Operational Competitiveness Development and Its Risk Evaluation

This paper connects previous research in global competitiveness analysis, taking the impact of global financial crisis into account, to evaluate how manufacturing companies are able to manage crisis by adjusting their manufacturing strategy and transformational leadership together with technology level, and develop their operational competitiveness through Sense & Respond (S&R) for dynamic decisions to optimize resource allocations and adjust strategies. It develops a theoretical approach of integrating the core factors which influence operational performance into conceptual analytical models to evaluate overall competitiveness and the risks arisen from adjustments. The empirical studies are focused to compare manufacturing companies in Finland with benchmarking to China, Slovakia, Iceland, and Spain to conclude the development of operational competitiveness.


Introduction
From an economic perspective, the future has never seemed clear, but high performance businesses have the ability to navigate through uncertainty and emerge ever stronger.How do they do it?The experience and research with the world's most successful companies show that winners follow certain common principles.Companies that come through the strongest actually use economic disruption to improve their competitiveness.To find out how to make it possible, this study develop a series of unique analytical models to evaluate the case companies in Finland and compare them with case companies in other countries e.g.China, Slovakia, Spain and Iceland to evaluate the operational competitiveness in global context and conclude the experience of developing competitiveness potentials.We promote a novel concept of overall competitiveness to evaluate performance of companies in global context by integrating the evaluation of manufacturing strategy and transformational leadership with technology level using analytical models created in this paper, and then use Sense & Respond methodology to improve and develop the competitiveness through optimizing resource allocations.
The theoretical reference framework of this study starts from resource-based view of a firm for case study (Wernerfelt, 1984)  [1] .Takala et al. (2002)  [2] have presented justification of multi-focused manufacturing strategies.Miles and Snow (1978)  [3] have defined four company groups which include prospector, analyzer, defender and reactor.According to Miles and Snow (1978)  [3] , on the contrary to the three groups which are prospector, analyzer and defender, reactor does not lead to a consistent and stable organisation and therefore it is advised to change over to one of the other three groups.Based on this theory, Takala et al. (2007) [4] have introduced unique analytical model to evaluate global competitiveness rankings for manufacturing strategies in prospector, analyzer and defender groups according to the company's multi-criteria priority weights of Q(Quality), C(Cost), T(Time) and F(Flexibility).Such analytical models are used to gain insight into the influences and sensitivities of various parameters and processes on the alteration of manufacturing strategies by Takala et al. (2007) [4] .In China, the most dynamic market, Liu et al. (2008) [5] has first time applied such analytical models to analyze and improve operational competitiveness of one private middlesize Chinese manufacturing company by adjusting competitive priorities in manufacturing strategy.Liu, Si and Takala (2009) [6] has compared the operational competitiveness strategies in China and other countries in a global context by utilizing same analytical models, in order to analyze different characteristics of manufacturing strategies in different markets and suggest how the companies can improve their operational competitiveness.But the adjustment of manufacturing strategy alone is not just enough to improve the overall competitiveness to develop the business.This is one important factor and there is another important and necessary factor to improve the overall competitiveness no matter in adversity or in prosperity, which can be even more decisive and that is leadership (Bass, 1985) [7] .Bass and Avolio (1994) [8] provided evidence on the benefits and effectiveness of transformational leadership on leadership and training of leaders.Transformational leaders help their subordinates to learn and develop as individuals, by encouraging and motivating them with versatile repertoire of behavioural and decision making capability (Bass and Avolio, 1994; Bass, 1997 [9] ).Takala et al. (2008a) [10] introduced another unique analytical model to evaluate the level of outcome direction, leadership behaviour and resource allocation of transformational leadership.In this paper transformational leadership is further extended by adding technology level as part of resource allocation.The final idea in this paper is to create a new analytical model to integrate manufacturing strategy and transformational leadership including technology level together for more comprehensive evaluation of overall competitiveness to develop the business operations further.The empirical studies are done in China, Finland, Slovakia, Iceland, and Spain with deeper insight analysis of overall competitiveness of case companies and suggest how to improve the overall competitiveness.The benchmarking and development of overall competitiveness of case companies in global context emphasize more on the adjustment of manufacturing strategy and transformational leadership through S&R to improve overall competitiveness in regional and global market.
The procedures of utilizing the AHP are as follows in this paper.The first step is to establish the model of hierarchy structure for the goal.In this study, the hierarchy models are constructed for the evaluation of manufacturing strategy by Takala et al. ( 2002) [2] and transformational leadership by Takala et al. (2005) [11] , which servers as theoretical framework of this study.The second step is the comparison of the alternatives and the criteria.They are pair wise compared with respect to each element of the next higher level.The last step is connecting the comparisons so that to get the priorities of the alternatives with respect to each criteria and the weights of each criteria with respect to the goal.The local priorities are then multiplied by the weights of the respective criterion.The results are summed up to get the overall priority of each alternative.

Research Methodologies 2.1 Evaluation of manufacturing strategy
The analytical models for manufacturing strategy are used to calculate the operational competitiveness indexes of companies in the different groups, which are prospector, analyzer and defender.According to Takala (2002), the responsiveness, agility and leanness (RAL) holistic model supports the theory of the analytical models using four main criteria, i.e. quality, cost, time and flexibility.The analytical models are developed from our research group based on over 100 case company studies in over 10 countries worldwide, whose industrial branch varies from one to another and company size varies from big to small but they share one thing in common which is that they all compete in a highly dynamic business environment and therefore such analytical model has good transferability.
The Manufacturing Strategy Index (MSI) is modelled as function f (Q,C,T, F) MSI.In the analytical models (Takala et al., 2007), the equations to calculate weights of core factors and the analytical models to calculate the operational competitiveness rankings in each group are given.

The analytical model for prospector group :
The analytical model for analyzer group: The analytical model for defender group: The theoretical frame of the analytical models is based on theory of Transformational Leadership (Bass 1997).A holistic but very simple model of a human being from resource allocations to behaviour and finally to outcome directions and outcomes has been built basing on psychic, social, functional, organizational and structural factors and put together according to the sand cone model (Takala et al., 2005) and participation objectives in leadership of an organization.
The analytical models for evaluation of leadership are as follow.Figure 1 shows analysis to critical factors through S&R for the case company FI_SW, from which the decision can be made to adjust manufacturing strategy and transformational leadership by optimizing the resource allocations, so that the multi-focus priorities i.e. quality to be slightly decreased by 5%, delivery to be increased a lot by 40%, cost to be slightly increased by 5%, flexibility to be decreased by 10%, and resource index to be much increased by 20%.The effects of such adjustments are compared in Table 1.
It can be seen from Table 1 that the results of adjustments are different as company FI_SW being considered to compete in three kinds of group.After S&R adjustments the result of MSI in prospector group is nearly the same as before; the result of MSI in analyzer respect is worse than before; and the result of MSI in defender group is slightly better than before.However, the result of TLI is much better by adjustment than before, which means that the overal competitiveness is improved significantly than before the adjustments.The correlation of MSI vs TLI before and after S&R adjustments are shown in Figure 2 and Figure 3. Figure 2 shows the MSI vs TLI before S&R adjustments.It can be seen that R² in prospector and defender groups are very high, and the competitive group for FI_SW is analyzer.Figure 3 shows the MSI vs TLI after S&R adjustments.It can be seen that the new competitive group for FI_SW should be prospector, and analyzer is no longer suitable with dramatic increase in delivery and decrease in flexibility.Under new business situation, prospector is more profitable for FI_SW based on the S&R measurements.
Figure 4 shows FI_SW improved OCI potential (light brown region) compared to its previous (black region) and other cases improved in global context with benchmarking to cases in China, Slovakia, Spain and Iceland.
It can be seen that S&R is a very effective way to make optimizations and strategic adjustments for case FI_SW and significantly improves its operational competitiveness potential.

Risk evaluation
From the empirical analysis in developing operational competitiveness, it can be seen that S&R can find out the critical factors in resource and optimize them accordingly.However, due to the uncertainty of evaluation and implementation in the adjustment, risks will arise including risk analysis processes, risks arising from the implementation process.Therefore it's important to apply risk management in following two major areas: (1) The process of risk assessment and management, also known as process control or field control, including targeted risk research object, the risk of data effectiveness, etc.
(2) The implementation of risk assessment and management, also known as ex post facto control, including the feasibility of risk adjustment indicators, indicators of other factors to adjust on endogenous risks, etc.
The detail evaluation will be modelled analytically in future studies.

Conclusions
In this paper, a novel concept to evaluate and develop overall competitiveness potentials for dealing with dynamic business situations has been proposed by integrating manufacturing strategy and transformational leadership with technology level together and through S&R for dynamic decision making to optimize resource allocations and adjust strategies in order to develop operational competitiveness potentials in a sustainable manner.The empirical studies are focused to studying manufacturing companies in Finland and benchmarking with cases in China, Slovakia, Spain and Iceland.The case companies are evaluated with the proposed analytical models and their performances are compared in global context to conclude the development of operational competitiveness potentials.

2. 2
Evaluation of transformational leadership Takala et al. (2008a) have developed analytical models for the evaluations of leadership indexes and its outcomes of different parts of leadership.These models are outcome direction index (OI) by balancing the directions, leadership behaviour index (LI) by measuring deep leadership, and by measuring maximum of passive and/or controlling leadership and by measuring in different ways the utilization of the cornerstones of deep leadership, and resource allocation index (RI) by balancing utilization of human resources.In this paper we propose that technology level index (TI) to be considered into transformational leadership as a special part of resources of leadership.Therefore the new proposal is to model Total Leadership Index (TLI) as function f TLI (OI, LI , RI,TI ).

Figure 1 -
Figure 1 -Analysis to critical factors through S&R

Figure 4 -
Figure 4 -FI_SW improved OCI potential (light brown region) compared to its previous (black region) and other cases improved in global context