Friday, September 13, 2013

State why productivity is important during competition and economic slowdown.Principles of Management 2

High productivity is important under all conditions. It
enables manufacture to reduce cost, and increasing production. Which ultimately means
improved capacity  to deliver more value to customer. The greater value thus generated
bu increased productivity can be shared by the company and the
customer.


However, when there is no completion the
customers are often forced to be content with lower value delivered by the products
purchased by them. The manufactures also manage to survive, although at lower profit.
But in competitive markets the customer will shift their business to competitors who are
able to offer lower prices and higher value because of their better productivity. In a
situation like this a company cannot compete with more productive firms on price
also.


Similarly, firms with low productivity find it
difficult to survive during economic slowdown. In such periods, the total consume demand
is reduced, and the firm that have lower productivity and hence create lower value find
it most difficult to maintain their sales volume, and therefore are the worst hit by
economic slow down, and if the conditions are very bad may be forced to close
down.

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