Chapter 8 TQM Implementation 1. IDENTIFY the basic steps in TQM implementation, including environmental scanning, internal resource analysis of the company’s.

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pter 8

TQM Implementation

1. IDENTIFY the basic steps in TQM implementation, including environmental scanning, internal resource analysis of the company’s strengths and weaknesses, and goal formulation.

2. EXPLAIN what strategic planning is all about (PDSA)

3. DESCRIBE how an Organization implements the strategic plan, such as how it chooses a site for overseas operations.

The specific objectives of this chapter are:

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pter 8

Strategy Formulation and Implementation

4. DESCRIBE how an organization implements the strategic plan, such as how it chooses a site for overseas operations.

5. REVIEW the three major functions of marketing, production, and finance that are used in implementing a strategic plan.

6. EXPLAIN specialized strategies appropriate for emerging markets and international new ventures.

The specific objectives of this chapter are:

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Determinants of Quality

1. Design, planned qualityIntension of designers to include or exclude features in a product or service

EX: Designed size, actual durabilityCustomer input is accounted for

2. Conformance to design (standards), executed quality

The degree to which goods or services conform to the intent of the designers

EX: Actual size, actual durabilityDesign for quality: Design with quality in mind

3. Ease of useEX: Directions, instructions, training

4. Service after delivery

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The Consequences of Poor Quality

Loss of business Liability Productivity Costs

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The Consequences of Poor Quality

Loss of business: Customer quietly stops buying. Customer complaints rarely reach to the upper management.

Liability: Due to damages or injuries resulting from poor quality (design, conformance, ease of use, service)

Low productivity: Rework or scrap. More input but does not increase the output.

High costs

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Costs of Quality (continued)

Appraisal Costs Product and/or service inspection costs. EX: Time and effort spent for course evaluations

Prevention Costs Quality training, planning, customer assessment, process

control, and quality improvement costs to prevent defects from occurring

EX: Instructor training for better course presentation

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Top management, past vs. current Design teams Procurement departments, standard input Production/operations, processes conform to standards Quality assurance Packaging and shipping, damaged in transit Marketing and sales, customer wishes Customer service, quality feedback

Responsibility for Quality

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Substandard work Defective products Substandard service Poor designs Shoddy workmanship

Ownership of the work Substandard parts and materials

Ethics and Quality

Having knowledge of this and failing to correctand report it in a timely manner is unethical.

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Strategic Management

Strategic management Process of determining an organization’s basic mission and

long-term objectives, and then implementing a plan of action for pursuing this mission and attaining these objectives

How to allocate finite resources to achieve long-term objectives

Growing need for strategic management Increasingly diversified operations in a

continuously changing international environment. More resources, more places to allocate them Increased complexity

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Approaches to Strategic Planning

Economic Imperative

Economic Imperative

Quality Imperative

Quality Imperative

Political Imperative


Administrative Coordination


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Economic imperative focused employ a worldwide strategy based on cost leadership, differentiation, and segmentation

They often sell products for which a large portion of value is added in the upstream activities of the industry’s value chain Research and development Manufacturing Distribution

Strategy also used when the product is regarded as a generic good and therefore does not have to be sold based on name brand or support service

Economic Imperative

Economic Imperative

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Approaches to Strategic Planning Using the political imperative approach to strategic

planning are country- responsive; their approach is designed to protect local market niches

Success of the product or service depends heavily on Marketing Sales Service

Country-centered or multidomestic strategy.



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Two paths of quality imperative Change in attitudes and a raising of expectation

for service quality Implementation of management practices designed to make

quality improvement an ongoing process “Total quality management,” (TQM)

Cross-training personnel to do the jobs of all members in their work group

Process re-engineering designed to help identify and eliminate redundant tasks and wasteful effort

Reward systems designed to reinforce quality performance

Quality Imperative

Quality Imperative

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TQM Implementation

Quality is operationalized by meeting or exceeding customer expectations

The quality strategy is formulated at the top management level and is diffused throughout the organization Deliver quality products or services to internal and external

customers.

TQM techniques Traditional inspection (no!) and statistical quality control Cutting-edge human resource management techniques, such

as self-managing teams and empowerment

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Administrative coordination approach Making strategic decisions based on merits

of the individual situation rather than using a predetermined economic or political strategy

Least common approach to formulation and implementation of strategy because of the firm’s desire to coordinate its strategy both regionally and globally



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Globalization Production and distribution of products and services of a

homogeneous type and quality on a worldwide basis Many customers of MNCs have homogenized tastes, which

helps spread international consumerism National responsiveness

Understand different consumer tastes in segmented regional markets

Respond to different national standards and regulations imposed by autonomous governments and agencies

Adapt tools and techniques for managing the local workforce

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Global Integration vs. National Responsiveness

Global strategy

Global strategy

International strategy

International strategy

Transnational strategy

Transnational strategy

Multi-domestic strategy

Multi-domestic strategy

National responsiveness

Low High

Glo

bal i

nteg

ratio

n

Low

High

Adapted from Figure 8–1: Global Integration vs. National Responsiveness

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Summary of Approaches to Strategic Planning

The appropriateness of each strategy depends on pressures for cost reduction and local responsiveness in each country served

A global strategy is a low-cost strategy which attempts to benefit from scale economies in production, distribution, and marketing

A transnational strategy should be pursued when there are high cost pressures and high demands for local responsiveness Pressures for cost reduction and local responsiveness put

contradictory demands on a company because localized product offerings increase cost

Organizations that can find appropriate synergies in global corporate functions can leverage a transnational strategy effectively

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Elements of Strategic Planning for International Management

External Environmental Scanning for MNC

Opportunities and Threats



Internal Resource Analysis of MNC Strengths and

Weaknesses

Internal Resource Analysis of MNC Strengths and

Weaknesses

Strategic Planning Goals


IMPLEMENTATIONIMPLEMENTATION

Adapted from Figure 8–2: Basic Elements of Strategic Planning for International Management

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Environmental scanningExternal Environmental

Scanning for MNC Opportunities and Threats



Provide management with accurate forecasts of trends that relate to external changes in geographic areas where the firm is currently doing business or considering setting up operations

These changes relate to the economy, competition, political stability, technology, and demographic consumer data

ECLIPTER Econography, Culture, Legal Systems, Income Profile, Political Risk,

Tax Systems, and Exchange Rates

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Internal Resource Analysis

Evaluate current managerial, technical, material, and financial strengths and weaknesses Assessment then is used to determine its ability to take

advantage of international market opportunities Match external opportunities (gained through the

environmental scan) with internal capabilities (gained through the internal resource analysis

Key factors for success The key question is: Do we have the people and resources that

can help us to develop and sustain the necessary, or can we acquire them?

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Goal formulation often precedes the first two steps of environmental scanning and internal resource analysis

However, more specific goals for the strategic plan come out of external scanning and internal analysis These goals typically serve as an umbrella beneath which

the subsidiaries and other international groups operate Profitability and marketing goals almost always dominate

the strategic plans . Once the strategic goals are set, the organization should

develop specific operational goals and controls for the subsidiary or affiliate level



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Implementation

Provides goods and services in accord with a plan of action Often, this plan will have an overall philosophy or series of

guidelines that direct the process Considerations in selecting a country

Advanced industrialized countries because they offer the largest markets for goods and services

Amount of government control. Restrictions on foreign investment. Specific benefits offered by host countries


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Implementation

Local issues Once the country has been decided, the firm must choose the

specific locale Important factors influencing this choice include

Access to markets Proximity to competitors Availability of transportation and electric power Desirability of the location for employees coming in

from the outside


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Implementation

Production When exporting goods to a foreign market, the production

process traditionally has been handled through domestic operations.

More recently organizations have found that whether they are exporting or producing the goods locally in the host country, consideration of worldwide production is important.

A recent trend has been away from multi-domestic approach and toward global coordination of operations


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Implementation

Finance Transferring funds from one place in the world to another,

or borrowing funds in the international money markets, often is less expensive than relying on local sources

Issues include Re-evaluation of currencies Privatization

Strategies for the base of the pyramid International New Ventures and “Born-Global” Firms


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Implementation

Strategies for the “base of the pyramid” (BOP) Emerging market customers People at the bottom of the economic pyramid Marketing at BOP forces consideration of smaller-scale

strategies Building relationships with local governments, small

entrepreneurs, and nonprofits Less dependence on established partners such as central

governments and large local companies International New Ventures and “Born-Global” Firms


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Implementation

International New Ventures and “Born-Global” Firms firms that engage in significant international activity a short

time after being established Successful born-global firms leverage a distinctive mix of

orientations and strategies Global technological competence Unique-products development Quality focus Leveraging of foreign distributor competences


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Elements for Success

Management Support

Mission Statement

Proper Planning

Customer and Bottom Line Focus

Measurement

Empowerment

Teamwork/Effective Meetings

Continuous Process Improvement

Dedicated Resources

Chapter 8 TQM Implementation 1. IDENTIFY the basic steps in TQM implementation, including environmental scanning, internal resource analysis of the company’s.

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