Summary : Competitiveness/Strategy/Productivity

Chapter 2
Covers three important aspects of any business: competitiveness, strategy and productivity. All three aspects are vital to a company succeeding in the world of business. Any firm, whether a manufacturer or a service provider, must employ all three aspects as they all play in growing revenues. A successful organization must have a competitive advantage, a strategy to meet the company's goals, and the ability to produce goods and services in a cost-effective manner. Most organizations have a single company "motto" called a mission statement that summarizes these described aspects of the company. The mission statement should answer the question "What business are we in?". The mission statement is the basis for organizational goals.

Summary: Goal, Mission, Strategies and Tactics (page 42-43)

The three important characteristics of any business are competitiveness, strategy, and productivity. Competitiveness refers to how effective an organization meets the wants and needs of customers in comparison to its competitors that produce the same goods/services. Strategy denotes a plan for achieving organizational goals. The two strategies discussed in this chapter are organizational and functional level strategies. Productivity is a measure of the effective use of resources, usually expressed as the ratio of output to input. Productivity measures are useful for tracking an operating unit’s performance over time and judging the performance of an entire industry or country.

A correct goal, mission, tactics, and strategies are the necessary things for an organization’s success. These four terms are deeply related to each other. First, an organization needs to know its mission, which is the reason for its existence. Such as what kind of business are they going to pursue. Second, the mission statement gives the organization's purpose. Goals further explain this mission. They are like the marketing position, they express how organization wants its self-image and position in people’s mind. Third, the organization can start planning how to reach its goals, in other words, their strategy. Strategies have long, intermediate or short terms for organization’s different needs. Finally, the organization can approach the strategies by using tactics. Tactics tell us how to actually operate and process the organization and its strategies specifically.

Chapter 2
Describes the importance of competitiveness, strategy, and productivity in a business. Competitiveness describes how an organization meets the needs and wants of customers compared to the competitors of the organization, in other words, demand. Strategy helps the organization achieve their goals by using tactics, which are the methods and actions taken to accomplish strategies. Lastly, productivity helps the organization know what materials are used effectively. Productivity = Output (Goods and services) / Input. (labor, materials, energy, and other resources.)

Competitiveness is important to a company because it determines an organizations profits. For example, will the company be prosperous or barely get by. A strategy is important to be defined whether they are long term or short term. Also, they can be very specific, for example as in tactics or, in contrast, very broad. Finally, the chapter gives us a way to measure the company’s output relative to input. Measuring productivity is important for analyzing, scheduling, and many other type of managerial or external functions.

Many organizations are driven by competition. To be successful in today’s competitive business environment, companies must know what combinations of factors are most important to satisfy all of their shareholders while also helping to fulfill their mission. These factors may include, but are not limited to: price, quality, services, time or special features. It is critical that organizations as a whole develop goals and strategies to fulfill their mission. Further, each functional area in the business should also have goals and strategies that coincide with accomplishing the larger goals. Employees of the organization should also focus on using all resources efficiently to maximize the productivity of the organization. Productivity has implications not only for the organization at stake, but society as a whole.


1) Which is NOT an example of an external factor:

a) political conditions
b) technology
c) competition
d) operations
e) all the above

Answer: d (Page 46)

2) Which of the following is an example of an organizational strategy:

a) low cost
b) high quality
c) service
d) variety
e) all the above

Answer: e (Page 44)

3) Which of the following is NOT an example of a key internal factors:

a) suppliers
b) human resources
c) customers
d) financial resources
e) legal environments

Answer: e (Page 46-47)

4) Which factors affect the productivity of a company:

a) methods
b) quality
c) capital
d) technology
e) all the above

Answer: e (Page 57)

5) Which productivity factor is included in a balanced scorecard:

a) labor
b) capital
c) energy
d) machine
e) financial

Answer: e (Page 53)

6) Which strategy focuses on reducing the time needed to accomplish a task?

a) Time-base strategy
b) Quality-based strategy
c) Operative strategy
d) Global strategy
e) None of Above

Answer: a (Page 50)

7) Which answer describes a reason why some organizations fail?

a) Neglecting operation strategy
b) Failing to consider customer wants and needs
b) Neglecting investments in capital and human resource
d) Failing to take advantage of strengths and opportunity
e) All of the above

Answer: e (Page 41-42)

8) Coordinating internal and external operations applies to which of the following?

a) Inventory management
b) Flexibility
c) Supply chain management
d) Location
e) Cost

Answer: c (page 41)

9) This concept is defined as the consideration of events and trends that present threats or opportunities to a company?

a) Core competencies
b) Productivity
c) The Balanced Scorecard (BSC)
d) Environmental scanning
e) None of the above

Answer: d (page 46)

10) What do you call plans for achieving organizational goals?

a) Mission
b) Goals
c) Tactics

d) Strategies
e) Mission statement

Answer: d (page 43)

11) Which of the following would
NOT be an example of partial productivity measures?

a) labor productivity

b) economic productivity
c) capital productivity
d) energy productivity
e) machine productivity

Answer: b (page 55)

12) True/False: The Stock Market is
NOT an example of a Strategic OM Decision Area.

a) True
b) False

Answer: a (page 50)

13) Which decision areas are affected by supply chains?

a) Costs, visibility
b) Costs, new products, services, operating systems
c) Costs, quality, liability and environmental issues
d) Costs, new products, services, or operating systems

e) Costs, quality, agility, shortages, vendor relations

Answer: e (page 50)

14) What are the five time-based strategies?

a) Planning, designing, financing, changeover, delivery
b) Planning, strategies, financing, changeover, delivery

c) Planning, designing, processing, changeover, delivery
d) Planning, strategies, processing, changeover, delivery
e) Planning, strategies, financing, changeover, delivery

Answer: c

15) True/False: Marketing is a factor that affects productivity.

a) True

b) False

Answer: b (page 57)

16) Which of the following approaches is consistent with the organization strategy, which is used to guide the operations function?

a) Quality-based strategy
b) Time-based strategy

c) Operations strategy
d) Marketing strategy
e) None of the Above

Answer: c (page 49)

17) This concept deals with the time needed to fill orders.

a) Delivery time
b) Processing time
c) Changeover time
d) Planning time

Answer: a (page 51)

18) Using the data below, find the multi-factor productivity for the combine input of labor and machine time.
Output: $10,000
Labor $2000
Material: $720
Overhead: $3000

a) 2.13
b) 1.75
c) 1.36
d) 3.12

Answer: b (Output/Labor+Materials+Overhead (Page 56))

19) All of the following are NOT external factors EXCEPT:

a) Customers
b) Human Resources
c) Financial Resources
d) Competition
e) All of the above

Answer: d (page 46)

20) What determines whether a company meets the wants and needs of customers relative to their competitors?

a) Mission and Strategy
b) Strategy formulation
c) Competitiveness
d) Strategy and tactics

Answer: c (page 40)

21) 12 Workers were able to clean 120 rooms in 3 hours. What is the productivity for each worker?

a) 3.33 Rooms/Hour
b) 10 Rooms/Hour
c) 30 Rooms/Hour
d) The workers are not very productive
e) None of the above

Answer: a (Rooms Cleaned / Labor Hours Worked = 120 Rooms / [12 Workers X 3 Hours/Worker] = 3.33 Rooms/Hour (Page 55))

22) Determine the multi-factor productivity for the combined input of labor and machine time using the following data:
Output: 10,050 units
Labor: $4,000
Materials: $780
Overhead: $1,470

a) 1.84 units per dollar input
b) .62 units per dollar input
c) 1.61 units per dollar input
d) 4.47 units per dollar input
e) Not enough information given

Answer: c (Output / [Labor + Materials + Overhead] = 10,500 units / [$4,000 + $780 + $1,470] = 10,050 units / $6,250 = 1.61 units per dollar input (Page 56))

23) Productivity growth is measured by:

a) [(Previous Productivity – Current Productivity) / Current Productivity] X 100
b) [(Current Productivity – Previous Productivity) / Previous Productivity] X 100
c) [Current Productivity / Previous Productivity] X 100
d) [Previous Productivity / Current Productivity ] X 100

e) None of the above

Answer: b (Page 53)

24) True / False: The Balance Scorecard (BSC) has a large role in helping to determine strategy formation within an organization

a) True
b) False

Answer: b (The Balance Scorecard (BSC) has no role in strategy formation. The BSC is a top-down management system that organizations can use to clarify their vision and strategy and transform them into action (Page 52-53))

25) True / False: Workers are the main determinant of productivity.

a) True
b) False

Answer: b (This is a common misconception of productivity. In the past, gains in productivity have come from technological improvements such as automation, fax machines, the internet, cell phones, e-mail, computers, copiers, and calculators (Page 57))

26) Which strategic organization statement below contains the broadest statement for any given company?

a) tactic
b) goals
c) operational strategies
d) mission statement
e) all of the above

Answer: d (Page 42)

27) Supermarkets, dry cleaners, ATMs and mall stores are the best example of what kind of operations strategy?

a) low cost
b) rapid delivery
c) superior customer service
d) convenience
e) none of the above

Answer: d (Page 43)

28) What decisions affect cost, quality, liability, and environmental issues?

a) product and service design
b) capacity
c) process selection and layout
d) inventory
e) scheduling

Answer: a (Page 49)

29) Which of the following operations, that has a major influence in competitiveness, might involve after-sales activities customers perceive as value-added?

a) cost
b) location
c) supply chain management
d) inventory management
e) service

Answer: e (Page 39)

30) Characteristics that customers perceive as minimum standards of acceptability are

a) order qualifiers
b) order winners
c) examples of environmental scanning
d) None of the Above
e) All of the Above

Answer: a (Page 45)

31) Which of the following is the correct productivity growth given the following?
Current productivity: 55
Previous productivity: 50
Last year’s productivity growth: 4%

a) 12%
b) 10%
c) 8%
d) 6%
e) 4%

Answer: b (Page 51)

32) Formulation of a successful strategy, businesses must take into account:

a) Competition and markets
b) Products and services
c) Quality and flexibility
d) Order qualifiers and order winners
e) None of the Above

Answer: d (Page 46)

33) Process yield is related to:

a) Balanced Scorecard
b) Strategy
c) Productivity
d) Competitiveness
e) None of the Above

Answer: c (Page 57)

34) All are internal factors, EXCEPT:

a) Equipment
b) Suppliers
c) Financial resources
d) Markets
e) None of the Above

Answer: d (Page 46)

35) Quality-based strategies focus on reducing the time required to accomplish various activities:

a) True
b) False

Answer: b (Time-based strategies focus on reducing the time required to accomplish various activities. On the other hand, quality-based focus on maintaining or improving quality.(Page 50))

36) It is important to link operation strategy to:

a) organization strategy
b) Markets
c) organization tactics
d) economic conditions
e) None of the Above

Answer: a (Page 49)