Competitiveness

● Companies need to be competitive to succeed in the marketplace.

● Competitiveness is influenced by price, delivery time, and product/service

differentiation.

Marketing's Role in Competitiveness

1. Identifying consumer wants and needs is crucial for matching products/services to

customer expectations.

2. Price and quality are key factors in consumer buying decisions, with a trade-off
between the two.

3. Advertising and promotion help inform customers about products/services and attract
buyers.

Operations' Influence on Competitiveness

1. Product and service design should align with consumer needs, financial resources,
and operations capabilities. Key factors include innovation and time-to-market.

2. Cost affects pricing and profits; higher productivity leads to cost advantages.
Companies may outsource to reduce costs.

3. Location impacts cost and convenience, especially for reducing input and transportation
costs or providing easy customer access (important in retail).

4. Quality is judged by how well a product/service satisfies its purpose. Customers may
pay more for perceived higher quality.

5. Quick response involves swiftly delivering products, handling complaints, or bringing

new products to market.

6. Flexibility refers to adapting to changes in product design, customer demand, or

product/service mix.

7. Inventory management matches supply with demand efficiently.

8. Supply chain management coordinates internal and external operations to ensure

timely, cost-effective deliveries.
 9. Service includes after-sale activities (delivery, setup, support) and extra customer
attention (e.g., courtesy and communication).

Why Some Organization fails

Organizations often fail or underperform due to various internal and external factors.
Understanding these reasons can help prevent similar issues in the future. Some key causes
include:

1. Neglecting Operations Strategy: Without a clear operations strategy, organizations

struggle to align their resources with their goals, leading to inefficiencies.

2. Ignoring Strengths and Opportunities: Failing to leverage internal strengths or

capitalize on market opportunities, while overlooking competitive threats, can leave an
organization vulnerable.

3. Overemphasis on Short-term Financials: Prioritizing immediate financial gains over

long-term investments in research and development stifles innovation and future growth.

4. Imbalance in Product vs. Process Design: Focusing too much on designing

products/services without improving the delivery processes can lead to inefficiencies and
quality issues.

5. Neglecting Capital and Human Resources: Lack of investment in technology,

equipment, or employee development results in outdated operations and low morale.

6. Poor Internal Communication: A lack of cooperation and communication between

departments hampers collaboration, resulting in fragmented efforts./

7. Ignoring Customer Needs: Failing to understand or meet customer preferences leads

to a loss of market share and customer loyalty.

Q : Explain Mission and organization Strategy

Mission and Organizational Strategy:

● Mission: Defines the organization's purpose and answers the question:

"What business are we in?" It serves as the foundation for setting
organizational goals.
● Goals: Specific objectives derived from the mission statement. They guide
the organization in how it wants to be perceived by its stakeholders.
 ● Organizational Strategy: Provides direction for achieving the
organization's mission and goals, influencing the strategies of various
functional units (marketing, operations, etc.).

Business Strategies:

There are three fundamental business strategies or Operation strategies

1. Low Cost: Focus on minimizing production and operational costs to offer

products/services at competitive prices
.
2. Responsiveness: Prioritize quick and efficient delivery and adaptability to
meet customer demands.

3. Differentiation: Distinguish the organization’s products or services from

competitors through innovation, quality, or unique features.

Strategy and Tactics:

● Strategies: Broad, long-term plans that provide direction to achieve the

organization’s goals.
● Tactics: Specific actions and methods used to implement strategies
effectively.
● The overall strategic hierarchy begins with the mission, which informs
goals, which are achieved through strategies and tactics.

Strategy Examples:

● Low cost: Outsourcing to reduce labor costs.

● Scale-based: Use high output volumes to reduce unit costs.
● Specialization: Focus on narrow product lines to improve quality.
● Innovation: Introduce new products or services to create market
differentiation.
● Flexibility: Adjust quickly to changes in market demand or customer
preferences.
● Service: Focus on enhancing customer service.
● Sustainability: Adopt eco-friendly practices.
Strategy Formulation:

● Involves aligning core competencies with market needs and competitive

actions.
● The SWOT approach helps identify internal strengths and weaknesses, as
well as external opportunities and threats.
● Michael Porter’s Five Forces Model also aids in analyzing competitive
environments.

Environmental Scanning:

● Organizations must monitor economic, political, legal, technological, and

competitive factors to adapt strategies effectively.

Order Qualifiers vs. Order Winners:

● Order Qualifiers: These are the minimum standards that a product or

service must meet for customers to consider purchasing it. For example,
basic quality, acceptable pricing, or industry compliance.
● Order Winners: These are the features or attributes of a product or
service that give it a competitive edge and influence a customer’s
purchasing decision. Examples include superior quality, faster delivery
times, or exceptional customer service.

Strategy formulation
is the process of developing a plan of action to achieve organizational goals and
objectives. It involves analyzing internal and external factors, defining the
organization's mission, setting goals, and determining how resources will be
allocated to execute the strategy. This process is crucial because it provides a
roadmap for decision-making, guides resource allocation, and aligns operations
with long-term goals.

Steps in Strategy Formulation:

 1. Mission and Vision Definition: Clarifying the organization's purpose and
long-term vision.
2. Environmental Scanning: Analyzing internal (strengths and weaknesses)
and external (opportunities and threats) factors through tools like SWOT
analysis or Porter's Five Forces.
3. Goal Setting: Defining specific, measurable objectives aligned with the
mission.
4. Strategy Development: Crafting broad strategies (like cost leadership,
differentiation, or focus) that determine how the organization will compete
in the market.
5. Implementation Planning: Outlining the specific actions or tactics
required to achieve the strategy, including resource allocation, timeframes,
and responsibilities.

Example of Strategy Formulation:

● Walmart: Walmart formulated its low-cost strategy by focusing on cost

leadership. The company achieved this through:
○ Efficient supply chain management (using advanced technology and
just-in-time inventory systems).
○ Negotiating bulk discounts with suppliers to offer products at lower
prices.
○ Expanding globally while maintaining operational efficiency.
● Walmart's strategy formulation involved setting the mission to be the leader
in low-cost retail, scanning the competitive environment, and developing a
clear strategy to dominate through low prices and high-volume sales.

Michael Porter's Five Forces Model is a tool used to analyze the competitive
environment of an industry. It helps businesses assess the strength of their
competition and identify strategic actions they can take to gain a competitive
advantage. Here’s a breakdown of the five forces:

1. Threat of New Entrants:

● New companies entering the market can increase competition and reduce
profitability. Factors like economies of scale, capital requirements, brand
loyalty, and access to distribution channels affect this force.

2. Threat of Substitute Products or Services:

 ● The presence of alternative products or services that customers can switch
to poses a threat to an industry. A high threat can drive companies to
innovate and improve quality to stay competitive.

3. Bargaining Power of Customers:

● Customers have power when they can easily switch to competing products
or when they demand higher quality or lower prices. If few customers buy
large volumes, they hold more power over a business.

4. Bargaining Power of Suppliers:

● Suppliers with strong control over materials or components can increase

costs or reduce the quality of inputs, thus affecting an organization’s
competitiveness. Companies with limited alternative suppliers face higher
risks.

5. Intensity of Competitive Rivalry:

● This is the level of competition within an industry. High rivalry often leads
to price wars, advertising battles, or new product launches. Factors like
market growth rate and product differentiation impact the level of rivalry.

Single vs. Multiple Strategies:

● Organizations may choose to adopt a single dominant strategy, such as

becoming a price leader, to focus on a particular strength.
● Alternatively, they may pursue multiple strategies to address varying
market conditions or opportunities.

Outsourcing for Strategic Advantage:

● Many companies use outsourcing to reduce costs, gain flexibility, and

leverage supplier expertise. An example is Dell, which benefited from
outsourcing as part of its business strategy.

Growth Strategy:

● Growth is often a component of strategic planning, especially for new

companies. It’s essential that growth rates are sustainable, as overly
 aggressive growth can lead to failure. For example, Boston Markets
expanded too quickly in the 1990s and nearly went bankrupt.

Failure Due to Poor Strategy or Execution:

● Companies fail not just because of missing or incomplete strategies, but

also due to poor execution of strategies.
● External factors like political changes, disasters, or competitor
advantages (e.g., low labor costs) can also cause failure.

PIMS Database:

● The Profit Impact of Market Strategy (PIMS) database is a resource

used by businesses and academic institutions to guide strategic thinking.
It contains profiles of over 3,000 businesses and is used to develop
benchmarks and successful strategies.

—---------------------------

Organization Strategy

Operations strategy is a focused subset of the organization’s overall strategy. While the
organizational strategy is broad and encompasses the entire company, operations
strategy narrows in on the functional aspects of the organization. It deals primarily with
products, processes, quality, cost management, lead times, and resource
allocation.

Link Between Organizational and Operations Strategy

For operations strategy to be effective, it must be aligned with the overall

organizational strategy. This involves senior management working collaboratively with
functional units to create synergy. It’s critical to recognize the strengths and
weaknesses of the operations function and ensure they are consistent with the broader
goals of the company. Misalignment can lead to internal conflicts and reduced
competitiveness.

Historical Context of Operations Strategy

In the 1970s and early 1980s, many U.S. companies prioritized marketing and
financial strategies over operations, which led to a decline in competitiveness. This
neglect was exacerbated by mergers, acquisitions, and financial decisions made by
individuals unfamiliar with the operations aspect of the business. In response, foreign
competitors took advantage of this gap by focusing on efficient operations strategies,
leading U.S. companies to revisit their operations in the late 1980s and early 1990s.

The Importance of Strategy Formulation

The formulation of a strategy—both at the organizational and operational levels—

plays a critical role in determining the success of an organization. A well-formulated and
executed operations strategy can greatly enhance competitiveness and organizational
performance, while poor execution or design of the strategy can significantly hinder
success.

Q no : Quality-Based Strategies & Time-Based Strategies

Quality-Based Strategies

Quality-based strategies focus on enhancing or maintaining the quality of an

organization's products or services. This focus is crucial for both customer acquisition
and retention. The motivations for adopting quality-based strategies may include:

● Overcoming a reputation of poor quality.

● Keeping up or surpassing competitor standards.
● Preserving an existing reputation of high quality.

High-quality products or services often lead to indirect benefits like cost reduction,
improved productivity, and enhanced customer loyalty. Importantly, quality-based
strategies can complement other business strategies, such as time-based or cost-
reduction strategies, as better quality can streamline processes and lower overall
operational costs.

Time-Based Strategies

Time-based strategies prioritize reducing the time required to perform business

activities, such as:

● Product development.
 ● Customer service response.
● Delivery times.

By shortening these time frames, companies can gain a significant competitive

advantage. Reducing time to market or response time improves customer satisfaction
and enables organizations to outperform competitors that take longer to complete
similar tasks. Faster turnaround times in product development and customer service
directly impact an organization's ability to meet shifting customer demands quickly
and efficiently.