Chapter 02 Competitiveness, Strategy, and Productivity

List some factors that can affect productivity and some ways that productivity can be improved.

Factors affecting productivity include the following: Methods, capital, quality, technology, and management. Ways productivity can be improved include the following: Using productivity measures for all operations; eliminating bottlenecks; soliciting ideas from workers; forming work teams; studying other firms; reexamining work methods; establishing reasonable goals for improvement; obtaining support from management; measuring, rewarding, and publicizing improvements; and finally, not confusing productivity with efficiency because productivity is a much broader concept than efficiency is.

While it is true that increases in efficiency generate productivity increases, it is possible to get caught in an "efficiency improvement trap." Explain what this means.

Focusing solely on efficiency may result in overlooking potential major productivity gains that could be achieved by altering inputs rather than simply refining methods to achieve relatively modest gains.

Explain the rationale of an operations strategy that seeks to increase the opportunity for use of technology by reducing variability in processing requirements.

Technology usually works best when processing requirements are uniform. Therefore, reducing the variability provides more opportunities for implementing technology.

List the key ways that organizations compete.

Business organizations compete with one another in a variety of ways. Key among these ways are price, quality, product differentiation, flexibility, and delivery time.

Explain the importance of identifying and differentiating order qualifiers and order winners.

Characteristics such as price, quality, delivery speed, delivery reliability all can be order qualifiers or order winners. It is important to determine the set of order qualifier and order winner characteristics so that companies can emphasize or de-emphasize a given characteristic based on its classification of importance. Marketing must play a major role in determining order qualifiers and order winners. In classifying order winners and order qualifiers, marketing and operations must work together to match the market needs with the operational capability of the firm.

Contrast organization strategy and operations strategy.

Organization strategy provides the overall direction for the organization and is broad in scope, e.g., low cost, scale-based strategies, specialization, newness, flexible operations, high quality, service, or sustainability. Operations strategy is narrower in scope, dealing primarily with the operations aspect of the organization. Operations strategy must be consistent with organization strategy and deals with products, processes, methods, operating resources, quality, costs, lead times, and scheduling.

Contrast the terms strategies and tactics.

Strategy is the basic approach used by an organization to achieve its goal. Tactics are the methods and actions that are taken to accomplish strategies and carry out operations

It has been said that a typical Japanese automobile manufacturer produces more cars with fewer workers than its U.S. counterpart. What are some possible explanations for this, assuming that U.S. workers are as hardworking as Japanese workers?

The Japanese worker is probably working smarter, if not harder, than U.S. workers are. By working smarter, we mean the Japanese are using more productive work methods than American workers are. One way that the Japanese accomplish this is by using time-based strategies that focus on reducing the time needed to accomplish various tasks. Some of the areas in which their organizations benefit from time reduction are planning time, design time, processing time, changeover time, delivery time, and response time for complaints.

From time to time, various groups clamor for import restrictions or tariffs on foreign-produced goods, particularly automobiles. How might these be helpful? Harmful?

They would be helpful in the sense that they would give U.S. manufacturers time to step up the use of industrial robots and other measures, which would make them better able to compete in domestic and world markets. The higher profits possible from reduced competition or higher prices on foreign cars could be used for research and development costs. Possible pitfalls include higher prices and less choice, which U.S. consumers would have to endure, and the possibility that U.S. companies would not use this as an opportunity to improve, but merely as a crutch. From the Japanese standpoint, they would be penalized for doing what many would see as a good job.

Explain the term time-based strategies and give three examples.

Time-based strategies are approaches that focus on reducing the time needed to conduct the various activities in a process. The rationale is that by reducing time, costs are generally lower, productivity is higher, quality tends to be higher, product innovations appear on the market earlier, and customer service is improved. Examples of time-based strategies include reductions in any three of the following: planning time, product/service design time, processing time, changeover time, delivery time, or response time for complaints.

Name 10 ways that banks compete for customers.

a. Interest rate on savings. b. Interest rate on checking and CDs. c. Loan rates. d. Quick loan application processing. e. No fees or low fee values (free checking, no or low ATM fees). f. Number of branches and locations to make it more convenient for the customers. g. Free on-line banking. h. Extended hours of service. i. Extra services. j. Lower minimum deposit before charging a service fee.

Productivity should be a concern of every business organization. a.How is productivity defined? b.How are productivity measures used? c.Why is productivity important? d.What part of the organization has primary responsibility for productivity? e.How is efficiency different from productivity?

a. Productivity is the ratio of output to input. b. Productivity measures are used to judge the effective use of resources by countries, companies, and units within companies. c. High productivity rates relative to competitors can mean competitive advantages for companies. For countries, high productivity rates can reduce the risk of inflation and generate high standards of living for the country as a whole. d. Operations. e. Efficiency relates to a fixed set of tools or conditions. Productivity is wider in scope. Efficiency can be improved by better use of existing labor and equipment. Productivity can be improved by changing work methods, but also by changing equipment or conditions. The example of cutting grass with a pair of scissors is a good one: An efficiency approach would focus on the best way to use the scissors; a productivity approach would focus on use of a lawn mower. Note: Use of a mower, while more productive than the use of scissors, still may have room for improvement in its efficiency.

3.How can technology improve a.Competitiveness? b.Productivity?

a. Technology can improve competitiveness by improved product and service offerings, more efficient processing, a better Web site, more efficient order processing, better communication, easier and more effective coordination of supply chains, automatic billing, and automatic error checking. b. Computers and the related automation of various company or manufacturing functions and the Internet can assist in improving productivity by reducing processing time for activities.