Competitiveness Strategy & Productivity
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Transcript of Competitiveness Strategy & Productivity
Dr. Rameez Khalid, PMP, CQSSBB Faculty, Department of Management
Institute of Business Administration, Karachi
Competitiveness
Unit-2: Productivity [email protected] 3
Businesses Compete Using Marketing
• Identifying consumer wants and needs • Pricing • Advertising and promotion
Unit-2: Productivity [email protected] 4
Businesses Compete Using Operations
• Product and service design • Cost • Location • Quality – how much a product/service satisfies its intended purpose
• Quick response
Unit-2: Productivity [email protected] 5
Businesses Compete Using Operations
• Flexibility – ability to respond to changes
• Inventory management • Supply chain management • Service and service quality • Managers and workers
Unit-2: Productivity [email protected] 6
Why Some Organizations Fail
• Too much emphasis on short-term financial performance
• Failing to take advantage of strengths and opportunities
• Neglecting operations strategy • Failing to recognize competitive threats
Unit-2: Productivity [email protected] 7
Why Some Organizations Fail
• Too much emphasis in product and service design and not enough on improvement
• Neglecting investments in capital and human resources
• Failing to establish good internal communications
• Failing to consider customer wants and needs
Unit-2: Productivity [email protected] 8
Mission/Strategy/Tactics
How does mission, strategies and tactics relate to decision making and distinctive competencies?
Strategy Tactics Mission
Unit-2: Productivity [email protected] 10
Strategies
• Low cost • Scale-based strategies • Specialization • Flexible operations • High quality • Service
Unit-2: Productivity [email protected] 11
Banks, ATMs Convenience Location
Disneyland Nordstroms
Superior customer service
Service
Burger King Supermarkets
Variety Volume
Flexibility
Express Mail, Fedex, One-hour photo, UPS
Rapid delivery On-time delivery
Time
Sony TV Lexus, Cadillac Pepsi, Kodak, Motorola
High-performance design or high quality Consistent quality
Quality
U.S. first-class postage Motel-6, Red Roof Inns
Low Cost Price
Operations Strategies
2-12
Strategy Formulation
• Distinctive competencies • Environmental scanning • SWOT • Order qualifiers • Order winners
Unit-2: Productivity [email protected] 13
• 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
Strategy Formulation
Unit-2: Productivity [email protected] 14
Operations Strategy
Unit-2: Productivity [email protected] 15
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
Unit-2: Productivity [email protected] 17
Productivity
• Partial measures – output/(single input)
• Multi-factor measures – output/(multiple inputs)
• Total measure – output/(total inputs)
Productiv ity = Outputs Inputs
Unit-2: Productivity [email protected] 18
Productivity Growth
Current Period Productivity – Previous Period Productivity Previous Period Productivity
Productivity Growth =
Unit-2: Productivity [email protected] 19
Measures of Productivity
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
Unit-2: Productivity [email protected] 20
Units of output per kilowatt-hour Dollar value of output per kilowatt-hour
Energy Productivity
Units of output per dollar input Dollar value of output per dollar input
Capital Productivity
Units of output per machine hour machine hour
Machine Productivity
Units of output per labor hour Units of output per shift Value-added per labor hour
Labor Productivity
Partial Productivity Measures
Unit-2: Productivity [email protected] 21
7040 Units Produced Cost of labor of $1,000 Cost of materials: $520 Cost of overhead: $2000
What is the multifactor productivity?
Productivity: Problem
Unit-2: Productivity [email protected] 22
MFP = Output Labor + Materials + Overhead
MFP = (7040 units) $1000 + $520 + $2000
MFP = 2.0 units per dollar of input
Productivity: Solution
Unit-2: Productivity [email protected] 23
Factors Affecting Productivity
Capital Quality
Technology Management
Unit-2: Productivity [email protected] 24
• Standardization • Quality • Use of Internet • Computer viruses • Searching for lost or misplaced items • Scrap rates • New workers
Other Factors Affecting Productivity
Unit-2: Productivity [email protected] 25
• Safety • Shortage of IT workers • Layoffs • Labor turnover • Design of the workspace • Incentive plans that reward productivity
Other Factors Affecting Productivity
Unit-2: Productivity [email protected] 26
Outsourcing
• Higher productivity in another company is a key reason organizations outsource work
• Improving productivity may reduce the need for outsourcing
Unit-2: Productivity [email protected] 27
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
Unit-2: Productivity [email protected] 28
REFERENCES
•Operations Management William J. Stevenson
•Operations Management Barry Render & Jay Heizer