TQM Implementation The specific objectives of this chapter are:

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Presentation transcript:

TQM Implementation The specific objectives of this chapter are: IDENTIFY the basic steps in TQM implementation, including environmental scanning, internal resource analysis of the company’s strengths and weaknesses, and goal formulation. EXPLAIN what strategic planning is all about (PDSA) DESCRIBE how an Organization implements the strategic plan, such as how it chooses a site for overseas operations.

Strategy Formulation and Implementation The specific objectives of this chapter are: DESCRIBE how an organization implements the strategic plan, such as how it chooses a site for overseas operations. REVIEW the three major functions of marketing, production, and finance that are used in implementing a strategic plan. EXPLAIN specialized strategies appropriate for emerging markets and international new ventures.

Determinants of Quality 1. Design, planned quality Intension of designers to include or exclude features in a product or service EX: Designed size, actual durability Customer 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 durability Design for quality: Design with quality in mind 3. Ease of use EX: Directions, instructions, training 4. Service after delivery

The Consequences of Poor Quality Loss of business Liability Productivity Costs

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

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

Responsibility for Quality 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

Ethics and Quality Substandard work Defective products Substandard service Poor designs Shoddy workmanship Ownership of the work Substandard parts and materials Having knowledge of this and failing to correct and report it in a timely manner is unethical.

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

Approaches to Strategic Planning Economic Imperative Administrative Coordination Political Imperative Quality Imperative

Approaches to Strategic Planning Economic Imperative 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

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. Political Imperative

Approaches to Strategic Planning Quality Imperative 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

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

Approaches to Strategic Planning Administrative Coordination 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

Approaches to Strategic Planning 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

Global Integration vs. National Responsiveness Low High Global strategy Transnational strategy Global integration Low High International strategy Multi-domestic strategy Adapted from Figure 8–1: Global Integration vs. National Responsiveness

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

Elements of Strategic Planning for International Management External Environmental Scanning for MNC Opportunities and Threats Internal Resource Analysis of MNC Strengths and Weaknesses Strategic Planning Goals IMPLEMENTATION Adapted from Figure 8–2: Basic Elements of Strategic Planning for International Management

Elements of Strategic Planning for International Management External Environmental Scanning for MNC Opportunities and Threats Environmental scanning 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

Elements of Strategic Planning for International Management 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?

Elements of Strategic Planning for International Management Strategic Planning Goals Strategic Planning Goals 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

Elements of Strategic Planning for International Management IMPLEMENTATION 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

Elements of Strategic Planning for International Management IMPLEMENTATION 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

Elements of Strategic Planning for International Management IMPLEMENTATION 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

Elements of Strategic Planning for International Management IMPLEMENTATION 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

Elements of Strategic Planning for International Management IMPLEMENTATION 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

Elements of Strategic Planning for International Management IMPLEMENTATION 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

Elements for Success Management Support Mission Statement Proper Planning Customer and Bottom Line Focus Measurement Empowerment Teamwork/Effective Meetings Continuous Process Improvement Dedicated Resources