STRATEGICQULAITY

PLANNING

Phil Campbell

and

Anthony Redferin

What is Strategic Planning?

• Strategy is a plan for achieving a goal.– Designed to support organizations

mission and goals.– Provides focus for decision making.– Utilizes tactics to accomplish goals

• “how to”

What is Strategic Quality Planning?

• To develop and achieve the organization's vision in a manner that is consistent with its mission and values.

What is Strategic Quality Planning?

• SQP involves every member of the organization in developing a common understanding of:– the organization's customers and their needs and

expectations – how customer's expectations is measured– how customer's needs are met through purposeful

activity or systems – the values, mission, and vision or desired future state of

the organization – the goals of the organization – how to link plans to systems for organization-wide

design,improvement, alignment, and implementation activities

– how to execute annual plans – how to review the process and results of annual plans

and how to act upon the knowledge gained

How Does SQP Help an Organization?

• The output of strategic quality planning is improved organizational performance.

• The improved performance takes these three forms. – Quantitative improvement of several

organization wide indicators, and several subsystem-level indicators.

– Qualitative improvements within the organization and in relationships with systems outside the organization.

– Improvement in the companies overall strategic quality planning process.

When Should SP Be Used?

• Anytime an organization is facing on of the following:– originated to respond to a major issue, but

lately interest in the organization has diminished

– losing money and community interest, but continues with activities similar to those of 10 years ago

– members are leaving the organization to join other organizations with similar purposes

– the organization is now operating very smoothly, but you wonder if it will be in five years.

Generic SP Model

1.  Review of the mission and values.2.  State of the organization: review of key financial,

customer, employee and quality data & trends.3. Review of target customers, products and/or

services and trends (political, financial, technical, etc.).

4. Gap analysis: where are we now vs. where do we want to go.

5. SWOT: strengths, weaknesses, opportunities and threats.

6. Goals and initiatives to accomplish those goals 7. Project plan(s): owners, teams, schedule,

resources needed. 8. Design and review of departmental and team plans. 9. Progress reviews by executives.

Important Aspects of Strategic Management

• Content Variables:– Time– Leadership– Quality Costs– Differentiation Through Quality– Focus Through Quality

• Process– Focused-Choice Model

Two Components of Time

• Time to Achievement– Long-term goals– No “quick fix”

• Speed of Improvement– Slower is Better– Slow change allows learning to occur– Discourages distortion of the system and

the data

Leadership

• Leader organizes, plans, controls, communicates, teaches, advises, and delegates.

• Need to share responsibility.• Influences group toward achieving

superordinate goals.– Benefits the group not the individual.

• Must be willing to share power.• Must be worthy of trust.• Must listen to employees suggestions.• Must have long term commitment to

quality.

Quality

• Quality is strategic.• Quality is good business and ethical.• High quality reflects care for

customers.• Unethical to ship defective products to

customers.• Improves customer and employee

perception of organization.• Increases sales and market share.

Quality Costs

• Prevention costs: associated with preventing defects and imperfections from occurring. Includes training, quality planning, process engineering, and other costs associated with assuring quality.

• Appraisal Costs: direct costs of measuring quality (lab testing, inspection, test equipment and materials, losses due to destructive tests, and assessments for ISO 9000 or other awards).

Quality Costs Cont.

• Failure Costs:– Internal: associated with on-line failure.– External: associated with product failure

after customer takes possession of the product.

Differentiation Through Quality

• Products differ from competition through the eyes of the customer.

• Achieved by customer perception of quality.– Ex. Lexus, Infinity, Rolex, Bose

Focus Through Quality

• Shifting focus to specific clients.• Targeting specific niches within the

market.– Ex. Curves, Porche, Prowler

Forced-Choice Model

• Used to demonstrate integrated quality planning.

• Simple and Useful.• Useful for organizations that are

inexperienced in strategic planning.

Steps in Forced-Choice Model

• 6-12 members of upper management are sent to a retreat.

• Organizational assessment is performed to identify strengths and weaknesses.

• Environmental assessment is performed to evaluate position in the marketplace.

• Alternative strategies are developed by executives at a wrap-up session.

Forced-Choice ModelOrganization’s Position Environmental Assessment

1. Statement of Mission

2. Interrelated set of financial and nonfinancial objectives

3. Statement of strengthsand weaknesses

.

4. Forecast of operational needs

5. Major future programs

6. Broad economic assumptions

7. Key government and regulatory issues

8. Major technological forces

9. Significant market opportunities and threats

10. Explicit strategies of competitors

11. Strategic optionsRequirements for implementing options

Contingency plans

STRATEGIC PLANNING

What it is and how to implement it.

STRATEGIC PLANNING

• Quality process• Aid to a Business plan• Roadmap to an objective

BENIFITS IN IT USES• Focus Awareness • Analyze Recognize impact • Company's potentials Opportunities and potential

threats.• Change Management review• Attainable objectives A need for information • Growth Poor performance • Operational problems Communications • Road map Internal coordination • Budgets and short-range plans Security

WHY A COMPANY MIGHT USE SP (some examples)

• BROADSCOPE– St Luke Hospital– California's Higher Education

• NARROWSCOPE– Incentive Marketer– Subscription Marketer– General Motors

ST LUKES

• Its fit within the network• Deal with new and changing Regulations• Integrate new technologies with existing

facilities• Maintain financial stability and viability• How to satisfy it's customers• Patients, students, staff, community• What relationship it should have with its

partners– Suppliers, physicians, maintenance

CALIFORNIA HIGHER EDUCATION

• Increasing demand for higher education concurrent with a decline in government funding

• changing student demographics multiple cultures.

• New models of higher education.• Keeping elements of a "traditional"

model• Lack of consensus in state government• Economic transformation

SUBSCRIPTION MARKETER

• Marketer of subscription services of magazines was looking to expand its market beyond its current sweepstakes-based direct mail channel

• By teaming up with a USPS approved provider of the USPS move-related material (including the Mover's Guide, Welcome Kit and Movers Guide. com). By offering a free service, the Company was able create a new channel within which to

offer their subscription services.

INCENTIVE MARKETER

• It's incentive programs had become mature through its current channel of telemarketers to its Retailers and Distributors.

• The solution was to reach the untapped market of Fortune 1000 companies through creation of a Corporate Direct Sales organization

GENERAL MOTORS

• Determine how to merge two U.S. Divisions and coordinate activity with European operations.

DEFINITION

• Strategic planning is the PROCESS by which the GUIDING MEMBERS of an organization ENVISION its future and develop the necessary PROCEDURES AND OPERATIONS to achieve that future.

THE OBJECTIVES

• Who are we • Where are we • Where do we want to go • How do we get there

THE OUTCOMES

• A Mission Statement and Values Statement

• A Vision Statement, representing the future in a five-year time horizon

• A five-year Strategic Plan, linking organizational goals and objectives to departmental and individual goals and objectives

• An implementation and follow-up plan

MISSION AND OBJECTIVES

• What the firm is all about ideals that do not change referred to collectively as business vision.

• It is normally expressed as a mission statement and has the following components:

MISSION AND OBJECTIVES

• Core values– Values that are central to the firm independent

of the industry environment and management fads.

• examples • would be • excellent customer service• pioneering technology• creativity• integrity• social responsibility

ENVIRONMENTAL SCAN

• internal analysis of the firm• Analysis of the firms industry• PEST Analysis

MISSION AND OBJECTIVES

• Core purpose – the reason the firm existence– Visionary goals– future milestone the firm wants to

achieve.

PEST Analysis

• Political• Economic• Social• Technological

PEST Analysis

• Political Factors– Tax policy– employment laws– environmental regulations– trade restriction and tariffs– political stability

PEST Analysis

• Economic Factors– potential customers and the firms cost of

capital– economic growth– interest rates– exchange rates– inflation rate

PEST Analysis

• Social Factors– include demographic and cultural

aspects– health consciousness– population growth rate– age distribution– career attitudes– emphasis on safety

PEST Analysis

• Technological Factors– affect the barrier for entry and exit– R&D Activity– Automation– Technology incentives– Rate of technological change

SWOT Analysis

The SWOT analysis provides information that is helpful in matching the firms resources and capabilities to the competitive environment in which it operates, As such it is instrumental in strategy formulation and selection the following diagram shows how a SWOT analysis fit into an environment scan

SWOT Analysis

• STRENGTHS– a firms strengths are its resources and

capabilities that can be used as a basis for developing a competitive advantage

• patents• strong brand names• good reputation among customer• cost advantage from proprietary know-how• exclusive access to high grade natural

resources• favorable access to distribution networks

SWOT Analysis

• WEAKNESSES– lack of patent protection– a weak brand name– poor reputation among customers– high cost structure– lack of access to the best natural

resources– lack of access to key distribution channels– excess manufacturing capacity

SWOT Analysis

• OPPORTUNTITIES– as unfulfilled customer need– arrival of new technologies– loosening of regulations – removal of international trade barriers

SWOT Analysis

• THREATS– shifts in consumer tastes away from the

firms products– emergence of substitute products– new regulations– increased trade barriers

STRATEGY FORMULATION

• Select a strategy that matches strengths to the opportunities while addressing weakness and external threats

• to obtain competitive advantage over its rivals– cost – differentiation

STRATEGY IMPLEMENTATION

• Implementation– organization of the firms resources and

motivation programs • , budgets and procedures I

• communication is important in implementation also

EVALUATION & CONTROL

• Define parameters to be measured• define target values for those

parameters• perform measurements• compare measured results to the pre-

defined standard• make necessary changes

QUALITY METHODOLOGIES

• Statistical Quality Control• Six Sigma• Balanced Scorecard• Deming /Shewhart Cycle• Others

BIBLIOGRAPHY

• Chapters 1 &4, Managing Quality by Thomas Foster, Prentice Hall

• Strategic Planning, QuickMBA.com• St. Luke Hospital, baldrige.nist.gov• Theory, Balancedscorecard.org• Quality Methodology, Brecker.com• Strategic planning , entarga.com• PADIE, km-ent.com

Sources

• Foster, Thomas S. (2004). Managing Quality: An Integrative Approach, 2nd Ed. Upper Saddle River, New Jersey: Prentice Hall.

• Greenburg, Jerald & Baron, Robert A. (2000). Behavior in Organizations: Understanding and Managing the Human Side of Work, 7th Ed. Upper Saddle River, New Jersey: Prentice Hall.

• Stevenson, William J. (2005). Operations Management, 8th Ed. Boston: McGraw-Hill Irwin.

• http://www.gov.on.ca/OMAFRA/english/rural/facts/89-173.htm

• http://www.lakeland.cc.il.us/cbi/sqp1.htm• http://www.competitiveedge.com/planning.html