GMS 401 Lecture Notes - Lecture 2: Cost Leadership, Vertical Integration, Competitive Advantage
Document Summary
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. Productivity: ratio of outputs divided by one or more inputs. Outputs = goods and services, inputs = labor, capital, management. Efficiency = doing the job well, minimum resources and waste. Job well done helps us be efficient, developing and using the correct strategy helps us be effective. 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. Outputs goods or services produced by the operations system (measured in units/$)