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Tqm And Global Competition Essay

837 words - 4 pages

Quality has become imperative as the economy has globalized. At each successive level and scale of competition, the quality of competing goods and services increases as competitors “one-up” each other to gain market share. Companies that used to compete only on a local, regional, or national level now find themselves competing against companies across the world, and many companies find the competition to be more intense than anything ever encountered. Today, only those who are able to produce world-class quality goods/services can compete; thus, it is imperative that an organization incorporates a vision of overall quality, known as Total Quality Management, or “TQM,” that permeates ...view middle of the document...

Often, a firm with a differentiation strategy can command premium prices and achieve higher profits. However, a firm that uses differentiation as its source of competitive advantage must make its products or systems difficult to copy. Often this involves culture, habits, and sunk costs.

Competitive advantage has been traditionally pursued through marketing and finance, which typically tried to pursue competitive advantage through an either/or approach to either cost or differentiation. Quality was a derivative of the strategic route chosen, which could fluctuate either way depending on whether you pursued cost leadership (typically quality suffered as costs decreased), or differentiation (quality was higher but costs increased); however, total quality, with a focus on people and its incorporation into a company’s central operating strategy, has shown that it can lead to improvements in both areas:

• Cost Leadership: Quality processes lead to fewer defects and scrap, which reduces costs throughout the process.

• Differentiation: In many industries, the presence of quality in its offerings may serve to differentiate a company, and, once attained to a certain level, can be very hard to replicate by competitors who do not embrace the same quality philosophy in their processes.

Thus, TQM can help create a stronger, more sustainable competitive advantage. The value of product in the marketplace is influenced by the quality of its design. Improvements in performance, features, and reliability will differentiate the product from its competitors, improve a firm’s quality reputation, and improve the perceived value of the product. This allows the company to command higher prices and achieve an increased market share. This, in turn, leads to increased revenues that...

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