Chapter 2.docx

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Ch2 - Competitiveness, Strategic Planning, & Productivity GMS401
- Competitiveness: 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 the strategy for the
organization; productivity is a measure of how efficiently the resources are being used.
- Companies must be competitive to sell their goods/services in the marketplace.
Competitiveness depends on the capabilities and performance of the company in its
marketplace; using teamwork and rewards, and organization can develop its capabilities.
- Key purchasing criteria: the major elements influencing a purchase: price, quality,
variety, and timeliness.
o Price: the amount a customer must pay for the good/service.
o Quality: characteristics of a good/service determined by its design, material,
workmanship, performance, and consistency.
o Variety: choices of models and options available to the customers.
o Timeliness: availability of goods/services when they are needed by the customer.
o Other factors include customer service and convenient location.
- Most customers choose the “best buy” or best “value”
o Value = quality, timeliness, etc ÷ price
- In complex purchases, customers may use two categories of purchasing criteria:
o Order qualifiers: purchasing criteria that customers perceive as minimum
standards of acceptability to be considered for purchase.
o Order winners: purchasing criteria that cause the organization to be perceived as
better than the competition.
- Organizations compete by emphasizing one or more of the key purchasing criteria.
- These are called competitive priorities: the importance given to operations
characteristics: cost, quality, flexibility, and delivery.
o Cost: the unit production of a good or performance of a service to the
o Quality: determining customers’ quality requirements, translating them into
specifications for goods/services, and producing goods/performing services to
these specifications.
o Flexibility: being able to produce a variety of goods/services in the same facility.
o Delivery: being able to consistently meet promised due dates by producing goods
or performing services on time or quickly.
- As the organization becomes more competitive, it tends to reach a point where improving
one priority can be achieved only by reducing the emphasis on another priority.
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.
- It starts with top management soliciting the performance of current strategy, and
commissioning a market research study of where the industry is headed in the next 1-5
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