2 - Competitiveness, Strategy, and Productivity

Competitiveness

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

Identifying consumer wants and/or needs

basic input in an organization’s decision-making process, and central to competitiveness. The ideal is to achieve a ­ perfect match between those wants and needs and the organization’s goods and/or services.

Price and quality

key factors in consumer buying decisions. It is important to understand the trade-off decision consumers make between

Advertising and promotion

ways organizations can inform potential customers

about features of their products or services, and attract buyers.

Product and service design

should reflect joint efforts of many areas of the firm to achieve a match between financial resources, operations capabilities, supply chain capabilities, and consumer wants and needs. Special characteristics or features of a product or service can be a key factor in consumer buying decisions

innovation; time-to-market

Other key factors in product and service design include (1) and the (2) for new products and services.

Cost

_ of an organization’s output is a key variable that affects pricing decisions and profits. Cost-reduction efforts are generally ongoing in business organizations.

Location

can be important in terms of cost and convenience for customers. Location near inputs can result in lower input costs. Costs, visibility

Quality

refers to materials, workmanship, design, and service. Ability to meet or exceed customer expectations

Quick response

can be a competitive advantage. One way is quickly bringing new or improved products or services to the market. Another is being able to quickly deliver existing products and services to a customer after they are ordered, and still another is quickly handling customer complaints.

Flexibility

is the ability to respond to changes. Changes might relate to alterations in design features of a product or service, or to the volume demanded by customers, or the mix of products or services offered by an organization.

Inventory management

can be a competitive advantage by effectively matching supplies of goods with demand.

Supply chain management

involves coordinating internal and external operations (buyers and suppliers) to achieve timely and cost-effective delivery of goods throughout the system.

Service

might involve after-sale activities customers perceive as value-added, such as delivery, setup, warranty work, and technical support. Or it might involve extra attention while work is in progress, such as courtesy, keeping the customer informed, and attention to details.

service quality

can be a key differentiator; and it is one that is often sustainable. Moreover, businesses rated highly by their customers for _ tend to be more profitable, and grow faster, than businesses that are not rated highly.

Managers and workers

people at the heart and soul of an organization, and if

they are competent and motivated, they can provide a distinct competitive edge by their skills and the ideas they create.

Mission

The reason for the existence of an organization.

Mission statement

The purpose of an organization

Goals

Provide detail and scope of the mission

Strategies

Plans for achieving organizational goals

Low cost

Responsiveness

Differentiation from competitors

Three basic business strategies

Responsiveness

relates to ability to respond to changing demands

Differentiation

can relate to product or service features, quality, reputation, or customer service

Tactics

the methods and actions taken to accomplish strategies

Low cost

Outsource operations to third-world countries that have low labor costs.

Scale-based strategies

Use capital-intensive methods to achieve high output volume and low unit costs.

Specialization

Focus on narrow product lines or limited service to achieve higher quality.

Newness

Focus on innovation to create new products or services.

Flexible operations

Focus on quick response and/or customization.

High quality

Focus on achieving higher quality than competitors.

Sustainability

Focus on environmental-friendly and energy-efficient operations.

Core competencies

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

Strategy formulation

almost always critical to the success of a strategy.

Order qualifiers

Characteristics that customers perceive as minimum standards of acceptability 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.

Environmental scanning

The monitoring of events and trends that present threats or opportunities for a company.

Economic conditions

Political conditions

Legal environment

Technology

Competition

Markets

Key external factors

Human resources

Facilities and equipment

Financial resources

Customers

Products and services

Technology

Suppliers

Other

Key internal factors

database

According to the PIMS website, The _ is a collection of statistically documented experiences drawn from thousands of businesses, designed to help understand what kinds of strategies (e.g. quality, pricing, vertical integration, innovation, advertising) work best in what kinds of business environments.

Supply chain strategy

specifies how the supply chain should function to achieve supply chain goals. It should be aligned with the business strategy. If it is well executed, it can create value for the organization. It establishes how the organization should work with suppliers and policies relating to customer relationships and sustainability.

Operations strategy

The approach, consistent with the organization strategy, that is used to guide the operations function.

Product and service design

Costs, quality, liability, and environmental issues

Capacity

Cost structure, flexibility

Process selection and layout

Costs, flexibility, skill level needed, capacity

work design

Quality of work life, employye safety, productivity

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

Quality-based strategies

focus on maintaining or improving the quality of an orga-

nization’s products or services.

Time-based strategies

focus on reducing the time required to accomplish various activities (e.g., develop new products or services and market them, respond to a change in ­ customer demand, or deliver a product or perform a service).

Planning time

The time needed to react to a competitive threat, to develop strategies and select tactics, to approve proposed changes to facilities, to adopt new technologies, and so on.

Product/service design time

The time needed to develop and market new or redesigned products or services

Processing time

The time needed to produce goods or provide services. This can involve scheduling, repairing equipment, methods used, inventories, quality, training, and the like.

Changeover time

The time needed to change from producing one type of product or service to another. This may involve new equipment settings and attachments, different methods, equipment, schedules, or materials.

Delivery time

The time needed to fill orders.

Response time for complaints

These might be customer complaints about quality, timing of deliveries, and incorrect shipments. These might also be complaints from employees about working conditions (e.g., safety, lighting, heat or cold), equipment problems, or quality problems.

Low price

High quality

Quick response

Newness/innovation

Product or service variety

Sustainability

Organizational strategies

Low price

Requires low variation in products/services and a high-volume, steady flow of goods results in maximum use of resources through the system. Standardized work, material, and inventory requirements.

High quality

Entails higher initial cost for product and service design, and process design, and more emphasis on assuring supplier quality.

Quick response

Requires flexibility, extra capacity, and higher levels of some inventory items.

Newness/ innovation

Entails large investment in research and development for new or improved products and services plus the need to adapt operations and supply processes to suit new products or services.

Product or service variety

Requires high variation in resource and more emphasis on product and service design; higher worker skills needed, cost estimation more difficult; scheduling more complex; quality assurance more involved; inventory management more complex; and matching supply to demand more difficult.

Sustainability

Affects location planning, product and service design, process design, outsourcing decisions, returns policies, and waste man

Productivity

A measure of the effective use of resources, usually expressed as the ratio of output to input. Is essential for competitiveness

Output/Input

Productivity formula

Productivity growth

the increase in productivity from one period to the next relative to the productivity in the preceding period.

Partial measures

Multifactor measures

Total measure

Types of productivity measures

Standardizing

processes and procedures wherever possible to reduce variability can have a significant benefit for both productivity and quality.

Quality differences

may distort productivity measurements. One way this can happen is when comparisons are made over time, such as comparing the productivity of a factory now with one 30 years ago. Quality is now much higher than it was then, but there is no simple way to incorporate quality improvements into productivity measurements.

Use of the internet

can lower costs of a wide range of transactions, thereby increasing productivity. It is likely that this effect will continue to increase productivity in the foreseeable future.

Computer viruses

can have an immense negative impact on productivity.

Searching for lost or misplaced items

wastes time, hence negatively affecting productivity.

Scrap rates

have an adverse effect on productivity, signaling inefficient use of resources.

New workers

tend to have lower productivity than seasoned workers. Thus, growing companies may experience a productivity lag.

Safety

should be addressed. Accidents can take a toll on productivity.

A shortage of technology-savvy workers

hampers the ability of companies to update computing resources, generate and sustain growth, and take advantage of new opportunities.

layoff

often affect productivity. The effect can be positive and negative. Initially, productivity may increase after a _, because the workload remains the same but fewer workers do the work—although they have to work harder and longer to do it. However, as time goes by, the remaining workers may experience an increased risk of burnout, and they may fear additional job cuts. The most capable workers may decide to leave.

Labor turnover

has a negative effect on productivity; replacements need time to get up to speed.

Design of the workplace

can impact productivity. For example, having tools and other work items within easy reach can positively impact productivity.

Incentive plans that reward productivity increases

can boost productivity.

continuous improvement

an alternative to outsourcing can be improved productivity. Moreover, as a part of their strategy for quality, the best organizations strive for

Training and education

Technological improvements

Effective management

Continuous improvement

Improving productivity

Outsourcing concerns

Corporate responsibility

Ethical sourcing and fair labor practices

Ethical and social considerations

mission

Strategy aligns operations with

flexibility and awareness

Competing globally requires