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ch02 - PPT - Competitiveness, Strategy, and Productivity

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361 views21 pages

ch02 - PPT - Competitiveness, Strategy, and Productivity

Uploaded by

Pacific Hunter Johnny
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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2

Competitiveness,
Strategy,
and Productivity

McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
Competitiveness:

How effectively an organization meets the


wants and needs of customers relative to
others that offer similar goods or services

2-2
Businesses Compete Using
Marketing
 Identifying consumer wants and needs
 Pricing
 Advertising and promotion

2-3
Businesses Compete Using
Operations
 Product and service design
 Cost
 Location
 Quality
 Quick response

2-4
Businesses Compete Using
Operations
 Flexibility
 Inventory management
 Supply chain management
 Service and service quality
 Managers and workers

2-5
Why Some Organizations Fail

 Too much emphasis on short-term


financial performance
 Failing to take advantage of strengths
and opportunities
 Neglecting operations strategy
 Failing to recognize competitive threats

2-6
Why Some Organizations Fail
 Too much emphasis in product and
service design and not enough on
improvement
 Neglecting investments in capital and
human resources
 Failing to establish good internal
communications
 Failing to consider customer wants and
needs

2-7
Productivity
 Productivity
 A measure of the effective use of resources,
usually expressed as the ratio of output to
input
 Productivity ratios are used for
 Planning workforce requirements
 Scheduling equipment
 Financial analysis

2-8
PRODUCTIVITY

 It is an index that measures output (goods and services) relative to


input (labor, material, energy and other resources) used to produce
them.
 A measure of the effective use of resources, usually expressed as
the ratio of output to input.

Outputs
Productivity =
Inputs

 For non-profit organization higher productivity means lower costs


 For profit organization productivity is important factor in determining
how competitiveness of a company .
 For a nation rate of productivity is of great importance
COMPUTING PRODUCTIVITY
Partial measures: based on single input

Output Output Output Output


Partial productivity =
Capital Labor Machine Energy

Multifactor measures: based on multiple input, more than one input,


multifactor measures.
Multifactor productivity (MFP) = Output Output
Labor + Machine Labor + Capital + Energy

Total measures: based on total input and output

Total productivity = Goods or services produced


All inputs used to produce them

2-10
WHY PRODUCTIVITY MEASUREMENT IS
NEEDED …
• Used to track performance over time
• Allows managers to judge performance
• To decide where improvements are needed
• Judge the performance of the entire industry
• Judge the productivity of a country as a whole
• Serve as scorecards of the effective use of resources
• Productivity relates to competitiveness
• National productivity relates to nation’s standard of living

2-11
PRODUCTIVITY GROWTH

• Productivity growth is the increase in productivity from one


period to the next relative to the productivity in the
preceding period.

Current period productivity – Previous period productivity x 100


Productivity Growth =
Previous period productivity

For example if productivity increased from 80 to 84, the growth


rate would be -

84 - 80 X 100 = 5%
80

2-12
Examples of Partial Productivity Measures
Table 2.5

Labor Units of output per labor hour


Units of output per shift
Productivity Value-added per labor hour

Machine Units of output per machine hour


machine hour
Productivity
Capital Units of output per dollar input
Dollar value of output per dollar input
Productivity
Energy Units of output per kilowatt-hour
Dollar value of output per kilowatt-hour
Productivity
2-13
EXAMPLE 01

 A wrapping paper company produced 2000 rolls of paper one


day. Standard price is 1Tk/roll. Labor cost was Tk. 160,
material cost was Tk. 50 and overhead was Tk. 320.
Determine the multifactor productivity.
 Solution: Quantity produced @ standard price
Multifactor productivity = Labor cost + Material cost + Overhead

2000 rolls x 1Tk. / roll


= 160 + 50 +320

= 3.77 Tk output per Tk. input

2-14
EXAMPLE 02

 Compute the multifactor productivity measure for each of the


weeks shown. Assume 40 hrs weeks and an hourly wage Tk. 12.
Overhead is 1.2 times to total weekly labor cost. Material cost is Tk.
3 per kg. Standard price is Tk. 140 per unit.

Week Output (Units) Workers Materials (Kg)

1 300 6 45

2 338 7 46

3 322 7 46

 Also compute the productivity growth of week 2, 3 over week 1 of


this problem.

2-15
Example 3

7040 Units Produced

Cost of labor of $1,000

Cost of materials: $520

Cost of overhead: $2000

What is the multifactor productivity?


Ans. 2.0 units per dollar of input
2-16
Example 3 Solution

MFP = Output
Labor + Materials + Overhead

MFP = (7040 units)


$1000 + $520 + $2000

MFP = 2.0 units per dollar of input

2-17
Factors Affecting Productivity

Capital Quality

Technology Management

2-18
Other Factors Affecting Productivity

 Standardization
 Quality
 Use of Internet
 Computer viruses
 Searching for lost or misplaced items
 Scrap rates
 New workers

2-19
Other Factors Affecting Productivity

 Safety
 Shortage of IT workers
 Layoffs
 Labor turnover
 Design of the workspace
 Incentive plans that reward productivity

2-20
Improving Productivity

 Develop productivity measures


 Determine critical operations
 Develop methods for productivity
improvements
 Establish reasonable goals
 Get management support
 Measure and publicize improvements
 Don’t confuse productivity with
efficiency
2-21

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