Competitiveness, Strategy and

Productivity
Competitiveness- how
effectively an
organization meets the
wants and needs of
customers relative to
others that offer similar
goods and services
Marketing influences
competitiveness by:

1.)Identifying consumer wants

and needs
2.)Price and quality
3.)Advertising and promotion
Operations influences
competitiveness by:

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 worker
Why some organizations fail
1.) Neglecting Operations
Strategy

2.) Failing to take advantage of

strengths and opportunities and
failing to recognize competitive
threats

3.) Putting too much importance

on short- term financial
performance at the expense of
research and development

4.) Placing too much emphasis

on product and service design and
not enough on process design
improvement
5.) Neglecting
investments in capital and
human resources

6.) Failing to establish

good internal
communications and
cooperation among
different functional areas.

7.) Failing to consider

customer wants and needs
Strategic management refers to:

Strategy formulation
Strategy implementation
Strategy evaluation

Vision Statements

Answers the question: “What do

we want to become?”

First step in strategic planning

Oftentimes a single sentence.

Mission and Strategies
Mission- the reason for the
existence of an
organization

Mission statement- States

the purpose of an
organization

Goals- provide detail and

scope of the mission

Strategies- plans for

achieving organizational
goals.
Porter’s three basic
business strategies
1.) Cost
2.) Focus
3.) Differentiation
Some examples of different
strategies an organization
might choose from
1.) Low cost- Outsource
operations to third world
countries that have low labor
cost
2.) Scale based strategies-
use capital intensive methods to
achieve high output volume and
unit costs.
3.) Specialization- from a
narrow product lines or limited
service to achieve higher quality
4.) Newness- focus on
innovation to create new
products and services
Some examples of different
strategies an organization
might choose from
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 services (e.g. helpful
courteous and reliable)

8.) Sustainability- focus on

environmental-friendly and
energy efficient operations.
Distinctive Competencies- the
special attributes or abilities
that give an organization a
competitive edge

Operations Strategy- the

approach, consistent with the
organization strategy that us
used to guide the operations
function.
 Strategy Formulation

To formulate an effective
strategy, senior management
must take into account the
distinctive competencies of the
organizations, and they must
scan the environment

Order qualifiers- Characteristics

that customers perceive as
minimum standards of
acceptability to be considered as
a potential for purchase

Order winners- characteristics of

an organizations goods or
services that cause it to be
perceived as better than the
competition.
Environmental scanning- The
considering of events and trends
that present threats or
opportunities for a company.

SWOT-Analysis of strengths,
weaknesses, opportunity and
threats
 The Key External Factors-
Opportunities and Threats
Largely beyond the control of a single organization

1.) Economic Conditions- These include

the general health and direction of the
economy, inflation and deflation, interest rates ,
tax laws, tariffs

2.) Political conditions- These include

favorable or unfavorable attitudes toward
business, political stability or instability and
wars

3.) Legal Environment- this includes

antitrust laws, government regulations, trade
restrictions, minimum wage laws, product
liability and recent court experience, labor
laws,
 The Key External Factors-
Opportunities and Threats
4.) Technology- This can
include the rate at which product
innovations are occurring, current
and future process technology an
design technology

5.) Competition- this includes

the number and strength
competitors , the basis of
competition (price, quality, special
features) and the ease of market
entry

6.) Markets- this incudes size,

location, brand loyalties, ease of
entry, potential for growth, long
term stability and demographics.
 Internal Factors- Strengths and
Weaknesses
Controllable activities that are performed well or
poorly relative to competitors

1.) Human resources -These include the skills

and abilities of managers and workers; special
talents (creativity, designing, problem solving) loyalty
to the organization, expertise, dedication and
experience

2.) Facilities and equipment- Capacities,

location, age and cost to maintain or replace can have
a significant impact on operations

3.) Financial Resources- Cash flow , access to

additional funding, existing debt burden, and cost of
capital are important considerations

4.) Customers- loyalty, existing relationships

and understanding the wants and needs
Internal Factors- Strengths and
Weaknesses
5.) Products and services- These include
existing products and services and the potential for
new products and services.

6.) Technology- This includes existing

technology the ability to integrate new technology
and probable impact on current and future
operations

7.) Suppliers- Supplier relationships,

dependability of suppliers, quality, flexibility and
service are typical considerations

8.) Others- Other factors include patents, labor

relations, company and product image, distribution
channels, relations with distributors, maintenance
of facilities and equipment business
 Strategic Operations Management Decision Areas
Decision Area What the decisions affect
Product and service design Cost, quality, liability and
environmental issues
Capacity Cost, structure, flexibility
Process selection and lay out Cost flexibility, skill level needed,
capacity
Work design Quality of work life, employees safety,
productivity
Location Cost, visibility
Quality Ability to meet or exceed customer
expectations
Inventory Costs, shortages
Maintenance Cost, equipment reliability,
productivity
Scheduling Flexibility, efficiency
Supply chain Cost, quality, agility, shortages,
vendor relations,
Projects Costs, new products, services, or
operating systems
Supply Chain Strategy-
specifies how the supplies chain
should function to achieve supply
chain goals. It establishes how the
organization should work with
suppliers and policies relating to
customer relationships and
sustainability

Sustainability Strategy-
business should be devoting
themselves to sustainability
strategy

Global strategy- many companies

realized that strategic decisions
with respect to globalization must
be made
 Quality and Time Based Strategies

Quality-based strategy-
Strategy that focuses on
quality in all phases of an
organization

Time-based strategy-
strategy that focuses on
reduction of time needed to
accomplish task
Organization Strategy Implications for operation’s
Management
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 investments in research
and development for new or improved
products and services plus the need
to adapt operations and supply
process 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 and more complex, and
matching supply to demand more
difficult
Sustainability Affects location planning, product and
service design, process and design,
outsourcing decisions, returns policies
and waste management.
 Types of Action/Operational Strategies
Vertical Integration Strategy
1.) Forward Integration-
gaining ownership or increase
control over distributor or retailer

2.) Backward Integration-

gaining ownership or increase
control over supplier

3.) Horizontal Integration-

gaining ownership or increase
control over competitor through
mergers, acquisitions and take
over among competitors.
 Intensive Strategies
4.) Market Penetration- increase
market share with greater marketing
efforts (no change in product or
market) through increase the number
of salespersons, advertising
expenditure, offering extensive sales
promotion items or publicity effort(no
saturation)

5.) Market Development- is a

business strategy whereby a
business attempts to find new groups
of buyers as potential customers for
its existing products and services.
6.) Product Development-
It is done to improve the existing
product or to introduce a new
product in the market. It is also
done to improve the earlier
features or techniques or systems.
Diversification Strategies

7.) Related Diversification- A

process that takes place when a
business expands its activities into
product lines that are similar to
those it currently offers.

8.) Unrelated Diversification-

A process that takes place when a
business expands its activities into
different product lines
 Defensive Strategies

9.) Retrenchment- Occurs

when an organization regroups
through cost and asset reduction
to reverse declining sales

10.) Divestiture- Selling a

division or part of an organization.
It is often is used to raise capital
for further strategic acquisitions or
investments.

11.) Liquidation- It is selling

all of a company’s assets.
 Productivity
Productivity- a measure of the
effective use of resources
usually expressed as the ratio of
output to input

Factors that affect Productivity

1.) Methods
2.) Capital
3.) Quality
4.) Technology
 Productivity
Other factors that affect productivity
1.) Standardizing
2.) Quality Difference
3.) Use of the internet
4.) Computer viruses
5.) Searching for lost or misplaced
items
6.) Scrap rates
7.) New workers
8.) Safety
9.) A shortage of information
technology workers and other
technical workers
10.) Lay offs
11.) Labor turnover
12.) Design of the workspace
13.) Incentive plans that reward
productivity