Overview of Competitiveness, Strategy

&Productivity

Dr. T. T. Kachwala
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Overview of Competitiveness, Strategy
& Productivity
 Competitiveness

 Mission/Strategy/Tactics

 Operations Strategy

 Productivity – Definition, Measures of Productivity, Methods of improving

Productivity.
 Video (McDonald’s “Made for You”)

 Productivity in Service Sector

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Competitiveness

 Competitiveness: How effectively an organization

meets the wants and needs of customers relative to
others that offer similar goods or services
(Exercise)
 Competing using Marketing: Identifying Consumer
wants and needs, Pricing, Advertising and
Promotion (SWOT – O & T)
 Competing using Operations: Product and Service
Design, Cost, Location, Quality, Quick response,
Flexibility, Inventory Management, Supply Chain
Management, & Services (SWOT – S & W)
 Two basic issues :–
 First: What do the customers want?
 Second: What is the best way to satisfy those wants?
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Mission/Strategy/Tactics

Mission Strategy Tactics

 Mission: The reason for existence for an

organization, the mission statement states the
purpose of an organization & the Goals provide more
detail and describe the scope of Mission
 Strategies: Plans for achieving Organizational Goals
 Tactics: The methods and actions taken to
accomplish Strategies
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Mission/Strategy/Tactics

Mission

Goals

Organizational Strategies

Functional Goals

Finance Marketing Operations

Strategies Strategies Strategies

Tactics Tactics Tactics

Operating Operating Operating

procedures procedures procedures
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Mission/Strategy/Tactics

 Example: Student would like to have a career in business,

have a good job, and earn enough income to live comfortably
 Mission: Live a good life
 Goal: Successful career, Good income
 Strategy: Obtain an MBA education from reputed college
 Tactics: Select a reputed college and a specialization
 Operations: Register, buy books, take courses, study,
graduate, get job using college placements
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Operations Strategy

 Operations strategy: The approach, consistent with

organization strategy, that is used to guide the operations
function.
 Examples of strategies: Low cost, Scale-based, Specialization,
Flexible operations, High quality, & Service
 Quality-based strategies: Focuses on maintaining or improving
the quality of an organization’s products or services for both
attracting & retaining Customers
 Time-based strategies: Focuses on reduction of time needed
to accomplish tasks
 What are the strategies of World Class Companies?
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Definition of Productivity

1. The term Production is absolute. While the term

Productivity is relative (output relative to input)

2. It is ratio of output & input

i.e. Productivity = (Measure of output) / (Measure of input)

3. Productivity can be defined as incremental change in output

for a unit change in input.

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Measures of Productivity

1. Partial Measures

1. Labor productivity = Output (units) / Labor (hours)

2. Material Productivity = Output (units) / Material (kgs)

3. Machine Productivity = Output (units) / Machine (hours)

2. Multifactor Productivity Index = Output (units) / (Labor + Material + Machine)

3. Total Productivity Index = Output (units) / (All inputs used)

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Methods of improving Productivity

1. Increase the output for the same input (Quality

Management)
2. Decrease the input for the same level of output
(Reducing Wastage)
3. Small increase in input resulting in a
substantial increase in output (Capital
Investments in new facilities)
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Productivity Gains at Whirlpool

1. The plant is competing against the foreign

manufacturers with much lower labour cost

2. The issue really is the labor content and the product

i.e. Labour Productivity

3. Productivity at Whirlpool – 139% of the average of

the industry, and rising by about 5% per year

4. Whirlpool uses gain sharing program called

performance share & promises employees no job
loss because of productivity gains
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Productivity in Service Sector

1. More difficult to measure & manage because it involves intellectual

activities & high degree of variability: for example medical
diagnosis, consultancy & legal services
2. Some of the factors that affect Productivity are Money (Capital),
Methods, Quality, Technology & Management ( McDonald’s “Made for
You”)

3. Standardizing Processes & Procedures where ever possible to reduce

variability can improve Productivity & Quality: for example Burger
Kings combined menu items in meal packages such as a burger, fries
& soft drink which reduced time to take and process the order & this
resulted in increased productivity