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Chapter 2: Competitiveness, Strategy and Productivity.

Competitiveness- relates to the effectiveness of an organization in the marketplace relative to other
organizations that offers similar product or services
Competitiveness- how effectively an organization meets the wants and needs of customers relative to
others that offer similar good and services.
Strategy- relates to the plans that determine how an organization pursues its goal.
Productivity- relates to the effective use of resources and it has a direct impact on competitiveness.
Marketing influences competitiveness in several ways:
1. Identifying consumer wants and/or needs.-The ideal is to achieve a perfect match between
those wants and needs and the organization’s goods and services.
2. Pricing- it is important to understand the trade-off decision consumers make between price
and other aspects of a product or service such as quality.
3. Advertising and Promotion are ways organizations can inform potential customers about
features of their products or services and attract buyers.
Operation influences competitiveness through:
1. Product and service design should reflect joint efforts of many areas of the firm to achieve a
match between financial resources, operations capabilities, supply chain capabilities and
consumer wants and needs.
2. Cost – cost of an organization’s output is a key variable that affects pricing decisions and profits.
Cost-reduction efforts are generally ongoing in business organization.
3. Location- can be important in terms of cost and convenience for customers. Location near
inputs can result in lower input cost.\
4. Quality- refers to materials, workmanship, design and services. It is the ability to consistently
meet or exceed the customer expectation.
5. Quick response- how organization is quickly bringing new or improved product or services to the
6. Flexibility- is the ability to respond to changes.
7. Inventory Management- Effectively matching supplies of goods with demand.
8. Supply Chain management- Involves coordinating internal and external operation( buyers and
suppliers) to achieve timely and cost effective delivery of goods through the system
9. Service- might involve after sale activities like Jollibee delivery follow up call after delivery.
10. Managers and Workers- Great people are hired by great company because people are the
heart and soul of an organization.

Reason why some Organization fails:
1. Neglecting Operation strategy
2. Failing to take advantage of the strengths and opportunities.
3. Putting too much emphasis on short-term financial performance.
4. Placing too much emphasis on product and service design not enough on product design
and improvement
5. Neglecting investments in capital and human resources
6. Failing to establish good internal communications
7. Failing to consider customer wants and needs.

Mission – the reason for the existence of an organization.
Mission Statement- States the purpose of an organization
Goals- Provide details and scope of the mission and serve as a foundation for the
development of organizational strategies.
Strategies- are plans for achieving organizational goals.
Tactics are the methods and actions used to accomplish strategies.
Operation strategy- is narrow in scope and dealing primarily with the operation aspect of
the organization.
Core Competencies- The special attributes or abilities that give an organization a competitive edge.
Some strategies an organization may choose:
1. Low cost – example out -sourcing in Asian countries due to low labor cost. e.g Call center
industry .
2. Scale based- Strategies- Use of intensive method to achieve high output volume and low unit
3. Specialization- Focus on narrow product lines or limited service to achieve high quality.
4. Newness- Focus on innovation to create new products or services.
5. Flexible Operations- Focus on quick response and/or customization
6. High quality – Focus on achieving higher quality than competitors
7. Service- focus on how employee treats their customers based on courteousness, helpfulness
and reliability.
8. Sustainability- Focus on Environmental- friendly and energy- efficient operations.

Organization Strategy Operations Strategy Example
Low price Low cost Cebu pacific- piso fare
High quality High-performance design and
/or high quality
processing/consistent quality
Sony TV, gardenia processing
Short time Quick response McDonald restaurant and LBC
Newness Innovation Nokia, Apple
Variety Flexibility/ volume Handy man,SM supermarket
Service Superior Customer Services 5 star hotels and Disneyland
Location Convenience Seven Eleven, Atm

Strategy formulation
Steps in Strategy formulation (POM)
1. Link strategy directly to the organization’s Mission or vision statement
2. Assess Strengths, weakness, and threats and opportunities
3. Identify Order winners and Order qualifiers
Order winners- are those characteristics of an organization’s goods or services that cause
them to be perceived as better than the competitors.
Order qualifiers- are those Characteristics that potential customer perceive as minimum
standards of acceptability for a product to be considered for purchase.
4. Select one or two Strategies( e.g low cost and speed)

Environmental Scanning- is the considering of events and trends that present either threats
or opportunities in the organization.
Strategy formulation ( Dr. Eduardo Morato jr.)
Quality based- Strategies- Focus on maintaining or improving the quality of an organization’s product or
Time- Based Strategies- Focus on reducing the time required to accomplish various activities and
minimizing the time to produce goods and services.
Productivity – is a measure of effective use of resources, usually expressed in ration of output over
Productivity= Output/Input
Productivity growth is the increased in productivity from one period to the next relative to the
productivity in the proceeding period.
Productivity growth= current productivity- previous productivity X 100
Previous productivity
 Partial measures
 output/(single input)
 Multi-factor measures
 output/(multiple inputs)
 Total measure
 output/(total inputs)
Factors affecting productivity
1. capital
2. Quality
3. Technology
4. Management
Other Factors Affecting Productivity
 Standardization
 Quality
 Use of Internet
 Computer viruses
 Searching for lost or misplaced items
 Scrap rates
 New workers
 Safety
 Shortage of IT workers
 Layoffs
 Labor turnover
 Design of the workspace
 Incentive plans that reward productivity
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


 A statement about the future value of a variable of interest such as demand.
 Forecasting is used to make informed decisions.
 Long-range
 Short-range

Forecasting- The act of anticipating or predicting the future value of interest such as demand.

Uses of Forecasts

Accounting Cost/profit estimates
Finance Cash flow and funding
Human Resources Hiring/recruiting/training
Marketing Pricing, promotion, strategy
MIS IT/IS systems, services
Operations Schedules, MRP, workloads
Product/service design New products and services

Features of Forecasts
 Assumes causal system
past ==> future – (future are cause by the past decision)
 Forecasts rarely perfect because of randomness
 Forecasts more accurate for
groups vs. individuals
 Forecast accuracy decreases
as time horizon increases
Steps in the Forecasting Process
1. Determine the purpose of the forecast
2. Establish a time horizon
3. Select a forecasting technique
4. Obtain, Clean and Analyze data
5. Make the forecast
6. Monitor the forecast

Types of Forecasts
A.Judgmental - uses subjective inputs
1. Executive opinions
2. Sales force opinions
3. Consumer surveys
4. Outside opinion
5. Delphi method
a. Opinions of managers and staff
b. Achieves a consensus forecast
B.Time series - uses historical data assuming the future will be like the past
1. Trend - long-term movement in data
2.Seasonality - short-term regular variations in data
3.Cycle – wavelike variations of more than one year’s duration
4.Irregular variations - caused by unusual circumstances
5.Random variations - caused by chance
C. Associative models - uses explanatory variables to predict the future
1. Predictor variables - used to predict values of variable interest
2.Regression - technique for fitting a line to a set of points
3.Least squares line - minimizes sum of squared deviations around the line
Kindly send this lecture to all your classmates. Good luck to the exam.
4A- AUG 24, 2012- Friday
4C- AUG 23, 2012- THURSDAY
4D- AUG 22, 2012- WED
4E-AUG 23, 2012- Thursday