chapter 2
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Chapter 2. Productivity, Competitiveness, and Strategy. Productivity. Partial measures output/(single input) Multi-factor measures output/(multiple inputs) Total measure output/(total inputs). - PowerPoint PPT PresentationTRANSCRIPT
CHAPTER TWO
Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 1999
PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY
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Chapter 2Productivity,
Competitiveness, and Strategy
CHAPTER TWO
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Productivity• Partial measures
– output/(single input)
• Multi-factor measures– output/(multiple inputs)
• Total measure– output/(total inputs)
Productivity = Outputs
Inputs
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Measures of ProductivityTable 2-1
Partial Output Output Output Outputmeasures Labor Machine Capital Energy
Multifactor Output Output
measures Labor + Machine Labor + Capital + Energy
Total Goods or Services Produced
measure All inputs used to produce them
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Example10,000 Units Produced
Sold for $10/unit
500 labor hours
Labor rate: $9/hr
Cost of raw material: $5,000
Cost of purchased material: $25,000
What is the labor productivity?
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•10,000 units/500hrs = 20 units/hour or we can arrive at a unitless figure
•(10,000 unit* $10/unit)/(500hrs* $9/hr) = 22.22
Can you think of any advantages or disadvantages of each approach?
Example--Labor Productivity
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Example--Multifactor Productivity
MFP = OutputLabor + Materials
MFP = (10,000 units)*($10)(500)*($9) + ($5000) + ($25000)
MFP = 2.90
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Factors Affecting Productivity
Capital Quality
Technology Management
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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
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Bottleneck Operation
OperationOperation
BottleneckOperation
BottleneckOperation
OperationOperation
OperationOperation
OperationOperation
Figure 2-2
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Competitiveness
Quality
Price
Time
Flexibility
Differentiation
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Mission/Strategy/Tactics
How does mission, strategies and tactics relate todecision making and distinctive competencies?
Strategy TacticsMission
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Strategy• Mission
– The reason for existence for an organization
• Mission Statement– A clear statement of purpose
• Strategy– A plan for achieving organizational goals
• Tactics– The actions taken to accomplish strategies
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Strategy Example
Rita is a high school student. She would like to have a career in business, have a good job, and earn enough income to live comfortably
Mission: Live a good life•Goal: Successful career, good income
•Strategy: Obtain a college education
•Tactics: Select a college and a major
•Operations: Register, buy books, take courses, study, graduate, get job
Example 3
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Planning and Decision Making
Mission
Goals
Organizational strategy
Functional strategies
Finance Marketing Operations
Tactics Tactics Tactics
Finance operations
Marketingoperations
Operationsoperations
Figure 2-3
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Strategy Formulation
• Distinctive Competencies– The special attributes or abilities that
give an organization a competitive edge.
• Environmental Scanning– The considering of events and trends
that present threats or opportunities for a company.
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New Strategies• Quality-based strategies
– Focuses on quality in all phases of an organization
– Quality at the source
• Time-based strategies– Focuses on reduction of time
needed to accomplish tasks
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Time-based Strategies
JAN FEB MAR APR MAY JUN
Planning
Processing
Changeover On time!
Designing
Delivery
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Production• Craft Production - Highly skilled workers use
simple flexible tools to produce small quantities of customized goods.
• Mass Production - Lower-skilled workers use specialized machinery high volumes of standardized goods.
• Lean Production - Uses minimal amounts of resources high volume of high-quality goods.