Chapter 2: Competitiveness Flashcards
Relationship between competitiveness and total quality
In a modern global marketplace, quality is the key to competitiveness
Cost of poor quality
Direct costs:
- rejects
- customer returns
- waste
- inspection
- testing
- recalls
- rework
Indirect costs:
- excessive overtime
- billing errors
- printing errors
- Planning delays
- handling customer complaints / returns
- excessive turnover
- overdue receivables
- unused capacity
- lack of follow-up
- system costs
How to reduce poor quality and its effects
- identify all activities that exist only or primarily because of poor quality
- decide how to estimate the costs of these activities
- collect data on these activities and make cost estimates
- analyze the results and take necessary corrective actions in the proper order of priority
Factors inhibiting competitiveness (beyond scope of total quality)
- government and businesses
- short term thinking –> profits
- excessive medical costs
- excessive liability costs - family
- human resources - education
Critical indicators of national competitive status
- standard of living
- trade
- investment
- manufacturing productivity
Human resources and competitiveness
The most important key to maximizing competitiveness is human resources.
- leadership at all levels
- team work
- employee involvement and empowerment
- high-quality education and training
- cooperation among business, labor and government
Methods of world-class manufacturers
- competitive analysis strategy
- customization strategy
- production and supply chain strategy
- E-commerce strategy
- compensation systems
Management-by-accounting
Focuses solely on the organization’s financial performance
- leads to short-term thinking
Factors that account for a country’s ability to compete in the international marketplace
- economy that is open to foreign investment and trade
- greater transparency and availability of economic information
- high labor mobility
- ease of entry of new businesses
- Juridical system that works well and helps reduce corruption
- government minimizes control of business, but does a good job of supervising financial institutions