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Sources of Competitive Advantage

Q: What have studies shown about the link between investing in employees and stock market performance?

'Studies have shown a strong link between investing in employees and stock market performance. Companies which place workers at the core of their strategies produce higher longer-term returns to shareholders than their industry peers.'

Q: What can the competitive advantage resulting from an organization's people drive?

'The competitive advantage resulting from an organization’s people can drive both low cost and differentiation.'

Q: How does Southwest Airlines achieve its cost advantage?

'Southwest Airlines – fewer employees per aircraft and more passengers per employee. Most of its cost advantage comes from its very productive, motivated, and unionized workforce.'

39 important questions on Sources of Competitive Advantage

What does a supply of consistent, accurate, and timely data across all functional areas of business provide?

A supply of consistent, accurate, and timely data across all functional areas of business provides real-time information for the evaluation, control, and improvement of processes, products, and services.

What did many organizations traditionally rely on to assess organizational performance?

Many organizations traditionally relied on financial and factory productivity measures to assess organizational performance.

What have studies shown about the link between investing in employees and stock market performance?

"Studies have shown a strong link between investing in employees and stock market performance. Companies which place workers at the core of their strategies produce higher longer-term returns to shareholders than their industry peers."

What does the balanced scorecard proposed by Kaplan and Norton consist of?

The balanced scorecard proposed by Kaplan and Norton consists of four perspectives.

What are the three dimensions mentioned in the image?

Differentiation
Cost Leadership
People

What can the competitive advantage resulting from an organization's people drive?

"The competitive advantage resulting from an organization’s people can drive both low cost and differentiation."

How does performance measurement help manage resources?

Performance measurement helps manage the resources needed to travel in this direction by evaluating the effectiveness of action plans.

What is product lead time?

Product lead time: the time it takes to introduce a new product (design, engineering, purchasing, manufacturing, testing, packaging, … shipping)

How does Southwest Airlines achieve its cost advantage?

"Southwest Airlines – fewer employees per aircraft and more passengers per employee. Most of its cost advantage comes from its very productive, motivated, and unionized workforce."

What processes does performance measurement help operate?

Performance measurement helps operate the processes that make the organization work and continuously improve.

What is vital to competing in today's world according to the differentiation strategy?

Continuous innovation is vital to competing in today’s world (but Deming said the same thing eons ago).

What is process lead time?

Process lead time: the time from when a customer orders a product to the time that it is delivered

What is the role of the HR function at Ritz-Carlton Hotels?

"Ritz-Carlton Hotels – human beings don’t serve a function, they have a purpose, and the role of the HR function is to unleash the power of the workforce to achieve the goals of the organization."

What does continuous innovation require according to the differentiation strategy?

Continuous innovation requires encouragement of creativity and breakthrough thinking.

What is the capacity for flexibility and rapid change referred to in the differentiation strategy?

High agility – capacity for flexibility and rapid change

What are some examples of measures in the Internal perspective?

Quality levels, productivity, cycle time, cost, …

How can simplified and shortened processes impact quality?

Simplified and shortened processes can also reduce opportunities for errors, leading to improved quality

What is hard to copy in a work environment?

"A work environment that fosters cooperation, initiative, innovation, and other factors that affect employee satisfaction is hard to copy."

What is a major factor in consumer perception and business success?

The quality of service is a major factor in consumer perception and business success.

What does competing on agility require according to the differentiation strategy?

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

What does continuous innovation create according to the differentiation strategy?

Continuous innovation creates new customer needs and expectations, and leads to higher levels of performance.

What does a differentiation strategy competing on superior design require?

Requires significant investment in engineering to ensure that designs meet customer expectations.

What have researchers repeatedly demonstrated about service employee job satisfaction?

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.

What are some examples of measures in the Customer perspective?

Service levels, satisfaction ratings, repeat business, …

What is not sufficient for a company that hopes to stay in business according to W. Edwards Deming?

For the company that hopes to stay in business, it is not sufficient to improve processes. There must also be constant improvement of design of product & service, along with introduction of new product & service and new technology. All of this is management’s responsibility.

What are the two key components of service quality?

Two key components of service quality: employees and information technology.

What are the two main aspects of understanding customer needs in a differentiation strategy?

Understanding customer needs and expectations
Translating customer needs into product requirements

What does the Innovation and Learning perspective direct attention to?

Directs attention to the basis of future success.

According to Porter's View of 21st Century Competitiveness, in how many dimensions do you compete?

You only compete in two dimensions!

What are the two types of innovation mentioned by W. Edwards Deming?

Innovation in product & service
Innovation in process

What are the techniques included in a differentiation strategy competing on superior design?

Quality function deployment
Concurrent engineering
Design reviews
Value analysis

What are some examples of measures in the Innovation and Learning perspective?

Intellectual assets, employee satisfaction, market innovation, skills development.

What is one option for offering the same product at a lower cost?

Low-cost leaders produce high volumes of mature products and achieve competitive advantage through low prices. Low costs can result from high productivity and high capacity utilization – and improvements in quality lead to improvements in productivity, which in turn leads to lower costs.

What are the two dimensions mentioned in Porter's View of 21st Century Competitiveness?

Operational Excellence and Strategic Positioning

What are the two types of improvement mentioned by W. Edwards Deming?

Improvement of existing product & service
Improvement of existing process

According to Porter, from how many dimensions does competitive advantage come?

According to Porter, competitive advantage comes from two dimensions.

What is an alternative option to offering the same product at a lower cost?

Offer a different product at a higher price that is perceived as having greater value than the cost premium. Firms must be unique in industry along some dimensions that are widely valued by customers, but must make products or systems difficult to copy.

What are the two dimensions of competitive advantage according to Porter?

The two dimensions of competitive advantage according to Porter are Cost Leadership and Differentiation.

What is the challenge mentioned in achieving competitive advantage?

The challenge is “How do we achieve both low Cost and high Differentiation?”

The question on the page originate from the summary of the following study material:

Quality Management

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