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 Competitiveness,
Strategy, and
Productivity
These slides are only for the learning purposes of the
Operations management course. Do not distribute these
slides. Slides are not a substitute for readings / textbook
and are only meant to complement the textbook and
readings.

Chapter 2 2
 Competitiveness: Operations has major influence…..
◼ Competitiveness: How effectively an organization meets the wants and needs
of customers relative to others that offer similar goods or services
◼ Identifying consumer wants
◼ Source of competitiveness
◼ Marketing ◼ Pricing
◼ Operations ◼ Promotion

◼ Cost – Make it cheap

◼ Quality & Reliability – Make it good

◼ Delivery Speed – Make it fast Cost

◼ Delivery Reliability – Deliver it when promised

Flexibility Delivery

◼ Coping with Changes in Demand – Change its Volume

Quality
◼ New Product Introduction – Be flexible & rapid

◼ Services – Support it
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Why Some Organizations Fail?
◼ Too much emphasis on short-term financial performance

◼ Failing to take advantage of strengths and opportunities

◼ Failing to recognize competitive threats

◼ Neglecting operations strategy

◼ Lack of Improvement / Inertia to Innovate

◼ Neglecting investments in capital and human resources

◼ Failing to establish good internal communications

◼ Failing to consider customer wants and needs

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Operations Strategy – Consistent with Organization Strategy

Order Order
Qualifiers Winners

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 Productivity
Improving Productivity
◼ Productivity ◼ Develop productivity measures
◼ A measure of the effective use of
◼ Determine critical (bottleneck) operations
resources, usually expressed as the
ratio of output to input ◼ Develop methods for productivity
improvements
◼ Establish reasonable goals
◼ Productivity ratios are used for
◼ Get management support
◼ Planning workforce requirements
◼ Measure and publicize improvements
◼ Scheduling equipment
◼ Don’t confuse productivity with efficiency
◼ Financial analysis

Capital Quality

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Technology Management
An Example….

7040 Units Produced

Sold for $1.10/unit

Cost of labor of $1,000 What is the

multifactor
Cost of materials: $520 productivity?

Cost of overhead: $2000 Ans. 2.20

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Tradeoffs

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 Problem

•As Operations Manager, you are concerned about being

able to meet sales requirements in the coming months. You
have just been given the following production report.
Find the average monthly productivity (units per machine
hour).
JAN FEB MAR APR

Units Produced 2300 1800 2800 3000

Hours per Machine 325 200 400 320

Number of Machines 3 5 4 4

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Problem

◼ Live Trap Corporation received the data below for its rodent cage
production unit. Find the total productivity.
50,000 cages Production time 620 labor hours

Sales price: $3.50 per unit Wages $7.50 per hour

Raw materials (total cost) $30,000

Component parts (total cost) $15,350

Output Input

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 Problem
◼ A U.S. manufacturing company operating a subsidiary in an LDC
(less-developed country) shows the following results:

U.S. LDC
Sales (units) 100,000 20,000
Labor (hours) 20,000 15,000
Raw materials (currency) $20,000 LC 20,000
Capital equipment (hours) 60,000 5,000

Calculate partial labor, capital and material productivity figures for the parent and
subsidiary. ($1 = 10 LC)

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Thank you

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