Download - 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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I. Strategic Planning (cont.)
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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I. Strategic Planning (cont.)
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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I. Strategic Planning (cont.)
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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Strategic Planning and Customer Satisfaction
I. Strategic Planning (cont.)
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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Strategic Planning and Customer Satisfaction
I. Strategic Planning (cont.)
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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Strategic Planning and Customer Satisfaction
I. Strategic Planning (cont.)
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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Strategic Planning and Customer Satisfaction
I. Strategic Planning (cont.)
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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Strategic Planning and Customer Satisfaction
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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Strategic Planning and Customer Satisfaction
II. How organizations process improvement plan is
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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II. How organizations process improvement plan is
related to its strategic plan (cont.)
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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Strategic Planning and Customer Satisfaction
II. How organizations process improvement plan is
related to its strategic plan (cont.)
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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II. How organizations process improvement plan is
related to its strategic plan (cont.)
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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Strategic Planning and Customer Satisfaction
III. Leadership in relation to quality (cont.)
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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Strategic Planning and Customer Satisfaction
III. Leadership in relation to quality (cont.)
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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Strategic Planning and Customer Satisfaction
III. Leadership in relation to quality (cont.)
Organization & Employee Relationship
Training and education
Tools
Conflict resolution techniques
Hiring employee criteria
Skill-set match Organizational-climate match
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III. Leadership in relation to quality (cont.)
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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III. Leadership in relation to quality (cont.)
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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Strategic Planning and Customer Satisfaction
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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Strategic Planning and Customer Satisfaction
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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IV. Customers (cont.)
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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Strategic Planning and Customer Satisfaction
IV. Customers (cont.)
Measurements of Customer Satisfaction
Surveys
Returns and Warranties
Field complaints
Product measures
Repeat customer sales
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IV. Customers (cont.)
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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Strategic Planning and Customer Satisfaction
V. TQM
TQM plays in manufacturing, service, government, and non-profit
organizations a major role.
Commonalities
customer focus
process driven
Differences
customer involvement
regulations