Competitiveness
and Strategy
Manufacturing Perspective
1970’s - Cost focused
1980’s - Quality first
1990’s - Delivery performance, customization, and environmental issues
2000’s - Information and Knowledge integration
Proper Strategy Formulation
Competitive Advantage
Understand customer desires
Internal rapid response mechanisms
Faster and cost effective products
Competitiveness
By definition ““A strong desire to be more
successful than others.”
- An important factor to determine whether a
company prospers, barely gets through or fails.
- Business org. compete through combination of
their Marketing and Operation functions.
- Effect of Marketing:
influences competitiveness in several ways:
• Identifying customer wants and/or needs:
• Basic input for decision making
• Centres to competitiveness to achieve a perfect match
between wants/needs and organisation's goods/services
• Pricing:
• Key factor for consumer’s buying decision.
• It needs to understand the trade off between price and
other aspects of a product/ service such as quality
• Advertising and Promotion:
• To inform potential customers about the features of the
product and attract buyers
Effect of Operation function:
It affects competitiveness through-
• Product and service design:
• Achieve a match among resources, capabilities and
customer’s needs/wants
• Special features, innovation and time to market may be
other key factors for consumers buying decision
• Cost: affects pricing of product.
Productivity is an important determinant of cost
• Location: for low cost and convenience to the customer
Location near input: lower input cost
Location near market: low transportation cost and quicker
delivery
• Quality: consumer may like to pay more for significantly high
quality w.r.t. competitors product
Operation function contd..
• Quick response: to the calls from customers (orders, complaints)
• Flexibility: Ability to respond to change, Alteration in design
when required, volume produced as per demand, high flexibility
gives competitive advantage
• Inventory Management: matching supplies with demand
• Supply chain Management: timely and cost effective deliveries
throughout the systems
• After sales service: Customer perceives as value added: delivery,
setup, warranty works etc. Service quality is important.
• Employee: should be competent and motivated to provide a
competitive edge by their skill and ideas they create
Why Organisations fail?
- Putting more emphasis on short term financial performance
at the expense of R&D
- Failing to take advantages of strength and opportunities and
failing to recognize competitive threats
- Neglecting Operations strategy (plan for allocation of
resources for operations)
- Too much emphasis on product and services design and not
enough on process design and improvement
- Neglecting investment in capital and human resources
- Failing to consider customer needs and wants
Strategy
Strategy
Strategy formulation is important to meet goals set, to fulfil a company’s mission
Vision: reason for existence Case study: A typical
Mission: provide more details and describe student
the scope of vision
Goals and Strategy: Vision: Live a good life
Plans to achieve organisational goals, They Mission: Successful career,
Good income
provide focus on decision making
Strategy: Obtain a college
-Long terms degree
-Intermediate term Tactics: Select a college and a
-Short term major, decide how to finance
Tactics: college
Methods and actions used to accomplish Operations: Register, Buy
books, take courses, study
strategies
-Provide directions and guidance to carry
out operations
Vision and Mission of IIT Bhubaneswar
Vision:
“IIT Bhubaneswar will be globally well recognized for
creating outstanding graduates and new knowledge”
Mission:
[Link] shape ourselves into a learning community where we work, listen and
respect each other.
[Link] encourage and facilitate faculty, researchers and students to work
synergistically across discipline boundaries.
[Link] infuse a sense of excitement in students in innovation & invention,
design & creation and entrepreneurship.
[Link] develop and pursue curricula those are dynamic, flexible and
holistically designed to facilitate creativity and cognitive thinking.
[Link] strive for productive partnership between the industry and the Institute.
Operation strategy
The approach consistent with the organisation strategy,
that is used to guide the operation function
Quality based strategy: focus on quality in all phases
of the organisation
- To overcome the image of poor quality
- To catch up with competitor
- To maintain existing image of good quality
Time based strategy: focuses on reducing the time
required to accomplish various activities
- Time to respond to customer demand
- Time to provide service
- Time to deliver a product
Various Organisation strategies
Low cost: outsource from third world countries: Walmart
Scale based strategies: Mass produce to reduce the cost: McDonalds ,
Toyota
Specialization: narrow product line to achieve higher quality: Kodak,
Motorola ( risky….What if technology/ market changes??)
Flexible operation: focus on quick response and customisation, Variety:
Burger king, hospitals ICUs
High quality: better quality than competitors: Sony Inc., 5 star hotels
Service: focus on being helpful, courteous, reliable: HP, IBM,
On time and rapid delivery: Dominos Pizza, FedEx
Location: Supermarkets, Malls
Two or more of these are combined together for better results
Balance score card
• The Balanced Scorecard (or balance score card) is a strategic
performance measurement model (developed by Robert Kaplan and
David Norton).
• Its objective is to translate an organization’s mission and vision into
actual (operational) actions (strategic planning)
• The (operational) actions are set up with measurable indicators that
provide support for understanding and adjusting the chosen strategy.
• The starting points of the balanced scorecard are the vision and the
strategy that are viewed from four perspectives:
• Financial perspective,
• Customer perspective
• Internal business processes
• Learning & growth.
[Link]
Financial perspective
• It answers to: “How attractive must we appear to our
shareholders and financial backers?”.
• A quantitative benchmark based on figures from the
past. Internal Business
Customer Processes
perspective
• Which internal
• The competitors
processes add
have a large
value within the
influence on
organizations
customer
• This perspective
expectation.
answers to: “What
• This perspective
must we excel at to
answers to:
satisfy our
“How attractive
customers and
should we
shareholders/
appear to our
financial
customers?”
backers?”
Learning and growth
• An organization’s learning ability and innovation
indicate whether an organization is capable of
continuous improvement
• This perspective answers to: “How can we sustain
our ability to achieve our chosen strategy?”.
Thanks
Takes form here:
Various terminologies used to set path for an organization to walk on
