What are competitive priorities? Provide some examples of how OM influences the five major types of competitive priorities

Answer 1

Competitive priorities represent different areas of focus by which a firm can achieve competitive advantage. In general, organizations can compete on five key competitive priorities:
• Cost
• Quality
• Time
• Flexibility
• Innovation

Cost: Costs accumulate through the value chain, and include the costs of raw materials and purchased parts, direct manufacturing cost, distribution, postsale services, and all supporting processes. Through good design and by chipping away at costs, operations managers help to support a firm's strategy to be a low-price leader. They emphasize achieving economies of scale and finding cost advantages from all sources in the value chain.

Quality: The value of a good or service in the marketplace is influenced by the quality of its design. Improvements in performance, features, and reliability will differentiate the good or service from its competitors, improve a firm's quality reputation, and improve the perceived value of the customer benefit package. This allows the company to command higher prices and achieve an increased market share. This, in turn, leads to increased revenues that offset the added costs of improved design.

Time: Speeding up work processes improves customer response. Deliveries can be made faster, and more often on time. However, time reductions in processes and value chains can only be accomplished by streamlining and simplifying them to eliminate non-value-added steps such as rework and waiting time.

Flexibility: Success in globally competitive markets requires both design and demand flexibility. In the automobile industry, for example, new models are constantly being developed. Companies that can exploit flexibility by building several different vehicles on the same assembly line at one time, enabling them to switch output as demand shifts, will be able to sell profitably at lower volumes. Flexibility is manifest in mass-customization strategies that are becoming increasingly prevalent today.

Innovation: Over the years, innovations in goods (such as telephones, automobiles, computers, optical fiber, satellites, and cell phones) and services (self-service, all-suite hotels, health maintenance organizations, and Internet banking) have improved the overall quality of life. Within business organizations, innovations in manufacturing equipment (computer-aided design, robots and automation, and smart tags) and management practices (customer satisfaction surveys, quantitative decision models, and the Malcolm Baldrige criteria) have allowed organizations to be more efficient and better meet customers' needs.