BU 385 Lecture 2: Chapter 2 Competetiveness, Strategic Planning

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3 Dec 2015
Q: On what criteria will we outperform rivals? (strategy)
is the
ability and performance
of an organization
in the marketplace
compared to other organizations
that o!er
similar goods and services
oAn organizations performance in the market depends on the
expectation of its customers for the purchase of goods and
services-> mainly price quality, variety, and timeliness ->
Price-> how much as customers willing to pay for a
good/service (if all factors are equal a customer will
choose the option with the lowest price)
Quality-> desire high quality for the intended purpose
Variety-> more variety the higher variety of potential
Timeliness-> availability of goods in a timely manner->
ex. delivering goods/services on time
oMost tend to choose the “best buy” or “best value”
In complex purchases customers may use two categories of
purchasing criteria:
 
are the
basic criteria
that permit the 1rm’s
products to be considered as candidates for purchase by
oExample: a brand name car can be “order quali1er -> also
  
are the
criteria that di!erentiates
on 1rm’s
products and services from others
oExample: repair services => warranty, roadside assistance,
leases etc.
Purchasing criteria such as price, on-time delivery,
delivery speed and quality can be order quali1ers or
order winners
For example, for business travelers,
comfort/convenience (customer service) and being on
time are most important (order quali1ers) whereas for
economy air travelers price is most important (order
-> organizations compete by emphasizing
one or more of the key purchasing criteria in their goods or services
oOn which criteria should a 1rm focus its competitive e!orts?
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! ": attained how? Pro1t e!ect? ->
organizations that compete based on cost emphasize
lowering their operating costs
!#$%&": product/process
changes? Measurable e!ect? -> producing products free
of defect is the goal of all organizations
'$%product or volume 6exibility? E!ect? ->
(!"speed or reliability? E!ect?
oFocus on only one priority at a time-> 1rst emphasize quality
and only after their quality has reached a competitive level
focus on delivery reliability, next on low-cost operations and
on 6exibility
di!erentiate the organization from
competitors and build relationships that bind customers to the
1rm in a positive way
Example -> after sales service -> technical support
If we reduce costs by reducing product quality inspections, we might
reduce product quality
If we improve customer service problem solving by cross-training
personnel to deal with a wider-range of problems, they may become
less e7cient at dealing with commonly occurring problems
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~Operational and Operations Strategy~
What will be done to succeed on the chosen competitive priorities?
Strategy -> long term plan that will set a new direction for an
organization and implementing it through allocation of resources
and action plans (SWOT analysis-> Strengths, Weaknesses,
Opportunities and Threats)
is where the organization is going now
is where the organization desires to be in the future
is shared beliefs of the organization’s stakeholders
that should drive everything else such as culture,
mission/vision and strategy
provides detail and scope of mission-
> Mission/vision provides a general direction for an
organization and should lead to organizational goals, which
provide substance to the overall mission/vision, ex. Achieve
pro1tability -> An objective is a speci1c goal containing
numerical values, ex. 25% reduction in operating costs
are long term plans that determine direction for
achieving organizational goals and become competitive ex.
Operations strategies
are medium-term plans used as components of a
strategy-> they are more speci1c in nature than a strategy
and they provide guidance for determining policies and
carrying out action plans
is medium or short term project to accomplish a
speci1c objective, assigned to an individual with a deadline
and the resources needed
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