Chapter 2: Competitiveness

Question 1

Relationship between competitiveness and total quality

Answer 1

In a modern global marketplace, quality is the key to competitiveness

Question 2

Cost of poor quality

Answer 2

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

Question 3

How to reduce poor quality and its effects

Answer 3

1. identify all activities that exist only or primarily because of poor quality
2. decide how to estimate the costs of these activities
3. collect data on these activities and make cost estimates
4. analyze the results and take necessary corrective actions in the proper order of priority

Question 4

Factors inhibiting competitiveness (beyond scope of total quality)

Answer 4

1. government and businesses
   - short term thinking –> profits
   - excessive medical costs
   - excessive liability costs
2. family
   - human resources
3. education

Question 5

Critical indicators of national competitive status

Answer 5

• standard of living
• trade
• investment
• manufacturing productivity

Question 6

Human resources and competitiveness

Answer 6

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

Question 7

Methods of world-class manufacturers

Answer 7

• competitive analysis strategy
• customization strategy
• production and supply chain strategy
• E-commerce strategy
• compensation systems

Question 8

Management-by-accounting

Answer 8

Focuses solely on the organization’s financial performance
- leads to short-term thinking

Question 9

Factors that account for a country’s ability to compete in the international marketplace

Answer 9

• 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