactors Affecting Productivity

Capital Quality

Technology Management


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Standardization Quality

Use of Internet

Computer viruses

Searching for lost or misplaced items

Scrap rates New workers

Other Factors Affecting ProductivityOther Factors Affecting Productivity


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Improving ProductivityImproving Productivity

Develop productivity measures Determine critical (bottleneck)

operations

Develop methods for productivityimprovements

Establish reasonable goals

Get management support Measure and publicize improvements

Dont confuse productivity with

ffi i

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MBA IInd SEM POM Chapter 13 Competetiveness