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Competitiveness, Strategy, and Productivity

Key Ideas

1. The operations manager makes both strategic broad-scope decisions, and tactical moderate-scope decisions, as well as running the day-to-day operations of the production system. Strategic planning includes selecting products, choosing locations and technology, and overseeing new construction. Tactical decisions include setting employment and output levels, selecting equipment and controlling the flow of funds.

2. A key responsibility of the production manager is to achieve productive use of an organization's resources. This is often measured as the ratio of outputs to inputs, which is called a productivity ratio. The closer the ratio is to 1.0, the higher the productivity; the closer the ratio is to 0.0, the lower the productivity. U.S. productivity is high, but many other nations are close behind, and gaining at a rapid pace. Productivity is important because it relates to an organization's ability to compete, and to the overall wealth and standard of living of a nation. Productivity is affected by work methods, capital, quality, technology, and management. A list of ways that productivity can be improved is given in the textbook.

3. The postwar experience of Japanese industry has provided lessons in management effectiveness, quality low-cost production, and employee motivation; it has also enabled Japan to overcome a prewar reputation for low quality, and to become a leading industrial power, even though the country has limited natural resources.

4. Business organizations compete with each other in a variety of ways, such as price, quality, product or service features, flexibility, and delivery time. Operations and marketing functions must decide on an approach to competition, and work together to achieve success by capitalizing on strengths and exploiting the weaknesses of the competition.

5. The most successful business organizations have carefully thought out strategies for accomplishing the mission and the goals of the organization. Corporate strategy is the overall strategy of the organization. It is affected by both Internal and external factors. These are listed and described in your textbook. Operations strategy should support the corporate strategy. It has a narrower focus; it pertains to the transformation aspect of the organization's activities. Operations strategy often relates to cost, quality, flexibility, and availability of products or services.

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