Business
Productivity is the ability of
an organization to utilize its available resources in order to produce
profitable goods or services as desired by customers or clients. It is the
productivity that measures the performance of an organization, and it can also
be used for companies themselves in order to assess their own progress.
Productiveness increases the overall efficiency of an
organization. When the efficiency of the organization increases, the production
capacity of the company is utilized to the optimum level. Thus, all resources
are used in an effective and efficient manner to get the best possible
results. As is often indicated by business, the more products you make,
the lower your overhead, and the higher your profits.
Enhanced production lowers the cost per unit of a
product which in turn, results in lower prices for better quality, which
enhances a business’ competitiveness in the market. In the current turbulent
world, every organization faces stiff competition from their counterparts.
Hence, lower prices as a result of enhanced production give an edge to
businesses to sell products at more competitive prices. If the rates are
competitive, the business is in a better position to attract more customers and
make more sales. This is the primary motive of any business organization.
Increased production due to efficient utilization of
organizational resources leads to a lower cost production resulting in better
sales and profits. If the profits of an organization shoot up, it increases the
confidence of investors in the organization. Moreover, the share value of the
company increases. Due to this, the reputation and goodwill of the organization
increases.
Similarly, the business can share a portion of its
profits as a result of enhanced production with its employees. This boosts the
morale of the employees as they get to enjoy a part of the profits and the
satisfaction of a job well done. As a result, their working efficiency tends to
increase which in turn, further increases the production of the company. As you
can start to see, there is a snowball of business success that starts with
increased productivity.
Productivity is much more important than revenues and
profits of the organization because profits only reflect the end result whereas
productivity reflects the increased efficiency as well as effectiveness of
business policies and processes. Moreover, it enables a business to find out
its strengths and weaknesses. It also lets the business easily identify threats
as well as opportunities that prevail in the market as a result of competition
and changes in business environment.
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