5-Quality as Strategy

Chapter 4Chapter 4

©2001 Prentice-Hall©2001 Prentice-Hall©2001 Prentice-Hall©2001 Prentice-Hall

S. Thomas Foster, Jr.S. Thomas Foster, Jr.Boise State UniversityBoise State University

Slides Prepared bySlides Prepared byBruce R. BarringerBruce R. Barringer

University of Central FloridaUniversity of Central Florida

S. Thomas Foster, Jr.S. Thomas Foster, Jr.Boise State UniversityBoise State University

Slides Prepared bySlides Prepared byBruce R. BarringerBruce R. Barringer

University of Central FloridaUniversity of Central Florida

Strategic Quality PlanningStrategic Quality Planning

Source: Source: asgard.kent.edu/mis/syllabi/Summer2002/Chapter4Polin44150.ppt asgard.kent.edu/mis/syllabi/Summer2002/Chapter4Polin44150.ppt

Only Slide Nos.15 to 22 on “Quality as Strategy”Only Slide Nos.15 to 22 on “Quality as Strategy”are relevant for BS-IIare relevant for BS-II

Transparency 4-2Transparency 4-2© 2001 Prentice-Hall© 2001 Prentice-Hall

Chapter OverviewSlide 1 of 2


• Strategy Content

• The Importance of Time in Quality Improvement

• Leadership for Quality

• Quality and Ethics

• Quality as a Strategy

• Quality Strategy Process




• Deploying Quality (Hoshin Kanri)

• Does Quality Lead to Better Business Results?


Strategy Content1 of 2


• Why is Quality Planning Important?– As we have discussed in previous chapters,

quality improvement is a planned managerial activity.

– Quality improvement involves identifying potential improvements, prioritizing potential areas for improvement, and planning the implementation of projects and improvements.




• Strategy Content Variables– Among the strategy content variables we

discuss are time, leadership, quality costs, generic strategies, orders winners, and quality as a core competency.


The Importance of Time in Quality Improvement

The Importance of Time in Quality Improvement

• Two Important Aspects of Time– There are two aspects of time that we discuss:

• The time it takes to achieve business goals as a result of quality.

• The speed at which companies improve.


Leadership For QualitySlide 1 of 5


• Leadership– Leadership is the process by which a leader

influences a group to move toward the attainment of superordinate goals.

• Superordinate goals are those goals that pertain to achieving a higher end that benefits not just the individual, but the group.




Types of Power

Power of Expertise Reward Power

Sometimes a leader has special knowledge (or is perceived to have special

knowledge).

If a leader has rewards that he or she can

bestow on subordinates in return for some

desirable position, the leader has reward

power.




Types of Power

Coercive Power Referent Power

If the leader has power to punish the follower for not following rules or

guidelines, the leader has coercive power.

If a leader is charismatic or charming and is

followed because he or she is liked, then the leader has referent

power.




Types of Power

Legitimate Power

Legitimate power comes with the position.




• Leadership Dimensions– Trait dimension

• Leadership characteristics tied to the personal “traits” of leaders (such as height and intelligence).

– Leader skills• Attributes such as knowledge, communication,

planning, and vision.

– Leader behavior• This approach discusses how leaders behave to

identify specific leadership styles and the effects of leadership style on subordinate performance.


How Leaders Resolve ConflictSlide 1 of 2


• Passive Conflict Resolution– Some managers and leaders ignore conflict.

• Win-win– Leaders might seek solutions to problems that

satisfy both sides of a conflict by providing win-win scenarios.

• Structured Problem Solving– Conflicts can be resolved in a fact-based

manner by gathering data regarding the problem and have the data analyzed by a disinterested observer.




• Confronting Conflict– At times, it is best to confront the conflict and

help subordinates resolve conflicts.

• Choosing a Winner– In some cases the leader may choose a winner

of the conflict and develop a plan of action for conflict resolution between the parties.

• Selecting a Better Alternative– Sometimes there is an alternative neither of the

parties to the conflict has considered.


Quality and EthicsQuality and Ethics

Quality appears to be good business. Quality is also good ethics. It is unethical to ship defective products knowingly to a customer. Reliable products reflect an

ethical approach to management.


Quality as StrategySlide 1 of 8


• Quality as a Strategy– We now discuss quality as a strategy from the

perspective of generic strategies. These generic strategies are cost, differentiation, and focus

• Costs of Quality– There are two broad categories of costs: costs

due to poor quality and costs associated with improving quality.




• PAF Paradigm– Prevention costs are those costs associated with

preventing defects and imperfections from occurring.

– Appraisal costs are associated with the direct costs of measuring quality.




Examples of Appraisal Costs

Laboratory acceptance testing

Inspection and tests by inspectors

Inspection and tests by noninspectors

Set-up for inspection and testing

Product quality audits

Review of test and inspection data

On-site performance tests

ISO 9000 qualification activates

Quality award assessments




• PAF Paradigm (continued)– Failure costs are roughly categorized into two

areas of costs.• Internal failure costs are those associated with on-

line failure.

• External failure costs are associated with product failure after the production process.




Lundvall-Juran ModelCost

Conformance

C 1 ==Prevention & appraisal costs C 2 ==

Failure Costs

C 1 C 2+

00 11qq

c




• Differentiation Through Quality– Differentiation is achieved by a competitor if

the customer perceives the product or service to be unique in an important way

• Quality Through Focus– Think of a product that is particularly regional

or is marked to a particular group. That limited region or group is the object of the focus strategy.




• Order Winners– Terry Hill of the London Business School

defined a process for setting strategy that is centered on the identification of the order winning criteria (OWC).




• Quality as Core Competency– Quality, in and of itself, is probably not a core

competency.– However, core competency is built on the

foundation of a long-term commitment to quality and continual process improvement.


Quality Strategy ProcessSlide 1 of 2


• Forced-Choice Model– The forced-choice model, pictured in the

following slide, is one of several strategic-planning models that could be adapted to demonstrate integrated quality planning.

– The forced-choice model is particularly useful for companies that are relatively inexperienced in strategic planning.




Forced-Choice Model

Environmental AssessmentEnvironmental Assessment Organization’s PositionOrganization’s Position

Strategic options

Requirements for implementing options

Contingency plans

Statement of mission

Interrelated set of financial and nonfinancial objectives

Statement of strengths and weaknesses

Forecast of operational needs

Major future programs

Broad economic assumptions

Key government and regulatory issues

Major technological forces

Significant market opportunities and threats

Explicit strategies of competitors


Deploying Quality (Hoshin Kanri)Slide 1 of 2


• Hoshin– Hoshin is Japanese for a compass, a course, a

policy, or a plan.• Kanri refers to management control. In English,

this is generally referred to as policy deployment.

• Hoshin Process– Figure 4.4 in the textbook gives an overview of

the Hoshin process.




• Hoshin Process– The company develops a three-to-five year

plan, and senior executives develop the current year’s Hoshin objectives.

– Then the process of catchball occurs.

• Catchball– Is the terms used to describe the interactive

nature of the Hoshin planning process.


Does Quality Lead to Better Business Results?

Slide 1 of 3


Slide 1 of 3

• “Do Quality Efforts Pay Off?”– The effects of quality on business results is

mixed. – There are two primary reasons for this:

• First, there are many variables that affect profitability besides quality.

• Second, many companies implement quality incorrectly.



Slide 2 of 3


Slide 2 of 3

• Quality and Price– The price-quality relationship becomes

increasingly unclear when culture differences in an international setting are considered.

• Quality and Cost– A fundamental difference exists between a low-

cost strategy based on competitive pricing, and a low-cost orientation that is based on continual learning and production competence.



Slide 3 of 3


Slide 3 of 3

• Quality and Productivity– The relationship between quality and

productivity is clear. The elimination of waste results in higher productivity.

• Quality and Profitability– High quality is no guarantee of success. Firms

must still successfully market, manage cash, and do the many other things that ensure profitability.

Documents

5-Quality as Strategy