Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

6- 1
Chapter 6
The Voice of the Market



Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 6- 2
Strategic Quality Planning
The Voice of the Market
Chapter 6






What do we mean by The Voice of the Market?
Gaining insight through benchmarking
Purposes of benchmarking
Difficulties in monitoring and measuring
performance
Commonly benchmarked performance Measures
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 6- 3
Strategic Quality Planning
The Voice of the Market
Chapter 6
And he said unto them. What have I done now
in comparison of you? (Is) not the gleaning of
the grapes of Ephraim better than the Vintage
of Abiezer?
- Judges 8:2
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 6- 4
Strategic Quality Planning
The Voice of the Market
What do we mean by the Voice of the Market?






One of our best sources of information can be
other companies.
By understanding our competitors we begin to
understand the marketplace better
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Strategic Quality Planning
The Voice of the Market
What do we mean by the Voice of the Market?
Strategic Quality
plan
Competitive
Forces
Customer
Needs
Strategic Plan
Company Mission
Figure 6-1: Strategic Quality
Plan Model
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Strategic Quality Planning
The Voice of the Market
Gaining insight through benchmarking






A Benchmark is when an organization
recognized because of its excellent
operational performance.
Benchmarking is the sharing of
information between companies so that
both can improve.
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Strategic Quality Planning
The Voice of the Market
Gaining insight through benchmarking






There are two parties for the
benchmarking process:
Initiator Firm: Initiate contact and studies
another firm.
Target Firm: the firm being studied.

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Strategic Quality Planning
The Voice of the Market
Commonly Benchmarked Performance Measures






Financial
ratios
Productivity
rations
Customer-
related
results
Operating
results
Human
resource
measures
Quality
measures
Market
share data
Structural
measures
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Strategic Quality Planning
The Voice of the Market
Commonly Benchmarked Performance Measures
Process Benchmarking Comparing process
Financial Benchmarking Comparing business results
Performance Benchmarking comparing cost structure, speed,
quality levels, etc
Product benchmarking comparing product attributes and
functionality
Strategic Benchmarking- comparing for competiveness along
several dimensions
Functional benchmarking hoe another firm performs a function
Table 6-1 : Benchmark Types
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Strategic Quality Planning
The Voice of the Market
Purposes of Benchmarking
Learning
from
success
Borrowing
ideas
Best-in-firm
Beating
industry
standards
Best-in-
class
National
Leadership
Best-in-
world
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 6- 11
Strategic Quality Planning
The Voice of the Market
Purposes of Benchmarking
I
Learning
from
Success
II
Borrowing
Ideas
III
Best in -
firm
IV
Beating
industry
Standards
V
Best In
Class
VI
National
Leader
ship
VII
Best in -
word
Internally
Focused
Industry
Competitive
Outstanding
Word -
Class
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Strategic Quality Planning
The Voice of the Market
Difficulties in Monitoring and Measuring Performance






Limitations of accounting systems
Computing productivity
Comparisons between US firms with
foreign companies


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Strategic Quality Planning
The Voice of the Market
Difficulties in Monitoring and Measuring Performance






A company has gathered the following financial information for
itself and a competing firm. The company wishes to compare
productivity for the 2 firms.

Firm A Competition
Labor 20,000$ 15,000$
Plant & Equipment 100,000$ 145,000$
Energy 5,500$ 10,500$
Materials 220,000$ 190,000$
Sales 425,000$ 500,000$
Example 6-1: Computing Productivity
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Strategic Quality Planning
The Voice of the Market
Commonly Benchmarked Performance Indicators
Key Business Factors.
(KBFs) Are factor significantly related to
the business success of the firm

Financial ratios
Productivity ratios
Customer related ratios
Operating ratios
HR measures
Quality measures
Market share data
Structural measures
Table 6-2 : Benchmarking Data
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Strategic Quality Planning
The Voice of the Market
Commonly Benchmarked Performance Indicators
Financial ratios:
(ROA) Return on assets , (ROI) Return on
investments...
Productivity ratios:
Measure how the firm effectively uses the scarce
resources.
Customer related results:
Customer satisfaction. Retentions, gain , losses,

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Strategic Quality Planning
The Voice of the Market
Commonly Benchmarked Performance Indicators
Operating Results
Monitor & track the effectiveness of company
operations. Cycle times, waste reduction measure,
value added measure, lead times
Quality Measures
Reject rates, capability information, performance
information
Market Share data
Are essential indicators of business success. Rank
in the market
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Strategic Quality Planning
The Voice of the Market
Commonly Benchmarked Performance Indicators
Structural measures
Include objectives, policies, and procedures,
safety, production
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Strategic Quality Planning
The Voice of the Market
Why Collect All These Measures
Management by fact:
Dictates that decisions are made based on the
sound collection and analysis of data.
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Strategic Quality Planning
The Voice of the Market
Business Process Benchmarking
Inputs
Conversion
Process
Output
After- sales
process
Other Firms
Control process loop
Customer feedback loop
Benchmarking feedback
Figure 6-3 Process Model
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Strategic Quality Planning
The Voice of the Market
Robert Camps Business Process Benchmarking Process
Inputs Outputs Process
Feedback
Video clip: Benchmarking at Xerox
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Strategic Quality Planning
The Voice of the Market
Robert Camps Business Process Benchmarking Process
1. Decide what to benchmark.
2. Identify Whom to benchmark.
3. Plan & conduct the investigation
4. Determine the current performance gap
5. Project future performance levels.
6. Communicate benchmarking findings and gain acceptances
7. Revise performance goals
8. Develop action plan
9. Implement specific actions and monitor progress
10. Recalibrate the benchmarks
Table 6-3 : Benchmarking Steps at Xerox
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Strategic Quality Planning
The Voice of the Market
Baselining & Reengineering
Reengineering:
Is defined as a fundamental rethinking & redesign
of business process.
Breadth: refers to the impact of the reengineering
process to the entire organization.
Depth: refers to the organization elements such as
responsibilities, IT, and skills
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Strategic Quality Planning
The Voice of the Market
Baselining & Reengineering
Baselining:
A methodology that
can be applied in
assessing business
process reengineering
impact.
Figure 6-3 Process Model
Identify Measures
Establish time frame
Gather Data
Analyze data to identify
trends
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 6- 24
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