Companies, either manufacturing goods (tangibles) or offering services (intangibles) must be competitive to sell their goods or services in the marketplace. In the present era of globalization, any progressive company can not restrict its operations to the domestic market only. A global marketplace for goods and services involve more customers and more intense competition.
Competitiveness is a major factor that determines whether a company propers, barely manages to survive, or ceases to exist sooner or later. Business firms compete with one another in several ways.
These include prices, quality, product or service differentiation, dependability as a supplier, flexibility, time to market (or speed to market), customer service, employee productivity, and managerial expertise.
However, in the broadest terms, we speak of competitiveness about the countries rather than to other similar firms.
This is because how effectively a nation competes in the global market plc affects the success of the nation and the quality of life (or standard of living) for its citizens.
Different Competitive Dimensions of Manufacturing
The following are the dimensions of competitiveness in operations management:
1. Cost or Price
Price is the amount a customer must pay for the product or service. If two products are comparable in quality and differ in price, customers will buy the product or service that has a lower price.
Although the price is the competitive weapon used in the marketplace. profitability is related to the difference between price and cost.
Hence, the cost is an important variable that can allow lower prices that may still be profitable for the firms.
Some firms which compete on price may be satisfied with lower profit margins, but most firm focus on lowering the cost of goods or services instead of accepting lower profits.
To compete based on price, the production function must be capable of producing the outputs at a low cost.
Production management decisions regarding location, product design, equipment utilization, and replacement, labor productivity, inventory control, process technology, and tolls all contribute to the reduction of costs.
Quality refers to the ability of the product or service to met the requirements of the customer and achieve customer satisfaction for the firm selling the goods and services. generally quality relates to the customer’s perceptions of how well the product or services will serve its purpose.
Generally, customers are often willing to pay more for or wait for delivery if products of superior quality.
3. Product or Service Differentiation
Refers to any special features (such as design, cost, quality, convenience of use, warranty, etc.) that cause a product or services to be perceived by the customer as more suitable or attractive than the product or service offered by the competitors.
4. Dependability as a Supplier
A supplier who has a reputation for dependability (like, keeping the promised delivery schedule) or who can meet customer demand through off the shelf availability of the product has a strong competitive advantage.
Customers are often willing to compromises on cost or price or even quality to obtain on tie delivery when they need an item.
The production managers must develop the ability of the productive system to the product on time by scheduling and coordinating all the elements of the system.
This refers to the ability of a firm to respond to changes demanded by the customer.
The changes might relate to increases or decreases in volume demanded or to changes n the design of product or service or changes in the delivery time.
A firm having higher flexibility can have a competitive advantage over other firms.
The ability to be flexible depends a great deal on the design of the productive system and the process technology employed by the firm.
Also, the service offered by the firm before and after-sales, and in providing repair service and spare parts quickly ad effectively add to the competitive position of the firm.
Time to perform certain activities refers to several aspects of an organization’s operations such as:
- How quickly a product or service is delivered to a customer (like speed to market or minimum lead time to supply).
- How quickly new products or services are designed, developed, and launched to the market (speed to market of new products or services) and,
- The rate at which improvements in products or processes are made.
7. Customer Service
Sevice might involve after-sales services that are perceived by customers as a value-added, for example, delivery, set up or installation, warranty/guarantee repairs, technical support, or extra attention such as courtesy, keeping the customer informed, and attention to even little details or small problems of customers.
8. Employee Productivity and Managerial Expertise
Managers and other employees are the people at the heart and soul of any organization.
Competent and motivated employees including managerial personnel can provide a distinct competitive edge by their expertise, skill, and creative ideas.
Hence, in a broader sense, competitiveness can e defined as “The degree to which a nation can produce goods and services which meet the test of international markets while simultaneously maintaining or expanding the real incomes of its citizens.
The most common measure of competitiveness at the national level is productivity. Increases in productivity allow wages to grow without causing inflation and thus raising the standard of living of the people of a nation.
Productivity growth is a true indicator of how quickly an economy can expand its capacity to produce goods and services and meet customer demand both within the countries well as in the global market.
The dimensions of competitiveness that measure the effectiveness of the production function of a manufacturing firm are discussed briefly in the following one. In the context of individual firms, competitiveness refers to “how effectively an organization meets the needs of customers relative to other firms which offer similar goods and services.
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