adeyl khan, faculty, bba, nsu better quality, higher productivity, lower costs, quick response

Adeyl Khan, Faculty, BBA, NSU

Chapter 2Competitiveness, Strategy,

and ProductivityBetter Quality, Higher Productivity,

Lower Costs, Quick Response


GlossaryCompetitiveness:

How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services

Distinctive Competence (Ch1) The special attributes or abilities that give

an organization a competitive edge

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Businesses compete using marketing Identifying consumer wants and needs

Make decision using this info Pricing, Advertising and promotion (inform buyers)

Operations make businesses competitive Product and service design ~ achieve match Cost ~ pricing, profit, productivity Location ~ cost, convenience Quality ~ satisfy intended purpose Quick response ~ satisfaction … Flexibility ~ volume, mix Inventory management ~ matching supply & demand Supply chain management ~ time, cost Service and service quality ~ delivery, setup, VA Managers and workers ~ competent & motivated

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Why Some Organizations FailToo much emphasis on short-term financial

performanceFailing to take advantage of strengths and

opportunitiesNeglecting operations strategyFailing to recognize competitive threatsToo much emphasis in product and service

design and not enough on improvementNeglecting investments in capital and human

resourcesFailing to establish good internal

communicationsFailing to consider customer wants and needs 2-4

Determine customer wants or needDirecting efforts toward meeting

(exceeding) them

Adeyl Khan, Faculty, BBA, NSU2-5

Mission

• The reason for existence for an organization

Mission Statement

• States the purpose of an organization• Basis for org. goal-

Goals

• Provide detail and scope of mission

Strategies

• Plans for achieving organizational goals• Timeframe- Long term, Intermediate term, Short term

Tactics

• The methods and actions taken to accomplish strategies

See Table 2.1


Mission/Strategy/TacticsIt is all about timeframe

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How does mission, strategies and tactics relate todecision making and distinctive competencies?

Strategy TacticsMission


Planning and Decision Making

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Mission

Goals

Organizational Strategies

Functional Goals

Finance Strategies

MarketingStrategies

OperationsStrategies

Tactics Tactics Tactics

Operatingprocedures

Operatingprocedures

Operatingprocedures

Figure 2.1


Strategy | 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

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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, graduate, get job


Examples of Competitive StrategiesLow cost

Scale-based strategies

Specialization

Flexible operations

High quality Service

…Combination

s

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Table 2.1 P41


Examples of Operations Strategies

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Banks, ATMsConvenienceLocation

DisneylandNordstroms

Superior customer serviceService

Burger KingSupermarkets

VarietyVolume

Flexibility

Express Mail, Fedex,One-hour photo, UPS

Rapid deliveryOn-time delivery

Time

Sony TVLexus, CadillacPepsi, Kodak, Motorola

High-performance design or high quality Consistent quality

Quality

U.S. first-class postageMotel-6, Red Roof Inns

Low CostPrice

Table 2.2


Strategic advantage- Distinctive CompetenciesDistinctive Competencies

The special attributes or abilities that give an organization a competitive edge.

Examples include Price, Quality, Time, Flexibility, Service, Location

Do a SWOT analysis before formulating strategies

Example: Xerox Modular design Bottom up pricing strategy!

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Operations StrategyThe approach, consistent with the

organizational strategy, that is used to guide the operations functions. Narrow scope Shorter span Vs. Marketing S., Financial S.

Comparison of mission, org. strategy and op. strategy Table 2.3 P42 for

12


Strategic OM DecisionsDecision Area Affects

Product and service design

Costs, quality liability and environmental

Capacity Cost structure, flexibility

Process selection and layout

Costs, flexibility, skill level, capacity

Work design Quality of work life, employee safety, productivity

Location Costs, visibility

Quality Ability to meet or exceed customer expectations

Inventory Costs, shortages

Maintenance Costs, equipment reliability, productivity

Scheduling Flexibility, efficiency

Supply chains Costs, quality, agility, shortages, vendor relations

Projects Costs, new products, services, or operating systems 2-13


Strategy Formulation

Distinctive competenciesEnvironmental scanning

Competitors- current and future plansSWOT

Internal SW and External OTConsider Order qualifiers and Order winners

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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

PriceReliabilitySpeed Quality


Key External Factors

Economic conditionsPolitical conditionsLegal environmentTechnologyCompetitionMarkets

Key Internal Factors

Human ResourcesFacilities and equipmentFinancial resourcesCustomersProducts and servicesTechnologySuppliers

Strategy of Mr. Dell- Inventory

of computer parts

Growth of Boston Market and

absorption by MacDonald


Quality and Time Strategies

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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Time-based Strategies

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JAN FEB MAR APR MAY JUN

Planning

Processing

Changeover On time!

Designing

Delivery


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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Output

Input

Productivity

Current Period Productivity – Previous Period ProductivityPrevious Period Productivity

Productivity Growth =


Measures of Productivity

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Table 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

Partial measures

•output/(single input)

Multi-factor measures

•output/(multiple inputs)

Total measure

•output/(total inputs)


Examples of Partial Productivity Measures

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Units of output per kilowatt-hourDollar value of output per kilowatt-hour

Energy Productivity

Units of output per dollar inputDollar value of output per dollar input

Capital Productivity

Units of output per machine hourmachine hour

Machine Productivity

Units of output per labor hourUnits of output per shiftValue-added per labor hour

Labor Productivity

Table 2.5


Example 37040 Units Produced

Cost of labor of $1,000

Cost of materials: $520

Cost of overhead: $2000

What is the multifactor productivit

y?


Example 3 Solution

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MFP = OutputLabor + Materials + Overhead

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

MFP = 2.0 units per dollar of input


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 cars rented to cars available to rent

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Key Factors Affecting

Productivity

•Capital•Quality•Technology•Management

Other Factors

•Standardization•Quality ?•Use of Internet•Computer viruses•Searching for lost or misplaced items•Scrap rates•New workers•Safety

Other Factors

•Shortage of IT workers•Layoffs•Labor turnover•Design of the workspace•Incentive plans that reward productivity


Improving Productivity

•Develop productivity measures•Determine critical (bottleneck) operations•Develop methods for productivity improvements•Establish reasonable goals•Get management support•Measure and publicize improvements•Don’t confuse productivity with efficiency


Taking advantage of productivity- OutsourcingHigher productivity in another company is

a key reason organizations outsource workImproving productivity may reduce the

need for outsourcing

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CW-Ch2Example 2Example 3

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Global Strategy

Strategic decisions must be made with respect to globalizationWhat works in one country may not work in anotherStrategies must be changed to account for these differencesOther issues

Political, social, cultural, and economic differences

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AssignmentIOA Covering Ch1-2

Duration: 3rd June 6th June

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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. Describe and give examples of time-based strategies. 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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adeyl khan, faculty, bba, nsu better quality, higher productivity, lower costs, quick response

Documents

adeyl khan

nsu businesses

job slide

nsu missionstrategytactics

nsu planning

p41 slide

strategytacticsmission

short term strategies