Approaches for Self-Assessment
Theory of management gives numerous approaches for self-assessment that have both advantages and disadvantages. It is difficult to choose one approach that can be definitely called the most effective. It is necessary to remember that the specific model of quality management is not the only possible way out of all problems the business often has. The failure, just like the success, is the logical outcome of a variety of issues like the organization of the personnel's work, the infrastructure of the company and the system of its organization. The most important aspect that makes the managers apply business excellence models is their desire to make the companies work according to the standards of Total Quality Management and thus improve their business performance. It is also necessary to note that business excellence awards provide an opportunity to assess the companies' performances according to objective and unified criterion.
According to the article of Vokurka, Standing, and Brazeal (2000) “A Comparative Analysis of National and Regional Quality Awards”, TQM, or Total Quality Management, is the essential notion in understanding business excellence programs. It helps to popularize quality awareness strategies and work to fulfill the aims that correspond to the programs of quality awards. The article also features the main points in the history of quality management and gives a comparative analysis of the Australian Quality Award, the Malcolm Baldrige National Quality Award, the Deming Prize, the Canadian Quality Award and the European Quality Award. The tables in “A Comparative Analysis of National and Regional Quality Awards” (Vokurka, Standing, & Brazeal, 2000) show visually the criterion for quality assessment of business to receive the particular award and the ways of achieving business excellence.
Business excellence models have certain differences between each other. According to the Australian excellence framework, the main goal of management is to make Australian companies more popular on the global market and sell their production on the international level. This aim corresponds to the other strategic issue like making the economics better and increasing national wealth. This is a customer-oriented framework and it is based on the logical and strict structure. The Australian Quality Award implies that serious results in business can be achieved only with the help of regular learning and improvement. It is also important that all changes and improvements need to be planned in advance and be based on approved facts. In the percentage ratio, the Australian business excellence model features 12% of organizational performance, 14% of leadership, and 20% of quality of process and people (Vokurka, Standing, & Brazeal, 2000).
The Canadian excellence framework is similar to the Australian one in the questions of social orientation. It aims not only at increasing the wealth of the company, but also at raising standards of life in the country and the entire economical situation. The Canadian business excellence underlines that the main issue that guarantees effective growth is leadership. Showing respect to the employees and encouraging them makes the work and the atmosphere in the company better. In the percentage ratio, the Canadian business excellence model consists of only 5% for supplier focus, 10% planning and leadership, 17% of customer focus, process management and people focus, and 24% of organizational performance (Vokurka, Standing, & Brazeal, 2000).
The Deming Prize is very different from the previously discussed models of business excellence that are used in Canada and Australia. It is popular mainly in the eastern business and in Japan in particular, which makes the traditional world view of Asians the main issue in building business relationships. According to the Deming Prize, the aspects of company's activity are of equal value, neither of them has a priority. The quality principles in the work of managers are also quite different from the things that the Western culture considers in achieving business excellence. For example, managers make attempts to teach the employees the right ways of showing commitment, getting rid of fear and inequality among the personnel. According to this approach, less attention is paid to leadership and more to policy.
The European Quality Award pays much attention to cooperation with the partners, human resources, and their role in the process of organization. Among the most important issues in achieving business excellence with the European Quality framework are visionary leadership, customer-driven approach to excellence, learning and organizing the personnel, creating value and focusing on the results. The EFQM business excellence model consists of the following aspects: resources and partnership, policy and strategy, processes, people, and leadership.
Business excellence models have much in common. They differ mostly because of the cultural and social background of the country where it is used. I consider the EFQM business excellence model to be the most effective approach to self-assessment for the company that is located in the European Union or the United States for a number of reasons. First, this model does not have a strong social component unlike the Australian and the Canadian excellence frameworks. Second, it does not work with the psychological problems of the employees like the Japanese Deming Prize.
Application of the EFQM Business Excellence Model
It might be easier to illustrate the practical application of the EFQM business excellence model on the example of the working company that corresponds to the previously mentioned principles of the European self-assessment, which is BestBuy.
BestBuy is a well-known American electronics retail company that is famous for the stores providing discounts. It has a number of its exclusive brands like Geek Squad, Insignia, RocketFish Mobile and others. The business model of the company is based on selling consumer electronics divided by categories and assisting with the support of their production. For instance, its department that sells mobile phones provides a wide range of models and mobile contracts that might satisfy a lot of people. It is possible to search for the needed phone using special filters like shop by carrier (Y-Mobile, AT&T, Verizon Wireless, or Family Mobile). There is an option to choose by the company like Samsung or Nokia or by the operation system like Android, iOS, or Windows Mobile. However, the key issue that makes the BestBuy mobile phone department different from those of other companies in the market and that makes it popular among customers is the number of contract phones. It is possible to buy a brand new Samsung smart phone for a dollar if it has a contract number provided by one of the mobile operators.
It is evident that consumers are willing to buy different goods. In order to meet their various needs, managers and retailers try to identify the groups of consumers that are likely to react positively to the proposed products. Therefore, companies tend to focus their marketing efforts primarily on these groups of consumers.
Market segmentation is used to divide the market into distinct groups of customers (market segments), which may require various products and different marketing efforts. The key issue in marketing is to divide the market into segments that are optimal in two main criteria: the proximity and the popularity of the production. Segmentation effectively simplifies and reduces the investments in promotion and eliminates many costly methods of promotion. Also, the segmentation contributes to the reduction of the cost of marketing policy. The explanation of this phenomenon is quite simple. Customers search for products that meet their needs. In case the retailer offers the goods of high quality at a lower price and with better service than the others, the effect might be great. In addition, popularity among customers might minimize the costs of advertising (Green, 1991).
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It is possible to say that BestBuy is already using the right segmentation strategy that contributes to the company’s success. It has an image of a trustworthy retailer that offers not very expensive yet quality production. This allows people with low and average incomes buy better goods. BestBuy combines two main principles of the segmentation strategy. Firstly, the company’s stores are available mostly everywhere as they have a chain of regional departments and an Internet store. Secondly, they are popular among people, so they are a growing and profitable organization. Thus, as it was mentioned above, the segmentation of the market is used to identify the unmet needs of customers and offer popular goods to the target audience. BestBuy can be definitely called a successful example of this policy.
There are several important requirements the pricing strategy needs to meet. First, the products the company offers have to be the best by quality and price, because the competition in the market is tough. Second, the company has to determine which products are the most successful and popular among customers. Another important issue that needs to be considered by the company is the way customers can pay for the products. The more methods of payment are available, the more chances the product has to be bought. In addition, the company has to take into consideration the average established price for similar products in the market (Lichtenstein, Ridgway, & Netemeyer, 1993).
BestBuy has a successful pricing strategy. As it is a chain of discount stores, the prices are low. Even people with incomes below average can buy products of good quality there. BestBuy establishes the prices that are below average, which is a guarantee of their constant popularity. Walmart administration does not allow selling those products that are not actively bought. There are many ways to pay for the products. In the Internet store, it is possible to pay by a Visa, a MasterCard, or PayPal. All these issues make the pricing strategy of BestBuy successful. BestBuy considers the expectations of the market and the prices of the competitors to establish the price that will be popular.
A vivid example of the pricing strategy BestBuy uses is the way they manage to sell mobile phones. The company has contracts with major providers of traffic like Verizon and AT&T. They sell mobile phones at low prices like several cents or dollars, but those phones are contract ones. The situation is quite profitable for the customers, though. The mobile operators provide them with a wide variety of tariffs, so there is no problem with choosing the right one. In addition, the customers can get a brand new smart phone for several dollars instead of paying several hundreds. This issue makes BestBuy phones very popular among people who want to save some money.
Another thing that BestBuy introduces in its pricing strategies is package prices, when two products together will cost less than each of them separately. There is also a possibility to add a small present to the main product at some small price. For example, if the customer buys a mobile phone, they get a SD-cart for free. From a psychological point of view, this present the customer does not pay for will make them content with the services of the store. As a result, they might tell their friends and relatives to come to the store and buy a mobile phone there. This is the guarantee of real popularity among people, when the company does not need to promote itself. Promotion by word of mouth is one of the keys to the company’s success.
It is also necessary to monitor the development of the market and understand that competitors can lower the prices too. BestBuy has done its best for many years and nowadays it is problematic for new companies to compete with chain stores, even though they have low prices. BestBuy has a very important thing in business – it is its reputation. The company worked successfully for decades to earn this reputation. That is why it is difficult for start-ups to compete with Walmart, even if the pricing conditions do not differ much.
To conclude, as it was mentioned above, product and pricing strategies are very important to the development and functioning of a business. These strategies need to consider the overall situation in the market, the average prices, and the prices that are established by the competitors. The product has to meet all the requirements of the customers both in quality and in price. That is why pricing strategies like package pricing, bonuses, and discounts are actively used by companies. BestBuy is one of the most successful consumer electronics retail companies in the United States. It provides customers with a high quality production at low prices and has a developed chain of department stores. However, the main thing about BestBuy is that it has gained good reputation and nowadays it is not even necessary for the company to launch an advertising campaign to let people know that they can get more for less money.
Excellence Strategy for Transforming the Organization for the EFQM
It seems like everything in BestBuy corresponds to the conditions of the European excellence award, from the policy to the pricing strategies that are extremely popular among the customers. Though, it is possible to say that the company has one issue to work at in order to achieve the EFQM award standards – the leadership.
Leadership is ability to direct people. It is also an ability to influence individuals and groups, managing their efforts in the best way to achieve the goals of the organization. The personality of the leader has a great influence on the minds of participants of the group, it can even a change the usual behavior of people. The power allows the manager to coordinate the actions of his subordinates, to guide them into the mainstream of the organization's interests, and to encourage employees to work more efficiently, to prevent conflicts that arise in the team. Without power, there is no organization and no definite order in the working activity. The definition of power as the organizational process involves the following aspects: power exists in those who may potentially use it, or, in other words it exists not only when it is used. The power and its practical application are interdependent, like there is a connection between those who use power and those to whom it applies. However, in modern society there is no slavery and the power is not absolute, so everybody is formally free.
There are several types of leadership. Among them it is possible to mark out democratic, authoritative, advisory and others. Though, it is necessary to analyze the notion of servant leadership both from philosophical and practical points of view. In this type of leadership the power is not gathered in one place, as it is in the traditional pyramid of control. It is divided by all members of the ruling system, so that it helps to work effectively.
In 1970 Robert K. Greenleaf in his essay used the notion of servant leadership for the first time. He (1996) described this phenomenon in the following way:
The servant-leader is servant first… It begins with the natural feeling that one wants to serve, to serve first. Then conscious choice brings one to aspire to lead. That person is sharply different from one who is leader first, perhaps because of the need to assuage an unusual power drive or to acquire material possessions…The leader-first and the servant-first are two extreme types. Between them there are shadings and blends that are part of the infinite variety of human nature.
The European Greenleaf Centre for Servant Leadership analyzed the circumstances under with servant leadership give the best results and emphasized the most effective characteristics of this theory. Conger (2000) noted that this style of leadership encourages the majority of people to develop. The atmosphere of self-confidence created a sense of personal power. The servant leader believes that every participant of that group is unique and so he/she can generate new ideas. The experience shows that it works good in educational institutions – when the teacher encourages students to do their best, because they can do anything if they try, the students usually try and succeed.
Another peculiarity of service leadership is “holding people accountable for performance they can control” (Conger, 1989). Froiland, Gordon, and Picard (1993) write that it is important in a workspace, because people know the limits within which they are free to make experiments. This helps both employees and companies to achieve their goals. In this situation the leader stands back and only gives the followers support when the help is needed. This way of managing work is a good basis for creative atmosphere, where everyone can find a “true-self”. The last important characteristic of service leadership is stewardship. According to Block (1993), it is “the willingness to take responsibility for the larger institution and go for service instead of control and self-interest”.
Motivation can be called the key concept in management, especially in popular materials that can be found in the magazines and in the Internet. Many leaders try to do their best to increase the level of motivation of their employees. However, it is a difficult thing to achieve, because the leader needs to create the right atmosphere and be the person workers estimate. Service leadership is a good tactics to motivate the group of people. Among popular pieces of advice “how to make people work with enthusiasm” it is possible to find the following ideas:
- A strong relationship with their manager;
- Clear communication from their manager;
- A clear path set for concentrating on what they do best;
- Strong co-worker relationships;
- A strong commitment to their co-workers so they will take risks and stretch for excellence;
- Opportunities to learn and grow (Kimball, n.d.).
It is impossible to imagine a ship without a captain. When the place of the “dominant person” in the current micro-society is free, others might start fighting for the right to rule. So, it is impossible to create a group of individuals without the leader. The difference is in the style of managing the actions of other people. The captain of the ship who is load, fierce and everybody is frightened to be punished by him, might soon be killed. The crew might start the mutiny, because no one prefers to be treated like a slave or an animal. Another variant of conduct for the captain is to listen to the crew and to create the right atmosphere in the ship, so that everyone will be happy to work. That captain will be estimated by people, who know what they are working for and who feel their dignity. The second way is service leadership and it seems to be the right way to manage the work of people.
There is a variety of business excellence frameworks that depend upon the cultural and social background, and geographical location of the company. It is impossible to expect that the company will succeed on the global market because of the right choice of the business model. It might make the manager's work easier and improve the company’s performance, but the end result depends upon a great number of issues.