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
When total quality management was made available in the game it became one of our other competencies in the later rounds. We have to aggressively fund awareness and accessibility until they reach 100% to try and take away sales from competitors because not of them were investing a lot into those aspects in the early rounds of the game. We invested in human resources in order to get higher productivity and a lower turnover rate. We spent $5,000 in recruiting spending and had 80 training hours. We wanted the highest caliber of workers, higher productivity and lower turnover will result in lower labor cost which is beneficial to us especially since we are trying to stay relevant in all segment we need the lower labor cost for more workers. For product redesign we decided to put two or more products around the rough fine cut of the circle along the outer dashed lines. We thought that by having a product in between two segment would generate more sales. When TQM kicked in we invested money all of TQM initiatives especially since we want to present in all segments. These core competencies will helps us gain competitive advantage because funding awareness and accessibility early gives us the upper hand on customers being aware of our
To accomplish competitive advantage, and differentiation three elements are crucial; stating the strategies and practicalities, focusing on knowledge based behaviour, and improving the customer relationship management.(Slater and Narve 1995).
When a firm sustains a profit that exceeds the average for its industry, the firm is said to possess a competitive advantage over its rivals. The goal of much of business strategy is to achieve a sustainable competitive advantage (SCA). (QuickMBA, 2007) Michael Porter identified basic types of advantages used by businesses. Cost and differentiation advantages are positional advantages used by organizations to achieve that competitive through creating superior value for its consumers and thus increase profits for itself. In this session long project I will discuss strategic plans including; low cost, differentiation, focus, and preemptive. By comparing each strategic plan with one of Kraft’s SWOT elements, I will discuss a tactic for taking advantage of strength, opportunity, or managing a threat or weakness, and ultimately recommending which strategic plan in order to achieve SCA.
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.
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.
"A holistic approach to the management of quality that emphasises the role of all parts of an organisation and all people within an organisation to influence and improve quality.’’ (Slack, Chambers and Johnston, 2004)‘ ASOS could take TQM on board in order for the company to achieve overall quality with all their activities. However TQM has to be applied accurately otherwise the opposite can occur and lead ASOS to be competing below the standard. For example, supply not meeting demand and when it is met the demand has disappeared as fashion trends have changed. Therefore in order for TQM to be a success a good supplier relationship is key. TQM would also allow ASOS to compete with high fashion but it may be costly. (appendix 3)
It is suggested by many that there are two ways for a business to gain competitive advantage; this is done through either cost advantage or differentiation. Porter (2004, p.64) claims that cost advantage is when a “firm achieves a lower cumulative cost of performing value activities than its competitors”. A good example of this would be ASDA within the food retailer industry. ASDA (ASDA beats its full year sales and profit plan, 2009), known for their “commitment to everyday low prices”, are very much a cost-leading competitor in the food retailer industry and they stated that they beat their “full year sales and profit plan” for the fourth consecutive quarter in 2009 by introducing a “significant cost reduction prog...
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 25-40.
The Generic Strategy of the company has to be analysed as the initial step to identify the basis of its competitive advantage. There are three types of generic strategies (cost leadership, differentiation and niche), out of which one would determine the basis of its competitive advantage.
It involves putting a firm’s resources and capabilities into action to increase value, lower costs, or both. According to Walker and Madsen, execution must permanently be tied to the company’s value and cost drivers (2016). The research found that companies can compete on the same value and cost drivers but differ in how well they perform and achieve goals. For Papa John’s it is observable that brand, culture, and distribution (Quality Centers) are some of its resources, while some of its main capabilities include marketing, continuous improvement by maximizing the use of cutting edge technology.
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.
Everyone wants a competitive advantage in this world. A competitive advantage is like a golden ticket to wealth and riches, to a world where your company rules. If one’s organisation is on the higher ground it is always perceived as an advantage over the competition. But that’s just fiction. We all know it’s not just sunshine and roses. It takes a lot to get to the top and be the best and sometimes the road can be challenging and full of holes and boulders that need to be overcome or pushed aside to achieve your goal. There are four approaches of generic strategies. They are one, “Cost Leadership (no frills)”, two, “Differentiation (creating uniquely desirable products and services)”, “Focus (offering a specialized service in a niche market)”. Focus was divided into two parts, “Cost Focus and Differentiation Focus”
The important relationship between Quality and Profit is paramount in terms of sustainability, performance and long term success. Producing a high quality product at the lowest cost possible ensures this success is achievable. Organisations can only realise this relationship by means of measuring their performance in delivering the product to the customer. Measuring the cost of quality provides information about the financial consequences of adopting quality improvement programs.
...M. E. (2008). Competitive advantage: Creating and sustaining superior performance. New York: Simon and Schuster.
Porter, M. E., 1999. The Five Forces that Shape Competitive Strategy. Harvard business review, p. 80.