mgt449 qm & productivity - week 2

8/3/2019 MGT449 QM & Productivity - Week 2

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MGT 449 Quality Management and

Productivity

Week Two: Strategic Planning and

Customer Satisfaction


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Strategic Planning and Customer Satisfaction

I. Strategic Planning

Strategic Plan - The development of a written document by the

organization that determines the strategic intent and direction for thefirm including the mission, vision, corporate goals and objectives,

tactics, measures for success, and a plan of action.

The Strategic Plan is measurable and involves timely steps for

execution of the plan by the organization.


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I. Strategic Planning (cont.)

Mission

It sets out why the organization exists and what it should be doing.

For example, the mission of a national airline might be defined as

satisfying the needs of individual and business travelers for high-

speed transportation at a reasonable price to all major cities of the

country.


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Vision

It is a formal declaration of what the company is trying to achieve.The spelling out of the vision gives direction to the corporatemission statement and helps guide the formulation of strategy.

For instance, the vision of an international electronic appliance products might be defined as the best electronic applianceproducts company in the world.


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Goals & Objectives

Beyond articulating their vision, many companies also state othermajor goals in their mission statement. These goals specify how acompany intends to go about attaining its strategic intent.

For example, Philip Morris statement makes plain the companysintent to achieve its vision by maximizing productivity andstressing TQM.

The goal of maximizing productivity indicates that when PhilipMorris reviews its strategic options, it will favor strategies thatincrease its productivity.


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Identification of strengths, weaknesses, opportunities, threats,and trends (SWOTT analysis)

Identify companys external opportunities and threats, as well as itsinternal strengths and weaknesses to consider what your findingsmean (SWOT). In addition, it is necessary analyze the trends in theindustry.

Never generate the SWOT analysis and then put it aside. A goodSWOT analysis is the key to further analyses such as: corporate-level strategy and companys business-level strategy.


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SWOT Analysis - Strengths

- Broad market coverage?

- Manufacturing competence?- Good marketing skills?

- Brand name reputation?

- Information systems competencies?

- Broad market coverage?

- Good financial management?- Appropriate control systems?

- Cost of differentiation advantage?

- R&D skills and leadership?

- Well-developed corporate strategy?


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SWOT Analysis - Weaknesses

- Obsolete product lines?

- Rising manufacturing costs?

- Decline in R&D innovations?

- Poor marketing plan?

- Loss of customer goodwill?

- Inadequate human resources?

- Growth without direction?

- Inappropriate organizational structure?

- Infighting among divisions?


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SWOT Analysis - Opportunities

- Expand core business?

- Exploit new market segments?

- Differentiation advantage?

- Diversify into new growth business?

- Apply R&D skills in new areas?

- Overcome barriers to entry?

- Reduce rivalry among competitors?

- Make profitable new acquisitions?

- Apply brand name capital in new areas?


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SWOT Analysis - Threats

- Attacks on core business?

- Increases in domestic/foreign competition?

- Change in consumers tastes?

- Rise in new products?

- New forms of industry competition?

- Potential for takeover?

- Changes in demographic factors?

- Rising labor costs?

- Changes in economic factors?


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II. How organizations process improvement plan is

related to its strategic plan

In order to ensure the success of any type of process

improvement plan within an organization, it is critical thatquality be a key element in the organizations strategic plan.

Without being part of the organizations strategic plan, the

process improvement plan will lack the needed management

support and focus.

Without managements support, the plan will appears as the

program of the month.

It is imperative that process improvement plan be a focal point

of the organizations strategic plan.


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related to its strategic plan (cont.)

Quality makes an extremely valuable contribution to an

organizations ability to give their customer the highest level ofcustomer satisfaction.

An organization can provide their customer with a well-designed

product, competitive pricing, and on-time delivery, but if the

quality is not there, the product is not worth nearly as much to

the customer.

Not only does the value of the product decrease, but it can end

up costing the customer more money in missed deliveries and re-

work for the customer.


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Organizational change can have a great impact on quality. The

most important step in developing an effective quality plan isestablishing a culture of quality.

The key to establishing a quality culture is not only to have the

right organizational structure in place, but the right people in the

right managerial positions.

Note: As we mentioned in last weeks discussion, managerial

support is a key element in making any quality program

successful within an organization.


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II. How organizations process improvement plan isrelated to its strategic plan (cont.)

Commitment

Everyone in the organization must make an effort (commitment)to producing quality products or providing quality services.

For instance, consider the case of Nucors CEO, Ken Iverson.Nucor is a very efficient steel-maker with perhaps the lowestcost structure in the steel industry.

It has done so by focusing on cost reduction, which starts withIverson himself. Mr. Iverson answers his own phone calls,employs only one secretary, drives an old car, flies coach, and isproud of being one of the lowest-paid CEOs in the Fortune 500.


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Competitive advantage

The basis of competitive advantage is determine why some

companies outperform others within a given industry.

To achieve a competitive advantage a company must:

lower its costs

differentiate its product(s) to charge higher price(s) or both simultaneously


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Competitive advantage (cont.)

Competitive advantage is the product of at least one of the

following:

superior efficiency

superior quality

superior innovation

superior customer responsiveness


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II. How organizations process improvement plan isrelated to its strategic plan (cont.)

Competitive advantage (cont.)

Achieving superiority requires that a company developappropriate distinctive competencies, which in turn are a productof the kind of resources and capabilities that a companypossesses.

The durability of competitive advantage is determined by thefollowing:

height of barriers to imitation the capability of competitors to imitate a companys advantage the general level of environmental turbulence


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III. Leadership in relation to quality

The strategic plan starts with the leadership of the organization, then

quickly spreads to all disciplines within the firm.

The organization encourages individual accountability to implement

the tactics needed for success.

The leadership uses self-governing teams, made up of members of

cross-functional areas, and are invaluable in brain-storming and

problem-solving due to their closeness to many of the issues trying tobe solved.


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III. Leadership in relation to quality (cont.)

Participatory management - It is a drastic change in the traditional

management style. Whereas traditional management involves

governing, decision-making, and handing down commands;

participatory management involves two-way communication, the

sharing of ideas, and decision-making between the manager and the

employees.


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Coaches versus managers Role is to facilitate their employees

active involvement and successful participation in the quality

initiative in the organization. This is known as employee

empowerment.


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Establishing a quality culture

The role of TQM is even more important in todays organizations as

we move from traditional manufacturing to the service, government,and non-profit sectors.

These sectors have come to value the importance of qualityimprovement efforts and the impact they have on the success of thefirm.

As manufacturing has led the quality effort, these sectors havefollowed based on the extensive value the organization derives fromthe quality improvement effort.


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Organization & Employee Relationship

Training and education

Tools

Conflict resolution techniques

Hiring employee criteria

Skill-set match Organizational-climate match


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Organizational Change

In the past, restructuring and change were closely linked with

layoffs, terminations, and reduction in work force.

In order to minimize these fears within the organization,

management must have a clear vision of the change and be able to

effectively communicate to the organization.


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Leadership & Change

When leadership within an organization changes, it is critical that

the new leader has the following attributes: A clear vision and corresponding goals

A strong sense of responsibility

An effective communicator

A high energy level

The will to changeIf the new leadership has these skills and a clear vision as to howthe organization will benefit from the changes, much can be done toalleviate the fears within the organization.


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IV. Customers

Customer-driven Quality

The ability of the firm to understand the needs and expectations of both

internal and external customers with respect to a product or service

being offered.

The firm must understand the customers concerns and effectively

communicate them throughout the organization, thus allowing the

customers voice to be heard and integrated into a quality improvement

effort by the firm.


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IV. Customers (cont.)

Customer Identification

Internal customers - The recipient of anothers output within theorganization.

For example, when Manufacturing Department receive raw material

from Warehouse that was bought by Purchasing Department.

External customers - The person or organization that receives a good,

service, or information, but is not part of the organization supplying it.

For instance, when Information Technology (IT) Department outsource

IT Consultants to provide a service.


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Customer Satisfaction

A measure by which the management of the firm gauges the overallcustomer attitude with regard to the organization. This will involve a

formal program to measure and track the results to provide meaningful

data to the firm for making strategic decisions involving the marketing

and quality programs by the firm.


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Measurements of Customer Satisfaction

Surveys

Returns and Warranties

Field complaints

Product measures

Repeat customer sales


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Customer Retention

The task of keeping a customer satisfied with your organization and notto lose them as a customer. Studies have shown that it is much easier,

and less expensive, to retain a customer than seek out a new one.


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V. TQM

TQM plays in manufacturing, service, government, and non-profit

organizations a major role.

Commonalities

customer focus

process driven

Differences

customer involvement

regulations

mgt449 qm & productivity - week 2

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