Operations Management and TQM Lesson # 2

COMPETITIVENESS, STRATEGY AND PRODUCTIVITY

Competitiveness

➢ Companies must be competitive to sell their goods and services in the

marketplace.
➢ Competitiveness is an important factor in determining whether a company
prospers, barely gets by, or fails.

Influence of Operations on Competitiveness

➢ Product and service design

➢ Cost
➢ Location
➢ Quality
➢ Quick response
➢ Flexibility
➢ Inventory management
➢ Supply chain management
➢ After sales service

Why some organizations fail?

➢ Neglecting operations strategy

➢ Failing to take advantage of strengths and opportunities
➢ Putting too much emphasis on short-term financial performance
➢ Neglecting investments on human resources
➢ Failing to establish good internal communications and cooperation among
different functional areas
➢ Failing to consider customer wants and needs

The Failure of Nokia

• In October 1998, Nokia became the best-selling mobile phone brand in the world
• The best-selling mobile phone brand in the world
• Had a built-in flashlight
• Can hold 50 text messages
• With cool collection of ringtones
• In 2017, Apple introduced iPhone. By the end of 2017, half of smartphones sold
in the world were Nokia’s, while Apple’s iPhone had a mere 5 percent of the
global market
 • The quality of Nokia’s high-end phones continues to decline. Nokia’s decline
accelerates by 2011 and is acquired by Microsoft in 2013

Reasons for the Failure

➢ Nokia’s technology was inferior to Apple’s

➢ The arrogance among top-level managers
➢ Lack of vision

The Failure of Kodak

• Kodak was founded in the late 1880s and it became a giant in the photography
industry in the 1970s. It filed for bankruptcy in 2012
• For almost a hundred years, Kodak was at the forefront of photography

Reasons for the Failure

➢ They missed opportunities in digital photography

➢ Digital photography replaced Kodak’s established film-based business

Mission

➢ An organization’s mission is the reason for its existence

➢ Missions vary from organization, depending on the nature of business
➢ It serves as the basis for organizational goals

Strategies

➢ Strategies can be the main reason for the success or failure of an organization
➢ There are three basic business strategies:
Low cost
Responsiveness
Differentiation

Example of different strategies an organization might choose from:

➢ Low cost
➢ Scale-based strategies
➢ Specialization
➢ Newness
➢ Flexible operations
➢ High quality
➢ Service
➢ Sustainability
External Factors to Consider in Choosing a Strategy

➢ Economic conditions
➢ Political conditions
➢ Legal environment
➢ Technology
➢ Competition
➢ Markets

Competition: The Case of SMC’s Telecom Capability

• San Miguel Corporation planned to launch a third mobile operator in the country
• It announced it is selling its telecoms assets to PLDT and Globe Telecom
• The two operators took 50 percent stake and paid Php 52.8 billion to SMC

Internal Factors to Consider in Choosing a Strategy

➢ Human Resources
➢ Facilities and equipment
➢ Financial resources and suppliers
➢ Customers
➢ Products and services
➢ Technology

Productivity

➢ One of the primary responsibilities of a manager is to achieve productive use of

an organization’s resources.
➢ Productivity is an index that measures output relative to input