Competitiveness, Strategy, and
Productivity
You should be able to:
1. List the three primary ways that business organizations
compete
2. Explain five reasons for the poor competitiveness of some
companies
3. Define the term strategy and explain why strategy is
important
4. Discuss and compare organization strategy and operations
strategy, and explain why it is important to link the two
5. Describe and give examples of time-based strategies
6. Define the term productivity and explain why it is important
to organizations and countries
7. Provide some reasons for poor productivity and some ways
of improving it
Competitiveness:
◦ How effectively an organization meets the needs
and wants 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 in best way can be
satisfied?
1. Product and service differentiation
2. Price
3. Location
4. Quality
5. Quick response
6. Flexibility
7. Supply chain management
8. Service (After sales services)
9. Managers and workers
1. Emphasis on short-term financial performance
2. Failing to take advantage of strengths and
opportunities
3. Failing to recognize competitive threats (SWOT
Analysis).
4. Neglecting operations strategy.
5. Neglecting investments in human resources.
6. Internal communications issues and lack of
cooperation among different functional areas.
7. Failing to consider customer needs and wants.
Mission
◦ The reason for an organization’s existence
Goals
◦ Provide detail and the scope of the mission
Goals can be viewed as organizational destinations
Strategy
◦ A plan for achieving organizational goals
Serves as a roadmap for reaching the organizational
destinations
Tactics
◦ The methods and actions taken to accomplish strategies
They provide guidance and direction for carrying out
actual operations
Operations strategy is narrower in scope,
dealing primarily with the operations aspect of
the organization.
The approach, consistent with the
organization strategy.
It is used to guide operations functions,
Effective strategy formulation requires
taking into account:
Core competencies
Environmental scanning
SWOT Analysis
PESTEL Analysis
examples of different strategies an organization might choose
from:
1. Low cost: Outsource operations to third-world countries that
have low labor costs.
2. Scale-based strategies: Use capital-intensive methods to
achieve high output volume and low unit costs.
3. Specialization: Focus on narrow product lines or limited service
to achieve higher quality.
4. Newness: Focus on innovation to create new products or
services.
5. Flexible operations. Focus on quick response and/or
customization.
6. High quality: Focus on achieving higher quality than
competitors.
7. Service: Focus on various aspects of service (e.g., helpful,
courteous, reliable, etc.).
8. Sustainability: Focus on environmental-friendly and energy-
efficient operations.
Time-based strategies:
Strategies that focus on the reduction of time needed to
accomplish tasks
It 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
Quality-based strategy:
Strategy that focuses on quality in all phases of an
organization
Pursuit of such a strategy is rooted in a number of factors:
Trying to overcome a poor quality reputation
Desire to maintain a quality image
A desire to catch up with the competition
A part of a cost reduction strategy
Productivity
◦ A measure of the effective use of resources, usually
expressed as the ratio of output to input
Productivity measures are useful for
◦ Tracking an operating unit’s performance over time
◦ Judging the performance of an entire industry or
country
Output
Productivity =
Input
Output Ouput Output
Partial Measures ; ;
Single Input Labor Capital
Output Ouput Output
Multifactor Measures ; ;
Multiple Inputs Labor +Machine Labor +Capital +Energy
Productivity Growth = Current period productivity – previous
period productivity / previous period productivity
Goods or services produced
Total Measure
All inputs used to produce them
Methods
Capital Quality
Technology Management
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