Chapter 2

Quality

Objectives
After reading the chapter and reviewing the materials presented the students will be able to: Differentiate between quality and competitiveness. Understand the factors inhibiting competiveness. Realize the characteristics of world class organizations. Understand U.S. companies: Global strengths and weaknesses.

Relationship between quality and competitiveness

Companies that used to compete only on local, regional, or national level now find themselves competing against companies from throughout the world. At each successive level of competition the quality of the competitors increases. Only those who are able to produce world class quality can compete. It is important for a countrys business to be able to compete globally. When they cannot, jobs are lost and the quality of life in that country declines correspondingly.

Cost of Poor Quality and Competitiveness

When an organization does what is necessary to improve performance by reducing deficiencies in key areas (cycle time, warranty costs, scrap, and rework, on time delivery, billing, etc), it can reduce overall costs without eliminating essential services, functions, product features, and personnel. Reducing the costs associated with poor quality is mandatory for companies that hope to compete in the global marketplace. Reducing such costs is one of the principal drivers behind the total quality concept of continuous improvement.

Evolution of the rebuilding effort undertaken by Japan and Germany following World War II
As Japanese and German manufacturers rebuilt, two things became apparent to them: 1. To succeed, they would have to compete globally. 2. To compete globally, they would have to produce goods of world class quality, which meant producing better goods but at reasonable, competitive prices.

Actions of U.S. manufacturing following World War II

Basking in their prosperity, U.S. manufacturers were slow to catch on that the game had changed from mass production with acceptable levels of waste to quality production with things done right the first time every time to provide superior value for customers. The old game was best cost, the new game was best cost and best quality. In a relatively short period of time, the United States went from the worlds leading lender and exporter to the worlds biggest debtor. By 1980, the United States was consuming more than it produced.

Impact of Competitiveness on Quality of Life

A nations ability to compete in the global marketplace has a direct bearing on the quality of life of its citizens. Because the ability to compete translates into the ability to do a better job producing quality goods, it is critical that nations and individual organizations within them focus their policies, systems, and resources in a coordinated way on continually improving both quality and competitiveness.

Education Related Factors

The quality of a countrys educational system is a major determinant of the quality of its labor pool. The higher the quality of the entry level employee, the faster they can become productive employees and contribute to their employer competitiveness. Consequently, a high quality education system is an important component of the competitiveness equation.

U.S. Manufacturers and Global Competition

The most important sectors in determining the quality of life in a country are manufacturing and agriculture. The United States has led the world in agricultural production for many years and still does. In terms of manufacturing productivity, Japan, United States, Germany, China, and Korea became increasingly competitive. Japanese automobile manufacturers take an average of 2 years to complete the product development cycle compared with more than 3 years for their competitors in United States and Europe.

Human Resources and Competitiveness

The most valuable resources for enhancing competitiveness are human resources. Strategies for Human resource competitiveness: 1. Cooperation among business, labor, and government. 2. High quality education and training. 3. Employee involvement and empowerment. 4. Leadership at all levels. 5. Teamwork.

Summary
Companies that used to compete only on local, regional, or national level now find themselves competing against companies from throughout the world. At each successive level of competition the quality of the competitors increases. Only those who are able to produce world class quality can compete. It is important for a countrys business to be able to compete globally. When they cannot, jobs are lost and the quality of life in that country declines correspondingly. A nations ability to compete in the global marketplace has a direct bearing on the quality of life of its citizens. Because the ability to compete translates into the ability to do a better job producing quality goods, it is critical that nations and individual organizations within them focus their policies, systems, and resources in a coordinated way on continually improving both quality and competitiveness.

Home Work
Answer Questions 1, 5 on page 45. 1. Explain the relationship between quality and competitiveness. 5. How does a nations ability to compete affect its quality of life?