CSU Competition in Organizations Discussion

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Business Finance

Central State University

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Competitiveness is defined as how effectively an organization meets the wants and needs of its customers relative to other organizations with similar goods or services. Organizations compete through some combination of their marketing and operations functions. Consider these 3 organizations, of which you should be familiar: McDonald's, Burger King, and Rally's (Checkers). On slide 5 (under the Slides tab in module 2) there are 10 areas where these businesses may bring success to their organizations in this competitive market. Using at least 3 of the areas on the slide, define how these organizations could and do compete in today market.


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Competitiveness, Strategy, and Productivity Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 2-1 You should be able to: LO 2.1 List several ways that business organizations compete LO 2.2 Name several reasons that business organizations fail LO 2.3 Define the terms mission and strategy and explain why they are important LO 2.4 Discuss and compare organization strategy and operations strategy and explain why it is important to link the two LO 2.5 Describe and give examples of time-based strategies LO 2.6 Define the term productivity and explain why it is important to organizations and to countries LO 2.7 Describe several factors that affect productivity Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-2 Better quality, higher productivity, lower costs, and the ability to respond quickly to customer needs are more important than ever, and… the bar is getting higher Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-3  This chapter focuses on three separate but related ideas that are vitally important to business organizations Competitiveness 2. Strategy 3. Productivity 1. Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-4  Competitiveness:  How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services  Organizations compete through some combination of their marketing and operations functions • What do customers want? • How can these customer needs best be satisfied? LO 2.1 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-5  Identifying consumer wants and/or needs  Pricing and quality  Advertising and promotion LO 2.1 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-6 Product and service design 2. Cost 3. Location 4. Quality 5. Quick response 6. Flexibility 7. Inventory management 8. Supply chain management 9. Service 10. Managers and workers 1. LO 2.1 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-7 1. 2. 3. 4. 5. 6. 7. Neglecting operations strategy Failing to take advantage of strengths and opportunities and/or failing to recognize competitive threats Too much emphasis on short-term financial performance at the expense of R&D Too much emphasis on product and service design and not enough on process design and improvement Neglecting investments in capital and human resources Failing to establish good internal communications and cooperation Failing to consider customer wants and needs LO 2.2 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-8  Mission  Goals  Organizational strategies  Functional strategies  Tactics FIGURE 2.1 Planning and decision making are hierarchical in organizations LO 2.3 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 2-9  Mission  The reason for an organization’s existence  Mission statement  States the purpose of the organization  The mission statement should answer the question of “What business are we in?” LO 2.3 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-10 LO 2.3 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-11  The mission statement serves as the basis for organizational goals  Goals  Provide detail and the scope of the mission  Goals can be viewed as organizational destinations  Goals serve as the basis for organizational strategies LO 2.3 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-12  Strategy  A plan for achieving organizational goals  Serves as a roadmap for reaching the organizational destinations  Organizations have  Organizational strategies  Overall strategies that relate to the entire organization  Support the achievement of organizational goals and mission  Functional level strategies  Strategies that relate to each of the functional areas and that support achievement of the organizational strategy LO 2.3 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-13  Tactics  The methods and actions taken to accomplish strategies  The “how to” part of the process  Operations  The actual “doing” part of the process LO 2.3 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-14  Core competencies The special attributes or abilities that give an organization a competitive edge  LO 2.3 To be effective, core competencies and strategies need to be aligned Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-15 Organizational Strategy Operations Strategy Examples of Companies or Services Low Price Low cost U.S. first-class postage Wal-Mart Short processing times McDonald’s restaurants On-time delivery FedEx High performance design and/or high quality processing Sony TV Consistent quality Coca-Cola Differentiation: Newness Innovation 3M, Apple Differentiation: Variety Flexibility Burger King (Have it your way”) Volume McDonald’s (“Buses Welcome”) Differentiation: Service Superior customer service Disneyland Differentiation: Location Convenience Responsiveness Differentiation: High Quality LO 2.4 IBM Supermarkets; mall stores Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw2-16 Hill Education.  Effective strategy formulation requires taking into account:  Core competencies  Environmental scanning  SWOT: Strengths, Weaknesses, Opportunities, and Threats  Successful strategy formulation also requires taking into account:  Order qualifiers  Order winners LO 2.4 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw2-17 Hill Education.  Order qualifiers  Characteristics that customers perceive as minimum standards of acceptability for a product or service to be considered as a potential for purchase  Order winners  Characteristics of an organization’s goods or services that cause it to be perceived as better than the competition LO 2.4 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw2-18 Hill Education.  Environmental scanning is necessary to identify  Internal factors  Strengths and weaknesses  External factors  Opportunities and threats LO 2.4 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-19 1. 2. 3. 4. 5. 6. 7. 8. Economic conditions Political conditions Legal environment Technology Competition Customers Suppliers Markets LO 2.4 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-20 1. 2. 3. 4. 5. 6. 7. Human resources Facilities and equipment Financial resources Customers Products and services Technology Other LO 2.4 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-21  Supply Chain Strategy  How the organization should work with suppliers and policies relating to customer relationships and sustainability  Sustainability Strategy  Work with governmental regulations and interest groups to achieve sustainability goals  Global Strategy  Work with international suppliers/producers and also with countries where the products and services are sold LO 2.4 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 2-22  Operations strategy  The approach, consistent with organization strategy, that is used to guide the operations function LO 2.4 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw2-23 Hill Education. Decision Area What the Decisions Affect Product and service design Costs, quality, liability, and environmental issues Capacity Cost, structure, flexibility Process selection and layout Costs, flexibility, skill level needed, capacity Work design Quality of work life, employee safety, productivity Location Costs, visibility Quality Ability to meet or exceed customer expectations Inventory Costs, shortages Maintenance Costs, equipment reliability, productivity Scheduling Flexibility, efficiency Supply chains Costs, quality, agility, shortages, vendor relations Projects Costs, new products, services, or operating systems LO 2.4 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw2-24 Hill Education.  Quality-based strategy  Strategy that focuses on quality in all phases of an organization  Pursuit of such a strategy is rooted in a number of factors:  Trying to overcome a poor quality reputation  Desire to maintain a quality image  A desire to catch up with the competition  A part of a cost reduction strategy LO 2.4 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-25  Time-based strategies  Strategies that focus on the reduction of time needed to accomplish tasks  It is believed that by reducing time, costs are lower, quality is higher, productivity is higher, time-to-market is faster, and customer service is improved LO 2.5 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-26  Areas where organizations have achieved time reductions:  Planning time  Product/service design time  Processing time  Changeover time  Delivery time  Response time for complaints LO 2.5 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-27  Agile operations  A strategic approach for competitive advantage that emphasizes the use of flexibility to adapt and prosper in an environment of change  Involves the blending of several core competencies:  Cost  Quality  Reliability  Flexibility LO 2.5 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw2-28 Hill Education.  A top-down management system that organizations can use to clarify their vision and strategy and transform them into action  Develop objectives  Develop metrics and targets for each objective  Develop initiatives to achieve objectives  Identify links among the various perspectives  Finance  Customer  Internal business processes  Learning and growth  Monitor results LO 2.5 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw2-29 Hill Education. FIGURE 2.2 The Balanced Scorecard Source: Adapted from Robert S. Kaplan and David P. Norton, “Using the Balanced Scorecard as a Strategic Management System,” Harvard Business Review (January-Febrary 1996): 76. LO 2.5 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 2-30  Productivity  A measure of the effective use of resources, usually expressed as the ratio of output to input  Productivity measures are useful for  Tracking an operating unit’s performance over time  Judging the performance of an entire industry or country LO 2.6 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw2-31 Hill Education.  High productivity is linked to higher standards of living  As an economy replaces manufacturing jobs with lower productivity service jobs, it is more difficult to maintain high standards of living  Higher productivity relative to the competition leads to competitive advantage in the marketplace  Pricing and profit effects  For an industry, high relative productivity makes it less likely it will be supplanted by foreign industry LO 2.6 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw2-32 Hill Education. Productivi ty = Output Input Partial Measures Output ; Single Input Multifactor Measures Total Measure LO 2.6 Ouput ; Labor Output ; Multiple Inputs Output Capital Ouput ; Labor + Machine Output Labor + Capital + Energy Goods or services produced All inputs used to produce them Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-33 LO 2.6 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw2-34 Hill Education. Units produced: Standard price: Labor input: Cost of labor: Cost of materials: Cost of overhead: 5,000 $30/unit 500 hours $25/hour $5,000 2× labor cost What is the multifactor productivity? LO 2.4 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw2-35 Hill Education. Multifactor Productivity = Output Labor +Material +Overhead = 5,000 units  $30/unit (500 hours  $25/hour) + $5,000 + (2(500 hours  $25/hour)) = $150,000 $42,500 = 3.5294 What is the implication of an unitless measure of productivity? LO 2.6 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw2-36 Hill Education. Productivity Growth = Current productivity - Previous productivity 100% Previous productivity Example: Labor productivity on the ABC assembly line was 25 units per hour in 2014. In 2015, labor productivity was 23 units per hour. What was the productivity growth from 2014 to 2015? Productivity Growth = 23 - 25 100% = −8% 25  LO 2.6 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-37  Service sector productivity is difficult to measure and manage because  It involves intellectual activities  It has a high degree of variability  A useful measure related to productivity is process yield  Where products are involved  Ratio of output of good product to the quantity of raw material input  Where services are involved, process yield measurement is often dependent on the particular process:  Ratio of cars rented to cars available for a given day  Ratio of student acceptances to the total number of students approved for admission LO 2.6 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-38 Methods Capital Technology LO 2.4 Quality Management Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-39 • • • • • • • LO 2.7 Drones GPS devices Smartphones 3D printers Radio frequency ID tags (RFID) Medical imaging Artificial intelligence Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education. 2-40 1. Develop productivity measures for all operations 2. Determine critical (bottleneck) operations 3. Develop methods for productivity improvements 4. Establish reasonable goals 5. Make it clear that management supports and encourages productivity improvement 6. Measure and publicize improvements 7. Don’t confuse productivity with efficiency LO 2.7 Copyright ©2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw2-41 Hill Education.
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1

Competition in Organizations

Student's Name
Course Number
Instructor's Name
March 19, 2022
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2

Competition in Organizations
Competition between organizations happens in different areas. Each organization has
a specific area where it corners the market, and no other organization can outdo them. For
instance, Apple is well known for its high-end phones and quality. They provide quality that
cannot be matched by any other company (Razak et al., 2020). Organizations compete by
giving their customers features and services that...


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