PRODUCTIVITY, COMPETITIVENESS

AND STRATEGIES
 Productivity

Productivity is nothing but a measure of

effective uses of resources
Productivity concept is getting tremendous
importance of Business Organization from
the year 1980s onwards.
In another way:
Productivity is an index that measures out
put (goods and Services) relative to the
input (labor, materials, energy and other
resources).
It is usually expressed as the ratio of out
put to input:
Productivity

Output
Productivity =
Input
 Productivity measure for what?
• A productive ratio can be computed for a
- single operation
- a department
- an organization or
- even an entire country.
 Who is responsible?

One of the primary responsibilities of a

operations manager is to achieve
productive use of an organization’s
resources.
Types of Productivity Measures

1. Partial Productivity Measure

2. Multifactor Productivity Measure
3. Total Productivity Measure
 Partial Productivity Measure

If the productivity is measured based on only

one input then it is known as Partial Productivity
Measure.
Examples:
Output
Partial Productivity 
Energy Input
Output
Partial Productivity 
Machin Input
Output
Partial Productivity 
Labor Input
Output
Partial Productivity 
Capital Input
 Output
Output
Capital
Machine
Energy
Labor
Units of output per labor hour
Units of output per shift
Labor Productivity Value added per labor hour
Dollar Value per labor hour
Machine Productivity Unit of output per machine hour
Dollar Value of output per
machine hour
Capital Productivity Unit of output per dollar input
Dollar Value of output per dollar
input.
Energy Productivity Units of output per kilowatt-Hour
Dollar Value of output per
Kilowatt-hour
 Multifactor Productivity Measure

• If the productivity is measured based on

more than one input then it is known as
Multifactor Productivity Measure.

Output
Multifactor Productivity 
Energy  Capital  Labor
 Total Productivity Measure

• If the productivity is measured based on

all input then it is known as Total
Productivity Measure.

So Total Productivity Measure=

Goods or service produced
All inputs used to produced them
• Example-1:

Determine the productivity for the cases:-

1. Four workers installed 720 squares yards
of carpeting in eight hours.
2. A machine produced 68 usable pieces in
two hours.
• Solution-i:

We know that
output
Productivity 
input
Yards of carpets installed

Labor hours Wored
720 square yards

4 workers  8 hours/worker
720 yards

32 hours
 22.5 yards/ hour
Solution-2:

We know that
output
Productivity 
input
Usable pieces

Production Time
68 pieces

2 hours
 34 pieces/ hour
• Example-2:

• Determine the multifactor productivity for

the combined input of labor and
machine time using the following data:
• Output 1760 units
• Inputs:
• Labor 1000 $
• Materials 520 $
• Overhead 2000 $
• Solution:

We know that,

Output
Multifactor Productivity 
Energy  Capital  Labor
Output

Labor  Materials  Overhead
1760

1000  520  2000
 .50 units/$
Advantages of Productivity Measures
1. Productivity serve as a scoreboard of the effective use
of resources.
2. Productivity measure can used to take performance
over time as a result managers can judge
performance and to decide where improvements are
needed.
3. Government leaders are concern with the productivity
because of the close relationship between productivity
and a nation’s standard of living.
• Basically higher the productivity , higher the living
standard.
4. Business leaders are concern with
productivity as it relates to competitiveness.
Example:
If two firms both have the same level of output,
but one requires less input because of higher
productivity, that one that will be able to change
a lower price and consequently increase its
share to the market or that firm might have
elect to change the same price, thereby reaping
a greater profit.
 Factors That Affect
Productivity:
• Numerous factors that affect Productivity,
Some of them are:-
-Methods
-Capital
-Quality
-Technology and
-Management etc.
A nice example for understanding the factors of
Productivity are given in the next slide
• Problem:
• A Student has plan to write a lengthy term paper. The particular student is an
average typist and can turn out 3 pages/ hour. How could the student increase the
productivity (i.e., more than 3 pages/ hour)?
• Solution:
• The student can enroll his name in a short course offered by the college for
improving the typing skills (and this is nothing but Method).
• The traditional type writer can be replaced by the expensive computer and word
processing package (and this is nothing but Capital).
• By using computer(Technology) Quality also can be assured through some
automatic features such as spell checking and error correction.
• Productivity improvements might be achieved through improving organization and
preparation for the actual typing that is refered as Management.
• The incentives of receiving a good grade and a pride of doing a good job is also
important.
• The factors that are mentioned above is not for the case of typing alone but for
any kind of work in general.
 Technology and Productivity:

• It was generally believed that

workers are the main determinant of productivity.
According to that theory, the route to productivity
gains involves getting employees to work harder.
• However,
the fact is that many productivity gains in the past
have come from technological improvements.
Some examples are given as an evident in the
next slide