Competitiveness, Strategy, and Productivity PDF

Preview

Summary

Professor: Eyran Gisches...

Description

Chapter 2

MIS 373

Lecture Notes TOperta

Competitiveness, Strategy, and Productivity o Competitiveness, Strategy, Productivity  Three separate, but related concepts that are vitally important to business organizations o Competitiveness  How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services  Organizations compete over:  Price  Quality  Response-time  Variety o Operations’ Influence Competitiveness  1.Operations  Product and service design  Capacity  Process design  Location  Inventory management  Supply chain management  Service  Quality  Work design  Scheduling  2. Operational Competencies  Cost  Quality  Flow-time  Flexibility  3. Competitiveness  Price, Quality, Response time, Variety o Planning and Decision Making

Chapter 2

MIS 373

Lecture Notes

o Mission  The reason for an organization’s existence  Mission statement  States the purpose of the organization  Answer the question: “What business are we in?”  Serves as the basis for organizational goals o Goals  Provide detail and the scope of the mission  Goals can be viewed as organizational destinations  The basis for organizational strategies o Organizational Strategies  Strategy  A plan for achieving organizational goals  Serves as a roadmap for reaching the organizational destinations  Organizations have:  Organizational Strategies  Overall strategies that relate to the entire organization  Support the achievement of organizational goals and mission  Functional Level Strategies  Strategies that relate to each of the functional areas that support achievement of the organizational strategy o Strategies  Low Price  Specialization  Narrow product lines or limited services  Variety  E.g., customization  Newness  Innovation to create new products or services  Service  Various aspects of service (e.g., helpful, reliable, etc.)  Sustainability  Environmentally friendly and energy efficient operations  Quality  Responsiveness (time-based strategies)  Reduction of time needed to complete products or perform services o Strategy Formulation  Strategy formulation should take into account:  1. Core Competencies  2. Order Qualifiers & Order Winners  3. Environmental Scanning  SWOT

Chapter 2

MIS 373

Lecture Notes

o 1. Core Competencies  Special attributes or abilities that give an organization a competitive edge  Core competencies and strategies should be aligned o 2. Order Qualifiers & Order Winners  Order Qualifiers  Characteristics that customers perceive as minimum standards of acceptability for a product or service to be considered as a potential for purchase  Order Winners  Characteristics of an organization’s goods or services that cause it to be perceived as better than the competition  Price, delivery reliability, delivery speed and quality  Can be order qualifiers or order winners  May change over time o 3. Environmental Scanning — SWOT  Necessary to identify:  Internal Factors  Strengths and Weaknesses  External Factors  Opportunities and Threats o Key Internal Factors: Strengths and Weaknesses  Human Resources  Skills of workforce, expertise, experience, loyalty to organization  Facilities and Equipment  Capacities, locations, age, maintenance costs  Financial Resources  Cash flow, access to additional funding, debt, cost of capital  Customers  Loyalty, wants and needs  Products and Services  Existing, potential for new ones  Technology  Existing, ability to integrate new and its impact on current and future operations  Suppliers  Relationships, dependency, quality, flexibility, service  Other  Labor relations, company image, distribution channels, etc. o Key External Factors: Opportunities and Threats  Economic Conditions  Health and directions of the economy, inflation, deflation, interest rates, taxes, tariffs  Political Conditions  Attitude towards business, political stability, wars

Chapter 2

MIS 373



Lecture Notes

Legal Environment  Antitrust laws, regulations, trade restrictions, minimum wage laws, liability laws, labor laws, patents  Technology  Innovations rate, future process technology, design technology  Competition  Number and strength of competitors, basis of competitions (price, quality, etc.)  Markets  Size, location, brand loyalty, ease of entry, growth potential, long term stability, demographics o Operations Strategy  The approach, consistent with organizational strategy, that is used to guide the operations function  But…Organizational Strategy should take into account the realities of operations strengths and weaknesses

o Tactics and Operations  Tactics  The methods and actions taken to accomplish strategies  The “how to” part of the process  Operations  The actual “doing” part of the process o Mission, Organizational Strategy, Operations Strategy

Chapter 2

MIS 373

Lecture Notes

o Productivity  Productivity  A measure of the effective use of resources  Expresses as the ratio of Output to Input  Productivity measures track an operating unit’s performance over time  Planning workforce requirements  Scheduling equipment  Financial analysis o Why Does Productivity Matter?  Higher productivity relative to the competition leads to competitive advantage in the marketplace  High productivity is linked to higher standards of living  Have more, work less  Manufacturing multiplier (1.6-16): manufacturing has beneficial side effect  service jobs  GOAL: Improve Productivity o Productivity  Productivity = Outputs / Inputs  Partial measures  Output / (single input) Multi-factor measures   Output / (multiple inputs)  Total measure  Output / (total inputs) o Productivity (continued)  Agriculture:  1900’s 40% of US workers vs. 2% today  More automation & Innovation = Higher Productivity = New Products & Services  Increased Productivity  Increased Wealth  Increased consumer spending power and desire  More jobs

Chapter 2

MIS 373

Lecture Notes

o Service Sector Productivity  Fewer manufacturing jobs  More service jobs  Bifurcated service job marked:  High skill workers (e.g., doctors, IT professionals)  Shrinking middle  Low skill workers  Service sector productivity is more difficult to measure and manage  Involved intellectual activities  A high degree of variability  Manufacturing multiplier (1.6-16): manufacturing has beneficial side effect  service jobs o Productivity Decline  We are in the longest slide in worker productivity since the late 1970s is haunting the U.S economy’s long-term prospects o Productivity Growth Analysis  Over time, there are gaps between peaks of productivity  Standard of living is not expected to increase substantially in the near future  Big productivity peaks:  Post-war “Golden Age” ~ 1960-1968  Tech boom ~ 2001-2003 o Measures of Productivity

o Examples of Partial Productivity Measures  Labor Productivity  Units of output per labor hour  Units of output per shift  Value-added per labor hour  Machine Productivity  Units of output per machine hour  Capital Productivity  Units of output per dollar input  Dollar value of output per dollar input  Energy Productivity  Units of output per kilowatt-hour

Chapter 2 o

o

o

o

o

o

MIS 373

Lecture Notes

 Dollar value of output per kilowatt-hour Productivity Calculation Example: What is the multifactor productivity?  Information:  Units Produced: 5,000  Standard price: $30/unit  Labor input: 500 hours  Cost of labor: $25/hour  Cost of materials: $5,000  Cost of overhead: 2x labor cost  Formula Application:  Multifactor Productivity = (Output) / (Labor+Material+Overhead)  = [5,000 units x $30/unit] / [(500 hrs x $25/hr)+$5000+(2 x (500 hrs x $25/hr))]  = $150,000 / $42,500  = 3.5294  *What is the implication of a unit-less measure of productivity?  Productivity Growth  [(Current Productivity – Previous Productivity) / (Previous Productivity)] x 100%  EXAMPLE: Labor productivity on the ABC assembly line was 25 units per hour in 2013. In 2014, labor productivity was 23 units per hour. What was the productivity growth from 2013 to 2014?  Productivity Growth = [(23 – 25) / 25] x 100% = –8% Service Sector Productivity  Difficult to measure and manage  Involves intellectual activities  Has a high degree of variability Factors Affecting Productivity  Methods  Quality  Management  Capital  Technology  INCREASE: calculators, computers, faxes, copiers, Internet search engines, voice mail, cell phones, email  REDUCE: inflexibility, high costs, mismatched operations, non-work activities Productivity vs. Efficiency  Don’t confuse productivity with efficiency  Efficiency = getting the most out of a fixed set of resources  Productivity = effective use of overall resources (e.g., upgrading equipment) SWOT EXAMPLE: Amazon  Strengths  Cost leadership strategy

Chapter 2







MIS 373

Lecture Notes

 Superior quality services and products  Strategic acquisitions  Efficient distribution and logistics  Economies of scope Weaknesses  Only online presence  Selling at zero margins  Negative publicity Opportunities  Online payment system  Release more of its own brand products and services  Increase services and product portfolio through acquisitions  Open more online stores in other countries  Physical presence Threats  Emerging online competitors  Etc.

CLICKER QUESTIONS 1. What competitive dimension did the Cricket-Stick improve upon? a. Variety (and Quality) 2. What competitive dimension did the Turning Point Cloud improve upon? a. NONE 3. How long does it take to get an order from Amazon Prime Air? a. 30 minutes or less 4. Organization’s Strategies are: a. A roadmap for reaching the organizational destinations i. Goals are: 1. Organizational destinations ii. Mission is: 1. The reason for an organization’s existence iii. Tactics is: 1. Methods and actions taken to accomplish strategies iv. Operations is: 1. The actual “doing” part of the process 5. Why does Productivity matter? a. Our quality of life is closely tied to productivity...