Chapter 44

Only Slide Nos.15 to 22 on “Quality as Strategy”

are relevant for BS-II
Strategic
Strategic Quality
Quality Planning
Planning

S.
S. Thomas
Thomas Foster,
Foster, Jr.
Jr.
Boise
Boise State
State University
University
Slides
Slides Prepared
Prepared by
by
Bruce
Bruce R.R. Barringer
Barringer
University
University of
of Central
Central Florida
Florida
Source:
asgard.kent.edu/mis/syllabi/Summer2002/Chapter4Polin44150.ppt
©2001
©2001 Prentice-Hall
Prentice-Hall
 Chapter
Chapter Overview
Overview
Slide
Slide 11 of
of 22

• Strategy Content
• The Importance of Time in Quality
Improvement
• Leadership for Quality
• Quality and Ethics
• Quality as a Strategy
• Quality Strategy Process

© 2001 Prentice-Hall Transparency 4-2

 Chapter
Chapter Overview
Overview
Slide
Slide 22 of
of 22

• Deploying Quality (Hoshin Kanri)

• Does Quality Lead to Better Business
Results?

© 2001 Prentice-Hall Transparency 4-3

 Strategy
Strategy Content
Content
11 of
of 22

• Why is Quality Planning Important?

– As we have discussed in previous chapters,
quality improvement is a planned managerial
activity.
– Quality improvement involves identifying
potential improvements, prioritizing potential
areas for improvement, and planning the
implementation of projects and improvements.

© 2001 Prentice-Hall Transparency 4-4

 Strategy
Strategy Content
Content
22 of
of 22

• Strategy Content Variables

– Among the strategy content variables we
discuss are time, leadership, quality costs,
generic strategies, orders winners, and quality
as a core competency.

© 2001 Prentice-Hall Transparency 4-5

 The
The Importance
Importance of
of Time
Time in
in Quality
Quality
Improvement
Improvement

• Two Important Aspects of Time

– There are two aspects of time that we discuss:
• The time it takes to achieve business goals as a
result of quality.
• The speed at which companies improve.

© 2001 Prentice-Hall Transparency 4-6

 Leadership
Leadership For
For Quality
Quality
Slide
Slide 11 of
of 55

• Leadership
– Leadership is the process by which a leader
influences a group to move toward the
attainment of superordinate goals.
• Superordinate goals are those goals that pertain to
achieving a higher end that benefits not just the
individual, but the group.

© 2001 Prentice-Hall Transparency 4-7

 Leadership
Leadership For
For Quality
Quality
Slide
Slide 22 of
of 55

Types of Power

Power of Expertise Reward Power

Sometimes a leader has If a leader has rewards
special knowledge (or is that he or she can
perceived to have special bestow on subordinates
knowledge). in return for some
desirable position, the
leader has reward
power.

© 2001 Prentice-Hall Transparency 4-8

 Leadership
Leadership For
For Quality
Quality
Slide
Slide 33 of
of 55

Types of Power

Coercive Power Referent Power

If the leader has power to
punish the follower for
not following rules or
guidelines, the leader has
coercive power.
If a leader is charismatic
or charming and is
followed because he or
she is liked, then the
leader has referent
power.

© 2001 Prentice-Hall Transparency 4-9

 Leadership
Leadership For
For Quality
Quality
Slide
Slide 44 of
of 55

Types of Power

Legitimate Power
Legitimate power comes
with the position.

© 2001 Prentice-Hall Transparency 4-10

 Leadership
Leadership For
For Quality
Quality
Slide
Slide 55 of
of 55

• Leadership Dimensions
– Trait dimension
• Leadership characteristics tied to the personal
“traits” of leaders (such as height and intelligence).
– Leader skills
• Attributes such as knowledge, communication,
planning, and vision.
– Leader behavior
• This approach discusses how leaders behave to
identify specific leadership styles and the effects of
leadership style on subordinate performance.
© 2001 Prentice-Hall Transparency 4-11
 How
How Leaders
Leaders Resolve
Resolve Conflict
Conflict
Slide
Slide 11 of
of 22

• Passive Conflict Resolution

– Some managers and leaders ignore conflict.
• Win-win
– Leaders might seek solutions to problems that
satisfy both sides of a conflict by providing
win-win scenarios.
• Structured Problem Solving
– Conflicts can be resolved in a fact-based
manner by gathering data regarding the
problem and have the data analyzed by a
disinterested observer.
© 2001 Prentice-Hall Transparency 4-12
 How
How Leaders
Leaders Resolve
Resolve Conflict
Conflict
Slide
Slide 22 of
of 22

• Confronting Conflict
– At times, it is best to confront the conflict and
help subordinates resolve conflicts.
• Choosing a Winner
– In some cases the leader may choose a winner
of the conflict and develop a plan of action for
conflict resolution between the parties.
• Selecting a Better Alternative
– Sometimes there is an alternative neither of the
parties to the conflict has considered.

© 2001 Prentice-Hall Transparency 4-13

 Quality
Quality and
and Ethics
Ethics

Quality appears to be good business.

Quality is also good ethics. It is unethical
to ship defective products knowingly to a
customer. Reliable products reflect an
ethical approach to management.

© 2001 Prentice-Hall Transparency 4-14

 Quality
Quality as
as Strategy
Strategy
Slide
Slide 11 of
of 88

• Quality as a Strategy
– We now discuss quality as a strategy from the
perspective of generic strategies. These generic
strategies are cost, differentiation, and focus
• Costs of Quality
– There are two broad categories of costs: costs
due to poor quality and costs associated with
improving quality.

© 2001 Prentice-Hall Transparency 4-15

 Quality
Quality as
as Strategy
Strategy
Slide
Slide 22 of
of 88

• PAF Paradigm
– Prevention costs are those costs associated with
preventing defects and imperfections from
occurring.
– Appraisal costs are associated with the direct
costs of measuring quality.

© 2001 Prentice-Hall Transparency 4-16

 Quality
Quality as
as Strategy
Strategy
Slide
Slide 33 of
of 88

Examples of Appraisal Costs

Laboratory acceptance testing
Inspection and tests by inspectors
Inspection and tests by noninspectors
Set-up for inspection and testing
Product quality audits
Review of test and inspection data
On-site performance tests
ISO 9000 qualification activates
Quality award assessments

© 2001 Prentice-Hall Transparency 4-17

 Quality
Quality as
as Strategy
Strategy
Slide
Slide 44 of
of 88

• PAF Paradigm (continued)

– Failure costs are roughly categorized into two
areas of costs.
• Internal failure costs are those associated with on-
line failure.
• External failure costs are associated with product
failure after the production process.

© 2001 Prentice-Hall Transparency 4-18

 Quality
Quality as
as Strategy
Strategy
Slide
Slide 55 of
of 88

Lundvall-Juran Model
Cost
C1 + C2

C 1 = Prevention & C 2 = Failure Costs

= appraisal costs =

00 qq 11
Conformance
© 2001 Prentice-Hall Transparency 4-19
 Quality
Quality as
as Strategy
Strategy
Slide
Slide 66 of
of 88

• Differentiation Through Quality

– Differentiation is achieved by a competitor if
the customer perceives the product or service to
be unique in an important way
• Quality Through Focus
– Think of a product that is particularly regional
or is marked to a particular group. That limited
region or group is the object of the focus
strategy.

© 2001 Prentice-Hall Transparency 4-20

 Quality
Quality as
as Strategy
Strategy
Slide
Slide 77 of
of 88

• Order Winners
– Terry Hill of the London Business School
defined a process for setting strategy that is
centered on the identification of the order
winning criteria (OWC).

© 2001 Prentice-Hall Transparency 4-21

 Quality
Quality as
as Strategy
Strategy
Slide
Slide 88 of
of 88

• Quality as Core Competency

– Quality, in and of itself, is probably not a core
competency.
– However, core competency is built on the
foundation of a long-term commitment to
quality and continual process improvement.

© 2001 Prentice-Hall Transparency 4-22

 Quality
Quality Strategy
Strategy Process
Process
Slide
Slide 11 of
of 22

• Forced-Choice Model
– The forced-choice model, pictured in the
following slide, is one of several strategic-
planning models that could be adapted to
demonstrate integrated quality planning.
– The forced-choice model is particularly useful
for companies that are relatively inexperienced
in strategic planning.

© 2001 Prentice-Hall Transparency 4-23

 Quality
Quality Strategy
Strategy Process
Process
Slide
Slide 22 of
of 22

Forced-Choice Model
Environmental
EnvironmentalAssessment
Assessment Organization’s
Organization’sPosition
Position

Broad economic assumptions Statement of mission

Key government Interrelated set of financial

and regulatory issues and nonfinancial objectives

Major technological forces Statement of strengths and

weaknesses
Significant market
opportunities and threats Forecast of operational needs

Explicit strategies of competitors Major future programs

Strategic options
Requirements for implementing options
Contingency plans
© 2001 Prentice-Hall Transparency 4-24
 Deploying
Deploying Quality
Quality (Hoshin
(Hoshin Kanri)
Kanri)
Slide
Slide 11 of
of 22

• Hoshin
– Hoshin is Japanese for a compass, a course, a
policy, or a plan.
• Kanri refers to management control. In English,
this is generally referred to as policy deployment.
• Hoshin Process
– Figure 4.4 in the textbook gives an overview of
the Hoshin process.

© 2001 Prentice-Hall Transparency 4-25

 Deploying
Deploying Quality
Quality (Hoshin
(Hoshin Kanri)
Kanri)
Slide
Slide 22 of
of 22

• Hoshin Process
– The company develops a three-to-five year
plan, and senior executives develop the current
year’s Hoshin objectives.
– Then the process of catchball occurs.
• Catchball
– Is the terms used to describe the interactive
nature of the Hoshin planning process.

© 2001 Prentice-Hall Transparency 4-26

 Does
Does Quality
Quality Lead
Lead to
to Better
Better Business
Business
Results?
Results?
Slide
Slide 11 of
of 33

• “Do Quality Efforts Pay Off?”

– The effects of quality on business results is
mixed.
– There are two primary reasons for this:
• First, there are many variables that affect
profitability besides quality.
• Second, many companies implement quality
incorrectly.

© 2001 Prentice-Hall Transparency 4-27

 Does
Does Quality
Quality Lead
Lead to
to Better
Better Business
Business
Results?
Results?
Slide
Slide 22 of
of 33

• Quality and Price

– The price-quality relationship becomes
increasingly unclear when culture differences in
an international setting are considered.
• Quality and Cost
– A fundamental difference exists between a low-
cost strategy based on competitive pricing, and
a low-cost orientation that is based on continual
learning and production competence.
© 2001 Prentice-Hall Transparency 4-28
 Does
Does Quality
Quality Lead
Lead to
to Better
Better Business
Business
Results?
Results?
Slide
Slide 33 of
of 33

• Quality and Productivity

– The relationship between quality and
productivity is clear. The elimination of waste
results in higher productivity.
• Quality and Profitability
– High quality is no guarantee of success. Firms
must still successfully market, manage cash,
and do the many other things that ensure
profitability.
© 2001 Prentice-Hall Transparency 4-29