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Chapter 2

GMS 401 Chapter Two Notes.docx

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Ryerson University
Global Management Studies
GMS 401
Kirk Bailey

GMS 401 Chapter Two Notes Competitiveness, Strategic Planning and Productivity Competitiveness – the ability and performance of an organization in the marketplace compared to other organizations that offer similar goods or services Strategy – the long term plans that determine the direction an organization takes to become (or remain) competitive Strategic Planning – the managerial process that determines a strategy for the organization An organization’s performance in the marketplace depends on the expectation of its customers for purchase of goods or services, mainly price, quality, variety and timeliness. These are the key purchasing criteria. 4 KEY PURCHASING CRITERIA Price – the amount a customer must pay Quality – refers to characteristics of a good or service determined by its design, material, workmanship, performance and consistency Variety – refers to the choices of models and options available to the customer Timeliness – refers to the availability of goods or services when they are needed by the customer ***If quality, variety and timeliness are equal, the customer will choose the good/service with the lowest price Order qualifiers – purchasing criteria that customers perceive as minimum standards of acceptability to be considered for purchase (eg. price, delivery speed, quality, etc.) Order winners – purchasing criteria that cause the organization to be perceived as better than the competition (eg. price, delivery speed, quality, etc.) Competitive priorities – the importance given to operations characteristics: cost, quality, flexibility and delivery Cost – the unit production of a good or performance of a service to the organization Quality – from an organization’s perspective: means determining customers’ quality requirements, translating these into specifications for goods or services and consistently producing goods or performing services to these specifications Flexibility – refers to being able to produce a variety of goods or services in the same facility Delivery – refers to being able to consistently meet promised due dates by producing goods or performing services on time or quickly Strategic planning – 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 plans SWOT analysis – a decision aid that looks at the strengths, weaknesses, opportunities and threats of the business Here are the 9 steps involved in effective strategic planning (in brackets are the questions that must be answered) 1. Getting Started (what is the scope of business, what is the current strategy, are there any immediate problems/issues?) 2. Analyze the industry and source of competitive advantage (are there any company rivalries, how large is bargaining power of suppliers, how hard is it for new entrants to enter industry, is it easy to substitute goods/services, are there changing trends, how do we gain competitive advantage) 3. Analyze customers (what are the key market segments, what are the key purchasing criteria) 4. Analyze competitors (what are the strategies, why do competitors behave the way they do, has their strategy changed over time) 5. Assess our position (what are OUR products’ strengths and weaknesses) 6. Assess the state of our business (what are the major issues, what are our goals) 7. Develop and evaluate alternative strategies (can we implement a strategy to conquer all our issues, what investments should we make) 8. Choose and refine recommended strategy (what strategy should we choose, what actions and policies are required, what resources are required) 9. Identify major actions and implement them (how can we coordinate the action and monitor overall progress) Mission – where the organization is heading Vision – where the organization desires to be in the future Values – share
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