CHAPTER 2 SUMMARY
2.2.
Competitiveness - relates to the effectiveness of an organization in the marketplace relative to other
organizations that offer similar products or services.
Strategy - relates to the plans that determine how an organization pursues its goals．
Productivity - relates to the effective use of resources and has a direct impact on competitiveness.
Marketing influences competitivenes:
1. Identifying consumer wants and/or needs
2. Price and quality
3. Advertising and promotion
Operating influences competitiveness:
1. Product and service design. Special characteristics or features of a product or service.
2. Cost. Lower cost lower prices
3. Location
4. Quality
5. Quick response. A
6. Flexibility. Ability to respond in sudden changes
7. Inventory management.
8. Supply chain management. Efficient movement of inputs until output.
9. Service
10. Managers and workers. Competent enough can be advantage.
2.3.
Mission - the reason for the existence of an
organization.
Mission statement - states the purpose of an
organization. It is the mission expressed in a
statement.
Goal - provide detail and scope of the mission. In
order to construct this, the basis for each goal is
based on mission statement. To achieve its
mission
Strategies - plans for achieving organizational
goals. Can be strategically (long-term), tactically,
operationally (both short-term but operationally is
shorter in term of length).
Three basic strategies:
1. Low cost
2. Responsiveness. Responsiveness relates to the ability to respond to changing demands. Fast enough.
3. Differentiation from competitors. Refers to quality, reputation and more.
Two kinds of strategies:
1. Organizational strategies - which relate to the entire organization. Supports the goals and mission of
business.
2. Functional strategies - which relate to each of the functional areas of the organization. It supports the
organizational strategies.
Tactics - methods used to achieve strategies. More specific. Important to carry out the operations.
Core competencies - the special attributes or abilities that give an organization a competitive edge. These are
only special attributes that a company have.
Competitor competencies - the special attributes that your competitors have. It is important to level it or gain
and edge.
SWOT - analysis of strengths, weaknesses, opportunities, and threats. (SW for internal, OT for external).
Linked with organizational strategies or operational strategies
Five Forces model - alternative for SWOT, proposed by Michael Porter. It is a framework for analyzing the
competitive structure of an industry. It helps businesses understand the attractiveness of an industry and
identify potential threats and opportunities.
The Five Forces:
1. *Threat of New Entrants: The ease or difficulty of entering the industry.
2. *Bargaining Power of Suppliers: The ability of suppliers to influence prices and terms.
3. *Bargaining Power of Buyers: The ability of customers to influence prices and terms.
4. *Threat of Substitute Products: The availability of alternative products or services.
5. *Competitive Rivalry: The intensity of competition among existing firms in the industry.
Order qualifiers - characteristics that customers perceive as minimum standards. These can be also with
other product or services.
Order winners - characteristics of an organization’s goods or services that cause them to be perceived as
better than the competition.
Example of order qualifiers and order winners
Think about when you are planning to have vacation, after long long hectic days in your program. So you
planned to book a hotel. While scrolling you notice two hotel: AURA Hotel (Order Winners) offers an spa
experience once you check in while the other, FINE SHYT Hotel (Order Qualifier) is just normal hotel.
Environmental scanning - is the monitoring of events and trends that present either threats or opportunities
for the organization.
Such as:
External
1. Economic
2. Political
3. Legal Environment
4. Technology
5. Competition
6. Customers
7. Suppliers
8. Markets
Internal
1. Human Resources
2. Facilities and equipment
3. Financial resources
4. Products and services
5. Technology
6. Other
Growth - is often a component of strategy, especially for new companies.
2.4.
Operations strategy - narrower in scope, primarily deals with the operations aspect of the organization. The
organizational and operations should formulate together.
Quality-based strategies - focus on maintaining or improving the quality of an organization’s products or
services. It can attract or retain customers.
Time-based strategies - focus on reducing the time required to accomplish various activities. Finishing in a
short period of time.
§ Rationale: is that by reducing time, costs are generally less, productivity is higher, quality tends to be
higher, product innovations appear on the market sooner, and customer service is improved.
Time-based strategies by the following:
1. Planning time
2. Product/service design
3. Processing time
4. Changeover time. It involves changing from producing one product into another. Example making
banana cake and switching into carrot cake.
5. Delivery time
6. Response time for complaints
2.6.
Balanced Scorecard (BSC) - is a top-down management
system that organizations can use to clarify their vision and
strategy and transform them into action. Introduce by Robert
Kaplan and David Norton.
• No rule in strategy formulation
The four perspectives are intended to balance not only financial
and nonfinancial performance, but also internal and external
performance, as well as past and future performance.
This approach can also help organizations focus on how they
differ from the competition in each of the four areas if their
vision is realized.
2.7.
Productivity - a measure of the effective use of resources, usually
expressed as the ratio of output to input.
§ Productivity is an index that measures output (goods and services)
relative to the input (labor, materials, energy, and other resources)
used to produce it.
§ “the higher the productivity, the lower the cost of the output.
Productivity growth - is the increase in productivity from one period to the next relative to the productivity in
the preced- ing period.
Other productivity measurement used by the management
Partial measures - used to detect the
improvement of each factor (materials,
labor, overhead, capital)
“Productivity = Competitiveness”
§ “Productivity measures also can be
used to judge the performance of
an entire industry or the
productivity of a country as a
whole.”
§ In can determine the GDP, labor
productivity with these data it can
make informed decisions about
policy and reallocation of the
resources.
“Service productivity is more
problematic than manufacturing
productivity.”
§ Think about a situation especially
medical diagnoses or surgeries. It
is difficult to measure the
productivity because of high
degree of ‘variability’ being applied
to each patient.
Process yield - ratio of output of good
products to the quantity of raw material
input. This is also used in service industry.
Factors affecting productivity
1. Technological improvement.
(Positive and negative impact)
2. Standardizing
3. Quality differences
4. Use of internet
5. Computer viruses
6. Misplaced item
7. Scrap rates
8. New workers
9. Safety
10. Shortage of technology-savvy workers
11. Layoffs
12. Labor turnover
13. Design of workplace
14. Incentive plan that increases productivity
15. Equipment breakdown/shortages
“Productivity ❌ Efficiency”
§ Efficiency - It's about minimizing waste and optimizing processes
§ Productivity - Producing more with same resources
§ Example, an efficiency perspective on mowing a lawn with a hand mower would focus on the best way
to use the hand mower; a productivity perspective would include the possibility of using a power mower.
§ Productivity focuses on how to use the hand mover to remove the grass. While efficiency focus on the
‘power’ on how it can reduce its power and cut as many grass as possible.
