Chapter 2: Competitiveness, Strategy, and Productivity.

Definition of Terms
1. Competitiveness – The ability of an organization to maintain and gain
market share in its industry by offering superior value to customers through
cost, quality, flexibility, and innovation.
2. Strategy – A long-term plan outlining how a business will achieve its
objectives and compete in the market.
3. Operations Management – The administration of business practices to
ensure efficiency and effectiveness in converting resources into goods and
services.
4. Competitive Advantage – The attributes that allow an organization to
outperform its competitors, such as cost leadership, product differentiation,
or customer service.
5. Operations Strategy – The approach a business takes to align its operational
processes with its overall strategy to gain a competitive advantage.
6. Supply Chain Management – Coordination of production, inventory, location,
and transportation to achieve efficiency.
7. Capacity Planning – Determining the production capacity needed to meet
demand.
8. Balanced Scorecard – A strategic management tool that helps organizations
measure performance from financial, customer, internal process, and learning
perspectives.
9. Productivity – A measure of how efficiently resources are used to produce
outputs.
10.Lean Operations – A systematic approach to minimizing waste without
sacrificing productivity.

Competitiveness
Competitiveness determines an organization's ability to attract and retain
customers. Businesses compete based on:
 Cost: Producing goods or services at a lower cost than competitors (e.g.,
Walmart).
 Quality: Offering superior or consistent quality products (e.g., Toyota’s
reliability in vehicles).
  Flexibility: Adapting to changing customer demands (e.g., Zara’s fast
fashion model).
 Innovation: Continuous improvement and new product development (e.g.,
Apple’s technological advancements).
Mission and Strategies
A company's mission statement defines its purpose, while strategies help achieve
that mission.
Levels of Strategy:
1. Corporate Strategy – Overall organizational direction (e.g., market
expansion, diversification).
2. Business Strategy – How the company competes in a specific market (e.g.,
cost leadership, differentiation).
3. Functional Strategy – How specific departments, like operations, support
business strategy.
Porter’s Competitive Strategies:
 Cost Leadership – Providing goods/services at the lowest cost (e.g.,
Walmart).
 Differentiation – Offering unique products (e.g., Apple, Tesla).
 Focus Strategy – Targeting a specific niche (e.g., Rolex in luxury watches).
Discussion: What makes a company competitive today? Think
about technology, customer service, and sustainability.
Operations Strategy
Operations strategy ensures that processes align with business goals. Key
performance objectives include:
 Cost efficiency: Reducing waste and improving resource utilization.
 Quality management: Maintaining consistency and customer satisfaction.
 Speed: Responding quickly to customer demands.
 Flexibility: Adapting operations to market changes.
Examples:
 McDonald's focuses on efficiency through standardized processes.
 Amazon emphasizes speed in order fulfillment and customer service.
Implications for Operations Management
Operations strategy affects:
  Product design
 Supply chain decisions
 Workforce management
Challenges:
 Managing resources efficiently
 Responding to changing market conditions
 Balancing cost, quality, and speed
Discussion: What happens if operations strategy does not align
with business strategy? Consider companies that struggled due
to poor alignment.
The Balanced Scorecard
A framework that ensures strategies translate into action through four perspectives:
 Financial: Profitability, revenue growth
 Customer: Customer satisfaction, retention
 Internal Process: Efficiency in production and operations
 Learning & Growth: Employee training, innovation
Example:
 A retail chain might set targets like increasing revenue (financial), improving
service quality (customer), reducing delivery times (internal process), and
upskilling employees (learning & growth).
Productivity
Productivity is crucial for profitability and competitiveness.
Types of Productivity Measures:
1. Partial Productivity – Output per single input (e.g., labor productivity =
output per worker).
2. Multifactor Productivity – Output per multiple inputs (e.g., labor + capital
+ materials).
3. Total Productivity – Output per total inputs used.
Ways to Improve Productivity:
 Lean operations (Toyota Production System)
o Is a business strategy that aims to eliminate waste and improve
efficiency
 Technology and automation (Robotics in manufacturing)
 Employee training (Investing in workforce skills)
Discussion: Why do some companies struggle with productivity
despite using advanced technology?