Q.

1: What were the factors that you would consider responsible for lower productivity of the
American Companies?
Answer:
Productivity:
As define by the Bureau of Labor Statistics:
The value of goods manufactured divided by Amount of labor inputs
Factors for lower productivity:

Cost reduction without increase in labor output or increase In number of labor

Cost had not reduced deeply but focus on present cost(product cost)
Not increase in direct labor costs
Most focus on efficiency of workers
Rule of 40%, 40% & 20% are not proper applicable for productivity
Not adoption of others methods to get competitive edge
Fail to provide a good strategy about manufacturing process
NO flexibility remained in present product
Not upgrade of equipments
Creation of quota system
Calculation of overhead cost on direct labor is not enough
No creativity in mangers beyond a structural work place

The following are the detail of above factors which causes low level of productivity.

1. Cost reduction without increase in labor force:

The labor is the basic key factor of production process. The American Companies tried
to increase productivity but not much focus on labor. They have not increased the number of
workers and their capability. So they have failed to achieve their goal.

2. Not focus deeply to reduce cost:

The American companies tried to control cost relative to product like labor cost
and process cost. So they did not tried to control other cost which is also necessary for
production process and competitive edge like material cost and factory overhead cost.
3. Not increase in direct labor cost:

4.

5.

6.

7.

The American companies not increased labor cost but they much focused on other cost
like process cost and product cost. If the labor cost increased by 10% the production
will also increased 20% but they had not much focus on direct labor cost.
Most focus on efficiency of workers:
The American Companies tried to get maximum output from workers. They
made tight rule and discipline to achieve this goal of productivity. So when the workers
focus on their tight discipline they left from the structure of work.
Role of percentage measurement are not proper justified;
The American companies followed 40% work for manufacturing structure and 40%
focus on major changes in process and equipment and 20% conventional approaches to
productivity improvement. These measurements are not perfect for achievement of goal
to get edge on competitors.
Not adoption of more methods to improve competitors edge:
The American companies only tried to get maximum production. They have not much
focus on others tools of progress like quality, Reliability, delivery, short lead time,
customer services, rapid product introduction, flexible capacity, efficient capital
development.
Fail to provide good strategy about manufacturing process;
The American companies mostly focused on increased in production and decrease in
cost. So they have not give proper strategy if they will fail to achieve these purposes. And
they also not provide proper planning about manufacturing process.

8. NO flexibility remained in present product;

The American companies tried to much focus on production of present product.
So they cannot rapid change in product and cannot innovation very rapidly because of
this tight condition.
9. Not upgrade of equipments;
The American companies only tried to get edge on that product. And use equipment for
only this purpose. They have not increased the level of present equipment for future
product and strategy.
10. Creation of quota system:
American companies have followed by last 150 years of quota system that every worker
will work on his work time and how much work they have define anybody cannot go
beyond their frame work so mostly companies fail due to this reason.
11. Calculation of overhead cost on direct labor is not enough:
Most companies calculate their factory overhead cost on direct labor based which is not
enough because other factors which contribute factory overhead are always neglect.
12. No creativity in mangers beyond a structural work place:
The managers cannot do more or new work without the jurisdiction of their work
structure. They are all bond with the companies policies and targets. So theirs
extraordinary skills demolished in tight work structure.

Q.2: what would be the right approach towards productivity improvements? Give
rationale to your answer.
Answer:
There are following suggestion I think will be better for their increased in
productivity.
1. Workers are allowed to do work as they want.
2. Flexibility must be remained in work structure.
3. Proper up gradation of machinery and product.
4. Upgrade judgment of market for production volatility.
5. Upgrade their strategies according to market informations.
6. Innovation in product to increase their production.
7. Provide full opportunity to managers for their creativity in product and in production.
8. Quota system like daily must be abolished for increase in production.
9. Increase in quality of product to increase the production of product.
10. Managers must be rewarded for their good jobs in increase in productivity.
11. Workers must be compensated on their performance.
12. Division of labor for different tasks related to productivity.