Professional Documents
Culture Documents
LECTURE NOTES
Competitiveness - how effectively an organization meets the wants and needs of customers relative to others that
offer similar goods or services.
• Operations must work with marketing to obtain information on the relative importance of the various
items to each major customer or target market. Understanding competitive issues can help managers
develop successful strategies.
STRATEGY FORMULATION
• It is almost always critical to the success of a strategy.
• To formulate an effective strategy, the managers must take into consideration the core competencies of the
organization by scanning the environment.
• This is referred to as the SWOT approach.
EXTERNAL
Opportunities Threats
1 1
2 2
3 3
4 4
5 5
Strength SO Strategies ST Strategies
1 1 1
2 2 2
3 3 3
4 4 4
INTERNAL
5 5 5
Weakness WO Strategies TW Strategies
1 1 1
2 2 2
3 3 3
4 4 4
5 5 5
• The alternative to SWOT analysis is Michael Porter’s FIVE FORCES MODEL. This model takes into
consideration the threat of new competition, the threat of substitute products or services, the bargaining
power of suppliers, and the intensity of competitions.
Threat of
new
entrants Bargaining
Competitive
power of
rivaly
customers
Operations strategy - relates to products, processes, methods, operating resources, quality, costs, lead times, and
scheduling.
• In order for operations strategy to be truly effective, it is important to link it to organization strategy; that
is, the two should not be formulated independently. Rather, formulation of organization strategy should
take into account the realities of operations’ strengths and weaknesses, capitalizing on strengths and
dealing with weaknesses.
• It is a top-down management system that organizations can use to clarify their vision and strategy and
transform them into action.
• The idea was to move away from a purely financial perspective of the organization and integrate other
perspectives such as customers, internal business processes, and learning and growth.
• Using this approach, managers develop objectives, metrics, and targets for each objective and initiatives to
achieve objectives, and they identify links among the various perspectives.
• This, however, has no role in strategy formulation.
PRODUCTIVITY
• It is an index that measures output relative to the input used to produce it. It is expressed as a ratio of
OUTPUT to INPUT.
2. A machine produced 700 units in 20 hours. There are 4 units which are not fit for sale.
3. Determine the multifactor productivity for the combined input of labor and machine using the given
information:
a. Output – 7,040 units
b. Input
i. Labor – P1000
ii. Materials – P520
iii. Overhead – P2000