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Chapter 2

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Global Management Studies
GMS 401
Vikraman Baskaran

CHAPTER 2: COMPETITIVENESS, STRATEGIC PLANNING, AND PRODUCTIVITY L01- COMPETITIVENESS  Competitiveness is the reason a company prospers, barely gets by or fails  Competiveness depends on the capabilities and performance of the company in its marketplace  Organizations performance in the marketplace depends on the expectation of its customers for purchase of goods and services. (Purchasing Criteria) I. Price- If all factors are equal, customer will pick lowest II. Quality- Most customers desire high-quality goods and services, but are willing to settle for goods or services that serve their intended purpose (specification) III. Variety- the more variety, the greater range of customers IV. Timeliness- availability of the goods/services  Most customers tend to trade off price against the other purchasing criteria and choose the "best buy" or "best value"  In complex purchases, customers use two categories of purchase criteria i. Order Qualifiers- minimum standard of acceptability for purchase. May not be enough to entice a customer ii. Order Winners- products that make the organization look better than the competition.  Purchasing criteria such as price, on-time delivery, delivery speed, and quality can be order qualifiers or order winners. Over time, a characteristic that once was an order winner may become an order qualifier, and vice versa.  Organizations compete by emphasizing one or more of the key purchasing criteria in their goods or services. From an organization's point of view, these are called competitive priorities ( the importance given to operations characteristics) i. Cost ii. Quality- determining quality wanted by customers iii. Flexibility- refers to producing a variety of goods. (Customization, increase, decrease in inventory) iv. Delivery- able to consistently meet promised due dates  If an organization is far from being competitive, it may be able to improve many or all of its competitive priorities simultaneously  Competitive organizations tends to reach a point where improving one priority can be achieved only by reducing the emphasis on another priority, i.e., a trade-off is required. The result of this is a focus on only one priority at a time. (Emphasize quality, then delivery, then cost, and finally flexibility. L02-STRATEGIC PLANNING  Strategic planning is the process of determining a strategy, long-term plans that will set a new direction for an organization, and implementing it through allocation of resources and action plan i. Starts with top management the performance of current strategy from department mangers ii. Figuring out where company will be in five years iii. Management team may form/adjust the organization's mission and vision and determine a set of goals iv. Finally chosen strategy is implemented  Organization will use SWOT to determine the competitiveness of the organization MISSION, VISION AND VALUES  Some organizations determine and use a mission, vision and values statement during their strategic planning process  Mission- where the organization is going now, its product, and its markets  Vision- where the organization wants to be in the future  Values- the shared beliefs of the organizations stakeholders Goals and Objectives  Mission/vision provide a general direction for an organization and should lead to organization goals. Objective is a specific goal containing a numerical value. Strategies, Tactics and Action Plans  Strategy- long term plans of the organization. Determine the direction an organization will take to become competitive. Determined during the strategic planning process. Long term functional strategy/plan (marketing , finance, operations) and Long term organizational strategy.  Tactics- medium-term plans sometimes used as components of a strategy. More specific than strategy.  Action- Plan- medium or short-term project to accomplish a specific objective, assigned to an individual with a deadline and the resources needed. OPERATIONS STRATEGY  Operations strategy deals with guiding the operations function of the organization, but should answer organizational goal  operations strategy comprises a set of well-coordinated policies, objectives, and action plans, directly affecting the operations function, which is aimed at securing a long-term sustainable advantage over the competition  Should monitor external markets  Usually, the operations policies, objectives, and action plans are classified into nine strategic decision categories . i. Facility- a major decision for multi-facility organizations is how to specialize or focus each facility ii. Capacity- whether to change the capacity in anticipation of future demand iii. Vertical Integration- suppliers etc iv. Vendor Relations v. Product Mix and New Products- challenge of operations management increases as the variety of products and the rate of new products increases vi. Process Types and Technology- 4 generic process types
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