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Competitive Advantage denotes a firm’s ability to achieve market superiority over its competitors.
Strategy is the pattern of decisions that determines and reveals a company’s goals, policies and plans to meet the needs of its stakeholders.
Strategic Planning is the process by which the members of an organization envision its future and develop necessary procedures and operations to carry out that vision.
Quality, Competitive Advantage and the Bottom Line
1. A strong competitive advantage is driven by
customer wants and needs.
2. A strong competitive advantage makes a
significant contribution to the success of
the business.
3. A strong competitive advantage matches the
organization’s unique resources with the
opportunities in the environment.
4. A strong competitive advantage is durable and
lasting and difficult for competitors to copy.
5. A strong competitive advantage provides a basis for
further improvement.
6. A strong competitive advantage provides direction
and motivation to the entire organization.
Source of Competitive Advantage
2 basic types of competitive advantage
1. Low Cost
2. Differentiation
Cost Leadership Early manufacturing involvement in the design
of the product. Product design to take advantage of
automated equipment. Limited product models and customization in
distribution centers rather than in the factory. A manufacturing system designed for a fixed
sequence of operations.
Quality and Differentiation Strategies
• Superior product and service design,
• Outstanding service,
• High agility,
• Continuous innovation, and
• Rapid response.
Useful techniques of quality engineering:o Concurrent engineering, in which engineering and
production personnel develop product designs that are both functional and easy to manufacture.
o Value analysis, in which the function of every component of a product is analyzed.
o Design reviews, in which managers assess how well the design relates to customer requirements; and
o Experimental design, in which formal statistical experiments are applied.
Role of Quality in Product Design
5 key dimensions of service quality:o Reliability The ability to provide what is promised,
dependably and accurately.o Assurance The knowledge and courtesy of employees and
their ability to convey trust and confidence.o Tangibles The physical facilities and equipment, and the
appearance of personnel.o Empathy The degree of caring and individual attention
provided to customers. o Responsiveness The willingness to help customers and
provide prompt service.
Role of Quality in Service
Competing on AgilityAgility is the capacity for flexibility and rapid
change to product variety.Flexibility means adapting successfully to
changing environmental conditions and process requirements.
Variety refers to the ability to produce a wide range of products and options.
3 types of Products:• Custom Products, generally made in small
quantities, are designed to meet customer’s specification wisely.
• Option-oriented products are unique configurations of subassemblies that are designed to fit together.
• Standard products are made in larger quantities.
Role of Quality in Innovation The criteria are non-prescriptive. Customer-driven quality emphasizes the
“positive side of quality” Workforce focus stresses employee and also
encourages creative approaches to improve employee.
Continuous improvement and learning are integral parts of the activities of all workgroups.
The focus on future requirements of customers encourages companies to seek creative ways to serve their patrons.
Information and Knowledge for Competitive AdvantageOrganizations need performance measures for three reasons:
o To lead the entire organization in a particular direction; that is, to drive strategies and organizational change;
o To manage the resources needed to travel in this direction by evaluating the effectiveness of action plans; and
o To operate the processes that make the organization work and continuously improve.
Balanced ScorecardThe term coined by Robert Kaplan and David Norton of
Harvard Business School.• Financial Perspective: Measures the ultimate results that
the business provides to its shareholders.• Internal Perspective: Focuses attention on the
performance of the key internal processes that drive the business.
• Customer Perspective: Focuses on customer needs and satisfaction as well as market share.
• Innovation and Learning Perspective: Directs attention to the basis of a future success – the organization’s people and infrastructure.
Strategic Planning for Performance Excellence
Quality and Performance Excellence as a Strategic focus.
Quality in the Process of Strategic Planning.
Quality in the Process of Strategic Planning Plan for the long term and understand
requirements that might affect the organization’s future opportunities and directions.
Project the future competitive environment. Develop action plans and deploy resources. Ensure that deployment will be effective.
Strategy Development The MISSION of a firm defines its reason for
existence. The VISION describes where the organization
is headed and what it intends to be. The VALUES or GUIDING PRINCIPLES directs
the journey to a vision by defining attitudes and policies for all employees that are reinforced through conscious and subconscious behaviour at all levels of the organization.
Strategies are broad statements that set the direction for the organization to take in realizing its mission and vision.
Strategic Objectives are what an organization must change or improve to remain or become competitive.
Hoshin Planning / Policy Development
Hoshin means policy or policy development. Policy development is a systems approach to managing change in critical business processes.
Affinity DiagramThe Affinity Diagram is a tool for organizing a large
number of ideas, opinions and facts relating to a broad problem or subject area.
Interrelationship DigraphAn Interrelationship Digraph identifies and explores causal
relationships among related concepts or ideas.
Tree DiagramA Tree Diagram maps out the paths and tasks necessary to
complete a specific project or reach a specified goal.
Matrix DiagramsMatrix Diagrams are “spreadsheets” that graphically
display relationships between ideas, activities or other dimensions in such a way as to provide logical connecting points between each item.
Matrix Data AnalysisMatrix data analysis takes data and arranges them to
display quantitative relationships among variables to make them more easily understood and analyzed.
Process Decision Program ChartA Process Decision Program Chart(PDPC) is a method for
mapping out every conceivable event and contingency that can occur when moving from a problem statement to possible solutions.
Core Competencies and Strategic Work System Design Work Systems Core Competencies
Technology expertiseUnique service offeringsA Marketplace nicheParticular business acumen
Outsourcing Vertical Integration