Chapter 2 Competitiveness, Strategy, and Productivity

1. Which of the following is least likely to affect the cost an organization incurs in producing its products or services?

A. price
B. productivity
C. location
D. quality
E. inventory management

Relative to the other choices, price is least likely to affect cost.

2. Where a firm locates would typically not affect that firm's:

A. costs.
B. convenience for customers.
C. delivery times.
D. strategy.
E. transportation costs.

Typically, strategy dictates where firms will locate, rather than location dictating strategy.

3. Which of the following is not among the chief reasons organizations fail?

A. overemphasis on short-term financial performance

B. emphasizing labor productivity in labor-intensive environments
C. poor internal communications
D. not investing in capital and human resources
E. overemphasis on product (or service) design

In labor-intensive environments, emphasizing labor productivity is a good idea.

4. The key to successfully competing is understanding what customers want and then __________ satisfy those wants.

A. training production workers to

B. finding suppliers who can
C. finding the best way to
D. designing products and services that
E. hiring enough workers to

To successfully compete, two basic issues must be addressed: What do the customers want? What is the best way to satisfy
those wants?
5. An organization's mission statement serves as the basis for:

A. environmental scanning.
B. core competencies.
C. operating procedures.
D. distinctiveness.
E. organizational goals.

Organizations' missions serve as the broad underpinning for their goals.

6. Which of the following would be least important in the pursuit of a time-based strategy?

A. cost minimization
B. quick changeover times
C. operational agility
D. reduced complaint resolution times
E. flexible technology

Many means for minimizing cost would have the effect of making a time-based strategy less feasible.

7. Competitiveness doesn't include:

A. productivity.
B. effectiveness.
C. profitability.
D. operations strategy.
E. operations management.

A company can be competitive relative to similar companies and still be unprofitable if the competitive environment is
inherently unprofitable.
8. Product design and choice of location are examples of _______ decisions.

A. strategic
B. tactical
C. operational
D. customer-focused
E. design

These decisions are made high in the hierarchy.

9. Scheduling personnel is an example of an operations management:

A. mission implementation.
B. operational decision.
C. organizational strategy.
D. functional strategy.
E. tactical decision.

Scheduling decisions are made low in the hierarchy.

10. Productivity is expressed as:

A. output plus input.

B. output minus input.
C. output times input.
D. output divided by input.
E. input divided by output.

Productivity is the ratio of outputs to inputs.

11. In the 1970s and early 1980s in the United States, organizations concentrated on:

A. operations strategies.
B. improving quality.
C. marketing and financial strategies.
D. revising mission statements.
E. environmental issues.

This led to U.S. firms being not very competitive with regard to their operations.

12. Which of the following is not a factor that affects productivity?

A. computer viruses
B. design of the workspace
C. use of the Internet
D. standardizing processes
E. product price

These don't lead to fundamental changes in operations.

13. Which of these factors would be least likely to affect productivity?

A. methods and technology

B. workers
C. management
D. product mix
E. advertising

Advertising could increase the value of the outputs, but it is less likely to affect productivity than these other factors.

14. Which of the following is not a key step toward improving productivity?

A. developing productivity measures for all operations

B. improving the bottleneck operations
C. establishing reasonable goals for improvement
D. considering incentives to reward workers
E. converting bond debt to stock ownership

A firm's productivity is independent of its capital structure.

15. For an organization to grow its market share, it must:

A. advertise using multimedia.

B. reduce prices.
C. exceed minimum standards of acceptability for its products or services.
D. establish an Internet Web site.
E. broaden its mission statement.

Only by exceeding standards can an organization grow its market share.

16. The ratio of good output to quantity of raw material input is called

A. nondefective productivity.
B. process yield.
C. worker quality measurement.
D. total quality productivity.
E. quantity/quality ratio.

This is sometimes a useful productivity measure in service industries.

17. The fundamental purpose for the existence of any organization is described by its:

A. policies.
B. procedures.
C. corporate charter.
D. mission statement.
E. bylaws.

A mission statement is the organization's attempt to justify its existence.

18. A productivity increase in one operation that does not improve overall productivity of the business is not

A. worthwhile.
B. trivial.
C. competence-destroying.
D. an order winner.
E. an order qualifier.

Only system-wide productivity improvement makes the organization more productive.

19. Productivity growth can be calculated by:

A. outputs minus inputs.

B. inputs divided by the outputs.
C. outputs divided by the inputs.
D. input plus output divided by two.
E. (current productivity – previous productivity) x 100 / (previous productivity)

Productivity growth is a key factor in a country’s rate of inflation and the standard of living of its people.

20. Which of the following is true?

A. Corporate strategy is shaped by functional strategies.

B. Corporate mission is shaped by corporate strategy.
C. Functional strategies are shaped by corporate strategy.
D. External conditions are shaped by corporate mission.
E. Corporate mission is shaped by functional strategies.

Corporate strategy shapes strategies at lower levels.

21. Core competencies in organizations generally do not relate to:

A. cost.
B. quality.
C. time.
D. flexibility.
E. sales price.

What a firm charges for its outputs is not a core competency. What it can charge, however, is potentially related to a core
competency.
22. With regard to operations, organization strategy should, ideally, take into account:

A. operations' strengths and weaknesses.

B. inventory levels.
C. labor productivity.
D. product mix.
E. production processes.

Formulation of organization strategy should take into account the realities of operations' strengths and weaknesses,
capitalizing on strengths and dealing with weaknesses.

23. Which of the following is not typically considered a cure for poor competitiveness?

A. Remove communications barriers within organizations.

B. Minimize attention to the operations function.
C. Put less emphasis on short-term financial results.
D. Recognize labor as a valuable asset and act to develop it.
E. Improve quality.

Operations is a prime area for improving competitiveness.

24. Time-based approaches of business organizations focus on reducing the time to accomplish certain necessary activities. Time
reductions seldom apply to:

A. product/service design time.

B. processing time.
C. delivery time.
D. response time for complaints.
E. internal audits.

Internal audits have little to do with core value-adding efforts.

25. The external elements of SWOT analysis are:

A. strengths and weaknesses.

B. strengths and threats.
C. opportunities and threats.
D. weaknesses and opportunities.
E. strengths and opportunities.

Opportunities and threats relate to the organization and its external environment.
26. In an assembly operation at a furniture factory, six employees assembled an average of 450 standard dining chairs per five-
day week. What is the labor productivity of this operation?

A. 90 chairs/worker/day
B. 20 chairs/worker/day
C. 15 chairs/worker/day
D. 75 chairs/worker/day
E. 60 chairs/worker/day

Divide the output of 450 chairs by the input of 30 worker-days.

27. Which of the following is not a reason for poor performance of our organization in the marketplace?

A. placing too much emphasis on product/service design and too little on process design
B. failing to take into account customer wants and needs
C. putting too much emphasis on short-term financial performance
D. taking advantage of strengths/opportunities, and recognizing competitive threats
E. failing to monitor the external environment

Taking advantage of strengths/opportunities and recognizing competitive threats would enable good performance.
28. The manager of a carpet store is trying to determine the best installation crew size. He has tried various crew sizes with the
results shown below. Based on productivity, what crew size do you recommend?

Crew Size Yards Installed

2 716
4 1298
3 1017
3 1002
4 1278
2 702

A. 2
B. 3
C. 4

Crews of two workers are most productive with an average of ((716 + 702) / 2 ) / 2) = 354.5 yards/worker installed. The
average productivity of three-worker crews is 336.5 yards/worker and for four-worker crews it is 322 yards/worker.
29. Which of the following is not a key factor of competitiveness?

A. price
B. product differentiation
C. flexibility
D. after-sale service
E. size of organization

Competitiveness often has nothing to do with organization size.

30. Gourmet Pretzels bakes soft pretzels on an assembly line. It currently bakes 800 pretzels each eight-hour shift. If the
production is increased to 1,200 pretzels each shift, then productivity will have increased by:

A. 50 percent.
B. 33 percent.
C. 25 percent.
D. 67 percent.

Divide the difference in productivity by the original productivity.

Original productivity = 800 pretzels/eight-hour shift.

New productivity = 1200 pretzels/eight-hour shift.

Increase in productivity = (1200 - 800) × 100 / 800 = 50%

31. The weekly output of a fabrication process is shown below, together with data for labor and material inputs. Standard selling
price is $125 per unit. Overhead is charged weekly at the rate of $1,500 plus .5 times direct labor cost. Assume a 40-hour
week and an hourly wage of $16. Material cost is $10 per foot. What is the average multifactor productivity?

Week Output #Workers Material (ft)

1 392 5 2720
2 408 6 2790

A. 1.463
B. 1.457
C. 1.431

Calculate multifactor productivity for each week, then average the two.
Week 1: (392*$125)/((5 × 40 × $16) + ($1,500 + 0.5 × (5 × 40 × $16)) + (2720 × $10)) = 1.4627
Week 2: (408*$125)/((6 × 40 × $16) + ($1,500 + 0.5 × (6 × 40 × $16)) + (2790 × $10)) = 1.4505
Average = (1.4627 + 1.4505) / 2 = 1.4566 or 1.457
32. The Balanced Scorecard is a useful tool for helping managers translate their strategy into action in the following areas:

A. Sustainability; Flexibility; Efficiency; Technology

B. Customers; Financial; Internal Business Processes; Learning and Growth
C. Customization; Standardization; Efficiency; Effectiveness
D. The Environment; The Community; Suppliers; Other Stakeholders
E. Strategy; Tactics; Productivity; Profitability

These are the four core areas addressed by the Balanced Scorecard.

33. A firm pursuing a strategy based on customization and variety will tend to structure and manage its supply chain to
accommodate more _____________ than a firm pursuing a strategy based on low cost and high volume.

A. variation
B. streamlined flow
C. quality
D. capacity
E. productivity

Customization and variety lead to variation that must be accommodated.

34. Unique attributes of firms that give them a competitive edge are called:

A. functional strategies.
B. Balanced Scorecards.
C. supply chains.
D. core competencies.
E. sustainable initiatives.

Core competencies can be translated into competitive advantage.

35. Years ago in the overnight delivery business, providing package tracking capability gave some firms a competitive
advantage. Now, all firms must offer this capability simply to be in this line of business. This is an example of
______________ becoming ____________ over time.

A. tactical implications; strategic

B. strategic implications; tactical
C. order winners; order qualifiers
D. profitability factors; productivity factors
E. order qualifiers; order winners

What is an order qualifier and what is an order winner changes over time.
36. For firms competing in worldwide markets, conducting __________________ is more complex, since what works in one
country or region might not work in another.

A. productivity analysis
B. environmental analysis
C. strategy implementation
D. sustainability analysis
E. growth forecasting

Environmental analysis takes into account the relevant factors in the environment; there are more of these if there are more
markets to consider.

37. Increasing the service offered to the customer makes it more difficult to compete on the basis of:

A. order qualifiers.
B. customization.
C. quality.
D. price.
E. flexibility.

More extensive service can be more costly, and more costly outputs make price-based strategies more difficult.

38. ___________ is generally used to facilitate an organization strategy that emphasizes low cost.

A. Speed to market
B. Flexibility
C. Customization
D. Sustainability
E. Standardization

Standardization is a powerful means of achieving low-cost production.

39. Which of the following factors would tend to reduce productivity?

A. improvements in workplace safety

B. reductions in labor turnover
C. more inexperienced workers
D. reductions in the scrap rate
E. less variety in the product mix

More inexperienced workers tend to be less productive.

40. Suppose a country's productivity last year was 84. If this country's productivity growth rate of 5 percent is to be maintained,
this means that this year's productivity will have to be:

A. 88.2.
B. 79.8.
C. 82.8.
D. 78.9.
E. 4.2.

Multiply 84 by 1.05.