Chap 2 - Competitiveness, Strategy, Productivity
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Transcript of Chap 2 - Competitiveness, Strategy, Productivity
Competitiveness, Strategy, and Productivity
McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
CompetitivenessStrategyProductivity
2Instructor Slides
Better quality, higher productivity, lower costs, and the ability to respond quickly to customer needs are more important than ever and…
the bar is getting higher
Instructor Slides 2-3
Competitiveness:How effectively an organization meets the
wants and needs of customers relative to others that offer similar goods or services
Organizations compete through some combination of their marketing and operations functions
• What do customers want?• How can these customer needs best be
satisfied?
Instructor Slides 2-4
Identifying consumer wants and/or needsGetting the consumer interested in our
productPricingAdvertising and promotion
Instructor Slides 2-5
1. Product and service design2. Cost3. Location4. Quality5. Quick response6. Flexibility7. Inventory management8. Supply chain management9. Service10. Managers and workers
Instructor Slides 2-6
1. Failing to take advantage of strengths and opportunities and/or failing to recognize competitive threats
2. Too much emphasis on short-term financial performance at the expense of R&D
3. Too much emphasis in product and service design and not enough on process design and improvement
4. Neglecting investments in capital and human resources
5. Failing to establish good internal communications and cooperation
6. Failing to consider customer wants and needs – and to anticipate changes in customer requirementsInstructor Slides 2-7
Mission
Goals
Organizational Strategies
Tactics
Functional Strategies
Instructor Slides 2-8
Mission The reason for an organization’s existence The mission statement should answer the question of
“What business are we in?”
Goals Provide detail and the scope of the mission
Goals can be viewed as organizational destinationsStrategy
A plan for achieving organizational goalsServes as a roadmap for reaching the organizational
destinations
Instructor Slides 2-9
FedEx Corporation will produce superior financial returns for its shareowners by providing high value-added logistics, transportation and related information services through focused operating companies.
Customer requirements will be met in the highest quality manner appropriate to each market segment served.
FedEx Corporation will strive to develop mutually rewarding relationships with its employees, partners and suppliers.
Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical
and professional standards.http://ir.fedex.com/documentdisplay.cfm?DocumentID=125
Instructor Slides 2-10
The mission statement serves as the basis for organizational goals
GoalsProvide detail and the scope of the mission
Goals can be viewed as organizational destinationsGoals serve as the basis for organizational
strategies
Instructor Slides 2-11
Strategy A plan for achieving organizational goals
Serves as a roadmap for reaching the organizational destinations
Organizations haveOrganizational strategies
Overall strategies that relate to the entire organizationSupport the achievement of organizational goals and
missionFunctional level strategies
Strategies that relate to each of the functional areas and that support achievement of the organizational strategy
Instructor Slides 2-12
TacticsThe methods and actions taken to accomplish
strategiesThe “how to” part of the process
Operations The actual “doing” part of the process
Instructor Slides 2-13
Mission
Goals
Organizational Strategies
Tactics
Functional Strategies
Instructor Slides 2-14
Core CompetenciesThe special attributes or abilities that give anorganization a competitive edge
To be effective core competencies and strategies need to be aligned
Instructor Slides 2-16
Effective strategy formulation requires taking into account:Core competenciesEnvironmental scanning
SWOTSuccessful strategy formulation also
requires taking into account:Order qualifiersOrder winners
Instructor Slides 2-17
1. Economic conditions2. Political conditions3. Legal environment4. Technology5. Competition
1. Import or legal restrictions
6. Markets
Instructor Slides 2-18
1. Human Resources2. Facilities and equipment3. Financial resources4. Customers5. Products and services6. Technology7. Suppliers8. Other
Instructor Slides 2-19
Quality-based strategyStrategy that focuses on quality in all phases
of an organizationWhy might a company want a Quality-based
strategy, if they are not already known for having good quality?
How good does your quality have to be?
Instructor Slides 2-20
Time-based strategiesStrategies that focus on the reduction of time
needed to accomplish tasksIt is believed that by reducing time:
costs are lower, quality is higher, productivity is higher, time-to-market is faster, and customer service is improved
Instructor Slides 2-21
Areas where organizations have achieved time reductions:Planning timeProduct/service design timeProcessing timeChangeover timeDelivery timeResponse time for complaints
Instructor Slides 2-22
Agile operationsA strategic approach for competitive advantage
that emphasizes the use of flexibility to adapt and prosper in an environment of changeInvolves the blending of several core competencies:
CostQualityReliabilityFlexibility
Instructor Slides 2-23
A top-down management system that organizations can use to clarify their vision and strategy and transform them into action Develop objectives Identify links among the various perspectives
FinanceCustomer Internal business processesLearning and growth
Develop metrics and targets for each objective Develop initiatives to achieve objectives Monitor results
Instructor Slides 2-24
ProductivityA measure of the effective use of resources,
usually expressed as the ratio of output to input
Productivity measures are useful forTracking an operating unit’s performance over
timeJudging the performance of an entire industry
or country
Instructor Slides 2-25
It has been said that Japanese car manufacturers produce more cars with fewer workers than US car manufacturers.
Explain why, assuming that the US workers are as hardworking as Japanese workers.
Instructor Slides 26
High productivity is linked to higher standards of living As an economy replaces manufacturing jobs with lower
productivity service jobs, it is more difficult to maintain high standards of living
Higher productivity relative to the competition leads to competitive advantage in the marketplace Pricing and profit effects
For an industry, high relative productivity makes it less likely it will be supplanted by foreign industry
Instructor Slides 2-27
Partial Measures Output
Single Input;
Ouput
Labor;
Output
Capital
Energy+Capital+Labor
Output ;
Machine+Labor
Ouput ;
Inputs Multiple
Output Measuresr Multifacto
Total Measure Goods or services produced
All inputs used to produce them
Input
Output=tyProductivi
Instructor Slides 2-28
What is the multifactorproductivity?
Units produced: 5,000 Selling price: $30/unitLabor input: 500 hoursCost of labor: $25/hourCost of materials: $5,000Cost of overhead: 2x labor cost
Instructor Slides 2-29
Multifactor Productivity =Output
Labor +Material +Overhead
$25/hour))hours (2(500+$5,000+$25/hour)hours (500
$30/unitunits 5,000=
3.5294=
500,42$
$150,000=
Instructor Slides 2-30
Instructor Slides 2-31
Productivity Growth = Current productivity- Previous productivity
Previous productivity100%
Productivity Growth = 23 - 25
25100% 8%
Example: Labor productivity on the ABC assembly line was 25 units per hour in 2009. In 2010, labor productivity was 23 units per hour. What was the productivity growth from 2009 to 2010?
Instructor Slides 2-32
Service sector productivity is difficult to measure and manage because It involves intellectual activities It has a high degree of variability
A useful measure related to productivity is process yieldWhere products are involved
ratio of output of good product to the quantity of raw material input.
Where services are involved, process yield measurement is often dependent on the particular process: ratio of cars rented to cars available for a given day ratio of student acceptances to the total number of
students approved for admission.
Instructor Slides 2-33
Capital
Methods
Technology Management
Quality
Instructor Slides 2-34
1. Develop productivity measures for all operations
2. Determine critical (bottleneck) operations
3. Develop methods for productivity improvements
4. Establish reasonable goals
5. Make it clear that management supports and encourages productivity improvement
6. Measure and publicize improvements
Don’t confuse productivity with efficiency
Instructor Slides 2-35
What are competitive trade-offs?What are some competitive trade-offs
that might be faced in a fast food restaurant?
36Instructor Slides
A catering company prepared and served 300 meals at a party last week using 8 workers. The week before, 6 workers prepared and served 240 meals at a wedding reception.
For which event was the labor productivity higher?
What are some possible reasons for the productivity differences?
37Instructor Slides
Student Slides 38