Chapter 2 Objectives

List and briefly discuss the primary ways that business organizations compete.

Business and organizations compete through:

Identifying consumer wants and needs is a basic input in an organization’s decision-making process, and central to competitiveness. The ideal is to achieve a perfect match between those wants and needs and the organization’s goods and/or services.

Pricing is usually a key factor in consumer buying decisions. It is important to understand the trade-off decision consumers make between price and other aspects of a product or service such as quality.

Advertising and promotions are ways organizations can inform potential customers about features of their products or services, and attract buyers.

List five reasons for the poor competitiveness of some companies.

1. Lack of quality

2. Poor location

3. Slow response to changing market needs

4. Inflexibility of design or services offered

5. Unmotivated/incompetent workers and managers

Define the term strategy and explain why strategy is important for competitiveness.

Strategies: Plans for achieving organizational goals.

Strategies have a major impact on what the organization does and how it does it. Strategies can be long term, intermediate term, or short term. To be effective, strategies must be designed to support the organization’s mission and its organizational goals.

Contrast strategy and tactics.

Tactics are the methods and actions used to accomplish strategies. They are more specific in nature that strategies, and they provide guidance and direction for carrying out actual operations.

Discuss and compare organization strategy and operations strategy, and explain why it is important to link the two.

The organization strategy provides the overall direction for the organization. It is broad in scope, covering the entire organization. Operations strategy is narrower in scope, dealing primarily with the operations aspect of the organization.

Describe and give examples of time-based strategies.

Time-Based Strategy: Strategy that focuses on reduction of time needed to accomplish tasks. Organizations have achieved time reduction in some of the following:

Planning time: The time needed to react to a competitive threat, to develop strategies and select tactics, to approve proposed changes to facilities, to adopt new technologies, and so on.

Product/Service Design Time: The time needed to develop and market new or redesigned products or services.

Processing Time: The time needed to produce goods or provide services. This can involve scheduling, repairing equipment, methods used, inventories, quality, training, and the like.

Changeover Time: The time needed to change from producing one type of product or service to another. This may involve new equipment settings and attachments, different methods, equipment, schedules, or materials.

Delivery Time: The time needed to fill orders.

Response Time for Complaints: These might be customer complains about quality, timing of deliveries, and incorrect shipments. These might also be complains from employees about working conditions (e.g. safety, lighting, heat or cold), equipment problems, or quality problems.

Define the term productivity and explain why it is important to organizations and to countries.

Productivity: A measure of the effective use of resources, usually expressed as the ratio of output to input. Productivity ratios are used by companies for planning work-force requirements, scheduling equipment, financial analysis, determining how competitive a company is, and other important tasks. Countries use productivity growth ratios to determine rates of inflation and standard of living of its people. Productivity increases add value to the economy while keeping inflation in check.

List some of the reasons for poor productivity and some ways of improving it.

Generally, the methods, capital, quality, technology and management are the largest contributors to poor productivity. Ways of improving productivity include:

1. Develop productivity measure for all operations

2. Look at the system as a whole in deciding which operations are most critical.

3. Develop methods for achieving productivity improvements, such as soliciting ideas from workers, studying how other firms have increased productivity, and reexamining the ways work is done.

4. Establish reasonable goals for improvement.

5. Make it clear that management supports and encourages productivity improvement.

6. Measure improvements and publicize them.