Competitiveness, Strategy, and Productivity

1. 2 Competitiveness, Strategy, and Productivity Slides prepared by Laurel Donaldson Douglas College

2. List and briefly discuss the primary ways that organizations compete. Describe a company’s strategic planning, mission/vision/values, strategies, operations strategy, and list steps involved in formulating an operations strategy. Define and measure the term productivity, evaluate Canada’s productivity, describe factors affecting productivity, and explain why measuring productivity of services is difficult. LO 1 LO 2 LO 3

3. Competitiveness • Strategic Planning • Productivity

4. Competitiveness: • the ability and performance of an organization in the marketplace compared to other organizations that offer similar goods or services

5. Order Qualifiers and Order Winners • Order qualifiers • minimum standards of acceptability for purchase • allow product to be considered • Order winners • create perception of being better than the competition • allow product to be purchased

6. Businesses Compete Using Operations • Cost • Quality • Flexibility • Timeliness

7. Competitive Priorities

8. Mission/Vision/Values • Mission • Where the organization is going now • Vision • Where the organization desires to be in the future • Values • Shared beliefs of the organization’s stakeholders • Goals and Objectives • Provide detail and scope of mission • Strategies • Plans that determine direction for achieving organizational goals • Tactics and Action Plans • The methods and actions taken to accomplish strategies

9. Hierarchical Strategic Planning

10. Hierarchical Strategy 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 • Goal: Successful career, good income • Strategy: Obtain a college education • Tactics: Select a college and a major • Action plans: Register, buy books, take courses, study, graduate, get job

11. Operations Strategy • Operations strategy – The approach that is used to guide the operations function. • consistent with organization strategy • support competitive priorities

12. Strategic Decision Categories

13. Formulation of an Operations Strategy

14. Generic Operations Strategies: GenericOperationsStrategies

15. Time-based Competition and Outsourcing • Time-based Competition • Focuses on reduction of time needed to accomplish tasks • Outsourcing • buying a part of a good/service or a segment of production/service process from an outside supplier.

16. Outputs Productiv ity = Inputs Productivity • Productivity • A measure of the effective use of resources, usually expressed as the ratio of output to input • Productivity ratios can be computed for: • a worker • a department • an organization • a country

17. Current Period Productivity – Previous Period Productivity Previous Period Productivity Productivity Growth Productivity Growth =

18. Measures of Productivity • Partial measures • output(single input) Output OutputOutputOutput Labour Machine Capital Energy Output Output Labour + Machine Labour + Capital + Energy Goods or Services Produced All inputs used to produce them • Multi-factor measures • output • (multiple inputs) • Total measure • output(total inputs)

19. Labour Productivity Units of output per labour hour Units of output per shift Value-added per labour hour Machine Productivity Units of output per machine hour machine hour Capital Productivity Units of output per dollar input Dollar value of output per dollar input Energy Productivity Units of output per kilowatt-hour Dollar value of output per kilowatt-hour Partial Productivity Measures

20. Example: Multifactor Productivity 7040 Units Produced Cost of labour of $1,000 Cost of materials: $520 Cost of overhead: $2000 What is the multifactor productivity? Ans. 2.0 units per dollar of input

21. Productivity Example: Solution MFP = Output Labor + Materials + Overhead MFP = (7040 units) $1000 + $520 + $2000 MFP = 2.0 units per dollar of input

22. Productivity Measures are Useful • Productivity  efficiency • Used to: • track performance over time • determine areas for improvement • compare competitiveness

23. Productivity Measurement of Services • Measurement of service productivity is problematic because services : • are intangible • involve intellectual activities • have output with a high degree of variability How do you measure an improved state of a customer??

24. Factors Affecting Productivity

25. Chapter Summary LO 1 • A company’s competitive priorities might be cost, quality, flexibility, and/or delivery reliability • identify order qualifiers and order winners. • Strategies are plans for directing the organization to achieve its mission/vision/goals. • An operations strategy is a coordinated set of policies, objectives, and action plans related to the operations function in nine strategic decision categories • Productivity is a measure of efficient use of resources that is: • affected by methods & management, equipment & technology, and labour • difficult to measure for highly variable, intangible output of services LO 2 LO 3

26. Identify major competitive priorities. • Define strategic planning, mission/vision/values, and operations strategy. • List steps involved in formulating an operations strategy. • Define productivity and discuss how it is measured. • Describe factors affecting productivity. • Explain why measuring productivity of services is difficult.