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Business Policy
&
Strategic Management
Not only how much better than you own history but how much
better than your competitors
What is that you do that the customers value better than the
competition
If you are not the best in a critical activity, you are sacrificing
the competitive advantage by continuing to do what you are
doing with old practices
Only the firms that are able to continually build new strategic
assets faster and cheaper than the competition will earn superior
customer value and returns over long period
Amity Business School
“The first job we have is to turn out quality merchandise that consumers will buy and
keep on buying. If we produce it efficiently and economically, we will earn a profit, in which
you will share.”
- William Cooper Procter
Amity Business School
TQM IS
– Encompassing and mobilizing entire organization to satisfy the customer
– Improving each individual and groups within the organization
– Integrating the philosophy and practices in day to day approach to work
– Influencing all product, services, systems, process & technology
– Long term and continuous and is sensitive to the social responsibilities of
the enterprise
– Supporting ‘High Performance Culture through teamwork, trust &
leadership
IT IS NOT
– A program, that has a beginning & an end.
– It is a continuous journey.
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History…
• Craftsmen… Early days, generations learning, own inspector.
• Early 20th Century… Unskilled repetitive, start of interchangeability.
• Ford Story…. Standardization, concepts for quality, Mass Mfg.
• Post War….. American Society for Quality 1944
Safety, Public interest ‘producer beware’
• Dr. Joseph Juran & Dr. Edward Demming story
Pioneering work in Total Quality ( in Japan )
Demming returns to US (1980-1993)
• Product Quality to Performance Excellence
‘Quality of Management’ as important as ‘Management of Quality’
• American Society for Quality identifies future challenges
Partnering, Learning system, Adaptability and speed of change
Environmental Sustainability, Knowledge Focus, Globalization
Customization & Differentiation, Shifting Demographics
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Joseph M Juran
Deming
Malcom Baldrige
Amity Business School
• . The following table outlines the major points of Dr. Juran's quality management ideas:
Quality Trilogy:
• Quality Planning
• Identify who are the customers.
• Determine the needs of those customers.
• Translate those needs into our language.
• Develop a product that can respond to those needs.
• Optimise the product features so as to meet our needs and customer needs.
• Quality Improvement
• Develop a process which is able to produce the product.
• Optimise the process.
• Quality Control
• Prove that the process can produce the product under operating conditions with minimal
inspection.
• Transfer the process to Operations.
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Edward Deming
• International Activities
• Statistician, Allied Mission to Observe the Greek Elections, January-April 1946; July-
October 1946 Consultant in sampling to the Government of India, January and
February 1947; December 1951; March 1971
Delegate from the A.A.A.S. to the Indian Science Congress, New Delhi, January 1947
Adviser in sampling techniques to the Supreme Command of the Allied Powers,
Tokyo, 1947 and 1950
Teacher and consultant to Japanese industry, through the Union of Japanese
Scientists and Engineers 1950, 1951, 1952, 1955, 1960, 1965
Member of the United Nations Sub-Commission on Statistical Sampling, 1947-52
Consultant to the Census of Mexico, to the Bank of Mexico, and to the Ministry of
Economy, 1954, 1955
Consultant., Statistisches Bundesamt, Wiesbaden, 1953
Consultant to the Central Statistical Office of Turkey, 1959-1962
Lecturer, London School of Economics, March 1964
Lecturer, Institut de Statistique de l'Universite de Paris, March 1964
Consultant to the China Productivity Center, Taiwan, 1970, 1971
Lecturer in Santiago, Córdoba (Argentina), and Buenos Aires, under the auspices of
the Inter American Statistical Institute, 1971.
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TQM
All Employees involved
Journey to TQM…. Empowerment
Teamwork
Quality Strategy
Quality Assurance
•Quality Systems ISO
•Quality Planning
Quality Control
•Quality Policy
•Quality Controls
•Quality Standards
•Problem Solving
•Statistical Controls
•Process Performance
•Treat Quality Problems
Inspection
•Error Detection
•Rectification
•Unhappy Customer
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Definitions of Quality
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Quality Perspectives
transcendent &
product-based user-based
needs
Marketing
Customer
value-based Design
products
and manufacturing-
services based
Manufacturing
Distribution
Information flow
17
Product flow
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Paradigm Shift
From….
Management of Quality
to
Quality of Management
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Malcolm Baldrige
Criteria Weightage
• Leadership 12%
• Strategic Planning 8%
• Customer & Market Focus 8%
• Information & Analysis 8%
• Human Resources Development
& Planning
10%
• Process Management
• Business Results
10%
44%
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Understanding of Criteria
1. Leadership
– Leadership System.. How the senior leaders guide the company in setting directions
and in developing and sustaining an effective leadership system.
– Company Responsibility & Citizenship… How the company addresses the its
responsibility to the public and how it practices good citizenship.
1. Strategic Planning
– Strategy Development Process.. How the company sets strategic directions to better
define and strengthen its competitive position and how the development process leads
to action plan for deploying and aligning key plan and performance requirements.
– Company Strategy.. How the performance requirements and measures align with the
human resource plan and how the plans project the co’s future as compared to the
competitors and key benchmarks.
1. Customer & Market Focus
– Customer & Market Knowledge.. How the company determines the long term
requirements and preference of target and potential customers and market and
anticipate needs to develop business opportunities .
– Customer Relationship & Satisfaction Enhancement..How the company determines
and enhances the satisfaction of customers to strengthen relationships to improve
current offerings and to support customer and market related planning.
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7. Business Results
– Customer Satisfaction Results..How the co. performance on Customer Satisfaction
– Financial & Market Results….Co’s key financial & marketplace performance
– Human Resource Results…Co’s Human Resource results including employee well-
being, satisfaction, development and work system performance
– Supplier & Partner Results…Co’s supplier and partner results
– Company-Specific Results…How the company’s key operational performance and
results significantly contribute to key company goals- customer satisfaction, operational
effectiveness and financial/market place and performance.
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Leadership
Strategic
Planning
Leadership Operations
Customer and
Market Focus
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Executive Leadership
Defining and communicating business directions
Ensuring that goals and expectations are met
Reviewing business performance and taking appropriate
action
Creating an enjoyable work environment
Soliciting input and feedback from customers
Ensuring that employees are effective contributors
Motivating, inspiring, and energizing employees
Recognizing employee contributions
Providing honest feedback
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Key Idea
Effective leadership requires five core
leadership skills:
• vision
• Empowerment
• Intuition
• self-understanding
• and value congruence.
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Leadership System
• Leadership System
….. how decisions are made, communicated, and
carried out at all levels; mechanisms for leadership
development, self-examination, and improvement
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Key Idea
Governance
• Governance
…. The system of management and controls
exercised in the stewardship of an organization.
– Approving strategic direction
– Monitoring and evaluating CEO performance
– Succession planning
– Financial auditing
– Executive compensation
– Disclosure
– Shareholder reporting
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Key Idea
• Definition
– Traditional
– Leadership for Quality … Assortment of behaviors
vision, hope, stimulation, mission, transformation dreams to
reality, stewardship, Integration, courage, communication,
consensual, conviction, empowering
deploying, motivating, motivating and tenacity.
• ‘Executive Leadership’-not the only one
– Changed Business Scenario & New Economy demanding Unit,
Team, Project and Transformational Leadership
‘No more the one or few men show’
• Strategic Plan Integration
– Quality is the key element to strategic planning for ‘ Quality
management’ and ‘Performance Excellence’ under the current
business environment
– Identification of such competitive advantages that is driven by
customer and market.
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• Effective Leadership
Five Core Skills– vision, empowerment, intuition, self-understanding & value
congruence
• Leadership Practices
– Customer Focus, Strategic vision, Quality value
– Creating sustainable leadership, environment, empowerment, innovate
– Setting high expectations, demonstrate substantial personal commitment and
involvement, missionary zeal and constancy of purpose
– Integrating quality values in daily values, extensive communication
– Integrate public responsibility and community support in business practices
• TQ Leadership Contrasts….. Details
• Leadership & Public Responsibilities
– Public Health, safety & environment
– Compliance
– Corporate Citizenship, Community education, welfare, conservation
– Industry Obligation to Community
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TQ Leadership Contrasts
Traditional TQ Leaders
Strategic Planning
“The process of envisioning organization’s future and
developing necessary procedures and operations to shape and
achieve that future”
Concept
• Plan that integrates an organization’s major goals
• Policies and actions sequences in alignment and supporting the goals
• Marshalling and allocating organization’s resources into an unique
and viable posture
• Based on one’s relative strengths and competencies and anticipated
changes in the environment
• Counter measures and actions anticipating contingent moves by
intelligent opponents
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Leading Practices
• Top management, employees & even customers actively participate in
the planning process
• Systematic planning process for strategy development and deployment
including measurement, feedback and review.
• Gathering and analysis of variety of data external & internal factors
• Alignment of short-term action plans with long term strategic objectives.
• Derive human resource plans from strategic objectives and action plans
Strategy Development
Vision
Guiding Principle
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Mission
Definition of products and services, markets,
customer needs, and distinctive competencies
Vision
….Where the organization is headed and
what it intends to be.
– Brief and memorable - grab attention
– Inspiring and challenging - creates excitement
– Descriptive of an ideal state - provides guidance
– Appealing to all stakeholders - employees can identify with
Solectron:
“Be the best and continuously improve”
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Environmental Assessment
TEMPLES or PESTLE
Key Idea
•Strategies are broad statements that set the direction
for the organization to take in realizing its mission
and vision.
• Balance Scorecard
• Hoshin Kanri or Hoshin Planning or Policy Deployment
• Management by Planning
Balance Scorecard
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Policy Deployment
(Hoshin Kanri)
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Key Idea
As more and more companies accept the process view of
organizations, they are structuring the quality organization
around functional or cross-functional teams.
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Strategic Planning
– Customer & market driven quality ‘integrated into bloodstream’
– Integrated into the product, operations and service processes
– Operational Excellence to deliver on above
Deployment
– Deployment to the right people with ‘smart’ objectives
– Organization’s ability to translate strategic objective into action plans
TQ aspects include
Customer Driven •Empowerment
Quality •Diffused Leadership
TQM way to implement strategy •Institutionalized
Learning
Operational •Innovation and
Excellence Experimentation
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Focusing on Customers
50
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Key Idea
To create satisfied customers, the organization
needs to identify customers’ needs, design the
production and service systems to meet those
needs, and measure the results as the basis for
improvement.
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Importance of Customer
Satisfaction and Loyalty
“Satisfaction is an attitude; loyalty is a behavior”
Key Idea
Perceived Customer
quality complaints
Perceived Customer
value satisfaction
Customer
expectations Customer
loyalty
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Key Idea
Leading Practices
Requirements Requirements
and feedback and feedback
60
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Key Idea
Customer Segmentation
• Demographics
• Geography
• Volumes
• Profit potential
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Key Idea
66
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Key Idea
As customers become familiar with them,
exciters/delighters become satisfiers over
time. Eventually, satisfiers become
dissatisfiers.
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Key Idea
Moments of Truth
• Every instance in which a customer comes in
contact with an employee of the company.
• Example (airline)
– Making a reservation
– Purchasing tickets
– Checking baggage
– Boarding a flight
– Ordering a beverage
– Requests a magazine
– Deplanes
– Picks up baggage
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Key Idea
Key Idea
75
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Key Idea
Survey Design
• Identify purpose
• Determine who should conduct the survey
• Select the appropriate survey instrument
• Design questions and response scales
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Key Idea
Performance-Importance Analysis
Performance
Low High
Vulnerable Strengths
High
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Key Idea
Difficulties with
Loyalty grid
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• “Organization that have not identified the customers they are targeting have a
special handicap in achieving total customer satisfaction and create many “merely
satisfied’s”.
– Customer tell about only extra-ordinary experience
– Only on third of the ‘dissatisfied’ tell – but the talk alright.