Chapter 2

Quality and Competitiveness

Relationship Between Quality and
Competitiveness
 Quality and competitiveness has a
positive relationship.
 Higher quality will lead to an increase in
competitiveness, vice versa.
 This relationship applies in any situation
especially in business sector.
 For a business organization, the degree of
competitiveness can be more intense if it
decides to compete globally.
 This is because at each successive level of
competition, the quality of the
competitors is likely to be increased.
Factors That Inhibit
Competitiveness
 Principles of total quality are essential to
ensure that the business can compete in
the global marketplace competitively.
 There are a few factors that inhibit
competitiveness, which every manager
must know. These factors are:
 Business/Government-Related
Factors
 Education-Related Factors
 Family-Related Factors
Business/Government-Related
Factors

 In W. Edwards Deming's Seven Deadly Diseases, there

are three diseases that can add cost to a company's
product without adding value. The three diseases are:
 Emphasis on short term profits fed by fear of
unfriendly takeover attempts and pressure from
enders or shareholders
 Excessive medical costs
 Excessive costs of liability inflated by lawyers
working on contingency fees
 Both business and government need to work together to
reduce these diseases so that the non-value-added cost
will be at minimum.
 Both business and government can develop a positive,
constructive partnership to enact policies or even
reconstruct the financial, legal and medical systems so
that these costs can be reduced.

Education-Related Factors
 The quality of a country's education system is a major
determinant of the quality of its labor pool.
 There is a positive relationship between the quality of
the education system and the quality of the labor pool.
 The higher the quality of the education system will
increase the quality of the labor pool.
 This situation will result in the increased level of
competitiveness in the labor.
 Business can reduce the cost in the training
development for their employees if the employees have
higher education level.
Family-Related Factors
 More knowledgeable, skilled and motivated and
able to learn members of the labor pool is a
critical part of the competitive equation.
 According to Ray Marshall and Marc Tucker,
family is the most important human-resource
development agency in any country.
 Family has a strong influence on the attitudes of
children toward learning and working.
 Therefore, knowledgeable, skilled and motivated
and able to learn members of the labor pool can
be derived if the problem in the family unit can be
reduced.
Comparisons of International
Competitors
 There are four critical indicators of a
country's competitive status used to
make comparisons between
nations;
 standard of living, manufacturing
productivity, investment and trade.
 All of these indicators have a
positive relationship with the
competitive level.
Most competitive countries

 The 19th annual World Competitiveness

Yearbook, published by the International Institute
for Management Development (IMD) survey:
 1. USA
 2. Singapore
 3. Hong Kong
 4. Luxembourg
 5. Denmark
 ……. 23. Malaysia
Industrial Policy and
Competitiveness
 Industrial policy plays a significant role in ensuring that
business can compete in the global marketplace
competitively.
 Examples of industrial policies that can increase
competitiveness are tax incentives, investments in
research, development, education reform, equipment
and facilities.
 Furthermore, a close relationship between government
and business can also promote competitiveness in the
global marketplace.
 A good industrial policy must also fulfil two
complimentary goals; it provides incentives that
encourage business to be more competitive and also
removes barriers that can reduce competitiveness.
Technology and Competitiveness
 Technology is designed to help enhance human
capabilities in increasing an organization's
competitiveness.
 A country must outperform foreign competitors to be able
to succeed in the global marketplace.
 Being a high quality and productive manufactured
products exporter can ensure a country's competitiveness.
 This is where technology plays its role.
 Using state-of-the-art technology can help produce high
quality products.
 This in turn will increase the level of competitiveness of
the manufacturer and the country itself.

Human Resources and
Competitiveness

 Human resources are the most valuable

asset in enhancing competitiveness.
 Developing human resources can be in
term of cooperation among businesses,
labor and government, high-quality of
education and training, employee
involvement and empowerment,
leadership at all levels and also
teamwork.
ISO 9000 and Competitiveness
 ISO 9000 is an internationally uniform quality standard
developed by International Organization for
Standardization, in Geneva, Switzerland.
 It provides a uniform framework for quality assurance
that can be used worldwide. Certification of ISO 9000
involves establishing a quality program that meets the
requirements set forth by ISO 9000.
 An ISO-9000-certified organization can enjoy benefits
that extend beyond access to foreign markets and
compatibility with foreign suppliers.
 Furthermore, the organization also tends to improve
quality, uniformity of work and also productivity while
in the process of achieving certification.
