CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction
This section examines the theoretical foundations of the study, review of empirical literature, the conceptual framework and research hypotheses.
2.2 Theoretical Foundations of the study
This section provides a brief review of the literature and theoretical background on the two main constructs underlying the models tested in this study: Competitive Strategy, Total Quality Management.
2.2.1 Competitive Strategy
According to Porter (1985), strategies allow organizations to gain competitive advantage from three different bases: cost leadership, differentiation, and focus and calls these bases the generic strategies.
2.2.1.1 Cost Leadership
In cost leadership, a firm sets out to become the
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These are summarized as; constancy of purpose, adopt the new philosophy, cease dependence on mass inspection, end the practice of awarding business on the basis of price tag alone, improve constantly the system of production and service, institute training on the job, institute leadership, drive out fear, breakdown barriers between departments, eliminate slogans, exhortations and targets for the workforce asking for zero defects and new levels of productivity, eliminate work standards (quotas) on the factory floor, institute a vigorous program of education and self-improvement and finally put everybody to work to accomplish the transformation (Deming, …show more content…
Hypotheses 1b: There is a positive and significant relationship between TQM practices and cost leadership strategy.
Hypotheses 2a: There is a positive and significant relationship between differentiation strategy and innovation performance.
Hypotheses 2b: There is a positive and significant relationship between differentiation strategy and quality performance.
Hypotheses 2c: There is a positive and significant relationship between cost leadership strategy and innovation performance.
Hypotheses 2d: There is no significant relationship between cost leadership strategy and quality performance.
Hypotheses 3a. TQM practices partially mediate the relationship between differentiation
"Using Cost of Quality to Demonstrate the Economic Value of Improvement, Organizational Excellence and Quality." Quality Texas. N.p., n.d. Web. 12 May 2014.
Porter’s generic strategy model states that business units need to decide whether or not they want to focus on differentiating their products or have a focus towards obtaining the lowest cost possible (Parnell, 2014). Porter’s model also states that business units need to decide whether or not
Arthur, A., Thompson, Margaret, A., Peteraf, John, E. Gamble, A., J., Strickland III. (2014). Crafting & Executing Strategy: The Quest for Competitive Advantage 19e: Concepts & Cases. C6-C25.
In the mid 1980s, and into the 1990s, business leaders realized that a renewed focus on quality was required to continue to compete in an expanding global market. (NIST, 2010) Consequently, several strategic frameworks were developed for managing, and measuring organizational performance. Among them were the Malcomb Baldrige National Quality Award, which was created by and act of congress and signed into law by the President in 1987, and The Balanced Scorecard, which is a performance management tool that was born out of research conducted in the late 1980s and early 1990s by Robert S. Kaplan, and David P. Norton published in 1996 (Kaplan, 1996). Initially, the renewed emphasis on quality management systems was a reaction to the LEAN approach to quality management implemented by many Japanese businesses to great success post World War II.
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 25-40.
Garvin, David A., "Quality on the Line," Harvard Business Review, September October 1983, pp. 64-75.
Thompson, A. A., Strickland, A. J., & Gamble, J. E. (2008). Crafting & executing strategy: The quest for competitive advantage (16th ed.). New York: McGraw-Hill Irwin.
Every organization uses different business strategies in order to remain in business. Some adopt customer- centric strategies; some uses strategies to maximize their profit. For a long time, many organizations have made quality as their selling point.
Porter, M. E., 1999. The Five Forces that Shape Competitive Strategy. Harvard business review, p. 80.
Thompson, A.A., Strickland, A.J., & Gamble, J. E. (2010). Crafting and executing strategy: The quest for competitive advantage: Concepts and cases: 2009 custom edition (17th ed.). New York: McGraw-Hill-Irwin
Contained within the following paper is the evaluation of the author’s organization’s mission, vision goals, and objectives .The author will discuss the pre-determined questions as set forth by Jeffrey Trapp, a certified University of Phoenix instructor. This paper will discuss the differences that a rise between a company that has implemented TQM (Total Quality Management) with that of the authors own organization’s management style.
TQM is a system of continuous improvement of work processes to enhance the organization’s ability to deliver high-quality products or services in a cost-effective manner [2]. The focus of TQM is to improve customer satisfaction and reduce waste [3]. Customers include ...
...M. E. (2008). Competitive advantage: Creating and sustaining superior performance. New York: Simon and Schuster.
"An article by Beecroft (1999) entitled "The role of quality in strategic management" discusses the significance of quality considerations in the development of effective strategic plan. One primary concern the author saw was the relationship between quality, short and long-term objectives, and bottom line profits. According to the author, "Conformance to design and customer requirements translates to quality, therefore higher conformance is higher quality. Higher quality results in lower costs and increases competitiveness, leading to an increase in sales and market share, more jobs and improved profitability" (p.
Cost leadership strategy involves the business winning the market share by appealing to cost-conscious and price-sensitive consumers. This is achieved when you have the lowest prices in the target market. The lowest price of value ratio (price compared to what consumers receive). To be successful at offering the lowest price while still achieving profitability and a high return on investment, the business must be able to operate at a lower cost than its competitors. There are three main ways to achieve this.