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1. Quality & Global Competitiveness - Ch. 2

1. Quality & Global Competitiveness - Ch. 2

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Chapter 2

Quality and Global Competitiveness

Quality and Global Competitiveness

Syed. M. Ahmed, Ph.D.

Course Instructor: Dr. Syed M. Ahmed, Ph.D.
College of Engineering & Computing Florida International University, Miami, Florida

Lecture Outline
 The relationship between Quality and Competitiveness  Cost of Poor Quality

 Impact of Competitiveness on Quality of Life
 Factors Inhibiting Competitiveness  Comparisons of International Competitors
Quality and Global Competitiveness

 Industrial Policy and Competitiveness  Technology and Competitiveness  Human Resources and Competitiveness
Syed. M. Ahmed, Ph.D.

 Characteristics of World-Class Organizations

 E-Commerce, Information Quality, and Competitiveness
 Management by Accounting: Antithesis of Total Quality  Key Global Trends  U.S. Companies: Global Strengths and Weaknesses

Syed.  In business.D. the quality of the competitors has increased. regional or national level to International level. which is making it tougher day by day. M. Quality and Global Competitiveness  It is extremely important for a country’s business to be able to compete globally.The Relationship Between Quality and Competitiveness  At each successive level of competition.  Now only those companies who are able to produce worldclass quality can compete at international level. the competition is now moved from local. Ph. jobs are lost and the quality of life in that country declines correspondingly. Ahmed. When they can’t. .

Quality and Global Competitiveness  ABC’s executives take major cost-cutting initiatives such as eliminating quality audits. Syed. without compromising on quality. billing errors. cut back on R&D. Inc.. etc.D. Ph.. choose low-bid suppliers.  XYZ’s executives try to eliminate extra costs such as costs associated with later deliveries to customers. both need to compete in the global market place in order to survive. Ahmed.  Which company will survive in long run?? .Cost of Poor Quality (1)  Quality costs money? Should quality be reduced to cope up with financial constraints?  Example: Two companies ABC. etc. Inc. scrap & rework. and XYZ. M.

Cost of Poor Quality (2)  The costs of poor quality account for 15 to 30% of a company’s overall costs. Ph. Traditional Costs Hidden Costs . Ahmed. M. Quality and Global Competitiveness Factors to consider when qualifying the costs of poor quality Syed.D.  Reducing the costs associated with poor quality is mandatory for companies that hope to compete in the global marketplace.

Analyze the results and take necessary corrective actions in the proper order of priority. Improvements in product or service features can lead to higher market share at a better price. means higher revenue. which. Decide how to estimate the costs of these activities.Cost of Poor Quality (3) Steps to measure the costs of poor quality 1.D. Ahmed. . 4. 2. Quality and Global Competitiveness 3. M. Syed. Collect data on these activities and make the cost estimates. Ph. of course. Identify all activities that exist only or primarily because of poor quality.

Quality of Life Issues in the United States Quality and Global Competitiveness Syed.D. Ph. M.Impact of Competitiveness on Quality of Life  A nation’s ability to compete in the global marketplace has a direct bearing on the quality of life of its citizens. Ahmed. .

 To overcome these business-related inhibitors. M.  Excessive costs of liability inflated by lawyers working on contingency fees. constructive partnership to enact policies that will reduce the non-value added costs to a minimum. Syed.D. Ph.Factors Inhibiting Competitiveness (1) Business/Government-Related Factors  Emphasis on short-term profits fed by fear of unfriendly takeover attempts and pressure from lenders or shareholders. Quality and Global Competitiveness  Excessive medical costs. . it requires business and government to work together in a positive. Ahmed.

motivated. Ph.D. The higher the quality of the labor pool. and able to learn members.Factors Inhibiting Competitiveness (2) Family-Related Factors  Human resources are a critical part of the competitive equation. the higher the quality of entry-level employees. The more knowledgeable. Ahmed. The countries with strong family values are found to be better in educating their kids and hence producing knowledgeable and smart workers. Syed. the better the labor pool will be. skilled. . Education-Related Factors  The quality of a country’s education system is a major determinant of the quality of its labor pool. Quality and Global Competitiveness  Family background play an important role in basic education of the kids. M.

Japan Germany Switzerland Demark United States The assessment is based on a nation’s domestic economic strength. Critical indicators of National Competitive Status . 4. internationalization. 5. and work force.Comparisons of International Competitors (1) Most competitive countries in the world (2002): 1. Ahmed. government infrastructure. Quality and Global Competitiveness Syed. science and technology. M. 3. Ph.D. 2. finance management.

D. Essential Components of US Industrial Policy . Remove barriers that mitigate against competitiveness. Quality and Global Competitiveness Syed. Ph. 2. M. Provide incentives that encourage business to behave in ways that promote competitiveness. Ahmed.Comparisons of International Competitors (2) How the Government can help? 1.

Technology and Competitiveness  Technology is the physical manifestation of knowledge.D.  In a competitive environment where knowledge is King. Quality and Global Competitiveness Syed. welldesigned technology can enhance an organization’s competitiveness. Ph. M. Competitiveness-enhancing manufacturing technologies . Ahmed.

Ahmed. Strategies for human resources competitiveness in Japan and Germany .D.  Germany and Japan are the best examples of effective human resources utilization. Quality and Global Competitiveness Syed. M. Ph.Human Resources and Competitiveness  The most valuable resources for enhancing competitiveness are human resources.

Acquiring new technologies 5. M. Outsourcing and contracting 14. 3. Manpower planning 9. Best practices (study and use of) 8. Reengineering of processes 12. Ahmed. Political lobbying Quality and Global Competitiveness Syed.D. . 2.Characteristics of World-Class Organizations (1) 1. Business partnerships and alliances 11. Ph. Research and development/ new product development 4. Innovation 6. Reliance on consulting services 15. Mergers and acquisitions 13. Team-based approach (adopting and using effectively) 7. Environmentally sound practices 10. Customer service. Quality control and assurance.

Open communication between management and employees Quality and Global Competitiveness 4. 7. M. Ahmed. Worker productivity (improvement) 2. Management-employee-union relations 10. Flextime arrangements 9. Employee benefits and perquisites 5.D. Child care . Conflict resolution Syed. Employee training and development 3. Codes of workplace conduct 6. Ph.Characteristics of World-Class Organizations (2) How to make an organization world-class? 1. Employee satisfaction 8.

speed to market. Internet ordering. worker productivity. Competitive analysis strategies (cost efficiencies in operations.) Quality and Global Competitiveness 2. M. Electronic commerce strategies (supply management. status and availability tracking by Internet) 5. Ph. research and development supremacy. etc. 4.) 3.) .D. zero defects. Ahmed. employee retention rates. Production and supply chain (collaborative planning. global sourcing and manufacturing.Characteristics of World-Class Organizations (2) World-class manufacturing: What it takes? 1. collaborative manufacturing and product design. forecasting and replenishment. inventory levels. etc.) Syed. manufactured/delivered costs per unit. customized mass production. Compensation systems (product profitability. supplier-managed inventory etc. real-time order management etc. Customization strategies (building to order.

Reintegration – An ongoing process of smoothing out the boundaries among the various redesigned processes. Poor information quality can be costly. Prioritizing Change – Once potential problems have been Syed. Those that have the greatest potential payoff should be given the highest priority. 3.D. Redesign and reeducation – Information systems and processes should be redesigned and personnel should be trained. 2. Ph. 4. identified. . Ahmed. Assessment – All key business processes should be systematically reviewed to identify potential information quality problems. Quality and Global Competitiveness Steps in establishing an effective information quality program 1. Information Quality. M. and Competitiveness  Organizations that hope to gain the benefit of e-commerce must make a full commitment to information quality.E-Commerce. they should be prioritized.

Syed. .  It makes for narrowly focused managers who review every problem from a finance and accounting perspective. Ahmed.  Also called managing by the numbers. M. Ph. Quality and Global Competitiveness Disadvantages of Management by Accounting  It creates an analytically detached approach to decision making in which managers study financial printouts instead of gaining the insight that comes from first hand knowledge of the situation.Management by Accounting: Antithesis of Total Quality  Management by accounting – Managing an organization’s financial results instead of managing the people and process that produce those results.D.  It promotes a focus on short-term cost reduction.

Growing irrelevance of distance. Quality and Global Competitiveness 4. This stability sets the stage for increased global trade. Current Global Trends Syed. Ahmed. 3. No major traditional hot or cold war for the foreseeable future. Ph. 1. Rise of magacities. M.Key Global Trends 1. Increasing potential for an interruption in the World’s oil supply. 2. 2. 3.D. Fundamental shift in labor-management relations. Shifts in the rates of growth of countries. No major banking disruptions. .

which enhances productivity and thus living standards. Syed. An economy that is open to foreign investment and trade. Greater transparency and availability of economic information. Ph. Ahmed. . 6. 4. M. A government that minimizes control on business. 5. Higher labor mobility. 2. A judicial system that works well and helps reduce corruption. Ease of entry by new business.US Companies: Global Strengths and Weaknesses (1) Factors that account for a country’s ability to compete in the international marketplace: 1. Quality and Global Competitiveness 3.D. but does a good job of supervising financial institutions.

Low rate of unionization 6. 2. 1. 3.D. 6. A growing “underclass” of have-nots.US Companies: Global Strengths and Weaknesses (2) Global Advantages of U. Quality and Global Competitiveness Global Disadvantages of U. World-class system of higher education. Rapidly advancing technologies. A weak public school system (K-12). Expanding government regulation.S. An increasing protectionist sentiment (to restrict imports).S. Strong entrepreneurial spirit. Comparatively low taxes 5. Companies Syed. 4. M. 5. Companies 1. Ph. 3. A poorly skilled labor force and poor training opportunities. Growing public alienation with large institution (public and private) . Presence of a “small capitalization” stock market for small and midsized companies. Ahmed. 4. 2.

D.Quality and Global Competitiveness Syed. Ahmed. Questions/Queries? . Ph. M.

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