Competitiveness and Operations Strategy. Competitiveness. Competitiveness. Competitiveness refers to how effective an organization is in the competition for customers’ purchases Primarily a function of how well the organization (through its operations) meets the needs of customers
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TimeCompetitiveness : Bases for Competition
Business organizations compete with one another in a variety of ways. These includes
Managers and workers
Note: Some of the dimensions, mentioned above might overlap. Ex: Several of the items on the list may come under the heading of “quality”.
Quality refers to materials and workmanship as well as design [Appearance, Performance & Function, After sales service, etc].
Usually, it relates to a buyer’s perceptions of how well the product or service will serve its intended purpose.
Product or service differentiation refers to any special features that cause a product or service to be perceived by the buyer as more suitable than a competitor’s product or service.
Example for Special Feature:
Design, Cost, Quality, Easy of use, Convenient Location, Warrantee
Flexibility is the ability to respond to changes. The better a company or department is at responding to changes, the greater its competitive advantage over another company that is not as responsive.
The changes might relate to increase or decrease in volume demanded, or to changes in the design of goods or services.
Service might involve after-sale activities that perceived by customers as value added, such as
technical support, or
extra attention while work is in progress such as
keeping the customer informed, and
attention to little details.
Managers and workers are the people at the heart and soul of an organization, and if they are competent and motivated, they can provide a distinct competitive edge by their skills and the ideas they create.
Example: One skill that is often overlooked is answering the telephone.
If the person answering the call is rude, not helpful, or cut off the call
produce a negative image to customers
else [calls are handled promptly and cheerfully]
produce a positive image to customers and potentially, a competitive advantage.
Example: One goal of an organization may be to capture a certain %age of market share for a product; Another goal may be achieve a certain level of profitability.
Taken together, the goals and the mission, establish a destination for the organization.
University – discovering and disseminating knowledge
Bank – Safeguard and increase the value of its customers’ investment
Manufacturer – Supply high quality products to a wide market, while ensuring a satisfactory profit
Telev. network – entertain, inform and educate the widest possible audience
Satisfy our customers’ immediate needs and wants by providing them with a wide variety of goods and services at multiple locations.
is to provide
(a) society with superior products and services - innovations and solutions that improve the quality of life and satisfy customer needs;
(b) employees with meaningful work and advancement opportunities and investors with a superior rate of return
We create, develop, and manufacture the industry’s most advanced information technologies, including computer systems, software, networking systems, storage devices, and microelectronics.
We have two fundamental missions:
We strive to lead in the creation, development, and manufacture of the most advanced information technologies.
We translate advanced technologies into value for our customers as the world’s largest information services company. Our professionals worldwide provide expertise within specific industries, consulting services, systems integration, and solution development and technical support.
The Skynet Worldwide Courier Network sets the standard for international delivery and distribution services by consistently exceeding customer expectations.
Skynet delivers customer satisfaction by:
Each strategy established in light of:
(related to environment)
The answers to the above questions suggest a range of more detailed questions like
is narrower in scope, dealing primarily with the operations aspect of the organization.
relates to Products, Processes, Methods, Operating Resources, Quality, Costs, Lead-Times and Scheduling.
can have a major influence on the competitiveness of an organization.
For operations strategy to be truly effective, it is important to link it to organization strategy. That is, both organization strategy and operations strategy should not be formulated independently.
Increase Org. Size
Increase Production Capacity
Decisions on Processes
Build New Factory
mission down to actual operations, which is
hierarchical in nature.
Planning and decision making is hierarchical in organization
Example: 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
Made at top levels of organization
Involve a high degree of uncertainty about outcomes
Long-term perspective/planning horizon
Tend to focus on external factors
Can require significant cost and lead time to implement
Can be difficult to reverse once implemented
Cross functional/geographic/organizational boundaries
Choices and results can have a powerful (positive or negative) impact competitiveness and survival of the organization (“high stakes”)
Note: The distinction between strategic, tactical and operational decisions are not usually as clear as given above [Example: Quality – when company plan for a new product then quality is strategic decision; tactical when deciding how quality can be measured; etc.]
To formulate an effective strategy, senior management must take into account the distinctive competencies of the organizations, and they must scan the environment [Internal and External Factors that relate to possible strength or weakness : Strategy Formulation ].
In formulating a successful strategy, organization must take into account both order qualifiers and order winners.
External Factors that relate to possible strength or weakness : Strategy Formulation
Economic Conditions: These include general health and direction of the economy, inflation, interest rates, tax laws, and tariffs.
Political Conditions: These include favorable or unfavorable attitudes towards the business, political stability or instability, and wars.
Legal Environment: These include antitrust laws, government regulations, trade restrictions, minimum wage laws, labour laws, and patents.
Technology: This can include the rate at which the product innovations are occurring, current and future process technology (equipment and material handling), and design technology.
Competition: This include the number and strength of competitors, the basis of competition (price, quality, special features), and the easy of market entry.
Markets: This include size, location, brand loyalties, easy of entry, potential for growth, long term stability, and demographics.
Internal Factors that relate to possible strength or weakness : Strategy Formulation
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.
Facilities and Equipment: Capacities, location, age, and cost to maintain or replace can have a significant impact on operations.
Financial Resources: Cash flow, access to additional funding, existing debt burden, and cost of capital are important considerations.
Customers: Loyalty, existing relationships, and understanding of wants and needs are important
Product and Services: These include existing products and services, and the potential for new products and services.
Technology: This include existing technology, the ability to integrate new technology, and the probable impact of technology on current and future operations
Suppliers: Supplier relationships, dependability of suppliers, quality, flexibility, and service are typical considerations
Others: Other factors include patents, labour relations, company or product image, distribution channels, relationship with distributors, maintenance of facilities and equipment, access to resources, and access to markets.
Within a given industry or market, certain competitive priorities can be identified as being either order winnersororder qualifiers.
Product/service design time
Planning time: The time needed to react to competitive threat, to develop strategies and select tactics, to approve proposed changes to facilities, to adopt new technologies, and so on.
Product/service design time: The time needed to develop and market new or redesigned products or service
Processing time: The time needed to produce goods or provide services. This can involve scheduling, repairing equipment, wasted efforts, inventories, quality, training, etc.
Changeover time: The time needed to change from producing one type of product or service to another. This may involve new equipment settings and attachments, different methods, equipment, schedules or materials.
Delivery time: The time needed to fill order
Response time: These must be customer complaints about quality, timing of deliveries, and incorrect shipments. These might also be complaints from employees about working conditions (e,g., safety, lighting, heat or cold), equipment problems, or quality problems.
Practical to change price or quality image
Best period to increase market share
R&D product engineering critical
Cost control critical
Poor time to change image, price, or quality
Competitive costs become critical
Defend market position
3 1/2” Floppy disks
Little product differentiation
Overcapacity in the industry
Prune line to eliminate items not returning good margin
Less rapid product changes - more minor changes
Increasing stability of process
Long production runs
Product improvement and cost cutting
Product design and development critical
Frequent product and process design changes
Short production runs
High production costs
Attention to quality
Product and process reliability
Competitive product improvements and options
Shift toward product focused
OM Strategy/IssuesStrategy and Issues During a Product’s Life