Cost, diff, responce
- 1. Competitiveness, Strategy, and Productivity
- 2. Competitiveness How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services
- 3. Competitiveness Strategies Differentiation – better or at least different Cost - cheaper Quick response – more responsive
- 4. Businesses Compete Using Marketing Identifying consumer wants and needs Pricing Advertising and promotion
- 5. Businesses Compete Using Operations Product and service design Cost Location Quality Quick response
- 6. Businesses Compete Using Operations (cont.) Flexibility Inventory management Supply chain management Service and service quality Managers and workers
- 7. Why Some Organizations Fail Too much emphasis on short-term financial performance Failing to take advantage of strengths and opportunities Neglecting operations strategy Failing to recognize competitive threats SWOT = Strengths, Weaknesses, Opportunities and Threats
- 8. Why Some Organizations Fail Too much emphasis in product and service design and not enough on improvement Neglecting investments in capital and human resources Failing to establish good internal communications Failing to consider customer wants and needs
- 9. Mission/Strategy/Tactics Mission Strategy Tactics How does mission, strategies and tactics relate to decision making and distinctive competencies?
- 10. Strategy Mission The reason for existence for an organization Mission Statement States the purpose of an organization Goals Provide detail and scope of mission Strategies Plans for achieving organizational goals Tactics The methods and actions taken to accomplish strategies
- 11. 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
- 12. Strategy Example Ratana 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
- 13. Examples of Strategies Low cost - outsourcing Scale-based strategies - capital intensive method for high volume production Specialization - focus on narrow product line for higher quality Flexible operations - customization High quality – focus on higher quality than competitors Services – focus on various aspect of services
- 14. Strategy and Tactics Strategy Factors Price – low cost Quality – consistent quality, high quality Time – rapid delivery, on-time delivery Flexibility – variety, volume Service – customer services Location - convenience Distinctive Competencies The special attributes or abilities that give an organization a competitive edge.
- 15. Strategy Formulation Distinctive competencies Environmental scanning SWOT Order qualifiers Order winners
- 16. Strategy Formulation Order qualifiers Characteristics that customers perceive as minimum standards of acceptability to be considered as a potential purchase Order winners Characteristics of an organization’s goods or services that cause it to be perceived as better than the competition
- 17. Key External Factors Economic conditions Political conditions Legal environment Technology Competition Markets
- 18. Key Internal Factors Human Resources Facilities and equipment Financial resources Customers (loyalty, understanding) Products and services Technology Suppliers
- 19. Strategic OM Decisions Decision Area Affects Product and service design Costs, quality liability and environmental Capacity Cost structure, flexibility Process selection and layout Costs, flexibility, skill level, capacity Work design Quality of work life, employee safety, productivity Location Costs, visibility Quality Ability to meet or exceed customer expectations Inventory Costs, shortages Maintenance Costs, equipment reliability, productivity Scheduling Flexibility, efficiency Supply chains Costs, quality, agility, shortages, vendor relations Projects Costs, new products, services, or operating systems
- 20. Quality and Time Strategies Quality-based strategies Focuses on maintaining or improving the quality of an organization’s products or services Quality at the source Time-based strategies Focuses on reduction of time needed to accomplish tasks
- 21. Time-based Strategies JAN FEB MAR APR MAY JUN Planning Designing Processing Changeover On time! Delivery
- 22. Global Strategy Strategic decisions must be made with respect to globalization What works in one country may not work in another Strategies must be changed to account for these differences Other issues Political, social, legal, cultural and economic differences
- 23. Four International Operations Strategies High International Cost Reduction Considerations Strategy Import/export or license existing product Examples U.S. Steel Harley Davidson Low Low High Local Responsiveness Considerations (Quick Response and/or Differentiation)
- 24. Four International Operations High Strategies Cost Reduction Considerations International Strategy Import/export or license existing product Examples U.S. Steel Harley Davidson Low Low High Local Responsiveness Considerations (Quick Response and/or Differentiation)
- 25. Four International Operations Strategies Global High Strategy Standardized Cost Reduction Considerations product Economies of scale Cross-cultural learning Examples International Strategy Import/export or Texas Instruments license existing product Examples Caterpillar Harley Davidson Elevator Otis U.S. Steel Low Low High Local Responsiveness Considerations (Quick Response and/or Differentiation)
- 26. Four International Operations Strategies High Global Strategy Standardized product Cost Reduction Considerations Economies of scale Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator International Strategy Import/export or license existing product Examples U.S. Steel Harley Davidson Low Low High Local Responsiveness Considerations (Quick Response and/or Differentiation)
- 27. Four International Operations Multidomestic Strategies Strategy High Use existing Global Strategy domestic model Standardized product Cost Reduction Considerations Economies of scale globally Cross-cultural learning Texas Franchise, joint Examples Instruments Caterpillar Otis Elevatorventures, subsidiaries International Strategy Examples Import/export or Heinz license existing product Examples McDonald’s U.S. Steel The Body Shop Harley Davidson Low Hard Rock Cafe Low High Local Responsiveness Considerations (Quick Response and/or Differentiation)
- 28. Four International Operations Strategies High Global Strategy Standardized product Cost Reduction Considerations Economies of scale Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator International Strategy Multidomestic Strategy Use existing Import/export or domestic model globally license existing Franchise, joint ventures, product subsidiaries Examples Examples U.S. Steel Heinz The Body Shop Harley Davidson McDonald’s Hard Rock Cafe Low Low High Local Responsiveness Considerations (Quick Response and/or Differentiation)
- 29. Four International Operations Strategies Transnational High Strategy Move material, Global Strategy Standardized product Cost Reduction Considerations people, ideas Economies of scale Cross-cultural learning Examples across national Texas Instruments Caterpillar boundaries Otis Elevator Economies of scale Cross-cultural International Strategy Multidomestic Strategy learning Import/export or Use existing domestic model globally license existing Franchise, joint ventures, product subsidiaries Examples Examples Examples Coca-Cola U.S. Steel Harley Davidson Heinz The Body Shop McDonald’s Hard Rock Cafe Low Nestlé Low High Local Responsiveness Considerations (Quick Response and/or Differentiation)
- 30. Four International Operations Strategies High Global Strategy Transnational Strategy Standardized product Move material, people, ideas Cost Reduction Considerations Economies of scale across national boundaries Cross-cultural learning Economies of scale Cross-cultural learning Examples Texas Instruments Examples Caterpillar Coca-Cola Otis Elevator Nestlé International Strategy Multidomestic Strategy Use existing Import/export or domestic model globally license existing Franchise, joint ventures, product subsidiaries Examples Examples U.S. Steel Heinz The Body Shop Harley Davidson McDonald’s Hard Rock Cafe Low Low High Local Responsiveness Considerations (Quick Response and/or Differentiation)
- 31. Productivity Productivity A measure of the effective use of resources, usually expressed as the ratio of output to input Productivity ratios are used for Planning workforce requirements Scheduling equipment Financial analysis
- 32. Productivity Partial measures output/(single input) Multi-factor measures output/(multiple inputs) Total measure output/(total inputs) Outputs Productivity = Inputs
- 33. Productivity Growth Productivity Growth = Current Period Productivity – Previous Period Productivity Previous Period Productivity
- 34. Input Output - Input Labor Machine Output Raw materials Products Electricity / water / etc. Processes Or Services Capital Inventory Others
- 35. Measures of Productivity Partial Output Output Output Output measures Labor Machine Capital Energy Multifactor Output Output measures Labor + Machine Labor + Capital + Energy Total Goods or Services Produced measure All inputs used to produce them
- 36. Examples of Partial Productivity Measures Labor Units of output per labor hour Units of output per shift Productivity Value-added per labor hour Machine Units of output per machine hour machine hour Productivity Capital Units of output per capital input Money value of output per money input Productivity Energy Units of output per kilowatt-hour money value of output per kilowatt-hour Productivity
- 37. Example 3 7040 Units Produced Cost of labor of $1,000 Cost of materials: $520 Cost of overhead: $2000 What is the multifactor productivity?
- 38. Example 3 Solution MFP = Output Labor + Materials + Overhead MFP = (7040 units) $1000 + $520 + $2000 MFP = 2.0 units per dollar of input
- 39. Process Yield Process yield is the ratio of output of good product to input Defective product is not included in the output Service example: Ratio of cars rented to cars available to rent
- 40. Factors Affecting Productivity Capital Quality Technology Management
- 41. Other Factors Affecting Productivity Standardization Quality Use of Internet Computer viruses Searching for lost or misplaced items Scrap rates New workers
- 42. Other Factors Affecting Productivity Safety Shortage of IT workers Layoffs Labor turnover Design of the workspace Incentive plans that reward productivity Outsourcing
- 43. Outsourcing Higher productivity in another company is a key reason organizations outsource work Improving productivity may reduce the need for outsourcing
- 44. Improving Productivity Develop productivity measures Determine critical (bottleneck) operations Develop methods for productivity improvements Establish reasonable goals Get management support Measure and publicize improvements Don’t confuse productivity with efficiency