Convenience

The Importance of Productivity
Managers consider it important that their firm maintains high levels of productivity for a
variety of reasons. Firm productivity is a primary determinant of an organization’s level
of profitability and, ultimately, of its ability to survive. If one organization is more pro-
ductive than another, it will have more products to sell at lower prices and have more
profits to reinvest in other areas. Productivity also partially determines people’s standard
productivity
An economic
measure of efficiency
that summarizes
what is produced
relative to resources
used to produce it
Chapter 15:
Managing Operations, Quality, and Productivity
4 7 9
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of living within a particular country. At an economic level, businesses consume resources
and produce goods and services. The goods and services created within a country can be
used by that country’s own citizens or exported for sale in other countries. The more
goods and services the businesses within a country can produce, the more goods and
services the country’s citizens will have. Even goods that are exported result in financial
resources flowing back into the home country. Thus, the citizens of a highly productive
country are likely to have a notably higher standard of living than the citizens of a country
with low productivity.