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Unit 1: Introduction to Operations Management




                                                                                                Notes
                            Table 1.2:  Overview of  Main Productivity  Measures

















          Productivity is also used at the national level. Productivity typically is measured as the rupee
          value of output per unit of labour. This measure depends on the quality of the products and
          services generated in a nation and on the efficiency with which they are produced. Productivity
          data is available from different sources for national productivity, for sector-wise as well as
          industry-wise performance. In improving the standard of living  of a nation, productivity  is
          more  important than  money because productivity determines the output  while money  just
          measures the value of the output.

          However,  the measures that are of relevance here from  the point of view of the operations
          manager are labour productivity, multiple factor productivity and total factor productivity.
          Productivity is linked to the competitive strategy of the organisation. Corporate strategy and
          objectives have  a major  impact in determining the  different  operational parameters at  the
          corporate level. There are many other factors and the list may differ from one organization to
          the next and between different time periods for an organization as well. The principle impact on
          these parameters comes from competitive strategies.

          Corporate  strategies and  competitive strategies form  a hierarchy  of strategies.  Corporate
          strategies are concerned with the type of business the organization is in, its overall competitive
          position and how the resources of the organization have to be deployed. The business strategies
          are basically competitive strategies. The objectives of these strategies are about how to compete
          successfully in particular markets, and how can the business units acquire competitive advantage.
          Sun-Tzu, a  Chinese strategist  and general, made an  observation in  Art of  War: "The  more
          opportunities that I seize, the more opportunities that multiply before me." This phenomenon is
          at the heart of strategy. Organizations compete successfully by seizing opportunities. At  the
          business unit level, the strategic decision that the organization needs to take is 'how will it place
          its products in the marketplace'? What will be the basis for it to gain competitive advantage?
          Organizations achieve  competitive advantage by providing  their customers with what they
          want, or need, better or more effectively than competitors and in ways the competitors find
          difficult  to  imitate.  The  strategy for  each organization  is unique  reflecting  the  particular
          circumstances it faces.
          There are two schools of thought on developing competitive strategies. On the one hand, the
          concept of Generic Strategies is promoted by strategic thinkers like Michael Porter. On the other
          hand, Prahalad  and Hamel  promote the "Resource based Approach". However,  we will lay
          greater emphasis on Generic Strategies as these are industry focused and reflect more closely the
          requirements of the OM Strategy. In order to succeed in this, organizations have found many
          offensive and defensive actions to defend their position in the industry and cope with competitive
          forces.





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