adeyl khan, faculty, bba, nsu better quality, higher productivity, lower costs, quick response
TRANSCRIPT
Adeyl Khan, Faculty, BBA, NSU
Chapter 2Competitiveness, Strategy,
and ProductivityBetter Quality, Higher Productivity,
Lower Costs, Quick Response
Adeyl Khan, Faculty, BBA, NSU
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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Adeyl Khan, Faculty, BBA, NSU
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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Adeyl Khan, Faculty, BBA, NSU
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
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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
Adeyl Khan, Faculty, BBA, NSU
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
Adeyl Khan, Faculty, BBA, NSU
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
Adeyl Khan, Faculty, BBA, NSU
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
Adeyl Khan, Faculty, BBA, NSU
Examples of Competitive StrategiesLow cost
Scale-based strategies
Specialization
Flexible operations
High quality Service
…Combination
s
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Table 2.1 P41
Adeyl Khan, Faculty, BBA, NSU
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
Adeyl Khan, Faculty, BBA, NSU
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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Adeyl Khan, Faculty, BBA, NSU
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
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Adeyl Khan, Faculty, BBA, NSU
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
Adeyl Khan, Faculty, BBA, NSU
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
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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
Adeyl Khan, Faculty, BBA, NSU
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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Adeyl Khan, Faculty, BBA, NSU
Time-based Strategies
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JAN FEB MAR APR MAY JUN
Planning
Processing
Changeover On time!
Designing
Delivery
Adeyl Khan, Faculty, BBA, NSU
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 =
Adeyl Khan, Faculty, BBA, NSU
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)
Adeyl Khan, Faculty, BBA, NSU
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
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Example 37040 Units Produced
Cost of labor of $1,000
Cost of materials: $520
Cost of overhead: $2000
What is the multifactor productivit
y?
Adeyl Khan, Faculty, BBA, NSU
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
Adeyl Khan, Faculty, BBA, NSU
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
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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
Adeyl Khan, Faculty, BBA, NSU
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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Adeyl Khan, Faculty, BBA, NSU
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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Adeyl Khan, Faculty, BBA, NSU
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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Adeyl Khan, Faculty, BBA, NSU
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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