Universal College of Parañaque

8273 Dr. Arcadio Santos Avenue San Dionisio Sucat Parañaque City Metro Manila

QUALITY AND GLOBAL COMPETITIVENESS

Learning Objectives:
1. Explain competitiveness and the marketing factors that affect it.
2. Determine the costs associated in implementing poor quality.
3. Explain the factors that affect competitiveness and global competitiveness.

Competitiveness and the Marketing Factors that Affect Competitiveness

 Competitiveness is the measure of how effective an organization meets the wants and needs of the
customers relative to other organizations that offer similar goods or services. The following are the ways
marketing influences competitiveness:

1. Identifying consumer wants and/or needs is a basic input in an organization’s decision-making process,
and central to competitiveness. The idea is to achieve a perfect match between those wantsand needs
and the organization’s goods and/or services.
2. Price and quality are the key factors in consumer buying decisions. It is important to understand the
trade-off decision consumers make between price and quality.
3. Advertising and promotion are ways organizations can attract buyers and inform potential customers
about the features of their products or services.

Cost of Poor Quality

 The costs of poor quality would disappear if systems, processes, and products were improved.
 It includes the cost involved in fulfilling the gap between the desired and actual product/service quality.It
also includes the cost of lost opportunity due to the loss of resources used in rectifying the defect.
 These costs include wastes, rejects, testing, reworks, customer returns, inspections, and recalls.

Factors of Operations that Affect Competitiveness

1. Product and Service Design. It is a key factor in consumer buying decisions. Consumers would often
criticize the product based on innovative presentation and timeliness of service delivery.

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 Universal College of Parañaque
8273 Dr. Arcadio Santos Avenue San Dionisio Sucat Parañaque City Metro Manila
2. Cost of an Organization’s Output. Costs affect pricing decisions and profits. The higher the cost of
operations for producing a product, the higher the price of the product to the market. Higher price of
the product may also affect the profits of the company since consumers would often consider price in
their buying decisions.

Therefore, organizations must practice cost-reduction efforts in terms of eliminating wastes and
improving processes in business operations. Organizations that maintain a lower cost of operations
than their competitors have competitive advantage.

3. Location. It is important in terms of cost and convenience for customers. Location near inputs can
result in lower input costs. Location near markets can result in lower transportation costs and quicker
delivery times. Convenience experienced by consumers and suppliers is important in all business
sectors.

4. Quality. It refers to materials, workmanship, design, and service. Consumers judge quality in terms of
how well they think a product or service will satisfy its intended purpose. Customers are generally willing
to pay more if they perceive that the product or service has a higher quality than that of a competitor.

5. Quick Response. It is the ability of the organization to quickly deliver existing products and services to a
customer after they are ordered, and being able to quickly handle customer complaints.

6. Flexibility. It is the ability to respond to changes. Changes might relate to alterations in design features
of a product or service, to the volume demanded by customers, or the mix of products or services
offered by an organization. High flexibility can be a competitive advantage in a changeable
environment.

7. Inventory Management. It is a competitive advantage by effectively matching supplies of goods with

8. Supply Chain Management. It involves coordinating internal and external operations (buyers and
suppliers) to achieve timely and cost-effective delivery of goods throughout the system.

9. Service. It involves after-sale activities which customers perceive as value-added such as delivery,
setup, warranty work, and technical support.

10. Managers and Workers. They are the people at the heart and soul of an organization. Their competency
and motivation can provide a distinct competitive edge in terms of the ideas they create.
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 Universal College of Parañaque
8273 Dr. Arcadio Santos Avenue San Dionisio Sucat Parañaque City Metro Manila

Factors that Determine Global Competitiveness

1. Productivity. It is a measure of output per input. Through improved technology and education, a country
can enjoy higher labor productivity and therefore produce goods at a lower cost.

2. Exchange Rate. It refers to the value of one country’s currency in relation to another currency. The
movements in the exchange rate will determine competitiveness

3. Tax Rates. It refers to the percentage at which an individual or corporation is being taxed. The tax rates
on labor and corporations will be a factor in determining competitiveness.

4. Cost of Doing Business. It refers to the expenses that a potential investor will incur for setting up a
business. The countries with more labor market regulations are less competitive since investors often
avoid huge amount of expenses in setting up a business.

5. Infrastructure. It refers to the physical structures like building and roads that connect distance between
regions and integrates market to nearby locations.

References:

Chan, T., & Hesan, Q. (2000). Quality management practices in selected Asian countries: A comparative
study. Retrieved from https://pomsmeetings.org/meeting2000/sc8f1.doc

Stevenson, J. (2015). Operations management: Twelfth edition. New York: McGraw-Hill Education

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