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Strategies for Competitiveness and Productivity Enhancement in Organizations

Explore the keys to organizational success through strategic planning, distinct competencies, and productivity improvement methods tailored to meet customer needs effectively. Learn about different strategies, such as quality-based, time-based, and supply chain management, to drive business growth.

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Strategies for Competitiveness and Productivity Enhancement in Organizations

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  1. Chapter 2 Competitiveness Strategy and Productivity

  2. Competitiveness • Effectiveness in meeting customer needs vs. the rest • Commonly confused terminology: Effectiveness vs. efficiency (Distinctive) competencies • Price • Time • Quality • Flexibility, ability to respond to changes • Differentiation, special product features • Service

  3. Strategy • Mission • The reason for existence of an organization • Mission Statement • A clear statement of purpose • Strategy • A plan for achieving organizational goals • Tactics • The actions taken to accomplish strategies • Operational decisions • Day to day decisions to support tactics

  4. Example for Strategy 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

  5. Strategy Formulation • Order qualifier = Acceptable product features • A car with 40 miles per gallon • Order winner = Better-than-the-rest product features • A car with 60 miles per gallon: Toyota Prius dual powered car • Environmental Scanning • The consideration of internal and external events and trends that present threats or opportunities for a company. • Reading Financial times, Benchmarking, Stealing Employees • Figure out distinctive competencies • Price, quality, service • Emphasize one or more of the distinctive competencies with the strategy

  6. Strategies • Quality-based strategies • Focuses on quality in all phases of an organization • Quality at the source • Sony TV • Toyota cars: Nummi plant rented from general motors. • Time-based strategies • Focuses on reduction of time needed to accomplish tasks • Technology start ups compete on turning ideas into products

  7. Strategies • Product development strategy relates to Set of products/services and technologies for future operations • e.g. Be the technology leader • IBM workstations • e.g. Offer many products • Dell computers • Marketing and sales strategy relates to positioning, pricing and promotion of products/services • e.g. Never offer more than 40% discount • e.g. EDLP = every day low price • At Wal-Mart • e.g. Demand smoothing via coupons • BestBuy • Supply chain management strategy relates to procurement, transportation, storage and delivery • e.g. Never use more than 1 supplier for every input • e.g. Never expedite orders just because they are late

  8. Big Retailer Strategies • Wal-Mart: Efficiency • Target: More quality and service • Carrefour: International, ambiance • K-Mart: Confused. • Squeezed between Target and Wal-Mart • Reliance on coupon sales • Do coupons stabilize or destabilize a Supply chain? • K-Mart and Sears merged in November 2004 • K-Mart gets cash • Sears gets presence outside malls

  9. Productivity • Partial measures : output / single input • Output/energy , output/machine hour, output/labor • Multi – factor measures : output / multi input • Multi – factor : output/(energy + machine cost), output/(labor + capital) • Total measure : output / all inputs • In general, Productivity = output / input

  10. Example for productivity • 10,000 items are produced • Price $10/item • 500 labor hours to accomplish the job • Labor rate : $9/hr • Cost of raw material is $5,000 • Cost of overhead is $25,000 • What is the labor productivity?

  11. Example for productivity cont. • Output : 10,000 x $10/item = $100,000 • Input : 500 hours x $9 /hr = $4500 • Labor productivity=100,000 / 4500 = 22.22 • MFP (multi factor productivity) = output / labor + materials • 100,000 / {4,500 + 25,000 + 5,000} • MFP = 2.90 • What are the units of these productivity numbers?

  12. Factors Affecting Productivity Positively • High Technology • Dual powered engine helps Toyota Prius • Effective Management • High Quality (products) • Less scrap • Extensive Training • University of Texas at Dallas • Low employee tenure/layoffs • High Standardization • Efficient Workplace Design-Ergonomics • Effective Goals and Incentives

  13. Improving Productivity • Develop productivity measures • First measure, then manipulate • Develop methods for productivity improvements • Venues for ideas to prosper • Establish reasonable goals • High challenges vs. trivialities • Publicize improvements • Incentives, positive feedback, awards • Get management support • Productivity is more general than efficiency • Set the rules of the game to win it • Determine the critical operations = bottleneck

  14. Operation Operation Bottleneck Operation Operation Operation Bottleneck Operations Low capacity

  15. Summary • Competencies • Mission/Strategy/Tactics • Productivity

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