This document discusses strategies for achieving competitive advantage and performance excellence. It provides an overview of key strategic concepts like quality, cost leadership, differentiation, core competencies, and strategic planning processes. Quality is identified as the most important factor for business profitability. Firms can pursue strategies like quality improvement, cost reduction, and differentiation to gain advantages over competitors. Effective strategic planning involves assessing opportunities and threats, defining goals and strategies, implementing action plans, and monitoring performance.

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COMPETITIVE ADVANTAGE
AND STRATEGIC
MANAGEMENT FOR
PERFORMANCE
EXCELLENCECADORNA CALAWOD BELA-ONG SAWIT

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a firm’s ability to achieve
market superiority over its
competitors.

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Is driven by customer wants and
needs
Makes significant contribution to
business success
Matches organization’s unique
resources with opportunities
Is durable and lasting
Provides basis for further improvement
Provides direction and motivation

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(PIMS STUDIES)

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Product quality is the most important determinant of business
profitability.
Businesses offering premium quality products and services
usually have large market shares and were early entrants into
their markets.
Quality is positively and significantly related to a higher return
on investment for almost all kinds of products and market
situations.
A strategy of quality improvement usually leads to increased
market share but at a cost in terms of reduced short-run
profitability.
High-quality producers can usually charge premium prices.

7. QUALITY AND PROFITABILITY
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Improved quality
of design
Higher perceived
value
Increased market
share
Higher
prices
Increased
revenues
Improved quality
of conformance
Lower
manufacturing and
service costs
Higher profitability

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GAO STUDY MODEL

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SOURCES OF
COMPETITIVE
ADVANTAGE
Cost Leadership
Differentiation
People

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COST LEADERSHIP
Strategy used by
businesses to create a
low cost of operation
within their niche.
The use of this strategy is
primarily to gain an
advantage over
competitors by reducing
operation costs below that
of others in the same
industry.

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DIFFERENTIATION
Result of efforts to
make a product or
brand stand out as a
provider of unique
value to customers in
comparison with its
competitors

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PEOPLE
s

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SUPERIOR PRODUCT AND SERVICE DESIGN
OUTSTANDING SERVICE
HIGH AGILITY
CONTINUOUS INNOVATION
RAPID RESPONSE
QUALITY AND DIFFERENTIATION
STRATEGIES

14. COMPETING
ON SUPERIOR
PRODUCT
DESIGN
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•Understanding customer needs and
expectations
•Systematic processes for design and
product improvement
•Tools and techniques
Concurrent engineering
Value analysis
Design reviews
Experimental design

15. COMPETING ON SERVICE
 Researchers repeatedly have
demonstrated that when
service employee job
satisfaction is high, customer
satisfaction is high, and that
when job satisfaction is low,
customer satisfaction is low.
 Key components of service
quality: employees and
information technology
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ELEMENTS OF SUPERIOR SERVICE
 Establish service goals that support
business and product-line
objectives.
 Identify and define customer
expectations for service quality and
responsiveness.
 Translate customer expectations
into clear, deliverable, service
features.
 Set up efficient, responsive, and
integrated service delivery systems
and organizations.
 Monitor and control service quality
and performance.
 Provide quick but cost-effective
response to customers’ needs.

17. COMPETING ON AGILITY
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AGILITY – capacity for flexibility and rapid change
Agility requires
 Continual monitoring and sensing of changing
customer needs and expectations
 Fast design changes
 Rapid roll out of new products and processes
 Cross-functional cooperation and coordination
 Good supplier relations

18. COMPETING ON INNOVATION
 Innovation is vital to
competing in today’s
world
 Innovation creates new
customer needs and
expectations and leads to
higher levels of
performance
 Creativity and
breakthrough thinking
are encouraged 18

19. COMPETING ON TIME
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 Major improvements in response
time often require work
organizations, processes, and paths to
be simplified and shortened.
Simplified processes reduce
opportunities for errors, leading to
improved quality.
 Improvements in response time often
result from increased understanding
of internal customer-supplier
relationships and teamwork.
Cycle time – the time it takes to accomplish one cycle of a process
Success in today’s markets requires increasingly shorter cycle times

20. NEED FOR PERFORMANCE
MEASUREMENT
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 To lead the entire organization in a
particular direction; that is, to drive
strategies and organizational change;
 To manage the resources needed to travel
in this direction by evaluating the
effectiveness of action plans; and
 To operate the processes that make the
organization work and continuously
improve

21. BALDRIGE CLASSIFICATION
OF
PERFORMANCE MEASURES
 Product and process outcomes
 Customer-focused outcomes
 Workforce-focused outcomes
 Leadership and governance
outcomes
 Financial and market
outcomes
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STRATEGY
the pattern of decisions that
determines and reveals a company’s
goals, policies, and plans to meet the
needs of its stakeholders
STRATEGIC PLANNING
the process by which members of an
organization envision its future and
develop the necessary procedures and
operations to carry out that vision
Two activities:
development and
implementation

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25.  Plan for the long term, and understand the
key influences, risks, challenges, and other
requirements that might affect the
organization’s future opportunities and
directions.
 Project the future competitive environment
to help detect and reduce competitive
threats, shorten reaction time, and identify
opportunities.
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26.  Develop action plans and deploy
resources—particularly human resources—to
achieve alignment and consistency, and
provide a basis for setting and
communicating priorities for ongoing
improvement activities.
 Ensure that deployment will be effective—
that a measurement system enables
tracking of action plan achievement in all
areas. 26

27. definition of products and services,
markets, customer needs, and
distinctive competencies
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“Innovative approaches…
practical results…outstanding
service.”

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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

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“Be the firm of choice for clients and employees.”

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Define attitudes and policies for all
employees, which are reinforced through
conscious and subconscious behavior at all
levels of the organization.

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We are ethical
We deliver quality
We are responsive
We add value
We improve continuously
We are innovative
We develop
professionally
We respect others
We give back to
our communities

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ENVIRONMENTAL ASSESSMENT
 Customer and market requirements,
expectations, and opportunities
 Technological and other innovations
 Changes in global or national
economy
 Partner and supply chain needs
 Strategic challenges - those pressures
that exert a decisive influence on an
organization’s likelihood of future
success

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TYPICAL STRATEGIC
PLANNING PROCESS

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Strategies are broad statements that
set the direction for the organization to
take in realizing its mission and vision.
STRAT•E•GIS

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are what an organization must
change or improve to remain or
become competitive.
STRATEGIC

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are things that an organization
must do to achieve its strategic
objectives.

39. STRATEGY IMPLEMENTATION
Developing detailed action
plans, defining resource
requirements and
performance measures, and
aligning work unit, supplier, or
partner plans with overall
strategic objectives.
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40. LINKING HUMAN RESOURCE
PLANS AND BUSINESS STRATEGY
 Changes in strategy often require
changes in HR plans
 Examples
 Redesign of the work organization to increase
empowerment or teamwork
 Changes in labor/management partnerships
 Directed training and education
 Improved processes for knowledge sharing
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41. ILLUSTRATIVE EXAMPLE
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42. affinity diagrams
Interrelationship
digraphs
tree diagrams
matrix diagrams
matrix data analysis
process decision
program charts
arrow diagrams
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DIAGRAM / KJ METHOD

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INTERRELATIONS DIAGRAPHS

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TREE DIAGRAM

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MATRIX
DATA
ANALYSIS

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PROCESS DECISION PROGRAM
CHART (PDPC)

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EXAMPLE OF A CPM CHART

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CORE
COMPETENCIES
AND
STRATEGIC
WORK
DESIGN

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CORE
COMPETENCIES
refers to an organization’s
areas of greatest expertise
that provide a sustainable
competitive advantage in
the marketplace or service
environment.

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CORE
COMPETENCIES
Some contemporary theories
suggest that business activities
that do not make up an
organization’s core competency
should be outsourced.
Outsourcing is the practice of
transferring the operations of a
business function to an outside
supplier. The opposite of
outsourcing is vertical integration,
by which certain business
functions are acquired and
consolidated within a firm.

52. REQUIREMENTS FOR EFFECTIVE
STRATEGIC PLANNING
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A definable approach for developing
company strategy.
A clear company strategy with action plans derived
from it, and human resource plans related to the
action plans.
An approach for implementing action plans.
An approach for monitoring company performance
relative to the strategic plan.
Projections of strategy-related changes in key
indicators of company performance.

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 Classic strategy formulation
addresses the market
environment, competitive
environment, and company
capabilities
 Other TQ-related factors –
financial and societal risk,
human resource capabilities,
and supplier/partner
capabilities – are addressed
only indirectly in the literature.
TQ AND STRATEGIC
MANAGEMENT THEORY

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IDENTIFY WHAT IS RELEVANT
DEFINE PARAMETERS
EXPECTATIONS AND ACTUAL
ANALYSIS OF TRENDS
SYNTHESIS

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IDEAS FOR STRATEGIES
NURTURING STRATEGIES

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ANALYSIS OF OPTIONS
CHANGE OF STRUCTURES
TRAINING AND DEVELOPMENT
IMPLEMENTATION
ORGANIZATION FOR LEARNING AND GROWTH
NOTHING IS AS PERMANENT AS CHANGE

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