Textbook Notes (363,569)
Canada (158,433)
MGTA02H3 (361)
Chapter 2

Chapter 2

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Chapter 2 Increasing Productivity and Quality THE PRODUCTIVITY QUALITY CONNECTION Productivity is a measure of economic performance. Productivity measures how much is produced relative to the resources used to produce it. The more we are able to produce the right things while fewer resources, the more productivity grows and everyone benefits. Productivity considers both the amounts and the quality of what is produced. Quality means fitness of use offering features that consumers want. Responding to the Productivity Challenge Productivity has both international and domestic ramifications. When one country is more productive than another, it will accumulate more wealth. A nation whose productivity fails to increase as rapidly as that of competitor nations will see its standard of living fall. Companies must design their marketing efforts to cultivate a more customer- oriented focus since quality must be defined in terms of value to the customer. As quality improvement practices are implemented, more and more firms will receive payoffs from these efforts. Four factors interact in this process: customers, quality, productivity, and profits. Measuring Productivity Most countries use labour productivity to measure their level of productivity: o Labour of productivity of a country = GDPtotal # of workers The equation above compares a countrys total annual output of goods and services with the resources used to produce that output. The focus of labour, rather than on www.notesolution.com
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