Total Quality Management

Leadership, Commitment, & Strategy

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Total Quality Management Model – major features

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The total quality management approach

 What is quality management?

‘something that is best left to the experts’  wrong answer
 Quality cannot be achieved on a company-wide basis if
it is left to the experts.
 Using the traditional control techniques is NOT the way
to achieve quality.
 Quality is not the responsibility of the QC or QA
departments only.
 TQM is far more than shifting the responsibility of
detection of problems from the customer to the
producer.

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The total quality management approach

 TQM requires a comprehensive approach that must first be

recognized and then implemented.
 Today, managers must plan strategically to maintain a hold
on market share, let alone increase it.
 Consumers choice quality or price?
 TQM is an approach to improving the competitiveness,
effectiveness and flexibility of a whole organization.

 Foran organization to be truly effective, each part of it

must work properly together towards the same goals.

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 The total quality management approach

 Themethods and techniques used in TQM can be applied

throughout any organization (manufacturing, public service,
health care, education and hospitality industries).
Toward TQ, management must focus on
developing a problem-prevention mentality.
Many people will need to undergo a complete
change of ‘mindset’.
The correct mindset may be achieved by looking
at the sort of barriers that exist in key areas.

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 The total quality management approach
 Staffwill need to be trained and shown how to reallocate their time
and energy to studying their processes in teams, searching for causes of
problems, and correcting the causes, not the symptoms a positive
management.

 The managements of many firms may think that their scale of operation
is not sufficiently large, that their resources are too slim.

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Quality Assessment - Questions

Managers should examine the existing quality

performance by asking the following questions:
1. Is any attempt made to assess the costs arising from
errors, defects, waste, customer complaints, lost
sales, etc?
2. Are the organization’s quality systems-
documentation, procedures, operations etc-in good
order?
3. Have personnel been trained in how to prevent
errors and quality problems?
4. What is being done to motivate and train employees
to do work right first time?

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Quality Assessment - Questions

 If satisfactory answers given to most of these

questions an organization in the way to using quality
procedures and management.
 If answers to the previous questions indicate problem
areas, it will be beneficial to review the top
management’s attitude to quality.
 Time and money spent on quality-related activities are
not limitations of profitability.

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Ten Points for Senior Management – TQM Foundation

1. The Organisation needs long term commitment to

constant improvement.
2. Adopt the philosophy of zero errors/defects to change the
CULTURE to right first time.
3. Train the people to understand the CUSTOMER-
SUPPLIER relationship.
4. Do not buy products or services on price alone. Look at
the TOTAL cost.
5. Recognize that improvement of the SYSTEM needs to be
managed.
6. Adopt modern methods of SUPERVISION and
TRAINING – eliminate fear.
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Ten Points for Senior Management – TQM Foundation

7. Eliminate Barriers between departments by managing the

PROCESS – improve COMMUNICATION and TEAMWORK.

8. Eliminate the following:

• Arbitrary goals without methods,
• All Standards based only on numbers,
• Barriers to pride of workmanship,
•Get FACTS by Using the correct TOOLS.

9. Constantly educate and retrain – develop the EXPERTS in the

business

10. Develop a SYSTEMATIC approach to manage the

implementation of TQM.

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Leadership as a Major Component of TQM

Teach & Institute Leadership - Deming

◦ Leadership is management’s job.
◦ Most managers/supervisors do not truly know (how to
perform) the duties of the employees they supervise.

Three Steps to Quality - A.V. Feigenbaum

◦ Quality Leadership, with a strong focus on planning
◦ Modern Quality Technology, involving the entire work force
◦ Organizational Commitment, supported by continuous
training and motivation

Leadership can’t be delegated - Juran

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Leadership as a Major Component of TQM

◦ One of the main categories of Malcolm Baldrige

National Quality Award (leadership – 125 points)
◦ EFQM Model (Leadership – 10%)
◦ ISO 9000 Quality Management Principles (leadership &
people involvement)
◦ British Model (TQM, combined with effective
leadership, results in an organization doing the right
things, first time)

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Leadership as a Major Component of TQM

Leaders must have (According to Yoshio Kondo)

◦ a dream (vision and shared goals)
◦ strength of will and tenacity of purpose
◦ ability to win the support of followers
◦ ability to do more than their followers,
without interfering when they can do it alone
◦ successes
◦ ability to give the right advice

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 Leadership & Commitment
 Leaders establish unity of purpose, direction, and internal
environment of the organization. They create the environment in
which people can become fully involved in achieving the
organization´s objectives.
• The ability of top management to establish, practice, and lead a
long-term vision for the firm, driven by changing customer
requirements, as opposed to an internal management control role.
• Lack of top management commitment is one of the reasons for the
failure of TQM efforts (Brown et al. 1994).
• A predominant requirement for quality management is that strong
commitment from top management is vital.
• To be an effective leader in most modern firms, the top manager
must continue to develop and learn.

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 Leadership & Commitment
• Knowledge of the business and continual learning are essential
prerequisites to effective leadership (DuBrin, 1995).
• In order to effectively lead the firm, top management must be
committed to provide education and training to employees and
regarding them as valuable resources of the firm.
• Top management must be committed to allocating sufficient
resources to prevent, as well as repair, quality problems.
• Top management should discuss quality frequently; by having
session on the topic and asking questions about quality at every
staff meeting.
• Top management must train and coach employees to assess,
analyze, and improve work processes (Deming, 1986).

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Characteristics of excellent leadership - Dr. Curt Reimann,
director of the Malcolm Baldrige National Quality Award
 Visible,committed, and knowledgeable — They promote the
emphasis on quality and know the details and how well the
company is doing. Personal involvement in education, training,
and recognition. Accessible to and routine contact with
employees, customers, and suppliers.

A missionary zeal — The leaders are trying to effect as much

change as possible through their suppliers, through the
government, and through any other vehicle that promotes
quality. They are active in promoting quality outside the
company.

 Aggressive targets — Going beyond incremental improvements

and looking at the possibility of making large gains, getting the
whole work force thinking about different processes — not just
improving processes.

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Characteristics of excellent leadership - Dr. Curt Reimann,
director of the Malcolm Baldrige National Quality Award
 Strong drivers — Cycle time, zero defects, six sigma, or other
targets to drive improvements. Clearly defined customer
satisfaction and quality improvement objectives.
 Communication of values — Effecting cultural change related
to quality. Written policy, mission, guidelines, and other
documented statements of quality values, or other bases for clear
and consistent communications.
 Organization — Flat structures that allow more authority at
lower levels. Empowering employees. Managers as coaches
rather than bosses. Cross-functional management processes and
focus on internal as well as external customers.
Interdepartmental improvement teams.
 Customer contact — CEO and all senior managers are
accessible to customers.

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Good Leaders

1. Give priority attention to customers and their needs

2. Empower, rather than control, subordinates.

3. Emphasize improvement rather than maintenance.

4. They emphasize prevention.

5. Encourage collaboration rather than competition.

6. They train and coach, rather than direct and

supervise.

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Good Leaders

7. Learn from problems.

8. They continually try to improve communications.

9. They continually demonstrate their commitment to

quality.

10. Choose suppliers on the basis of quality, not price.

11. Establish organizational systems to support the

quality effort.

12. Encourage and recognize team effort.

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Role of TQM leaders
 All are responsible for quality improvement especially
the senior management & CEO’s
 Ensure that the team’s decision is in harmony with the
quality statements of the organization
 Senior TQM leaders must read TQM literature and
attend conferences to be aware of TQM tools and
methods
 Senior managers must take part in award and recognition
ceremonies for celebrating the quality successes of the
organization
 Coaching others and teaching in TQM seminars
 Senior managers must liaise with internal ,external and
suppliers through visits, focus groups, surveys
 They must live and communicate TQM.

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 Effective leadership
 Effective leadership starts with the Chief Executive’s vision,
capitalizing on market or service opportunities, continues
through a strategy that will give the organization competitive
advantage, and leads to business or service success.
 Together, effective leadership and TQM result in the
company or organization doing the right things, right
first time.
 The five requirements for effective leadership are the
following:

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 Effective leadership
1. Developing and publishing clear documented
corporate beliefs and objectives – a mission
statement
The beliefs and objectives should address:
◦ The definition of the business.
◦ A commitment to effective leadership & Quality
◦ Target sectors and relationships with customers.
◦ Indications for future direction. (principal plans)
◦ Commitment to monitoring performance against customers'
needs and expectations, and continuous improvement.
2. Developing clear and effective strategies and
supporting plans for achieving the mission and
objectives.

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 Effective leadership
3. Identifying the critical success factors and critical
processes.
4. Reviewing the management structure
5. Empowerment – encouraging effective employee
participation
particular attention must be paid to the following:

A. Attitudes
◦ The key attitude for managing any winning organization may be
expressed as “I will personally understand who my customers are
and what are their needs and expectations of me”.
◦ This attitude must start at the top, then it must percolate down to be
adopted by every employee.

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 Effective leadership
B. Abilities
◦ Every employee must be able to do what is needed and expected
of him or her.
◦ Training and its effectiveness

C. Participation
◦ For effective employees participation in making the company or
organization successful, employees must be trained to:
E Evaluate – the situation and define their objectives.
P Plan – to achieve those objectives fully.
D Do, implement the plans.
C Check – that the objectives are being achieved.
A Amend, take corrective action if they are not.

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Leadership: Guiding the Organization in the Pursuit of Excellence: Key Issues
 Is the leadership and
governance structure clearly
defined and understood?
 Are senior leaders effective
role models?
 Do leaders promote leadership
at all levels?
 Are leadership goals
established?
 Are there informal and formal
methods for reviewing
leadership and governance
effectiveness throughout the
organization?
 Are leaders actively engaged in
campus activities?
 Are leaders actively engaged
with public, professional, and/or
academic groups?
 Are ethics and integrity
emphasized?
 Are the organization’s pertinent
legal and regulatory risks and
issues addressed?
 Do leaders encourage public
responsibility and attention to the
organization’s impact on the
physical and social environment?
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Leadership benefits
 for policy and strategy formulation, establishing
and communicating a clear vision of the
organisation's future;
 for goal and target setting, translating the vision
of the organisation into measurable goals and
targets;
 for operational management, empowered and
involved people achieve the organisation's
objectives;
 for human resource management, having an
empowered, motivated, well informed and stable
workforce.

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LEADERSHIP FOR INSPIRING CHANGE IN QUALITY

Why leadership for change?

• Eighty per cent of TQM initiatives fail because
they do not have the backing of the senior
management.
• Commitment is the foundation of an effective
TQM initiative.
• Leadership is the key in promoting
commitment.
• Leadership and commitment go hand in hand.
• TQM needs leaders who are committed to
change.
Leadership for Total Quality - Total quality is
defined as “performance leadership in meeting
customer requirements by doing the right the
first time.”
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Change Leadership
The most challenging aspect of business is
leading and managing change
The business environment is subject to fast-
paced economic and social change
Modern business must adapt and be flexible to
survive(Flexible to the changes)
Problems in leading change stem mainly from
human resource management (HR should assist
changes in the Org.)
Leaders need to be aware of how change
impacts on workers ( Leaders should understand the
psychology of employees ‘Fear of loosing job’)
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Leadership in TQM Role Model

TRANSFORMATIONAL LEADERS VERSUS

TRANSACTIONAL MANAGERS:

Transformational leaders: They provide mission

for others to follow and they expect the same
high standards from their people. They are
interested in ‘ends’ rather than ‘means’.

Transactional managers: They are good at

achieving short-term results, foster teamwork
and work in a practical manner.
Evidently, transformational leaders and
transactional managers need to work together.

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Leadership Characteristics
Jim Collins, “Good To Great”

Level One
◦ Highly capable
◦ Contributes through talent, knowledge, skills, and
good work habits
Level Two
◦ Team member
◦ Contributes individual capabilities to the group and
works effectively with others
Level Three
◦ Competent manager
◦ Organizes people and resources toward the effective
and efficient pursuit of predetermined objectives

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Leadership Characteristics
Jim Collins, “Good To Great”

Level Four
◦ Catalyst leader
◦ Makes a commitment to and vigorous pursuit of a clear
and compelling vision, stimulating higher performance
standards
Level Five
◦ Executive leader
◦ Builds enduring greatness through a paradoxical blend
of personal humility and professional will

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How all leaders drive the organisation towards a position of
Business Excellence

Give & Receive

Training

Develop Communicate
Goals Effectively

Leadership

Make Recognition
Themselves
Accessible
Listen & Respond
to People

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Comparison of Traditional Management and TQM

S.
TQM Traditional Management Aspect N
o
.
Products fit for customer us. (a) Products meet specifications. (a) Quality 1.
definition
Focus on building quality into (b) Focus on post-production (b)
the work process. inspection.

Systematic approach to seek, Ambiguous understanding of Customers 2.

understand and satisfy customer requirements.
internal and external
customers.
No tolerance for errors: do it A certain margin of error, Errors 3.
right the first time and waste and rework is
every time approach. tolerable.
Gradual but continuous Technological break-through Improvement 4.
improvement of each such as automation. emphasis
function.
Participative and disciplined Unstructured problem Problem solving 5.
problem solving and solving and decision
decision making based making by individual
on hard data. managers and
specialists.

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STRATEGY AND THE STRATEGIC PLANNING PROCESS

 Evidence
suggests that those companies with strategies based on
TQM have achieved stunning successes.

 Most of these successful companies will attribute their progress

to a quality-based strategy that was developed through a formal
structured approach to planning.

 Total Quality begins with a strategic decision — a decision that

can only be made by top management — and that decision,
simply put, is the decision to compete as a world-class company.
Total Quality concentrates on quality performance — in every
facet of the business — and the primary strategy to achieve and
maintain competitive advantage. It requires taking a sys‑tematic
look at an organization — looking at how each part interrelates
to the whole process. In addition, it demands con­tinuous
improvement as a “way of life.”

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STRATEGY AND THE STRATEGIC PLANNING PROCESS

Professors Andrews, Christensen, and others in

the Policy group at the Harvard Business School
argue that corporate strategy is the pattern of
decisions in a company that:
(1) determines, shapes, and reveals its objectives,
purposes, or goals;
(2) produces the principal policies and plans for
achieving these goals; and
(3) defines the business the company intends to be in,
the kind of economic and human organization it
intends to be, and the nature of the economic and
non eco­nomic contribution it intends to make to
its shareholders, employees, customers, and
communities.

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STRATEGY AND THE STRATEGIC PLANNING PROCESS

Michael Porter describes the development

of a competitive strategy as “a broad
formula for how a business is going to
compete, what its goals should be, and what
policies will be needed to carry out those
goals.”
Strategic Planning is a deliberate process
used by organizations to develop a mission,
vision, guiding values, strategic objectives,
and specific strategies for achieving the
objectives.
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Strategic Planning
Strategic business planning is similar to strategic
quality planning.

7 steps to strategic planning

1. Customer needs
2. Customer positioning
3. Predict the future
4. Gap analysis
5. Closing the gap
6. Alignment
7. Implementation

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TQM - Strategy Approach
 an approach to improving the competitiveness,
effectiveness and flexibility of a whole
organisation..... a way of planning, organising
and understanding each activity and it depends
on each individual at each level. TQM is a way
of ...... bringing everyone into the processes of
improvement (Oakland 1995)

 a TQM programme promotes "quality" as a

strategic imperative. Comprehensive TQM
programme requires re-evaluation how
organisational members address the quality of
their work and production /service processes.

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TQM supported by policy commitment
 culture & practice
 change strategy & organisational renewal
 injection of energy
 staff encouraged to practice positive, initiative taking
behaviours
 a prevention ethic
 quality improvement teams/circles
 use of methods and techniques (tools)

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The organisations mission, values, strategic direction & the
manner in which it achieves them

Employees
Customers Suppliers
Use Appropriate Legislation
Benchmarking
Information
Competitors

Set Communicate
Targets to all

Strategy &
Planning
& Review
Develop Improve
Changes
Check
Understanding

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 Determine
strategic intent Strategic
Define
Management
organizational mission
Process
Analyze environment

Set objectives

Assess
Determine requirements
resources

Develop action plans

Implement plans

Strategic
Planning Feedback
Monitor outcomes

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FACTORS DETERMINING COMPETITIVE STRATEGY

STRENGTHS OPPORTUNITIES
& &
WEAKNESSES THREATS

Factors Factors
Internal COMPETITIVE External
to the STRATEGY to the
Company Company

BROADER
PERSONAL
SOCIETAL
VALUES EXPECTATIONS

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Objective Setting through SWOT

SWOT ANALYSIS

Internal Strengths Weaknesses

External Opportunities Threats

SWOT 43
STRATEGIC PLANNING PROCESS (major questions)

Following a SWOT analysis, the strategic plan

will involve a process to search for the answers
to the following questions:
1. Who are we?
2. What are we known for?
3. What do we do better than 90% of our
competitors?
4. What do our competitors beat us on?
5. What do we wish to be known for?
6. Where are we headed as an organization?
7. Where do we wish to be headed?
8. How would we get there?
9. What would it take to get us there?

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Components of Strategy

The major role that quality plays in strategic

planning can best be understood by examining
the components of a strategy:
◦ Mission, vision, and guiding values
◦ Product/market scope
◦ Competitive edge (differentiation)
◦ Supporting policies
◦ Objectives
◦ Organizational culture

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Quality statements

Besterfield
The quality statements include the vision
statement, mission statement, and quality
policy statement.
Once developed, they are only occasionally
reviewed and updated. They are part of the
strategic planning process.
There may be considerable overlap among
the three statements.

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Quality statements

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Quality Statements
1. Vision statement :is the declaration of what an
organization should look like five to ten years in the
future.

2. Mission statement : answers the questions that who we

are ,who are the customers ,what we do and how we do it.
This statement is usually one paragraph or less in
length ,is easy to understand and describes the function of
the organization.

3. Quality policy statement : is a guide for everyone in the

organization as to how they should provide products and
service to the customers
It should be written by CEO with feed back from work force and be approved by
quality council.

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STRATEGIC QUALITY MANAGEMENT (Environment)

Environment
The major determinant of a mission is the
environment in which the firm plans to
operate: the general environment, the industry
environment, and the competitive
environment. Strategy is essentially the
process of posi­tioning oneself in that
environment as trends and changes unfold.
Thus, it is necessary to identify trends in the
environment and how they affect the strategy
of the firm.

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STRATEGIC QUALITY MANAGEMENT

Product/Market Scope
This answers the questions: What am I selling
and to whom am I selling it? The answers are
more complex than they appear.
in today’s heightened competitive
environment, a product or service is not simply
sold to anyone who will buy it.
To be effective, value must be sold to a
particular market or customer segment.
Strategic planning involves the determination
of these strategy components, and quality plays
a major role in this process.

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 Vision statement:
A short declaration of what an organization aspires to be in
the future. It is an ideal state that an organization
continually strives to achieve. It is timeless, inspirational,
and becomes deeply shared within the organization.
 Successful vision – a concise statement of the desired end
– provides a succinct guideline for sound decision making.
 Although mission and vision are often used as
synonymous, sometimes a distinction is made in which
case mission evolves from the vision.
 Example: “We will be the provider of safe, reliable, cost-effective
products and services that satisfy the electric-related needs of all
customer segments.” [Florida Power & Light Company].

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Vision statement:

A vision reflects where the organization is

headed or wishes to be. It is like a
destination dreamed up by the organization.
Every decision made by the organization
must be informed by its vision. An
organization’s
vision must come from top management,
and must be well articulated and understood
by all. The guiding values reflect the beliefs
that shape and mold the decisions and
choices an organization makes.
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Mission statement:
The mission statement answers the following
questions: who we are, who are our customers,
what we do, and how we do it.
This statement is usually one paragraph or less
in length, is easy to understand, and describes
the function of the organization. It provides a
clear statement of purpose for employees,
customers, and suppliers.
Example: “Our mission is to improve continually our
products and services to meet our customers’ needs,
allowing us to prosper as a business and provide a
reasonable return to our shareholders.” [Ford Motor
Company].

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Mission statement:

The mission is the primary overall purpose of

an organization and its expressed reason for
existence. The simplest statement of mission
might be to “meet the needs/values of
constituents.”
Example: The mission of NCR is stated simply: “Create
Value for Our Stakeholders.” Stakeholders are identified as
employees, share­holders, suppliers, communities, and
customers.13 The mission can be operationalized by
statements of how it will be imple­mented for each
stakeholder.

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Mission & Vision
Ifthe vision deals with ‘what’, the mission deals
with ‘why’ and ‘how’. It identifies the roles or
activities to which an organization is committed
and provides overall direction for achieving the
mission.
The mission provides the guide map, milestones
for achieving the vision.

Example: “To be the leading manufacturer and

supplier of measurement and computing solutions
whilst achieving the highest levels of customer
satisfaction, quality, and business ethics and
contributing to India’s technological, economic
and social needs.” [Hewlett-Packard India].
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Quality policy statement:
Besterfield
The quality policy is a guide for everyone in the
organization as to how they should provide
products/service to the customers. It is written
after obtaining feedback from the workforce and is
approved by the quality council.
A quality policy is a requirement of ISO9000.
Some common characteristics are:
‘Quality is first priority’; ‘Continually improve the
quality’; ‘Equal or exceed the competition’; ‘Meet
the needs of internal and external customers’, etc.

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:Quality policy statement
Example: “Xerox is a quality company. Quality
is the basic business principle of Xerox. Quality
means providing our external and internal
customers with innovative products and services
that fully satisfy their requirements. Quality is
the job of every employee.” [Xerox
Corporation].

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Vision & Plan Statement

Vision statement describes how a firm wants to be seen in its chosen

business. Vision describes standards, values, and beliefs of the
organization.
Intent of a vision statement is to communicate the firm’s values,
aspirations and purpose, so that employees can make decisions that
are consistent with and supportive of these objectives.
Plan statement is a detailed road map of actions; what and how
organization intended execute that plan in future.
Organization may have many kinds of plan;
- Strategic business performance plan
- Quality goal plan
- Quality improvement plan

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 Vision & Plan Statement

Strategic business performance plan can be divided into long- and

short-term business performance plans that include, for example,
market share, profits, annual sales, exports, and sales growth.
Quality goal plan can involve, for example, conformity rate, defect
rate, internal failure costs, external failure costs, performance,
reliability, and durability.
Quality improvement plan aims for quality improvement, which are
actions taken throughout the organization to increase the effectiveness
and efficiency of activities and processes in order to provide added
benefits to both the organization and its customers (ISO 8402, 1994).

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Strategic Quality Goals and Objectives

Goals must be focused

Goals must be concrete
Goals must be based on statistical evidence
Goals must have a plan or method with
resources
Goals must have a time-frame
Goals must be challenging yet achievable

60
Top Management Commitment

Above all, demonstration of commitment

by top management is essential. This
commitment is demonstrated by behaviors
and activities that are exhibited throughout
the company. Categories of behaviors
include the following:
◦ Signaling — Make statements or take actions
that support the vision of quality, such as
mission statements, creeds, or charters directed
toward customer satisfaction. Publix
supermarkets’ “Where shopping is a pleasure”
and JC Penney’s “The customer is always
right” are examples of such statements.

61
Top Management Commitment

 Focus — Every employee must know the mission,

his or her part in it, and what has to be done to
achieve it. What management pays attention to and
how management reacts to crisis is indicative of this
focus. When all functions and systems are aligned
and when practice supports the culture, everyone is
more likely to support the vision. Johnson and
Johnson’s cool reaction to the Tylenol scare is such
an example.
 Employee policies — These may be the clearest
expression of culture, at least from the viewpoint of
the employee. A culture of quality can be easily
demonstrated in such policies as the reward and
promotion system, status symbols, and other human
resource actions.

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Commitment and policy
 TQM must start at the top with the chief Executive or
equivalent.
 The Leader (Top Management) is responsible for
coordination the work between the different departments in
the company (Marketing, Design Production, Purchasing,
Distribution, and Service Functions).
 The middle management must explain the principles of
TQM to the people for whom they are responsible, and
ensure that their own commitment is communicated.
 The chief Executive must accept the responsibility for
and commitment to a quality policy in which he must
really believe.
 Within each and every department of the organization
at all levels, starting at the top, basic changes of attitude
will be required to operate TQM.

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Commitment and policy
 Controls, systems and techniques are very important in
TQM, but they are not the primary requirement.
 TQM requires from the management total
commitment, which must then be extended to all
employees at all levels and in all departments.
 Going into organizations sporting poster-campaigning
for quality instead of belief, one is quickly able to
detect the falseness.
 The opposite is an organization where TQ means
something, can be seen, heard, felt.
 Commitment is an essential element of a TQM drive.
Commitment must exist at every level. it is adherence
to plans, principles and procedures.

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Supporting Policies

Policies are guidelines for action and

decision making that facilitate the
attainment of objectives. Taken together, a
company’s policies delineate its strategy
fairly well. Tell me your policies and I can
tell you your strategy.
A firm’s policy choices are essential as
drivers of differentiation. They determine
what activities to perform and how to
perform them.

65
Supporting Policies

The role of policies as a critical element of strategy

is displayed in the policy wheel.
In the center are the mission (the purpose of the
organization), the differentiation (how to compete in
the market), and the key objectives of the business.
The spokes of the wheel represent the functions of
the business.
Each function requires supporting policies
(functional strategies) to achieve the hub. If the
firm’s strategy calls for competing on quality, then
this becomes the impetus for policy determination.
Each functional policy supports this central strategy
and the objectives that are determined during the
planning process.

66
Supporting Policies

The quality policy:

 Every organization should develop and state its policy
on quality, together with arrangements for its
implementation.
 The contents of the policy should be made known to all
employees.
 Management must be dedicated to the regular
improvement of quality, not simply a one-step
improvement to an acceptable plateau.

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Supporting Policies

 Ideas must be set out in a quality policy that requires top

management to:
1. Establish an ‘organization’ for quality.
2. Identify customer’s needs and perception of needs
3. Assess the ability of the organization to meet these needs
economically.
4. Ensure that bought-in materials and services reliably meet the
required standards of performance and efficiency.
5. Concentrate on the prevention rather than detection philosophy.
6. Educate and train for quality improvement.
7. Review the quality management systems to maintain progress.

 The quality policy must be publicized and understood at

all levels of the organization.

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Elements of a Quality Policy
 organisation structure for quality: roles, responsibilities
 how client/customer needs & perceptions are identified
 product-service development
 technical/economic resource allocation
 QMS scheme & operation
 how suppliers & supplies are required to meet standards
 prevention & zero defects
 communication, knowledge, information & staff
development
 audit of QMS in operation
 partnership with staff, customers & suppliers.
 physical manifestation not just conceptual

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STRATEGIC QUALITY MANAGEMENT (Competitive Advantage)

Differentiation
 Michael Porter, in his landmark book Competitive Strategy, identified
two generic competitive strategies:
(1) overall cost leadership and
(2) differentiation.
 Cost leadership in turn can be broad in market scope (e.g., Ivory Soap,
Emerson Electric, Black & Decker) or market segment focused (e.g.,
La Quinta Motels, Porter Paint).
 The second strategy involves differentiating the product or service by
creating something that is perceived by the buyer as unique.
 Differentiation, frequently called the competitive edge, answers the
question: Why should I buy from you?
 Differentiation can also be broad in scope (American Airlines in on-
time service, Caterpillar for spare parts support) or focused (e.g.,
Godiva chocolates, Mercedes automobiles).
 Thus, there are four generic strategies, but each depends on something
different — something unique or distinguishing. Even an effective
cost leadership strategy must start with a good product.

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STRATEGIC QUALITY MANAGEMENT (Competitive Advantage)

◦ Differentiation may depend on one or more or a

combination of Quality dimensions (Performance,
Features, Reliability, Conformance, Durability,
Serviceability, Aesthetics, Perceived quality);

◦ but the point is that when differentiating based on

quality, quality must be defined in terms that meet
customer expectations, even if this is only what the
customer perceives as quality.

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STRATEGIC QUALITY MANAGEMENT (Competitive Advantage)

Market Segmentation (Niche) Quality

Quality means different things to different
people. In terms of strategic quality
management, this means that the firm must
define that segment of the industry, that
generic strategy, and that particular customer
group which it intends to pursue. This can be
called a segmented quality strategy.

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 WHEEL OF COMPETITIVE
STRATEGY
Target
Markets
Product
Marketing
Line

Finance &
Sales
Control
Differentiation
Mission
GOALS
R&D Distribution

Purchasing Mfging
Labor

Competitive Strategy is a combination of the Ends (Goals) for which the

firm is striving and the Means (Policies) by which is it seeking to get
there
1
END