Omega, Int. J. Mgmt. Sci.

27 (1999) 497±514
www.elsevier.com/locate/orms

The large Spanish industrial company: strategies of the

most competitive factories
LucõÂ a Avella*, Esteban FernaÂndez, Camilo J. VaÂzquez
Fac. de Ciencias Economicas y Empresariales, Universidad de Oviedo, Avda. Cristo s/n, 33071 Oviedo, Spain
Received 1 April 1997; accepted 1 August 1998

Abstract

The growing role played by production as a key strategic element for competitive success is widely recognised.
Many companies have obtained sustainable competitive advantages and, consequently, superior results, due to the
manufacturing excellence or superiority obtained through the development of resources and capabilities in this area
and thus, through the implementation of certain manufacturing objectives and policies.
The work reported is part of a broader research programme which has enabled us to ascertain the present
situation of Spanish industrial companies in the ®eld of production strategic management. It uses a database of the
manufacturing strategies of a sample of 114 factories belonging to large companies in Spain. Speci®cally, the aim of
this paper is to verify, for the Spanish case, the hypothesis that there exist manufacturing objectives and policies
which are applied in a general way in the industrial companies which are most competitive in manufacturing.
For this purpose we have distinguished the factories with strengths or advantages in manufacturing in relation to
their best competitor (for the manufacturing priorities taken as a whole, as well as for each of them considered
individually), from those factories which are not competitive in this area. Using the discriminant analysis technique
and taking 1994 as a reference, the manufacturing objectives and policies followed in the past (1992±1993) and
those foreseen for the future (1995±1999) which enable us to di€erentiate the companies that are competitive in
manufacturing from those which are not, have been recorded. In this way the manufacturing strategies of the large
Spanish companies which are most competitive in this area have been identi®ed, as opposed to the least competitive
ones. # 1999 Elsevier Science Ltd. All rights reserved.

Keywords: Operations management; Manufacturing objectives and policies; Competitive strengths in manufacturing; Competitive
factories; Empirical research

1. Introduction this activity. Nevertheless, nowadays, a large number

In the past, due to the view that production activity
scarcely contributed to a company's competitiveness,
most companies have conceded little importance to
* Corresponding author. Tel.: +34-98-510-3915; fax: +34-
98-510-3708.
E-mail address: lavella@econo.uniovi.es (L. Avella)
of companies have obtained sustainable competitive
advantages and, consequently, superior results, due to
the manufacturing excellence or superiority obtained
through the development of resources and capabilities
in this area and thus, through the implementation of
certain objectives and policies. In this sense, the grow-
ing role played by production as a key strategic el-
ement for competitive success being recognised, the
companies are faced with the need to develop manu-

0305-0483/99/$ - see front matter # 1999 Elsevier Science Ltd. All rights reserved.
PII: S 0 3 0 5 - 0 4 8 3 ( 9 8 ) 0 0 0 7 3 - 5
498 L. Avella et al. / Omega, Int. J. Mgmt. Sci. 27 (1999) 497±514
facturing strategies which enable them to strengthen
their competitive strategies.
The work reported in this paper forms part of a
broader research project which in turn has enabled us
to ascertain the situation of the Spanish industrial
company in the ®eld of production strategic manage-
ment. Within this research framework there is the
underlying strategic concept of production, that is to
say, the consideration of a production department or
factory as a strategic tool capable of increasing the
competitiveness of the companies. Hence, the level of
strategic development of the production activities of
the large industrial companies (according to the num-
ber of employees) set up in Spain has been analysed,
as well as how far they are from achieving excellence
or superiority in manufacturing. The information
forming the base for this study has been obtained by a
survey aimed at the operations managers of the indus-
trial companies set up in Spain which have more than
200 employees. Given that the proposed aim of the
research framework this paper forms part of, is the
analysis of the manufacturing strategies of the large
industrial companies in Spain, the information
obtained refers to their factories.
Speci®cally, given the extensive amount of literature
on companies successfully competing at an inter-
national level thanks to manufacturing excellence or
superiority, this paper enables us to contrast the hy-
pothesis that the large Spanish industrial companies
which are most competitive in manufacturing are
characterised by the same manufacturing priorities and
policies as the most competitive companies at an inter-
national level thanks to their excellence in this area. In
other words, it is a question of verifying in Spain's
case, the existence of manufacturing objectives and
policies common to the industrial companies which are
most competitive in manufacturing, that is to say,
which are applied, generally, in the companies which
have competitive strengths in manufacturing.
For this purpose we have distinguished the factories
with strengths or advantages in manufacturing in re-
lation to their best competitor (for the manufacturing
priorities taken as a whole, as well as for each of them
considered individually), from those factories which
are not competitive in this area. Using the discriminant
analysis technique and taking 1994 as a reference, the
manufacturing objectives and policies followed in the
past (from the period 1992±1993) and those foreseen
for the future (which are going to be implemented in
1995±1999) have been identi®ed. This enables us to
1
Research on manufacturing strategy has seen a spectacular
growth following Skinner's seminal work published in 1969 in
the Harvard Business Review entitled `Manufacturing: Missing
Link in Corporate Strategy' (see [1]).
distinguish the factories which in 1994 have strengths
over their competitors, for the di€erent manufacturing
priorities, from those factories which are not competi-
tive. Consequently, using this methodology it is poss-
ible to identify the main characteristics of the most
competitive Spanish factories, as opposed to the least
competitive ones.
Given the proposed aim, this work is structured in
the following way. Firstly, the interest and relevance of
the subject under study is justi®ed by reviewing the
theoretical and empirical works which defend the stra-
tegic importance of companies' manufacturing activi-
ties as a determining factor in their competitiveness.
Similarly, we analyse the characteristics of the compa-
nies which are most competitive or reach manufactur-
ing excellence at an international level (`outstanding or
world-class manufacturers'), being successful precisely
due to the maintaining of production-related competi-
tive advantages or strengths. Later, the aims, method-
ology and the main results of the research work are
described; in the same way, the results obtained are
validated. Finally, the most relevant conclusions of the
work are noted.
2. Manufacturing strategy theory
For a long time most companies have given little im-
portance to manufacturing activities and have rele-
gated them to a secondary position compared to the
other departments or functional areas. Traditionally,
manufacturing has been considered as an eminently
technical function, the result of a series of decisions
which are merely routine, operative and based exclu-
sively on obtaining maximum eciency; consequently,
it is presupposed that manufacturing activities barely
contribute to company competitiveness. In this sense,
most companies have overlooked any strategic con-
siderations concerning their production activity and so,
only very few of them have planned and implemented
manufacturing objectives and policies which are expli-
cit and consistent with their competitive strategy.
At the present time, given the dynamism and uncer-
tainty of the competitive environment, it is necessary
to give greater emphasis to production activity, recog-
nising its strategic nature and becoming aware of its
potential contribution to business success. Professor
Wickham Skinner [1] was the ®rst to articulate and
propound the concept of a manufacturing strategy
used to avoid the isolation (and even the incompatibil-
ity) of manufacturing from the company's competitive
strategy1.
In general, most papers on manufacturing strategy
have not explicitly recognised the di€erence between
the process and content of such a strategy.
Nevertheless, recently, the need has become more
 L. Avella et al. / Omega, Int. J. Mgmt. Sci. 27 (1999) 497±514
marked to distinguish, on the one hand, the sequence
or process followed in planning and implementing the
manufacturing strategy in relation to the competitive
strategy and the other functional areas and, on the
other hand, the elements which make up the essence or
content of the manufacturing strategy2, that is the
manufacturing objectives and policies capable of pro-
viding distinctive competencies in this area and conse-
quently providing the company with competitive
advantages.
In relation to the manufacturing strategic planning
process, the conceptual works on the subject consider
that production management should not be limited to
neutralising the potentially negative e€ects of the pro-
duction process on the competitive strategy but rather
can be a fundamental cornerstone for this strategy, at
least on an equal basis with the rest of the departments
or functional areas. Generally, there is the underlying
idea that manufacturing activity can become one of
the company's main competitive advantages as long as
the strategy of this area is coherent with the competi-
2
Although most of the conceptual studies and empirical
research works analyse the process and content of manufac-
turing strategies together, these questions are recorded separ-
ately by Adam and Swamidass [2], Anderson et al. [3], Leong
et al. [4], Marucheck et al. [5], Schroeder et al. [6],
Stonebraker and Leong [7], Swamidass and Newell [8] and
Ward et al. [9].
3
Eciency refers to all the aspects related to costs.
Manufacturing ¯exibility is the speed and ease at which the
production plants are able to respond to changes in demand,
either introducing new products onto the market, modifying
the characteristics of the current products or altering the pro-
duction volumes; all of this in terms of market requirements.
The concept of quality fundamentally includes those aspects
related to the product's characteristics: defect-free products,
customer-perceived quality and durable products. In relation
to delivery, two dimensions are distinguished: reliability rep-
resents ful®lling delivery promises (on-time deliveries) whereas
speed or quickness refers to the shortest possible delivery time
(fast deliveries). Finally, customer service refers to e€ective
after sales service, broad product distribution and product
customization service; given the importance that incorporating
additional services to the product has in the competitiveness
of a large number of industrial companies, in this work ser-
vice has been included as the ®fth manufacturing priority.
4
Skinner [13] considers it impossible to pursue all of the
manufacturing objectives with the same emphasis in the same
factory and so the company will have to choose the priority
for each of them. Hence the manufacturing area, in order to
be more competitive must base its policies on a single `manu-
facturing task' of a fundamental nature so the company can
successfully compete within its sector.
5
For example, it has traditionally been considered that
quality and eciency are incompatible manufacturing objec-
tives and consequently, either high quality products or low
cost manufacturing must be chosen.
499
tive strategy and supports its implementation. For this
purpose the competitive strategy is de®ned ®rst and
based on this, the manufacturing competitive priority
is de®ned; then, the manufacturing policies which sup-
port the chosen priority are implemented.
Consequently, the competitive strategy of the company
(or the strategic business unit) is the factor which
determines the manufacturing strategy, that is to say,
the de®nition and implementation of its competitive
priorities and policies. Hayes and Wheelwright [10] in-
dicate that the end-purpose of a manufacturing strat-
egy is to guide the business towards obtaining the
production capabilities which enable it to reinforce its
competitive strategy with the passing of time.
Consequently, most of the studies published based on
Skinner's seminal work [1] conceive manufacturing
strategy as a natural extension of the company's com-
petitive strategy.
Despite the fact that the approach described above
concerning the production strategic planning process is
generally the most widely accepted, some authors such
as De Meyer and Wittenberg-Cox [11], Leong et al.
[4], Ward et al. [9] and Zahra and Das [12] indicate
that traditionally the possibility has been overlooked
that production provides the company with competi-
tive advantages not only through its close correlation
with competitive strategy (that is to say, acting as a
support for this) but rather as a determining factor of
this. It is a question of considering the manufacturing
resources and capabilities as elements which inspire the
company's competitive strategy and so, as the main
determining factor of its competitive success.
As to the manufacturing strategy content or essence,
two elements are assumed to exist: (a) the manufactur-
ing competitive priorities and (b) the policies or de-
cisions in this area.
Firstly, ®ve competitive priorities may be considered
in manufacturing: cost or eciency, ¯exibility, quality,
delivery and customer service3. Companies can develop
strengths or advantages over their competitors, in re-
lation to each of these priorities. Although generally
speaking, it is upheld that there exist clear incompat-
ibilities between the ®ve manufacturing priorities (and
so it is considered necessary to focus on achieving a
speci®c priority, at the expense of the others)4, the ex-
perience of some companies reveals the possibility of
reaching acceptable levels in the ®ve competitive manu-
facturing priorities at the same time. On this subject,
the works of Corbett and Wassenhove [14], De Meyer
and Wittenberg-Cox [11], De Meyer et al. [15],
Ferdows and De Meyer [16], Ferdows et al. [17] and
Miller and Roth [18] reach the conclusion that it is not
necessary to forego some manufacturing priorities at
the expense of others5, but rather that improvement in
quality lays the foundations for achieving acceptable
levels in the remaining manufacturing priorities and
500 L. Avella et al. / Omega, Int. J. Mgmt. Sci. 27 (1999) 497±514
therefore for successfully competing in all of them at
the same time6. It is observed that the companies fol-
lowing this approach to achieving competitive priori-
ties are among the most competitive companies in
manufacturing at an international level.
In any case, specifying the manufacturing priorities
which strengthen the company's competitive strategy is
the ®rst step in formulating the manufacturing strat-
egy. Subsequently, the company will have to adopt a
con®guration or design of the production system
which enables it to obtain improvements in the desired
competitive priorities. It is therefore necessary to im-
plement a series of policies (or make a series of de-
cisions) which are coherent with the priorities
established. Di€erent authors make di€erent classi®-
cations for the manufacturing policies7. In particular,
the categories devised by Hayes and Wheelwright [10],
Hayes et al. [25] and Wheelwright [24] integrate the
di€erent classi®cations compiled in the literature on
the subject. Hence, in order to identify and plan the
company's manufacturing strategy it is possible to dis-
tinguish between the policies of a structural nature and
those policies a€ecting infrastructures. The policies of
a structural nature require substantial investments,
cause a long-term impact and are dicult to reverse
once they are in place; they include decisions related to
(a) production plant capacity, (b) plant location, (c)
production technology and (d) degree of vertical inte-
gration and nature of the relationship with suppliers.
The infrastructural policies refer to the systems, pol-
icies, procedures and organisation which support the
manufacturing processes and enable them to perform
their function; among these, worthy of note are those
concerning: (a) personnel management, (b) quality con-
6
This alternative is recorded in the works of the mentioned
authors using the term `sand cone' model. In the aim of being
competitive in the ®ve manufacturing priorities, the companies
should follow a certain sequence, given that some improve-
ments lead to others. The most widely accepted model con-
sists of improving, in the ®rst place, quality, then delivery and
¯exibility and, ®nally, lowering manufacturing costs.
7
See the works of Bu€a [19], Fine and Hax [20], Hayes and
Schmenner [21], Hayes and Wheelwright [10], Leong et al. [4],
LeÂvary [22], Romano [23], Skinner [13] and Wheelwright [24].
8
Although at ®rst the companies have focused their atten-
tion on structural-type policies, nowadays the importance of
infrastructural policies is recognised. Hence, for example a
large number of companies are known which have been
capable of developing a powerful competitive advantage or
edge through their internal capabilities and teamwork (even
without having exceptional plants and equipment) but no
company is known which has been capable of developing a
sustainable or lasting competitive edge through technologi-
cally superior equipment alone (see [25]).
9
See [29], p. 137.
trol and guarantee systems, (c) production and inven-
tory planning and control systems, (d) new product
development and (e) organisational structure and de-
sign. The infrastructural policies are linked with
speci®c operative aspects, do not require large capital
investments and allow gradual changes; it is observed
that the companies which are most competitive or
reach highest degrees of excellence in manufacturing
pay great attention to the infrastructural policies
(specially personnel policies) as they form the basis of
long-term competitiveness8.
In conclusion, at the present time companies are
faced with the need to develop manufacturing strat-
egies which enable them to attain their competitive
strategies. Success of manufacturing strategies takes
the form of developing resources and capabilities
which arise from implementing di€erent manufacturing
policies (coherent with the established priorities) and
which provide the company with lasting advantages
over their competitors.
3. Characteristics of `world-class manufacturers'
We proceed to analyse the most relevant and distinc-
tive characteristics of the `outstanding or world-class
manufacturers', that is to say, those companies which
use production as a key element of their competitive
strategy and so their main advantages are derived from
the superiority of their production systems. The works
of Edmondson and Wheelwright [26], Hayes et al. [25],
Huge and Anderson [27], Misterek et al. [28] and Roth
et al. [29] describe in detail the characteristics of these
companies.
Roth et al. [29] understand by `world-class manufac-
turers' those companies which achieve a competitive
advantage or edge thanks to the development and
e€ective use of certain manufacturing capabilities
which are superior to the rest of their competitors;
hence, they use production as a key element to the
company strategy. Achieving manufacturing excellence
means being better than any other company in the
same industry in at least one important aspect of man-
ufacturing. Speci®cally, manufacturing excellence is
de®ned as a dynamic process that provides unique
value, competitive advantage and delight to customers
and suppliers through the development of internal op-
erations capabilities that foster continuous improve-
ments in human assets, technology, materials and
information ¯ows, that are synergistic with the total
business and that provide a sustainable competitive
position in the ®rm's target markets9.
The companies which compete based on the excel-
lence of their production systems maintain de®nite for-
malised manufacturing strategies, coherent with the
general business objectives. Furthermore, it is necess-
 L. Avella et al. / Omega, Int. J. Mgmt. Sci. 27 (1999) 497±514
ary for the companies to develop capabilities in the
di€erent competitive priorities to thus be able to di€er-
entiate themselves from competitors. It is therefore a
question of companies pursuing continuous improve-
ment in all the manufacturing performance indicators:
eciency, quality, ¯exibility, delivery and customer ser-
vice; to be number one in a single manufacturing
dimension does not guarantee success.
These companies reinforce those activities which fa-
cilitate, stimulate and favour interaction across the
di€erent functional areas of the company: R&D, man-
ufacturing and marketing. It is necessary that the com-
pany's long-term objectives, strategies and plans be
known by the employees at all levels throughout the
organisation; hence, communication and the pursuit of
common aims by the personnel across the di€erent
functional areas of the company make up one of the
determining factors for the company's success.
The obtaining of high quality levels proves to be a
top priority and a key element in obtaining the other
manufacturing priorities. Quality is understood as
meeting the customer's needs and is the primary orien-
tation of all employees. In order to ensure the quality
of the product, there is a permanent commitment in
control and process variation reduction (inspection
takes place at the source or origin); likewise, tech-
niques such as total quality management, quality cir-
cles or preventive maintenance are implemented.
As mentioned in Section 2 it is observed that the
`outstanding or world-class manufacturers' base them-
selves on the development of policies which a€ect in-
frastructures, more than on policies of a structural
nature. In this sense, it is revealed that the infrastruc-
tural policies in manufacturing establish the basis for
the companies' long-term competitiveness. In this
sense, special attention is paid to personnel policies;
the organisational characteristics of the companies and
the employees working in them is one of the determin-
ing factors of manufacturing excellence. `World-class
manufacturers' are managed by leaders who have a
clear vision of the future and who share this vision
with all their employees, communication between all
the personnel throughout the organisation is seen as
the critical element to the future improvement in com-
petitiveness.
Included in the concept of manufacturing excellence
is the underlying commitment and total dedication to
customers. Determining what the customer needs and
wants and the value-adding product attributes as well
as creating manufacturing capabilities to meet these
needs are activities which are characteristic of `out-
standing manufacturers'.
These companies adopt a philosophy of waste re-
duction, maintain frugal operations, pay attention to
detail, eliminate ineciency and accept simple sol-
utions (wherever possible).
501
`Outstanding manufacturers' tend to have a relation-
ship of mutually bene®cial cooperation with their sup-
pliers. Supply coordination is based on collaboration
with suppliers and their participation is vital in turning
manufacturing into the company's main competitive
advantage.
In order to maintain a competitive advantage based
on manufacturing excellence, constant e€ort is necess-
ary in the development of new products and processes.
The coordinated integration of all the functional areas
involved is preferred to the traditional sequential devel-
opment. Management should focus on product inno-
vation and manufacturing processes development,
together, based on pluri-functional integration.
Competitive manufacturers have vast experience in
the design and development of production equipment.
Although `outstanding companies' continue to buy a
large part of the equipment from outside suppliers,
they produce a part internally in order to guarantee
themselves a pioneer technological position. Likewise,
a signi®cant e€ort is made in the introduction of new
information technologies in the factories.
In short, the main world-wide competitors, increas-
ingly tend to adopt what are nowadays the emerging
principles of operations excellence: continuous
improvement, elimination of wasting, simplicity, re-
duction of the manufacturing lead time, total quality
management, worker empowerment, teamwork,
improving cooperation with suppliers and customer
orientation of the company.
4. Research aims and methodology
Having reviewed the theoretical bases of the stra-
tegic importance of production as well as the charac-
teristics of the companies which are most competitive
or excellent in manufacturing at an international level
(`world-class manufacturers'), the objectives pursued
and methodology used in this work based on the main
Spanish industrial companies are reported as follows.
The question posed in the previous sections justi®es
the interest currently aroused by production strategic
planning. Speci®cally, this work forms part of a
research project focused on the study of production
strategic management in the large Spanish industrial
company. Although for some years studies related to
this research line have been undertaken in American
and European companies, similar studies on the
Spanish industrial company do not exist.
Consequently, this is the broadest database on the
manufacturing strategies of the Spanish industrial com-
pany.
The database used in this work has been designed
based on the information from the structured surveys
mailed to the industrial companies set up in Spain with
502 L. Avella et al. / Omega, Int. J. Mgmt. Sci. 27 (1999) 497±514
Table 1
Manufacturing priorities and objectives
Manufacturing priorities
(1) Cost or eciency
(2) Flexibility
(3) Quality
(4) Delivery
(5) Customer service
the greatest number of employees. The study popu-
lation is made up of the set of manufacturing indus-
trial companies, whether national or foreign, which
conduct their activity in all the Spanish territory and
which in 1994 (reference period for this research) had
more than 200 employees, according to the directory
of Duns and Bradstreet International Consultancy.
The total size of the study population is 1,104 compa-
nies. As the companies implement their manufacturing
strategies at the level of the individual factory and con-
sidering that a company may have two or more plants
with di€erent strategies, the factory has been taken as
the unit of analysis. For this reason, each company
has been asked for information concerning each pro-
duction plant set up in Spain and thus, the question-
naire should be ®lled in by the operations manager.
Our survey has been designed taking as a reference
an international survey on the manufacturing strategies
of the large manufacturing companies, carried out
annually since 1983 as a base for the research project
entitled `Global Manufacturing Futures Survey
Project' (GMFSP). This project is carried out by the
Universities of Boston (USA), Waseda-Tokyo (Japan)
and INSEAD (France) working in collaboration, each
conducting the surveys on industrial companies of the
United States, Asia and Europe, respectively. In par-
ticular, the de®nitive survey used in this work has been
redesigned and adapted to the speci®c characteristics
of the Spanish industrial company based on (a) the
survey used by INSEAD in 1994 as a base for
Manufacturing objectives
(1) low cost
(2) rapid changes in current designs
(3) quick introduction of new products
(4) rapid changes in current production volumes
(5) rapid changes in product mix
(6) broad product line
(7) defect-free products
(8) customer-perceived quality
(9) durable products
(10) fast deliveries
(11) reliable deliveries
(12) e€ective after sales service
(13) broad product distribution
(14) product customization service
`European Manufacturing Futures Survey Project',
[30], and (b) the survey conducted from January to
June 1990 by GMFSP on a sample of 500 companies
from USA, Japan and Europe, a survey which is pub-
lished in [31].
The research was initiated in May 1995 with the
questionnaire design; this consists of 175 items, organ-
ised into three sections: (a) company pro®le, (b) com-
petitive strategy and (c) manufacturing objectives and
policies. To carry out this work we have basically used
the information on manufacturing objectives and pol-
icies of the companies analysed. In this sense, ®ve gen-
eric manufacturing priorities (that is cost or eciency,
¯exibility, quality, delivery and customer service) have
been further speci®ed into 14 objectives which are
compiled in Table 1. In the same way, we have con-
sidered 45 possible manufacturing policies which ®t
into at least one of the manufacturing policies of a
structural nature and in infrastructures identi®ed in the
literature; the classi®cation of the di€erent manufactur-
ing policies into di€erent levels is shown in Table 2.
Hence, taking 1994 as a time reference, we have ana-
lysed the situation of each factory in relation to the 14
objectives and 45 manufacturing policies identi®ed in
the survey. For each of the manufacturing objectives
we have evaluated the degree of strength or advantage
the factory has in 1994 over its best competitor, the
importance given in the previous two years (1992±
1993) and the importance foreseen for the following
®ve years (1995±1999). For each of the manufacturing

Table 2
Manufacturing policies at di€erent levels
Policies of a structural capacity
nature
Policies in infrastructures
L. Avella et al. / Omega, Int. J. Mgmt. Sci. 27 (1999) 497±514
location
technology
vertical integration/relations with
suppliers
personnel management
quality control and guarantee
systems
production and inventory
planning and control systems
development of new products
organisational structure
503
(1) recon®guration of factory lay-out
(2) factory reconditioning and/or reorganisation
(3) investments in plants, equipment and R&D
(4) expanding factory capacity
(5) reducing factory size
(6) factory location and relocation
(7) computer aided design (CAD)
(8) computer aided manufacturing (CAM)
(9) robots
(10) ¯exible manufacturing systems (FMS)
(11) group technology
(12) subcontract part of the current manufacturing processes
(13) cooperation with suppliers
(14) integration of information systems with suppliers
(15) increase variety of tasks to be carried out by workers
(worker job enlargement)
(16) increase workers' responsibility (worker empowerment)
(17) worker training
(18) management training
(19) inter-functional work teams
(20) total quality management
(21) zero defects
(22) quality circles
(23) statistical quality control
(24) preventive maintenance
(25) continuous improvement of the current manufacturing
processes
(26) de®nition of production objectives
(27) improvement in production and inventory control systems
(28) reduction in machine set-up time
(29) reduction in manufacturing lead time
(30) purchases management
(31) activity based costing (ABC)
(32) development of new manufacturing performance measures
(33) value analysis and product redesign
(34) concurrent engineering
(35) development of new products
(36) development of new processes for new products
(37) development of new processes for current products
(38) reduction in number of workers
(39) decision decentralisation
(40) improving management-worker labour relations
(41) teamwork
(42) improving quality of working conditions
(43) integrating of production information systems
(44) integrating production information systems with distributors
(45) integration of information systems with other departments
or functional areas
504 L. Avella et al. / Omega, Int. J. Mgmt. Sci. 27 (1999) 497±514
policies we have evaluated the degree of emphasis
placed in the previous two years (1992±1993) and the
emphasis foreseen for the following ®ve years (1995±
1999). All of these valuations have been made by
means of Likert scales from 1 to 7. If the factory is in a
very unfavourable position compared to the best com-
petitor as to a speci®c manufacturing objective, it is
given a score of 1; if the factory is in the best possible
competitive situation it is evaluated with a 7.
Therefore, for each manufacturing objective or policy a
score of 1 implies that hardly any importance has been
10
It is based on the internal consistency of a test, that is to
say, on the average correlation of the constituent items, if
these are treated to possess a standard deviation of 1, or in
the average covariance, if the items are not standardised. It is
assumed that the items on a scale or test are positively corre-
lated with the others because they are measuring the same
reality. Cronbach's Alpha coecients has di€erent interpret-
ations: (a) it can be viewed as the correlation between the
scale or test used and the rest of the possible tests or scales
which contain the same number of items and can be con-
structed within a hypothetical universe of items which
measure the same characteristic and (b) it shows the corre-
lation between the score a person gives in the current scale or
test and the score he would have given should he be asked the
whole universe of possible items. As this is a correlation coef-
®cient, its value oscillates between 0 and 1; the closer the
value of this coecient is to 1, the greater the reliability of
the scale used.
11
Most of Cronbach's Alpha values for each scale exceed
the 0.5 to 0.6 criterion generally considered adequate for ex-
ploratory work. Only the coecient value of the items that
measure the degree of emphasis placed in the previous two
years (1992±1993) on the customer service objective is less
than 0.5 (0.4349). Likewise, it is necessary to highlight that
the Cronbach's Alpha coecient is sensitive to the number of
items, that is to say, the lower the number of items measuring
the same reality, the lower the value of the coecient tends to
be.
12
It is necessary to point out that four companies have pro-
vided data on two factories and one company has sent infor-
mation on three factories; the other companies collaborating
in this research work have only completed one survey as (a)
they have only one factory in Spain or (b) they consider that
they develop similar strategies in all their factories located in
Spain. Analysing the replies of the companies that ®lled in
two or more surveys, it is observed that each of the factories
is made up of a strategic business unit with a speci®c and
independent competitive strategy. For this reason and given
that, in addition, the majority of the companies only ®ll in
one survey, in this work we identify each survey with a fac-
tory, strategic business unit or company (mutually inter-
changeable), following the same criterion adopted in similar
international studies. Hence, information has been obtained
on 114 factories, each of which belongs to a di€erent strategic
business unit or company although some of them form part
of the same group or corporation. Consequently, the sample
error is 8.9%, the con®dence level being 95.5%.
given, whereas a response of 7 re¯ects a heavy emphasis
on this objective or policy. De®nitively, the current
competitive strengths, as well as the past and future
objectives and policies of the factories under analysis
have been identi®ed. The coecient used to check the
reliability of the scale which measures the manufactur-
ing objectives and policies considered is Cronbach's
Alpha10. In this sense, Table 3 compiles the correlation
coecients, it being observed that the values obtained
are high enough and thus validating the reliability of
the scale used11. Consequently, it can be deduced that
it is suciently appropriate to measure the manufac-
turing objectives and policies of the companies under
analysis by means of the items proposed.
In order to test the viability of the questionnaire
designed, in July a pre-test was carried out on a small
sample of industrial companies. In September the de-
®nitive questionnaire was mailed to all of the compa-
nies forming the objective population or study
universe. The questionnaires were sent to the head-
oce in Spain of each of the companies in the sample
and were addressed to a company manager so that he,
in turn, might ask the operations manager of each of
the factories that the selected companies have in Spain
(should there be several) to ®ll it in. Throughout
November a follow-up study monitored the stage at
which the mailed surveys were at, establishing January
31, 1996 as the deadline to receive the surveys and
begin processing the information. In February 1996 a
detailed review was made of the surveys received,
which caused many of these to be rejected due to con-
taining information which was inconsistent with the
research aims. Following this detailed review of the
surveys returned, the database was designed, consisting
of information on 114 valid surveys, it being con-
sidered that the sample is suciently representative12.
Table 4 shows the technical data of the research work,
that is to say, the objective population, the geographi-
cal scope, the time reference, the sample unit, the
sample size, the sample error, the con®dence level, the
duration of the ®eld work and the pro®le of the man-
ager surveyed. The respondents have an average ex-
perience of seven years working in their present post.
Almost 90% of the companies making up the
sample have one or two factories in Spanish territory;
the rest possess between three and ten production
plants. Similarly, the sample includes factories of com-
panies representative of all the manufacturing sectors
appearing in the 1993 Spanish Classi®cation of
Economic Activities (CNAE-93) with the exception of
tobacco, leather and footwear industries. The indus-
trial sectors with greater representation in the database
are the chemical industry (19.3%), food products and
drinks (9.6%), metallurgy (7.9%), machinery and
mechanical equipment construction (7.9%) and manu-
facturing of other transport material (7.9%).
 L. Avella et al. / Omega, Int. J. Mgmt. Sci. 27 (1999) 497±514 505

Table 3
Cronbach's alpha reliability coecients

Scales of the manufacturing objectives

1992±1993 1994 strength 1995±1999

objectives or advantage objectives

Cost (1 item) NAa NAa NAa

Flexibility (5 items) 0.7835 0.8256 0.5416
Quality (5 items) 0.7178 0.7821 0.6021
Delivery (2 items) 0.8359 0.7693 0.7497
Service (3 items) 0.4349 0.5482 0.5148
Manufacturing objectives as a whole (14 items) 0.8600 0.8795 0.7447

Scales of the manufacturing policies

1992±1993 1995±1999
policies policies

Capacity (5 items) 0.6695 0.5519

Location (1 item) NAa NAa
Technology (5 items) 0.7380 0.7357
Vertical integration/relations with suppliers (3 items) 0.6586 0.5971
Personnel management (5 items) 0.8777 0.8177
Quality control and guarantee systems (6 items) 0.8678 0.7659
Production and inventory planning and control systems (7 items) 0.8187 0.7757
Development of new products (5 items) 0.8439 0.8295
Organisational structure (8 items) 0.8252 0.7770
Manufacturing policies as a whole (45 items) 0.9526 0.9373

a
NA: not applicable.

On the other hand, almost 60% of the companies
analysed are devoted to transforming industrial pro-
ducts, with a high level of standardisation of products
and entailing processes13. Furthermore, materials are a
relatively signi®cant factor in the total costs, represent-
ing almost 60% of these costs; whereas direct labour
13
In over 60% of the plants analysed, mass production pro-
cesses were used aimed at eciently manufacturing large
volumes of standardised and homogeneous products in a
narrow product line.
14
The relative cost contribution of direct work force in the
total manufacturing costs oscillates between 1 and 58%,
19.5% being its average value. In 54.3% of the companies
analysed the costs of direct work force do not exceed 20% of
the total manufacturing costs. In similar studies to that pre-
sented in this work, performed in large American and
European industrial companies, it has been observed that the
costs of materials oscillated between 53 and 57% of the total
manufacturing costs; the costs of direct work force represent
between 17 and 20%; the energy costs are approximately 5%
of the total costs; ®nally, general costs oscillate between 22
and 25% of the total manufacturing costs. In view of these
data it is deduced that the Spanish companies maintain a
manufacturing costs structure similar to that of the European
and American companies.
costs make up 19.5%, general costs 18% and energy
6.5%14.
Given the information obtained from the question-
naire (concerning the manufacturing objectives and
policies of the companies analysed) and taking the
extensive literature existing on the strategic conception
of production and manufacturing excellence as a refer-
ence (concepts which have been revised in Sections 2
and 3), this paper allows us to verify the hypothesis
that the large Spanish industrial companies with the
greatest competitive strengths in manufacturing are
implementing some of the manufacturing objectives
and policies which are characteristic of `world-class
manufacturers'.
In short, basing the study on 1994, we have ident-
i®ed the past and future objectives and policies as well
as the current competitive strengths of the factories
under analysis; in particular, the term `manufacturing
strengths' refers to the factory's position compared to
its best competitor, for each of the ®ve priorities con-
sidered separately, as well as all of them taken
together.
In this study, the 114 factories making up the data-
base are grouped into competitive and non-competitive
categories, taking into account the strength they have
506 L. Avella et al. / Omega, Int. J. Mgmt. Sci. 27 (1999) 497±514
Table 4
Research data
Characteristics
Universe, objective population or reference population
Geographical ®eld
Time reference
Sample unit
Sample size
Sample error
Con®dence level
Date of ®eld work
Manager surveyed
in relation to their best competitors concerning (1) the
manufacturing priorities considered as a whole and (2)
each of the ®ve generic manufacturing priorities, taken
separately (that is cost or eciency, ¯exibility, quality,
delivery and customer service). Hence, six factory
classi®cations are established; one of them is of a gen-
eral nature and distinguishes between competitive and
non-competitive factories in an overall sense (that is to
say, on average for the ®ve manufacturing priorities as
a whole) whereas the other ®ve categories are more
speci®c: (a) competitive and non-competitive in terms
of cost, (b) competitive and non-competitive in terms
of ¯exibility, (c) competitive and non-competitive in
terms of quality, (d) competitive and non-competitive
in terms of delivery and (e) competitive and non-com-
petitive in terms of customer service.
Once the factories have been classi®ed into the
above-mentioned categories, we have researched the
di€erences between competitive and non-competitive
factories in 1994, analysing, with this aim in mind, the
manufacturing objectives and policies in the past (from
the 1992±1993 period) and those of the future (which
are going to be implemented in 1995±1999). To ident-
15
Discriminant analysis is a technique enabling the determi-
nation of the di€erences existing, for a series of variables,
between the elements belonging to di€erent groups established
a priori, it being convenient for the size of groups de®ned to
be as homogeneous as possible. By this analysis, it is deter-
mined which are the original variables contributing to a
greater extent to explain the di€erences among the established
groups; these variables are termed discriminating variables.
16
In the ®rst instance, we considered the possibility of per-
forming a factor analysis which would allow us to summarise
all the initial information in a lower number of factors and
use these as discriminant analysis inputs. However, the fact
that a signi®cant part of the initial information was lost
(given that the variance explained by the factor analyses oscil-
lated around 60%) led us to reject this procedure. To perform
all the statistical analyses the SPSS software (Version 6.0.1)
was used.
Survey
1,104 industrial companies with over 200 employees
all Spanish territory
annual=®nancial year of 1994
production plants or factories
114 valid surveys
28.9%
95.5%
July 4 (1995)±January 31 (1996)
operations manager/other corporate or factory manager
ify the di€erences between the six di€erent dichotomic
factory classi®cations, the discriminant analysis tech-
nique has been used15; the stepwise variables selection
method has been applied in the resolution of the discri-
minant models using Wilks' Lambda as the criterion
for selection16. This enables us to distinguish the fac-
tories which in 1994 have strengths over their competi-
tors, for the di€erent manufacturing priorities, from
those which are not competitive. Consequently, using
this methodology it is possible to identify the main
characteristics of the most competitive Spanish fac-
tories, as opposed to the least competitive ones.
5. Research results
The main results concerning the di€erentiating
objectives and policies of the competitive and non-
competitive Spanish factories are then analysed as fol-
lows; based on this information we have identi®ed the
strategies of the most competitive Spanish factories.
Given the valuation of each factory as to the com-
petitive strengths it had in 1994 in each of the fourteen
manufacturing objectives proposed, the 114 factories
analysed have been classi®ed into competitive and
non-competitive categories, concentrating on two cri-
teria: (a) average strength in the fourteen manufactur-
ing objectives taken as a whole and (b) strength in
each of the ®ve generic priorities taken separately.
Consequently, six di€erent dichotomic classi®cations
arise.
In this sense, those factories in which the average
strength in the fourteen manufacturing objectives
taken as a whole is higher than 4 (representing the
average value of the Likert scale from 1 to 7) are con-
sidered to show competitive consistency or stability;
hence, according to this criterion the factories are
classi®ed into competitive/non-competitive (overall) in
manufacturing. Following the same criterion, the fac-
tories have been classi®ed in terms of their strength in
each of the ®ve generic manufacturing priorities; conse-
 L. Avella et al. / Omega, Int. J. Mgmt. Sci. 27 (1999) 497±514
quently ®ve classi®cations are produced: competitive/
non-competitive in terms of cost, competitive/non-com-
petitive in terms of ¯exibility, competitive/non-competi-
tive in terms of quality, competitive/non-competitive in
terms of delivery and competitive/non-competitive in
terms of customer service.
For each of the six classi®cations indicated, two dis-
criminant analyses are formulated determining the past
and future manufacturing objectives which enable us
to distinguish the competitive factories from the non-
competitive ones. In each case, the results based on the
discriminant analysis have been validated by a cluster
analysis of the two groups in which the discriminant
variables are considered as grouping criteria, compar-
ing the composition of these two groups with that
resulting from the discriminant analysis17.
Each row in Table 5 shows data on the signi®cance
of each of the discriminant analyses performed: (a)
Wilks' Lambda, which is the contrast statistic of the
di€erences of the means between the groups and is cal-
culated as the quotient between the intra-groups var-
iance and the total variance, (b) the signi®cance level
of the di€erences between the means of the groups, (c)
the number and percentage of factories which the dis-
criminant analysis correctly classi®es, (d) the number
and percentage of factories which the discriminant and
cluster analyses classify in the same group (whether
correct or not), (e) type 0 error, that is the number
and percentage of non-competitive factories (or
belonging to group 0) which the discriminant analysis
classi®es as competitive (or belonging to group 1) and
(f) type 1 error, that is to say the number and percen-
tage of competitive factories (or belonging to group 1)
which the discriminant analysis classi®es as non-com-
petitive (or belonging to group 0).
As can be seen in Table 5, the values of Lambda
statistic oscillate around 0.5, with the exception of the
analyses for competitiveness in costs, whose values are
17
In this way, obtaining similar results by applying these
two statistical techniques (which have the same end-purpose,
but use a di€erent methodology) contributes a greater signi®-
cance level to the results obtained.
18
These are some of the results contained in [32].
19
In the remaining companies either all the departments par-
ticipate equally or else the greater responsibility in developing
the competitive strategy falls on top management (corporate
development, executive committee or control and planning).
20
Only in three of the cases analysed is it considered that
the production department does not provide any competitive
advantage to the company; it is ®tting to interpret that in
these companies the production department hardly has a stra-
tegic nature and its role is limited to the operation ®eld (that
is to say, transforming raw material into ®nished products)
without these operations positively in¯uencing the obtaining
of the competitive objectives.
507
perceptibly higher (about 0.8%), being, in all cases
totally signi®cant. It is possible to conclude, therefore,
that in accordance with the analysis of variance results,
the groups are not excessively homogeneous (on aver-
age half the sample variance is internal to the groups),
but the di€erences which exist among them, despite
not being very great, are statistically signi®cant, just as
shown by the analysis of the second column in Table
5. If we observe the results obtained by the discrimi-
nant models as to the correct classi®cation of the fac-
tories, it is possible to support the previous conclusion
in the sense that the less powerful model correctly clas-
si®es 67.54% of the sample, the results oscillating
around 85% of success in classi®cation. Analysing the
last two columns in the table enables us to point out
that type 0 error is greater than type 1 error, which
means that it is more probable that a non-competitive
factory is classi®ed as competitive than vice versa. The
results obtained in the cluster analysis appear in the
fourth column, the observation of which enables us to
con®rm that the results obtained by both models are
quite similar. Therefore it is possible to conclude that
the discriminant variables are relatively signi®cant.
Speci®cally, the cluster and discriminant analyses clas-
sify in the same way (whether correctly or incorrectly)
between 73.68% (84 factories) and 92.98% (106 fac-
tories).
Before describing the characteristics of the most
competitive factories, compared to the least competi-
tive ones, it is necessary to point out that, in general,
Spanish companies are not using production as a com-
petitive weapon18. In almost 70% of the cases ana-
lysed, some of the departments or functional areas of
the company play a key role in developing their com-
petitive strategy19. The marketing and research and
development departments are the ones which play a
decisive role in developing competitive strategy; these
are followed in order of importance by the depart-
ments of production, purchases management or logis-
tics, quality and personnel. Similarly, it is observed
that only in a small number of companies (less than
20% of the total valid cases), does the production
department play a key role in developing the competi-
tive strategy of the company (whether alone or else
together with the departments of R&D, quality, pur-
chases management or marketing)20. Nevertheless, it is
possible to state that its participation is similar to that
of the other functional areas.
In over 40% of the cases, some of the departments
play a more important role than the others in imple-
menting the company's competitive strategy; in the rest
of the companies, either all the departments participate
in strategic implementation to an equal extent or else
the greater responsibility is exercised by top manage-
ment (corporate development, executive committee or
control and planning). In less than 10% of the total
 508

Table 5
Signi®cance of the discriminant analysis of manufacturing competitiveness in 1994

Wilks' Signi®cance Number of Number of Type O error Type 1 error

Lambda level cases correctly cases correctly (group O (group 1
classi®ed by classi®ed by factories factories
discriminant discriminant and incorrectly incorrectly
analysis cluster analyses classi®ed)a classi®ed)a

Current average competitiveness in manufacturing/objectives and policies previous two years 0.509763 0.0000 106 (92.98%) 96 (84.21%) 4 (19%) 4 (4.%)
Current average competitiveness in manufacturing/objectives and policies following ®ve years 0.546297 0.0000 108 (94.74%) 106 (92.98%) 6 (28.6%) 0
Current competitiveness in cost/objectives and policies previous two years 0.823659 0.0001 80 (70.18%) 96 (84.21%) 24 (55.8%) 10 (14.1%)
Current competitiveness in cost/objectives and policies following two years 0.810338 0.0000 77 (67.54%) 94 (82.45%) 29 (67.4%) 8 (11.3%)
Current competitiveness in ¯exibility/objectives and policies previous two years 0.646969 0.0000 95 (83.33%) 103 (90.35%) 14 (43.8%) 5 (6.1%)
Current competitiveness in ¯exibility/objectives and policies following ®ve years 0.593302 0.0000 97 (85.09%) 102 (89.47%) 14 (43.8%) 3 (3.7%)
Current competitiveness in quality/objectives and policies previous two years 0.480928 0.0000 105 (92.11%) 93 (81.57%) 6 (26.1%) 3 (3.3%)
Current competitiveness in quality/objectives and policies following ®ve years 0.619293 0.0000 97 (85.09%) 95 (83.33%) 11 (47.8%) 6 (6.6%)
Current competitiveness in delivery/objectives and policies previous two years 0.498421 0.0000 102 (89.47%) 84 (73.68%) 8 (30.8%) 4 (4.5%)
Current competitiveness in delivery/objectives and policies following ®ve years 0.612838 0.0000 98 (85.96%) 100 (87.71%) 12 (46.2%) 4 (4.5%)
Current competitiveness in customer service/objectives and policies previous two years 0.583872 0.0000 96 (84.21%) 89 (78.07%) 14 (40%) 4 (5.1%)
Current competitiveness in customer service/objectives and policies following ®ve years 0.542036 0.0000 98 (85.96%) 89 (78.07%) 11 (31.4%) 5 (6.3%)
L. Avella et al. / Omega, Int. J. Mgmt. Sci. 27 (1999) 497±514

a
Group 1 is made up of the competitive factories and Group 0 of non-competitive factories.
 L. Avella et al. / Omega, Int. J. Mgmt. Sci. 27 (1999) 497±514
valid cases the production department plays a more
important role than the rest of the functional areas in
implementing the company's competitive strategy
(whether alone or together with the departments of
R&D, quality, purchases or marketing).
On the other hand, it is observed that in 95% of the
companies, explicit manufacturing strategic objectives
are established and, in the vast majority, these objec-
tives are (formally) written down or partly written
down; in general, the manufacturing objectives are for-
mulated on an annual basis. In over half the compa-
nies which possess a de®nite and formalised
manufacturing strategy, the formulation of such a
strategy falls basically on top management and conse-
quently the production management and workers do
not participate in establishing the objectives which
they must pursue. It would be hoped that if manufac-
turing played an important strategic role in the compa-
nies, the objectives of this area would be formulated
within the production department or else in collabor-
ation with top management, taking into account the
resources and capabilities related to manufacturing, as
well as the general strategic objectives of the company.
These data prove that in 90% of the cases the pro-
duction department participates in the developing as
well as the implementing of the company's competitive
strategy, the participation of this department being
similar to that of the other functional areas.
Consequently, it seems to be inferred that, although
the main competitive advantage of the companies
under analysis does not stem from manufacturing
excellence, the production departments of these compa-
nies are ceasing to be relegated to a secondary position
in strategic planning.
De®nitively, the data we have on the process fol-
lowed by the companies analysed to plan their manu-
facturing strategies in relation to the competitive
strategy and the other functional areas, enable us to
arm that, in general, Spanish companies formulate
their manufacturing strategies based on the competitive
strategy established by top management. The oper-
ations managers hardly participate in strategic plan-
ning and consequently the production capabilities are
not taken into account when it comes to formulating
the company's competitive objectives.
Nevertheless, despite the fact that in most of the
Spanish companies, production is not the key element
in formulating the competitive strategy (that is to say,
production strategy is not a determining factor in
business competitiveness), it is observed that the objec-
tives and policies implemented in the past and foreseen
for the future in the most competitive Spanish factories
are coherent with the strategy content of the compa-
nies which are excellent in manufacturing, although it
is true that they only contemplate part of all the pol-
icies developed by the so-called `outstanding or world-
509
class manufacturers'. Hence, the most competitive
Spanish factories are increasingly conceding greater
strategic importance to their manufacturing activities
and are developing priorities and policies which lead to
manufacturing excellence (despite the fact that the
companies do not fully exploit their production capa-
bilities).
Table 6 shows the discriminant equations of each of
the models, as well as centroid values for each group.
In each model the discriminant score obtained for each
factory in terms of the variables selected as discrimina-
tors enables them to be classi®ed into one group or
another. The relative importance of a discriminant
variable and the nature of its e€ect (positive or nega-
tive) is de®ned, in each model, by the value and sign
of its standardised coecient. The value of the cen-
troid, for each group is the mean value of the discrimi-
nant scores obtained for all the companies classi®ed in
that group.
In this sense, observing Table 6 enables us to point
out that the factories which in 1994 are on average
most competitive in the entirety of manufacturing priori-
ties have placed in the previous two years (1992±1993)
greater importance than the least competitive factories,
on the objectives of the quick introduction of new pro-
ducts and manufacturing of a broad product line, as
well as on the policies of expanding factory capacity
and the statistical quality control programmes. In the
same way, they are distinguished from the least com-
petitive factories in the greater emphasis they try to
place in the following ®ve years (1995±1999) on the
objectives of carrying out rapid changes in production
volumes (rapid volume changes), manufacturing of a
broad product line and their broad product distri-
bution, as well as on implementing zero defect pro-
grammes.
If we focus on the analysis of each of the ®ve com-
petitive priorities of manufacturing, it is possible to in-
dicate, in the ®rst place, that the factories which are
most competitive in cost in 1994 are di€erent from
those which are least competitive in this priority in the
greater emphasis given in the previous two years
(1992±1993) to the objective of minimising cost (low
cost) as well as the policies related to expanding the
factory capacity and purchase management pro-
grammes. Similarly, these factories are distinguished
from the least competitive in cost in the greater
emphasis they are planning to place in the following
®ve years (1995±1999) on the objective of lowering
product cost and on policies of decentralising pro-
duction decisions (decisions decentralisation).
The factories which are most competitive in ¯exibility
in 1994 are di€erentiated from the least competitive in
the greater emphasis made in the previous two years
(1992±1993) on the objectives of quickly introducing
new products and manufacturing of a broad product
 510

Table 6
Discriminant functions of manufacturing competitiveness in 1994

Discriminant equations Centroids

group 0a group 1a

Current average competitiveness in manufacturing/objectives and policies Z = 0.63970 quick introduction of new products+0.40988 broad ÿ2.04554 0.46190
previous two years product line+0.33264 expanding factory capacity+0.58500
statistical quality control
Current average competitiveness in manufacturing/objectives and policies Z = 0.61116 rapid volume changes+0.33279 broad product ÿ1.89050 0.43153
following ®ve years line+0.31709 broad product distribution+0.35455 zero defects
Current competitiveness in cost/objectives and policies previous two years Z = 0.51840 low cost+0.58372 expanding factory capacity+0.51996 ÿ0.58932 0.35691
purchases management
Current competitiveness in cost/objectives and policies following ®ve years Z = 0.87008 low cost+0.50797 decisions decentralisation ÿ0.61178 0.37581
Current competitiveness in ¯exibility/objectives and policies previous two years Z = 0.63781 quick introduction of new products+0.57519 broad ÿ1.17207 0.45739
product line+0.40990 expanding factory capacity
Current competitiveness in ¯exibility/objectives and policies following ®ve years Z = 0.48521 rapid volume changes+0.75855 broad product line ÿ1.30553 0.51577
Current competitiveness in quality/objectives and policies previous two years Z=ÿ0.60693 low cost+0.62517 quick introduction of new ÿ2.04827 0.51769
products+0.58846 durable productsÿ0.48254 product customization
service+0.32509 improving management-worker labour
relations+0.27029 zero defects+0.33031 reduction in manufacturing
lead time
Current competitiveness in quality/objectives and policies following ®ve years Z=ÿ0.49327 low cost+0.64953 durable products+0.38289 ÿ1.53719 0.39284
statistical quality control+0.50161 development of new processes for
new products
Current competitiveness in delivery/objectives and policies previous two years Z = 0.39831 quick introduction of new productsÿ0.36542 defect-free ÿ1.82929 0.54047
products+0.83262 reliable deliveriesÿ0.36129 total quality
management+0.78299 statistical quality controlÿ0.40368 improving
production and inventory control systems+0.36842 reduction in
manufacturing lead time
Current competitiveness in delivery/objectives and policies following ®ve years Z = 0.72370 reliable deliveries+0.38195 broad product ÿ1.47798 0.41988
distribution+0.47194 statistical quality control
L. Avella et al. / Omega, Int. J. Mgmt. Sci. 27 (1999) 497±514

Current competitiveness in customer service/objectives and policies previous
two years
Current competitiveness in customer service/objectives and policies following
®ve years
Z = 0.51718 e€ective after sales service+0.43930 broad product ÿ1.25716 0.55697
distribution+0.35440 expanding factory capacity+0.31114 factory
location and relocation+0.45126 statistical quality control
Z = 0.55581 e€ective after sales service+0.64642 broad product ÿ1.3599 0.61025
distribution+0.39598 product customization service

a
Group 1 is made up of the competitive factories and group 0 of the non-competitive ones.
 L. Avella et al. / Omega, Int. J. Mgmt. Sci. 27 (1999) 497±514
line, as well as on the policies of expanding factory ca-
pacity. In the same way, they are distinguished from
the factories which are least competitive in ¯exibility in
the greater emphasis they are going to give in the fol-
lowing ®ve years (1995±1999) to the objectives of
quickly carrying out changes in production volumes
and of manufacturing a broad product line.
The factories which are most competitive in quality in
1994 di€er from the least competitive in the greater
emphasis conceded in the previous two years (1992±
1993) to the objectives of quickly introducing new pro-
ducts and manufacturing durable products and to the
policies of improving labour relations between manage-
ment and workers, implanting zero defect programmes
and reducing the manufacturing lead time; in the same
way, they are di€erentiated in the lesser importance
given to the objectives of lowering cost and product
customization service. On the other hand, these fac-
tories are distinguished from the least competitive in
quality in the greater emphasis they are going to make
in the following ®ve years (1995±1999) on the objective
of manufacturing durable products and on the policies
concerning development of new processes for new pro-
ducts and implementing statistical quality control, as
well as in the lesser importance they are going to give
to the objective of low cost manufacturing.
The factories which are most competitive in delivery
in 1994 di€er from the least competitive in the greater
emphasis given in the previous two years (1992±1993)
to the objectives of the quick introduction of new pro-
ducts and reliable deliveries and to the policies of
implementing statistical quality control and reduction
of the manufacturing lead time; similarly, they di€er in
the lesser importance conceded to the objective of
manufacturing defect-free products and the policies re-
lated to total quality management and investments in
improving production and inventory control systems.
Furthermore, they are distinguished from the least
competitive in delivery in the greater emphasis they are
going to make in the following ®ve years (1995±1999)
on the objectives of reliable deliveries and broad pro-
duct distribution and on the policies related to the stat-
istical quality control.
Finally, the factories which are most competitive in
customer service in 1994 di€er from the least competi-
tive in the greater importance given in the previous two
years (1992±1993) to the objectives of e€ective after
sales service and broad product distribution and the
policies concerning statistical quality control, expand-
ing the factory capacity and factory relocating. In the
same way these factories are distinguished from the
least competitive in customer service in the greater
emphasis they are going to bestow in the following ®ve
years (1995±1999) on the three dimensions related to
customer service: e€ective after sales service, broad pro-
duct distribution and product customization service.
511
It is necessary to highlight that the equations in
Table 6 represent a mixture of manufacturing objective
and policy variables. The theories on manufacturing
strategies defend, in general, that as the policies serve
as a means to achieve the objectives pursued, a clear
relation should be observed between the manufacturing
objectives and policies of the companies. In this sense,
in the results of this work a clear relation between the
manufacturing objectives and policies which enables us
to di€erentiate the competitive and non-competitive
factories should be observed (in the set of the ®ve
objectives taken together as well as each of them taken
separately). However, in some cases the separators
include objective and policy variables among which
there is no obvious relation and even in some cases
only objectives serve as separators. In our opinion the
reason why a clear relation is not observed between
the manufacturing objectives and policies which enable
us to di€erentiate the competitive from the non-com-
petitive factories lies in the fact that the perception of
the managers is di€erent from the theoretical
approach. The managers interviewed seem to have a
clear idea of the manufacturing objectives they pursue
but, on the contrary, there does not exist consensus
regarding the policies applied to obtain these objec-
tives. In other words, the companies are implementing
di€erent policies in order to obtain the same objec-
tives. This fact, on the one hand, enables us to explain
that it is not possible to identify a coherent set of man-
ufacturing objectives and policies which di€erentiate
the competitive factories from those which are not; on
the other hand, it is revealed that the managers inter-
viewed are not experts in production strategic manage-
ment that they do not seem to be aware of (nor come
to a consensus of opinion in) the policies which should
be applied to attain the objectives pursued.
6. Conclusions
Based on Skinner's seminal work in 1969, the stra-
tegic nature of the company's production activities is
widely recognised. Maintaining competitive priorities
and implementing ecient manufacturing policies can
provide companies with important competitive advan-
tages and consequently determine their competitive
success. Having recognised the strategic importance of
the development and making e€ective use of capabili-
ties related to production and of the policies im-
plemented in this area, this study aims to determine
the objectives and policies which allow us to dis-
tinguish the most competitive Spanish factories in 1994
from the least successful ones. Given that the manufac-
turing excellence or competitiveness can constitute the
key to the companies' success, it is interesting for these
factories to ascertain some of the elements which deter-
512 L. Avella et al. / Omega, Int. J. Mgmt. Sci. 27 (1999) 497±514
mine the di€erences in manufacturing competitiveness.
Based on this information, it is possible to draw the
following general conclusions on the manufacturing
strategies of the most competitive Spanish companies
in this area.
In this sense, it is observed that in the period studied
the most competitive factories maintain objectives and
policies characteristic of the `outstanding or world-class
manufacturers'; for example, the most competitive
Spanish factories give greater importance than the
least competitive ones to the introduction of new pro-
ducts and the manufacturing of a broad product line,
as well as implementing programmes related to
improving quality such as statistical quality control
and zero defect policies.
Furthermore, the most competitive factories in each
of the ®ve manufacturing priorities develop speci®c
manufacturing strategies which are coherent with the
passing of time; that is to say they are going to con-
tinue di€ering from the least competitive in maintain-
ing manufacturing objectives and policies similar to
those implanted in the past. Hence, the most competi-
tive factories in terms of cost, ¯exibility, delivery and
customer service will continue to di€er from the least
competitive in the same or similar competitive priori-
ties; in this sense, they set and try to obtain some
long-term manufacturing objectives. There is only a
change observed in the strategies of the most competi-
tive factories in terms of quality, tending to focus in
the future more on manufacturing quality (or process
quality) than on product quality; this change will cor-
roborate the argument that quality (just as occurs with
production eciency) is becoming a requirement which
is essential for company competitiveness although it is
not a sucient requirement and consequently, once
acceptable levels have been reached in product per-
formance (or features), the companies should develop
advantages in other manufacturing-related priorities.
In conclusion, despite the fact that the main Spanish
industrial companies do not seem to compete based on
the superiority of their production systems21 (just as
shown in other works carried out within the same
research project), analysing the objectives and policies
which allow us to distinguish the most competitive fac-
tories from the least competitive ones (overall as well
as in each of the ®ve manufacturing competitive priori-
ties) allows us to state that the companies which main-
21
This information is supported by the results obtained in
the research project of which this paper forms part, concern-
ing the strategic importance of the production department in
relation to the other functional areas; some of these results
have been brie¯y commented on in Section 5, in order to clar-
ify and reinforce the results of the analysis presented in this
study.
tain manufacturing strengths or advantages over their
competitors are gradually developing competitive pri-
orities and policies speci®c to the most competitive
companies in international manufacturing, also termed
companies which have achieved manufacturing excel-
lence, that is to say `outstanding or world-class manu-
facturing companies'.
7. Limitations of this study
The choice of the suitable unit of analysis, the val-
idity of the information provided by the respondents
and the representativeness of the sample analysed are,
in our opinion, the three main limitations of this
study, which are present, in general, in most of the
empirical research works on manufacturing strategies
of companies.
Firstly, there is no unanimity in the works on the
manufacturing strategies of companies about the most
suitable unit of analysis: company, business unit or
factory. In this study, as the companies implement
their manufacturing strategies at the level of the indi-
vidual factory and considering that a company may
have two or more plants with di€erent strategies, the
factory has been taken as the unit of analysis.
Nevertheless, due to the diversity of organisational
structures where manufacturing strategies occur, the
works of Kim and Arnold [33] and Roth and Miller
[34] take the manufacturing business unit (MBU) as
the unit of analysis; each MBU is a company, business
unit or factory with de®ned competitive and manufac-
turing strategies. Perhaps this is a solution to the pro-
blem of consensus in the sense that some companies
have a business unit and a single factory and, there-
fore, a single manufacturing strategy whereas other
companies have various business units with di€erent
manufacturing strategies for each business or even
with di€erent factories for each business and di€erent
manufacturing strategies in each factory, whereas,
®nally, some companies may have several factories for
the same or di€erent businesses but maintain, in gen-
eral, the same manufacturing strategies in all of them.
Secondly, the general studies on manufacturing
strategies implemented in the companies are made by
means of interviews and usually have a limitation
which is dicult to correct: the validity of information
provided by the managers surveyed. This problem is
lessened partially in that the respondents are oper-
ations managers who have been in this post for years;
hence, it is presupposed that they have wide knowledge
on the company's manufacturing strategy.
Nevertheless, although the respondents meet these
requirements, the need to eliminate some question-
naires from the study is frequently observed, since they
present incongruent responses which are not in line
 L. Avella et al. / Omega, Int. J. Mgmt. Sci. 27 (1999) 497±514
with the theories on manufacturing strategies. In our
study this fact can be explained in that most of the
production or operations managers in Spain are engin-
eers who are very familiar with technical questions but
have little theoretical training and information about
the formulation and implementation of manufacturing
strategies. This is due to the fact that, in general, in
Spain subjects on manufacturing strategies are not
obligatory and the fundamental weight is given to
technical subjects in which most e€ort is focused.
Furthermore, MBAs which would provide engineers
with a global view on company administration and
management, and specially on strategic issues related
to manufacturing, are not very developed in Spain.
This bias of managers, impossible to solve in our
study, explains some of the incongruities observed in
Section 6 of the paper regarding the coherence between
the objectives proposed and the manufacturing policies
implemented.
Thirdly, considering the 114 valid surveys, the
sample error is 8.9%, the con®dence level being
95.5%. Given an objective population size of 1,104
companies, to obtain a sample error no greater than
5%, which would be the desirable sample error for the
signi®cance level of 95.5%, 294 valid surveys must be
available for analysis. This would require a response
ratio of 30%, impossible to achieve in a survey of the
characteristics of that used in this research, for which
the response ratio oscillates around 10%. In this sense,
the fact that the survey was carried out by mail and
was not of a compulsory nature for the companies,
means that the origin of a possible bias would lie in
non-response. This failure to reply poses a problem in
the sense that the people (or companies they represent)
who do decide to reply to a survey may di€er greatly
from those who do not; nevertheless, this fact funda-
mentally a€ects opinion surveys. In an industrial sur-
vey of the type used in this research, non-response is
mainly due to the bureaucratic and administrative
steps necessary in order to obtain the information
required for the survey and its subsequent completion
and sending, as well as the fear of losing anonymity or
simply not identifying any advantage to be gained
from taking part in the research project (and on the
contrary, an important waste of time). Taking these
reasons into account, it would not, in principle, be ®t-
ting to expect substantial di€erences among the com-
panies who have replied to the survey and those who
have not and, consequently, it is not too risky to gen-
eralise the results obtained for the set of industrial
companies set up in Spain.
In the fourth place, it is ®tting to point out that the
information analysed in this study has been used in
other previous works in which we compared the manu-
facturing objectives and policies of the Spanish compa-
nies with the manufacturing objectives and policies of
513
European and American companies analysed as a part
of the `1994 Global Manufacturing Futures Survey
Project (GMFSP)' [35]. These comparative studies
have revealed that the Spanish companies analysed
have maintained and implemented in the past, and
foresee maintaining and implementing in the future,
practically the same manufacturing priorities and pol-
icies as the American and European companies ana-
lysed as part of the 1994 GMFSP. These results enable
us, ®rstly, to validate to a certain extent the infor-
mation obtained in our questionnaire and con®rm that
the bias related to the respondent's perception is pre-
dictably patent in most of the surveys on manufactur-
ing strategies. On the other hand, in the sense that the
Spanish companies analysed present similar manufac-
turing policies and objectives to those of European
and American companies and since this is the infor-
mation used in the study, it would be ®tting to expect
that similar works to this one, using the discriminant
analysis methodology, in the samples of American and
European companies produce similar results. In this
way, it would be possible to defend the generalisation
of this study beyond its own objective population.
Finally, it is ®tting to point out that, despite the
limitations mentioned, this is the broadest database of
the manufacturing strategies of the large Spanish
industrial company.
Acknowledgements
The authors wish to express their gratitude to all
those people who have made this research work poss-
ible: Professor Arnoud De Meyer who has kindly pro-
vided us with the questionnaire used by the `European
Manufacturing Futures Survey Project'; all those
people who have kindly replied to the questionnaires
used as a base for this research work and the referees
of the paper whose valuable comments and suggestions
have greatly contributed to its improvement.
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