Competitiveness,

Strategy
and
Productivity
Learning Objectives
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
Student Slides 2-2
 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 be best satisfied?

Student Slides 2-3

Businesses Compete Using Marketing
•Identifying consumer wants and needs
•Pricing
•Advertising and promotion
 Businesses Compete Using
Operations
1. Product and service design
2. Cost
3. Location
4. Quality
5. Quick response
6. Flexibility
7. Inventory management
8. Supply chain management
9. Service
10. Managers and workers
Student Slides 2-5
 Why Some Organizations Fail?
Organizations fail for a variety of reasons
1.Neglecting Operations Strategy
2.Failing to take advantage of strengths and
opportunities, and/or failing to recognize competitive
threats
3.Putting too much emphasis on short term financial
performance at the expense of R&D
4.Placing too much emphasis on product and service
design and not enough on process design and
improvements.

Student Slides 2-6

 Why Some Organizations Fail?
5. Neglecting investments in capital and human
resources.
6. Failing to consider consumer wants and needs
7. Failing to establish good internal communications
and co-operations from different functional areas.

Student Slides 2-7

 Strategic Planning & Management

Mission & Vision

Business Goals and Objectives

Organizational Strategies

Functional Strategies

Strategy formulation (roadmap)

Student Slides 2-8
Vision
 A vision statement looks forward and creates a mental
image of the ideal state that the organization wishes to
achieve.
 It is inspirational and aspirational and should challenge
employees.
 Questions to consider when drafting vision statements
might include:
• What problem are we seeking to solve?
• Where are we headed?
• If we achieved all strategic goals, what would we look
like 10 years from now?
Student Slides
9
Mission
 A mission statement is a concise explanation of the
organization's reason for existence.
 It describes the organization's purpose and its overall
intention.
 The mission statement supports the vision and serves to
communicate purpose and direction to employees,
customers, vendors and other stakeholders.
 Questions to consider when drafting mission statements
could include: 
•What is our organization's purpose?
•Why does our organization exist?
Note: See SHRM's Company Mission Statement Examples for a variety of samples.
  
Student Slides
10
Mission/Strategy/Tactics

Mission Strategy Tactics

How does mission, strategies and tactics relate to

decision making and distinctive competencies?
• Goals
• Provide detail and scope of mission
• Strategies
• Plans for achieving organizational goals
• Tactics
• The methods and actions taken to
accomplish strategies
Planning and Decision Making

Mission

Goals

Organizational Strategies

Functional Goals

Finance Marketing Operations

Strategies Strategies Strategies

Tactics Tactics Tactics

Operating Operating Operating

procedures procedures procedures
Strategy Example
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
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
Alpydin & Ch. Eick: ML Topic1 15
Alpydin & Ch. Eick: ML Topic1 16
Alpydin & Ch. Eick: ML Topic1 17
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Developing Operations Strategy

Corporate Mission
Assessment Distinctive
of Global Competencies
Business Business Strategy or
Conditions Weaknesses
Product/Service Plans

Competitive Priorities

Operations Strategy
Alpydin & Ch. Eick: ML Topic1 22
Alpydin & Ch. Eick: ML Topic1 23
Corporate Mission

A corporate mission is a set of long-range

goals and including statements about:
the kind of business the company wants to be in
who its customers are
its basic beliefs about business
its goals of survival, growth, and profitability
Business Strategy

Business strategy is a long-range game plan

of an organization and provides a road map
of how to achieve the corporate mission.
Inputs to the business strategy are
• Assessment of global business conditions - social,
economic, political, technological, competitive
• Distinctive competencies or weaknesses -
workers, sales force, R&D, technology,
management
 SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats

Student Slides 2-26

 Core Competencies
Core Competencies
The special attributes or abilities that
give an organization a competitive
edge
To be effective, core competencies and strategies need
to be aligned

Student Slides 2-27

Strategy Formulation
Effective strategy formulation requires taking
into account(SWOT analysis):
Core competencies
Environmental scanning
Successful strategy formulation also requires
taking into account:
Order qualifiers (minimum requirements for a
potential purchase)
Order winners (characteristics that win over the
customer)

Student Slides 2-28

Competitive Edges and Priorities

1. Cost
2. Quality
3. Response time
4. Customer service

Student Slides 2-29

Competitive Priorities
Low Production Costs
Definition
Unit cost (labor, material, and overhead) of each
product/service

Some Ways of Creating

•Redesign of product/service
•New technology
•Increase in production rates
•Reduction of scrap/waste
•Reduction of inventory
Competitive Priorities
Delivery Performance
• Definition
a) Fast delivery b) On-time delivery

• Some Ways of Creating

a) larger finished-goods inventory
a) faster production rates
a) quicker shipping methods
b) more-realistic promises
b) better control of production of orders
b) better information systems
Competitive Priorities
High-Quality Products/Services
• Definition
Customers’ perception of degree of excellence exhibited by
products/services

• Some Ways of Creating

Improve product/service’s
•Appearance
•Performance and function
•Wear, endurance ability
•After-sales service
Competitive Priorities

Customer Service and Flexibility

• Definition
Ability to quickly change production to other products/services.
Customer responsiveness.

• Some Ways of Creating

Change in type of processes used
Use of advanced technologies
Reduction in WIP through lean manufacturing
Increase in capacity
Elements of Operations Strategy

Positioning the production system

Product/service plans
Outsourcing plans
Process and technology plans
Strategic allocation of resources
Facility plans: capacity, location, and layout
Positioning the Production or Service
Delivery System
Select the type of product/service design
• Standard
• Custom
Select the type of production processing system
• Product focused
• Process focused
Select the type of finished-goods inventory policy
• Produce-to-stock
• Produce-to-order
 Productivity

• 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

Student Slides 2-36

 Productivity Measures
Output
Productivity =
Input

Output Ouput Output

Partial Measures ; ;
Single Input Labor Capital
Output Ouput Output
Multifactor Measures ; ;
Multiple Inputs Labor +Machine Labor +Capital +Energy

Goods or services produced

Total Measure
All inputs used to produce them

Student Slides 2-37

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 Factors Affecting Productivity
• Standardization
• Quality
• Searching for lost or misplaced items
• Scrap rates
• New/Untrained/Unskilled workers
• Safety issues
• Layoffs/Labor unrest/Labor turnover
• Design of workplace
• Lack of incentives to reward productivity

Student Slides
40
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