Chapter 4, Strategic Quality Planning TQM - Revised

Chapter 4:Strategic Quality Planning
Define the term strategy?

1. The science and art of using all the forces of a nation to
execute approved plans as effectively as possible during
peace or war. The science and art of military command as
applied to the overall planning and conduct of large-scale
combat operations.
2. A plan of action resulting from strategy or intended to

accomplish a specific goal.
3. The art or skill of using stratagems in

endeavors such as politics and business
Strategy and Quality Planning
 Many organizations are finding that

strategic quality plans and business
plans are inseparable.
 In order to understand the Strategic
Planning, we need to understand quality
statements of an organization.
The Quality Statements
 Quality statements are part of strategic planning process

and once developed, are occasionally reviewed and
updated.
 The quality statements include:
Vision statement
Mission Statement
Quality Policy
 The utilization of three statements varies from

organization to organization. Small organization may use
only the quality policy statement.
 Vision Statement :The vision statement is a short declaration

what an organization aspires to be tomorrow
 A vision statement, on the other hand, describes how the future will
look if the organization achieves its mission.
 Successful visions are timeless, inspirational, and become deeply

shared within the organization, such as:
 IBM’s Service
 Apple’s Computing for the masses
 Disney theme park’s the happiest place on the earth, and
 Polaroid’s instant photography
 Mission Statement: A mission statement concerns what an organization is all

about. The statement answers the questions such as: who we are, who are our
customers, what do we do and how do we do it.
 This statement is usually one paragraph or less in length, easy to understand,

and describes the function of the organization.
 It provides clear statement of purpose for employees, customers, and suppliers.
 An example of mission statement is:
 Ford Motor Company is a worldwide leader in automatic and automotive

related products and services as well as the newer industries such as
aerospace, communications, and financial services. Our mission is to improve
continually our products and services to meet our customers’ needs, allowing
us to prosper as a business and to provide a reasonable return on to our
shareholders, the owners of our business.
Seven Steps to Strategic Planning
 The process starts with the principles that quality and customer
satisfaction are the center of an organization’s future. It brings
together all the key stakeholders.
 The strategic planning can be performed by any organization. It
can be highly effective, allowing the organizations to do the right
thing at the right time, every time.
 There are seven steps to strategic Quality Planning:
1. Discover customer needs
2. Customer positioning
3. Predict the future
4. Gap analysis
5. Closing the gap
6. Alignment
7. Implementation
1. Customer Needs: The first step is to discover the future needs of the
customers. Who will they be? Will your customer base change? What
will they want? How will they want? How will the organization meet and
exceed expectations?
2. Customer Positioning: Next, the planners determine where

organization wants to be in relation to the customers. Do they want to
retain, reduce, or expand the customer base. Product or services with
poor quality performance should be targeted for breakthrough or
eliminated. The organization’s needs to concentrate its efforts on areas
of excellence.
3. Predict the future: Next planners must look into their crystal balls to
predict the future conditions that will affect their product or service.
Demographics, economics forecasts, and technical assessments or
projections are tools that help predict the future.
4. Gap Analysis : This step requires the planner to identify the gaps
between the current state and the future state of the organization.
An analysis of the core values and concepts is an excellent
technique for pinpointing gaps.
5. Closing the Gap: The plan can now be developed to close the
gap by establishing goals and responsibilities. All stakeholders
should be included in the development of the plan.
6. Alignment: As the plan is developed, it must be aligned with the
mission, vision, and core values and concepts of the organization.
Without this alignment, the plan will have little chance of success.
7. Implementation: This last step is frequently the most difficult.
Resources must be allocated to collecting data, designing
changes, and overcoming resistance to change. Also part of this
step is the monitoring activity to ensure that progress is being
made. The planning group should meet at least once a year to
assess progress and take any corrective action.
Strategy and Strategic Planning Process in
Business
 Corporate strategy is the pattern of

decisions in a company that:
1. Determines, shapes, and reveal its objectives,
purposes or goals;
2. Produces the principal policies and plans for

achieving these goals; and
3. Defines the business company intends to be in,
and nature of economic contribution it intends to
make to its share holders, employees,
customers, and communities.
Prof Andrews Christensen
Harvard Business School
Strategy and Strategic Planning Process in
Business
Michael Porter, the most popular writer on the subject of

Strategy describes the development of competitive strategy
as:
“a broad formula for how a business is going to compete, what

is goals should be, and what policies will be needed to carry
out those goals”
Business Definition for Competitive
Advantage
 A factor giving an advantage to a nation, company,
group, or individual in competitive terms.
 Used by Michael Porter for the title of his classic

text on international corporate strategy, The
Competitive Advantage of Nations (1990).
 The concept of competitive advantage derives

from the ideas on comparative advantage of the
19th-century economist David Ricardo.
Strategic Quality Management
 The management of strategic quality

planning begins from the top
management. It is the job of Chairman or
CEO to make ultimate decision. It cannot
be delegated.
 The components of strategic Planning
position are:
 Mission (Quality Statement)
 Product/market scope
 Competitive Edge (differentiation)
 Supporting policies
 Objectives
 Organizational Culture
 Quality Policy Statement: The quality policy is a

guide for everyone in the organization as to how they
should provide products and services to the customers.
 It should be written by the CEO with feedback from the
workforce and be approved by the quality council.
 A quality policy is a requirement of ISO 9000
 A simple quality policy is:
 Xerox is a quality company. Quality is the basic business principle
for 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.
The Components of Strategic Planning
Product/Market Scope
 In terms of strategic planning, an organization needs to think,
“What am I selling and to whom am I selling”
 A company does not simply sell a product or service. It sells
value to a particular segment of market.
 Value is what customer-not the company-says it is.
 Quality is defined differently to different market segment and
each company must define its market segment and customer
value in that segment.
 Every purchase decision is a function of price and quality. Price is
generally known, but quality is in the mind of individual customer.
 In today’s heightened competitive environment, a product or
service
Competitive Edge (Differentiation)

 Competitive edge, frequently called differentiation is best explained in
chapter by Michael Porter in his landmark book Competitive advantage:
Why should I buy from you?
 Porter identified two generic strategies:

1. Overall cost leadership: Cost leadership requires aggressive
construction of efficient-scale facilities, vigorous pursuit of cost
reductions from experience, tight cost and overhead control, and cost
minimization in areas like R&D, service, sales force, advertising, and
so on.
2. Differentiation: Creating something that is perceived by the buyer as

unique.
Objectives
 Management Statesman Peter Drucker has said “A company has
but one objective: to create a customer’
 Following this statement, he proceeded to popularize the concept

of management by objective (MBO) and identified eight key areas
for which objectives must be set:
1) Marketing
2) Innovation 5) Physical Resources
3) Human Organization 6) Productivity
4) Financial Resources 7) Social Responsibility
8) Profit Requirements
Various Approaches to view quality
 Quality means different to different
people. So are the approaches to address
it by the businesses:
1. Marketing: Performance, features,
services focus on customer concerns
2. Engineering: Specifications, Product
based concerns
3. Manufacturing: Conformance to
specifications, Cost reduction
Market Segmentation
 Quality means different to different people.
In terms of strategic quality management,
this means that a firm must define that
segment of the industry and the particular
customer group.
 The businesses thus need to define
product lines, each of which is marketed to
a different part of the market and each with
differing quality attributes.
Supporting Policies
 Policies are guidelines for action and decision
making and facilitate the attainment of objectives.
 Taken together, a company’s policies delineate its

strategy fairly well.
 Tell me your policies and I can tell your strategy.

Policy Wheel
Target Product
Market Line
Finance
and Marketing
Control
Differentiation
Research Differentiation
and
Mission
Mission
Development Objectives Sales
Objectives
Human Distribution
Resources
Supplier Manufacturing
 Consistency of Supporting Policy
The test for consistency of supporting policies for a hypothetical firm
Functions Illustration of Policies

Target Market Map the industry and seek out those segments where we have the
advantage
Product line Product line breadth is confined to those products where our value
chain is appropriate
Marketing Market research to be directed towards defining customer
expectations
Sales Sales force hired and trained to promote our competitive edge
Distribution Select distributors that complement our quality edge
Manufacturing Invest in automation for improvement of quality and productivity
Supplier Select supplier that have applied for Baldrige Award.
Make life contracts
Human Require skill and experience level for new hires.
Resources Partnership relations with union
Research and Percentage of budget devoted to quality improvement
development Products designed for ease of repair
Finance Service procedure is billing activity
Financial arrangements with suppliers
Organizational Culture
 When organization chooses to make quality a
major competitive edge, it becomes the central
issue in quality planning-form mission to
supporting policies.
 Therefore it is imperative to develop an
organizational culture where every employee of
the company have clear idea that product is
customer value rather than a physical product or
service.

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Chapter 4:Strategic Quality Planning

Define the term strategy?

2. A plan of action resulting from strategy or intended to

3. The art or skill of using stratagems in

 Many organizations are finding that

 Quality statements are part of strategic planning process

 The utilization of three statements varies from

 Vision Statement :The vision statement is a short declaration

 Successful visions are timeless, inspirational, and become deeply

 Mission Statement: A mission statement concerns what an organization is all

 This statement is usually one paragraph or less in length, easy to understand,

 It provides clear statement of purpose for employees, customers, and suppliers.

 An example of mission statement is:

 Ford Motor Company is a worldwide leader in automatic and automotive

2. Customer Positioning: Next, the planners determine where

 Corporate strategy is the pattern of

2. Produces the principal policies and plans for

Michael Porter, the most popular writer on the subject of

“a broad formula for how a business is going to compete, what

 Used by Michael Porter for the title of his classic

 The concept of competitive advantage derives

 The management of strategic quality

 Quality Policy Statement: The quality policy is a

Competitive Edge (Differentiation)

 Porter identified two generic strategies:

2. Differentiation: Creating something that is perceived by the buyer as

 Following this statement, he proceeded to popularize the concept

 Taken together, a company’s policies delineate its

 Tell me your policies and I can tell your strategy.

Functions Illustration of Policies

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