TOTAL QUALITY MANAGEMENT, SUSTAINABLE COMPETITIVE ADVANTAGE, AND THE RESOURCE-BASED VIEW

AN EXPLORATORY STUDY OF TQM AND COMPETITIVE ADVANTAGE AT FISHER & PAYKEL

HAMISH G. H. ELLIOTT

A PAPER SUBMITTED IN FULFILLMENT OF THE REQUIREMENTS FOR MANT 591 - RESEARCH PROJECT, AND PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS IN MANAGEMENT AT THE UNIVERSITY OF OTAGO, DUNEDIN, NEW ZEALAND

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MARCH 2004
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ABSTRACT

ABSTRACT
The aim of this research is to examine the relationships between Total Quality Management (TQM) and sustainable competitive advantage at Fisher & Paykel Appliances Ltd's Dunedin plant. The theory of how TQM may generate or support sustainable competitive advantage has previously been relatively uncharted. Therefore, this study is an exploratory case study using primary data from interviews with the plant Quality Facilitator and HR Manager, and additional data from secondary sources. The study also examines the stronger sustainability of competitive advantage from resource combinations.

The foremost conclusion from this study is that the cornerstone of Fisher & Paykel's competitive advantage lies in their innovative capacity, and that it is their core values – style, integrity, care, and innovation – underpinning their quality-inspired systems, operations, and culture that differentiate them in terms of innovative and competitive product design and manufacturing. While innovative products are the final results that generate value for the firm, it is the underlying quality systems, culture, and infrastructure that generates and supports innovation.

The study finds that Fisher & Paykel's core competence is its ability to design, manufacture, and get to market, innovative, stylish, and superior quality products more quickly than competitors, and support the products with care and integrity inspired quality service. It is the F&P way – their TQM system and culture – that facilitates this core competence, and consequently, appears to generate sustainable competitive advantage.

The holistic quality system (the F&P Way), strategic quality management planning, process control and management, and care in the team environment are identified as core gestalt combinations that appear to support Fisher & Paykel's sustainable competitive advantage. The results of this study suggest that three dynamic capabilities are the principal sources of sustainable competitive advantage at Fisher & Paykel: customer focus (service & satisfaction), continuous improvement, and innovation.

ii .ABSTRACT The value of this study is that establishes some empirical progress in the theoretical explanation of the relationship between TQM and sustainable competitive advantage. and how TQM can generate sustainable competitive advantage.

Finally. Diane Ruwhiu. Also thank you to Jo Kirkwood. and Tom Batley for their help and moral support. mentor. Further. and the Department of Management for making time allowances for my NZ Youth Choir commitments around the country during the semester. I must extend a huge thank you to Professor Colin Campbell-Hunt for being an inspirational and supportive supervisor. I hope this research is of mutual benefit. thank you to Professor Colin Campbell-Hunt. thank you to Fisher & Paykel Appliances Ltd. Particularly. Dunedin Facility for allowing me to undertake this research.ACKNOWLEDGEMENTS ACKNO EDGE NTS Firstly. Also. a big thank you to Hannah and 011ie for their support and putting up with my extended working hours. Also. Diane Ruwhiu. iii . and friend. thank you to my MBus colleagues. Mark Olsen and Ryan Duff. Without his guidance I could not have undertaken such exploratory and unique research. thanks to Gordon McGowan and Michelle Read. for their mutual support and comic relief during the wee small hours of the night.

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