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Lecture 2

GMS 401 Lecture Notes - Lecture 2: Outsourcing, Strategic Planning, Job Shop

Global Management Studies
Course Code
GMS 401
Wally Whistance- Smith

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GMS401 – Lecture 2 – 9/15/2015
- Efficient and effective
- Higher productivity = higher standard of living
oRelative to competition leads to competitive advantage in market
oLess likely it will be supplanted by foreign industry
-Productivity = OUTPUTS/INPUTS
- Outputs are goods produced by operations system
- Inputs = single (labour, materials, capital time)
oMultiple (labour + materials, in $)
oAll inputs/totals (total system productivity, in $)
- Total outputs – Total inputs = Value added
oTO – TI = VA
- Use fewer people or find better methods to improve productivity
- Key factor in country standard of living
- Labour productivity is the main instrument used to gauge the performance of individuals and
- Wage + prices increases = creation inflationary pressure on economy
- Average human thinking: Inverse relationship = quality goes up, productivity goes down
Productivity paradox:
- Optimized workers so much there is so little possibilities to get better at something
oAutomations make gains very little
oTechnology costs a lot
- Cannot grow anymore with too much automations
Positives in productivity
- Enjoy lower costs
- Good controls in place (good quality)
- Pass on savings in reduce prices
- Obtain competitive edge
Productivity growth = Current period productivity – previous period productivity/ previous period
Ex. What’s the labour productivity?
10000 units
500 labour hrs
Labour rate: 9$/ hrs
Costs of raw material: $5000
Costs of purchased materials: $25000
ANS: 10000 units/500 units = 20 units/ hrs
(10000 * 10)/(500*9)
= 22.22
Improving productivity
- Develop productivity measures and use them
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