Chapter 2 competitiveness, strategy, and productivity PDF

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Professor Christopher Brock, contains bulleted list of important topics covered in chapter 2 of the textbook....

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BUSI 411 Chapter 2: Competitiveness, Strategy, Productivity  Competitiveness – relates to the effectiveness of an organization in the marketplace       

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relative to other organizations that offer similar products or services Strategy – relates to the plans that determine how an organization pursues its goals Productivity – relates to the effective use of resources and has a direct impact on competitiveness Competitiveness is an important factor in determining whether a company prospers, barely gets by, or fails Business organizations compete through some combination of price, delivery time, and product/service differentiation Marketing influences competitiveness in several ways including::: identifying consumer wants and needs, pricing, and advertising/promotion Operations has a major influence on competitiveness through product and service design, cost, location, quality, response time, flexibility, inventory and supply chain management, and service (many are interrelated) Various reasons businesses fail::: 1) neglecting operations strategy. 2) failing to take advantage of strengths/opportunities and/or failing to recognize competitive threats. 3) putting too much emphasis on short-term financial performance at the expense of R&D. 4) placing too much emphasis on product and service design and not enough on process design and improvement. 5) neglecting investments in capital/human resources. 6) failing to establish good internal communications and cooperation among different functional areas. 7) failing to consider customer wants and needs Mission – reason for an organizations existence (expressed in mission statement) For a business organization, the mission statement should answer the question ‘what business are we in’ A mission of statement serves as the basis for organization goals which provide more detail and describe the scope of the mission Three basic business strategies:: low cost, responsiveness, differentiation from competitors Tactics – the methods and actions used to accomplish strategies, more specific than strategies, provide guidance and direction for carrying out actual operations Tactics are the ‘how to’ part of the process and operations are the actual ‘doing’ part of the process Different strategies for organizations:::: 1) low cost. 2) scale-based strategies. 3) specialization. 4) newness. 5) flexible operations. 6) high quality. 7) service. 8) sustainability

 Core competencies – special attributes or abilities possessed by an organization that give it a competitive edge

 To formulate an effective strategy, senior managers must take into account the core                

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competencies of the organizations, they must critically examine other factors that could have either positive or negative effects (SWOT analysis) Strengths and weaknesses have an internal focus and are typically evaluated by operations people Threats and opportunities have an external focus and are typically evaluated by marketing people SWOT is regarded as the link between organizational strategy and operations strategy Order qualifiers = characteristics that potential customers perceive as minimum standards of acceptability for a product to be considered for purchase Order winners = characteristics of an organizations goods or services that cause them to be perceived as better than the competition Key external factors:::: 1) economic conditions. 2) political conditions. 3) legal environment. 4) technology. 5) competition. 6) customers. 7) suppliers. 8) markets. Key internal factors::: 1) human resources. 2) facilities and equipment. 3) financial resources. 4) products and services. 5) technology. 6) other After assessing internal/external factors, a strategy/strategies must be formulated that will give the organization the best chance of success Supply chain strategy – specifies how the supply chain should function to achieve supply chain goals, should be aligned with business strategy Sustainability strategy – elevating sustainability to the level of organizational governance Global strategy – relates to where parts/products are made and where they are sold Operations strategy – deals primarily with the operations aspect of the organization, relates to products/processes/methods/operating resources/quality/costs/lead times/scheduling An operations strategy must be consistent with the overall strategy of the organization Operations management people play a strategic role in many strategic decisions in a business organization Quality-based strategies – focus on maintaining/improving the quality of an organizations products or services, may be motivated by a variety of factors, may be a part of another strategy Time based strategies – focus on reducing the time requires to accomplish various activities, focus on reducing the time needed to conduct the various activities in a process (((time can reduced in::: planning time, product/service design time, processing time, changeover time, delivery time, response time))) Organization strategy has a major impact on operations and supply chain management strategies Productivity::: index that measures output (goods and services) relative to the input (labor, materials, energy, other) used to product it

Productivity = output / input

Productivity growth = ((current – previous productivity) / previous productivity) * 100

 Productivity measures can be based on a single input, more than one input, or all inputs  The choice of productivity measure depends on the purpose of measurement (**see table      

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2.7 on page 58 for different productivity measures***) Aggregate productivity measures – used to judge the performance of an entire industry or the productivity of the country as a whole Productivity measurements serve as scorecards of the effective use of resources Service productivity is more problematic than manufacturing productivity, it is often more difficult to measure and manage because it involves intellectual activities and a high degree of variability Main factors that affect productivity::: methods, capital, quality, technology, and management Many productivity gains have come from technological improvements Key steps companies can take to improve productivity::: 1) develop productivity measures for all operations. 2) look at the system as a whole in deciding which operations are most critical. 3) develop methods for achieving productivity improvements. 4) establish reasonable goals for improvement. 5) make it clear that management supports and encourages productivity improvement. 6) measure improvements and publicize them Efficiency = pertains to getting the most out of a fixed set of resources...