1-1 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
DBA (2nd Year - 1st Semester Summer Course)
Subject: Operations Management
Instructor: Dr. Gamal Abdel Aziz
Date: 31/07/2015
Assignment: #1
(Operations Management - Competitiveness,
Strategy, and Productivity)
Presented by:
Ehab Mohamed Abdel Ghaffar
Doaa Nabil
Yasmine Hassan Sadek
Mohamed Mamdouh Mohamed Rashwan
1-2 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Operations
Management
Competitiveness,
Strategy, and Productivity
1-3 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Competitiveness:
How effectively an organization meets the
wants and needs of customers relative to
others that offer similar goods or services
1-4 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Why Some Organizations Fail
Too much emphasis on short-term financial
performance
Failing to recognize competitive threats
Failing to take advantage of strengths and
opportunities
Too much emphasis in product and service design
and not enough on improvement
Failing to establish good internal communications
Neglecting investments in capital and human
resources
Failing to consider customer wants and needs
Neglecting operations strategy
1-5 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Why Some Organizations Fail
Too much emphasis on short-term financial
performance
Failing to recognize competitive threats
Failing to take advantage of strengths and
opportunities
Too much emphasis in product and service design
and not enough on improvement
Failing to establish good internal communications
Neglecting investments in capital and human
resources
Failing to consider customer wants and needs
Neglecting operations strategy
1-6 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Business Operations Overlap
Operations
Marketing Finance
1-7 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Operations Interfaces
Industrial
Engineering
Maintenance
Distribution
Purchasing Public
Operations Relations
Legal
Personnel
Accounting MIS
1-8 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Businesses Compete Using
Operations Functions
Product and service design
Cost
Location
Quality
Quick response
Flexibility
Inventory management
Supply chain management
Service
Managers and workers: if they are competent and motivated,
they can provide a distinct competitive edge.
1-9 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Businesses Compete Using
Marketing Functions
Identifying consumer wants and needs
Pricing
Advertising and promotion
1-10 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Factors affecting competitive, performance
1) Reality of global competition : a- Changing the nature of world business
b- International
companies
2) Quality, service and cost changes.
3) Advanced Technology.
4) Continued of operation resources.
5) Scarcity of operation resources.
6) Social responsibility issues.
Global companies or firms: are companies whose scope
of operations spans the global as they buy, produce and sell
in the world market. Global firms search out opportunities for
profits by national boundaries operations managers must
coordinate geographically dispersed operations.
1-11 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Mission/Strategy/Tactics
Mission Strategy Tactics
1-12 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Strategy
Strategies
oPlans for achieving organizational goals
Mission
o The reason for existence for an organization
Mission Statement
o Answers the question What business are we in?
Goals
o Provide detail and scope of mission
Tactics
o The methods and actions taken to accomplish
strategies
1-13 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Planning and Decision Making
Mission
Goals
Organizational Strategies
Functional Goals
Finance Marketing Operations
Strategies Strategies Strategies
Tactics Tactics Tactics
Operating Operating Operating
procedures procedures procedures
Mission
What is a Mission?
The reasons for Existence Goal
What business are we in
What is a Goal?!
It provides detail and
Strategy
scope of the MISSION-
A strategy is a plan to
achieve a particular
GOAL (road map) Tactics
Activities
Tactics
Operations
Operations
How to Achieve the Strategy
Tactics
Methods to accomplishing Strategy
Operations
Detailed/specific Actions
1. Mission Register, buy books, take
courses, study
2. Goal Obtain College Education
3. Strategy Live a good life
Select a college & major, decide
4. Tactics how to finance college
5. Operations Successful Career, good income
1. Mission Live a good life
2. Goal Successful Career, good income
3. Strategy Obtain College Education
4. Tactics Select a college & major, decide
how to finance college
5. Operations Register, buy books, take courses,
study
1-18 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
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
1-19 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Examples of Strategies
Low cost
Scale-based strategies
Specialization
Flexible operations
High quality
Service
1-20 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Mission: is statement about the kind of
business the co. wants to be in, who at
customers are, its basic beliefs and at goals
of survive, growth and profitability.
Operation Strategy: Long range game plane
providing road map to achieve business
strategies and strategic objectives.
Corporation, business, organizational
strategy: Long range game plan providing
road map to achieve mission / corporate
objectives.
1-21 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Q (T/F): The operation Strategy should be formulated
independently from any strategies. (F)
Operation strategies must be consistent with organizational strategy
and with other functional strategies. (They are interrelated and
dependent).
* Operation strategy example:
Strategy process Example
Customer needs more products
Operation strategy Increase production capacity
Decision process Build new factory
* Strategy process:
Corporate mission, objectives
Environmental Business strategy SWOT
Analysis Functional area Strategies Analysis
Marketing Operation financial
Decision Decision Decision
1-22 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Different profit market strategy (dphs)
A- Strategic alliances:
. Are joint ventures among international companies to exploit global
business opportunities?
. Alliance is often motivated by:
1-Production technology
2-Market access
3-Production capabilities
4-Pooling of capital
. It is believed that joint venture (as merge or partnership) will be
more successful that of individual Co. take it on this own.
B- Production sharing: means that a product might be designed and
financed in one country, its materials supplied from another country,
parts are assembled in another country then the product may be sold
throughout world markets.
1-23 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Different profit market strategy (dphs)
C- International financial conditions:
International finance conditions are complex due to:
Inflation
Fluctuating currency exchange
Volatility of international stock market
Huge national debts of some countries
Turbulent interest rate
Economic trade in balances between countries
What are the competitiveness dimensions?
Cost.
Product quality reliability.
Flexibility and new product introduction speed.
Delivery.
Customer service and quick response.
Location.
Inventory management.
Quality.
Product or service design.
1-24 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
How to reduce product cost?
1- Redesign of product service.
2- Use of new technology.
3- Increase production rate.
4 Reduce scrap or waste
5 Reduction of inventory
Q what do we mean by delivery time? What are ways to create at?
* Delivery time means: (a) fast inventory (b) on time delivery
* Ways to create it:
1- Larger finished good inventory 4- More realistic promises
2- Faster production rate 5- Better control of production of
orders
3- Quicker shipping methods 6- Better information systems
** Customer Service flexibility
Is the ability to quickly change production to other products or services?
Ways to create it
Changing in type of processes used
Use of advanced technology
Reduce WIP through lean manufacturing
Increase in capacity
1-25 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
There is a tradeoff between cost and
quality .
Quality
Low High
High quality
Satisfy
Low Low cost
people
Cost
High cost High quality
High Low quality High cost
1-26 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Distinctive Competencies
The special attributes or abilities that give
an
organization a competitive edge.
o Price
o Quality
o Time
o Flexibility
o Service
o Location
1-27 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Examples of Distinctive Competencies
Price Low Cost U.S. first-class postage
Motel-6, Red Roof Inns
Quality High-performance design Sony TV
or high quality Consistent Lexus, Cadillac
quality Pepsi, Kodak, Motorola
Time Rapid delivery Express Mail, FedEx,
On-time delivery One-hour photo, UPS
Flexibility Variety Burger King
Volume Supermarkets
Service Superior customer Disneyland
service Nordstrom
Location Convenience Banks, ATMs
1-28 Introduction to Operations Management & Competitiveness, Strategy, and
Strategy Formulation
Productivity
Distinctive competencies or core competencies :
Is the special attributes or abilities that give an organization a
competitive edge (advantage).
Environmental scanning :
The considering of events and trends that presents threats or
opportunities for a company.
** Effective strategy formulation requires taking into account:
1. Core (distinctive) competencies.
2. Environmental scanning (SWOT) analysis.
3. Order Qualifier.
4. Order Winner.
** Environmental scanning is necessary to identify ( SWOT ):
1. Internal factors ( Strengths and weaknesses )
2. External factors (Opportunities and threats).
1-29 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
SWOT Key External Factors
Economic conditions
Political conditions
Legal environment
Technology
Competition
Markets
1-30 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
SWOT Key Internal Factors
Human Resources
Facilities and equipment
Financial resources
Customers
Products and services
Technology
Suppliers
1-31 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Strategy Formulation
Order qualifiers
o Characteristics that customers
perceive as minimum standards of
acceptability to be considered as a
potential purchase
Order winners
o Characteristics of an organizations
goods or services that cause it to be
perceived as better than the
competition
1-32 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Quality and Time Strategies
Quality-based strategies
o Focuses on maintaining or improving
the quality of an organizations
products or services
o Quality at the source
Time-based strategies
o Focuses on reduction of time needed
to accomplish tasks
1-33 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Stages of the industry Life Cycle
1- Introduction stage:
Sales begin.
Production and marketing are developed.
Profits are negative.
2- Growth stage.
Sales grow dramatically.
Marketing efforts intensify.
Capacity is expanded to keep with demand and profits begin.
3- Maturity stage:
Production at high volume.
Efficiency and low costs.
Marketing shifts to competitive sales promotion.
Aimed at increasing and maintaining market share.
4-Decline stage:
Declining sales and profit.
Product may be dropped out or replaced.
The characteristic of production system tend to evolve as product move
through their product life cycle.
Stages of the industry Life
1-34 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Cycle
Stages of the industry Life
1-35 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Cycle
Criteria / stage Introduction stage Early growth Late growth maturity
slightly
1)Production standardized highly
customized standardized
design products standardized
products
2) Volume very low low volume high volume very high volume
3) production
process focused process focused product focused product focused
processing system
4) inventory policy To. order To. order to stock to stock
continuous (v.
5) Batch size very small batches small batches large batches
large )
1-36 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Productivity
Productivity
o A measure of the effective use of resources, usually expressed as the
ratio of output to input
Productivity ratios are used for
o Planning workforce requirements
o Scheduling equipment
o Financial analysis
1-37 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Productivity
Partial measures
o output/(single input)
Multi-factor measures
o output/(multiple inputs)
Total measure
o output/(total inputs)
Outputs
Productivity =
Inputs
1-38 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Productivity Growth
Current Period Productivity Previous Period Productivity 100
Previous Period Productivity
1-39 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Measures of Productivity
Partial Output Output Output Output
measures 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
1-40 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Examples of Partial Productivity
Measures
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
1-41 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Factors Affecting
Productivity
1- Capital
2- Quality
3- Technology
4- Management
1-42 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Other Factors Affecting Productivity
Standardization
Quality
Use of Internet
Computer viruses
Searching for lost or misplaced items
Scrap rates
New workers
Safety
Shortage of IT workers
Layoffs
Labor turnover
Design of the workspace
Incentive plans that reward productivity
1-43 Introduction to Operations Management & Competitiveness, Strategy, and
Productivity
Improving Productivity
Develop productivity measures
Determine critical (bottleneck) operations
Develop methods for productivity
improvements
Establish reasonable goals
Get management support
Measure and publicize improvements
Dont confuse productivity with efficiency
