Competitive Advantage

and Strategic
Management for
Performance Excellence
Chapter 5
Competitive Advantage denotes a firms ability to
achieve market superiority over its competitors.

Strategy is the pattern of decisions that determines
and reveals a companys 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
organizations 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.

Quality and the Bottom Line
Sources 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.
Differentiation
People
Quality and Differentiation Strategies
Superior product and service design,
Outstanding service,
High agility,
Continuous innovation, and
Rapid response.
Competing on
Superior Product Design
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
Competing on Service
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 Agility
Agility 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 customers
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 Agility
Competing on Innovation
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.
Competing on Time
Cycle Time refers to the time it takes
to accomplish one cycle of a
process.
Role of Quality in
Time Competitiveness
Information and Knowledge
for Competitive Advantage
Organizations 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 Scorecard
The 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 organizations 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
organizations future opportunities and
directions.
Project the future competitive
environment.
Develop action plans and deploy resources.
Ensure that deployment will be effective.
Strategic Planning
2 Principal Activities
1. Strategy Development
2. Strategy Implementation

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.
Strategy
Implementation
Linking Human Resource Plans
and Business Strategy
Hoshin Planning / Policy Development
Hoshin means policy or policy development.
Policy development is a systems approach to
managing change in critical business
processes.
The Seven Management
and Planning Tools
Affinity Diagram
The Affinity Diagram is a tool for organizing a large
number of ideas, opinions and facts relating to a broad
problem or subject area.
Interrelationship Digraph
An Interrelationship Digraph identifies and explores causal
relationships among related concepts or ideas.
Tree Diagram
A Tree Diagram maps out the paths and tasks necessary to
complete a specific project or reach a specified goal.
Matrix Diagrams
Matrix 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 Analysis
Matrix data analysis takes data and arranges them to
display quantitative relationships among variables to
make them more easily understood and analyzed.
Process Decision Program Chart
A 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.
Arrow Diagram
Arrow Diagram is used to sequence and schedule project
tasks.
Core Competencies and
Strategic Work System Design
Work Systems
Core Competencies
Technology expertise
Unique service offerings
A Marketplace niche
Particular business acumen
Outsourcing
Vertical Integration