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Islamic University of Gaza - Palestine Department of Industrial Engineering

Chapter 2
Competitiveness, Strategy, and Productivity

Assistant Prof. Abed Schokry Operations and Productions Management First Semester 2010 2011

Islamic University of Gaza - Palestine

Chapter 2: Learning Outcomes
• After completing this chapter You should be able to: – Discuss and list briefly the primary ways that business organizations compete – List many reasons for the poor competitiveness of some companies – Define the terms mission, goals, strategy, and tactics and explain why strategy is important for competitiveness – Describe and give examples of time-based strategies – Discuss and compare organization strategy and operations strategy, and explain why it is important to link the two – Define the term productivity and explain why it is important to organizations and to countries – List a few of the reasons for reduced productivity and some ways of improving it


Palestine Competitiveness • Competitiveness: – How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services – Organizations compete through some combination of their marketing and operations functions • What do customers want? • How can these customer needs best be satisfied? Islamic University of Gaza .Palestine Hierarchical Planning Mission Goals Organizational Strategies Functional Strategies Tactics 2 .Islamic University of Gaza .

Goals.Islamic University of Gaza . and Strategy • Mission – The reason for an organization’s existence • Goals – Provide detail and the scope of the mission • Goals can be viewed as organizational destinations • Strategy – A plan for achieving organizational goals • Serves as a roadmap for reaching the organizational destinations Islamic University of Gaza .Palestine Mission.Palestine Tactics and Operations • Tactics – The methods and actions taken to accomplish strategies – The “how to” part of the process • Operations – The actual “doing” part of the process 3 .

flexibility. productivity Flexibility. shortages. Decision Area Product and service design Capacity Process selection and layout Work design Location Quality Inventory Maintenance Scheduling Supply chains Projects What the Decisions Affect Costs. and environmental issues Cost. Islamic University of Gaza . quality. shortages Costs. flexibility Costs. employee safety. that is used to guide the operations function. quality. new products. consistent with organization strategy. Weaknesses. skill level needed. agility. productivity Costs. threats) • Successful strategy formulation also requires taking into account: • Order qualifiers characteristics that customers perceive as minimum standards of acceptability for products or services to be considered as a potential purchase. or operating systems 4 . visibility Ability to meet or exceed customer expectations Costs. structure.Palestine Operations Strategy Operations strategy – The approach. vendor relations Costs.Palestine Strategy Formulation • Effective strategy formulation requires taking into account: – Core competencies – Environmental scanning • SWOT (Strengths. equipment reliability. capacity Quality of work life. Opportunities. liability.Islamic University of Gaza . • Order winners • characteristics of an organization's goods or services that cause them to be supposed as better than the competition's goods or services. services. efficiency Costs.

time-to-market is faster.and Quality-Based Strategies • Time-based strategies – Strategies that focus on the reduction of time needed to accomplish tasks • It is believed that by reducing time. and customer service is improved • Quality-based strategy – Strategy that focuses on quality in all phases of an organization • Pursuit of such a strategy is rooted in a number of factors: – Trying to overcome a poor quality reputation – Desire to maintain a quality image – A part of a cost reduction strategy Islamic University of Gaza . costs are lower. productivity is higher.Palestine Time.Islamic University of Gaza . quality is higher.Palestine Agile Operations • Agile operations – A strategic approach for competitive advantage that emphasizes the use of flexibility to adapt and grow in an environment of change • Involves the combination of several core competencies: – – – – Cost Quality Reliability Flexibility 5 .

Palestine The Balanced Scorecard Approach Department Areas Finance Internal Business Processes Learning & Growth Customer Return On Investment Cash Flow Return on Capital Employed Financial Results (Quarterly/Yearly) Number of activities per function Duplicate activities across functions Process alignment (is the right process in the right department?) Process bottlenecks Process automation Is there the correct level of expertise for the job? Employee turnover Job satisfaction Training/Learning opportunities Delivery performance to customer Quality performance for customer Customer satisfaction rate Customer percentage of market Customer retention rate 6 .aspx Islamic University of Gaza .balancedscorecard.Islamic University of Gaza .Palestine The Balanced Scorecard Approach • A top-down management system that organizations can use to clarify their vision and strategy and transform them into action – Develop objectives – Develop metrics and targets for each objective – Develop initiatives to achieve objectives – Identify links among the various perspectives • Finance • Customer • Internal business processes • Learning and growth – Monitor results –

Palestine The Balanced Scorecard Approach Islamic University of Gaza .Palestine Productivity • Productivity – A measure of the effective use of resources. usually expressed as the ratio of output to input • Productivity measures are useful for – Tracking an operating unit’s performance over time – Judging the performance of an entire industry or country 7 .Islamic University of Gaza .

Palestine Improving Productivity 1. Single Input Ouput . 4. Multiple Inputs Ouput . 3. 5. 2.Palestine Productivity Measures Productivity = Output Input Output . Labor Output Capital Output Labor + Capital + Energy Partial Measures Multifactor Measures Output . Develop productivity measures for all operations Determine critical (bottleneck) operations Develop methods for productivity improvements Establish reasonable goals Make it clear that management supports and encourages productivity improvement Measure and publicize improvements Don’t confuse productivity with efficiency 8 . Labor + Machine Total Measure Goods or services produced All inputs used to produce them Islamic University of Gaza . 6.Islamic University of Gaza .

Palestine End of Chapter 2 9 .Islamic University of Gaza .