Chap002 - Chapter 02 - Competitiveness, Strategy, and...

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Unformatted text preview: Chapter 02 - Competitiveness, Strategy, and Productivity CHAPTER 2 COMPETITIVENESS, STRATEGY, AND PRODUCTIVITY Teaching Notes The topics covered in this chapter can be used to help get your course in OM off to an interesting start. Most of your students are aware that U.S. firms are having a difficult time competing with foreign firms in both the domestic and international markets. Many of them have grown up using products produced by foreign firms on an everyday basis and they have developed a great deal of respect for the quality of their products. Students are probably as familiar with names like Minolta, Honda, Toyota, Sony, BP Oil, Nestlé & BIC as they are with Ford, GM, GE, IBM, Texaco, Hershey, and Parker. I think students will relate to the fact that companies must be productive in order to be competitive and that to be competitive they must have some well thought out approach, plan or strategy on how to achieve this position. In other words, students will be able to understand why it is important to learn what productivity really is, how we measure it, what factors affect it, and how firms can improve their productiveness. Students will become aware that business firms compete with each other in a variety of ways and will study the key competitive factors which are of primary concern in today’s global business environment. Finally, the students focus on operations strategy with special attention being given to some of the newer strategies based on quality, time, and lean production systems. Reading: Why Productivity Matters 1. Higher productivity relative to competitors is very important for a nation because it provides the nation with a competitive advantage in the marketplace. Productivity increases add value to the economy while controlling inflation. In addition, higher productivity provides the basis for a sustainable long-term growth in the economy. It allows companies to undercut competitors’ prices to improve their market share, or realize higher profit margin at the same price level. Relative higher productivity also makes it more difficult for foreign companies to compete. 2. In general, service jobs have lower productivity than their manufacturing counterparts because service productivity is very difficult to measure and consequently, difficult to improve. In many cases, service jobs include intellectual activities and a high degree of variability, which makes productivity improvements difficult to achieve. Manufacturing jobs, on the other hand, lend themselves to productivity improvements mainly because they are able to utilize computer-based technology such as robotics to increase worker productivity. 3. Higher productivity allows companies to undercut competitors’ prices to improve their market share, or realize higher profit margin at the same price level. Relative higher productivity also makes it more difficult for foreign companies to enter a new market because it is difficult for them to compete against companies that have relatively higher productivity....
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This note was uploaded on 04/20/2011 for the course TOM 301 taught by Professor Williamcosgrove during the Spring '08 term at Cal Poly Pomona.

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Chap002 - Chapter 02 - Competitiveness, Strategy, and...

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