Achieving Sustainable Performance Through TQM and Market Orientation: A Proposed Framework for Empirical Investigations - Page 8

Market oriented (Customer-focused) TQM companies

Customer-focused TQM companies are firms that exhibit high market orientation practices, place customer related objectives in their quality orientation practices, promote learning about market to develop market-based (outside-in) capabilities such as customer connection, customer relationships, customer retention, customer visits, etc. They practice a host of TQM programmes as well as market oriented behaviours that leverage activities during the ‘creative phase’ (see figure 1.4) to enhance market advantage as the primary source of revenue and competitiveness.

These companies fulfil the customer demands on customer oriented measures such as high quality, low cost, short lead time, and flexibility, all of which are external measures of successful operations, though they are measurable inside the firm (Schonberger, 1986, p.205). These measures, unlike the traditional internal oriented measures such as cost variance, internal due dates, efficiency, and utilisation, which customer don’t really care about, characterise world-class practice. By definition, market oriented measures are closer to measuring firm’s competitive advantage. A comprehensive measurement system in market oriented companies that embrace TQM should cover total perspective from design quality to conformance quality and performance quality.

Market-oriented TQM firms use market intelligence to anticipate customer’s changing needs and expectation thus become close to customer and deliver superior value earlier than rivals. Being market oriented means gaining and sustaining competitive advantage through customer focus behaviour (e.g. Narver and Slater, 1990; Day, 1994). As they actively collect information about customers and competitors thus would have extensive customer database. Good use of customer database would create knowledge about customers and enable firms to meet the customers’ requirements better and earlier than the rival firms. Subsequently, firms with exceptional knowledge of portfolio of customers would be able to focus on developing and on keeping profitable customers. It is also able to employ and leverage technology effectively to connect with customers better (wayland and Cole, 1997). As a result of these activities, firms that are customer oriented would enjoy a growth advantage over their peers.

Additionally, Customer-focused TQM company gains competitive advantage by providing customer satisfaction through quality (Deming, 1982). Product quality precedes customer value as the former is internally determined but the latter is measured in the marketplace after the customers experience with the products and realise its’ “value-in-use”. The ‘Market–based quality orientation’ must deploy both product quality and customer value emphases in order to not only create competitive advantage but to translate those advantages into sustainable performance.

Under this approach, firm emphasis covers both quality of ‘conformance to design’ and quality of ‘performance’. Balancing these internal-external concerns creates improved value to external customers. Continuously Improved customer value is the unifying mission for market-based quality oriented companies. By implication, customer-focused TQM companies should strive for revenue growth through optimum market advantage and achieve cost leadership through operational excellence. They benefit from both strategies by practising all the common TQM and market orientation practices as well as unique practices as necessary. In doing so, the contents of TQM and market orientation as generated in the literature review are meshed into the conceptual model, on which to be empirically studied.

TQM companies constantly evaluate its processes in order to improve the value delivery processes. Within TQM literature, process management and continuous improvement are central to quality improvement. Alternatively, improvement could be derived through benchmarking-an outward view of constant improvement by ‘copying and improved from the best’ so as to continuously achieve best practice. To nurture superior ability to deliver customer value, market-driven firms must compare their value delivery processes with “best-in-class” competitors (Day, 1998). Improvement for market driven companies encompasses product innovation, continuous process improvement and “benchmark improvement”.

Benchmarking or similar competitor-centred activities such as technological forecasting, setting competitor-centred objectives are contingent to the goals of the orientation itself. For example, a firm operating under stable market demand and facing little technological turbulence, might want to pursue continuous improvement, which could be cheaper and less risky to implement as opposed to more costly competitive benchmarking. In this competitive market, customer-focused TQM companies are likely to adopt competitor-centred initiatives such as strategic benchmarking in order to acquire best practice in delivering customer value.

In competing for customer value delivery, organisations must become highly information driven in managing the operations side and equally information driven in the marketing side (Woodruff, 1997). According to his value framework, achieving overall customer satisfaction is related to customer value dimensions derived from three equivalent satisfaction levels; i.e. goal-based (customer motive) satisfaction, consequence-based (usage) satisfaction, and attribute-based (product attributes) satisfaction. In this context, he suggested that by marrying the skills in managing quality of internal processes and product with customer value orientation firms would enhance customer value delivery practices as sources of competitive advantage.

This dual emphasis requires effective deployment of TQM tools as well as customer value tools such as QFD, benchmarking, customer satisfaction measurement and customer value-oriented marketing information system (CVOMIS) (Woodruff, 1997). Customer-focused TQM companies are likely to exhibit effective use quality tools, internal quality information and external customer knowledge. As noted earlier, these are possible through improved communication, cross-functional team activities and interfunctional co-ordination. As a result, market oriented TQM companies would be better able to satisfy customer needs earlier than rivals, achieve better market growth hence better performance than the internally focused TQM companies.

Figure 1.3: MBQ Orientation: Conceptual Integrated Model

MBQ Orientation: Conceptual Integrated Model

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