Quality as a competitive advantage is increasingly important for businesses, with 70% of small and medium-sized businesses ranking it as their top concern. Quality can support a business strategy by facilitating customer loyalty, reducing negative feedback, and lowering manufacturing costs. Quality can be broken down into design quality and conformity quality, and Total Quality Management (TQM) must remain customer-centric for business success.
Quality as a competitive advantage is seen as one of the fundamental ways in which individual companies and national economies can successfully compete in the global marketplace. It contrasts with comparative advantage, which, until the mid-1980s, was seen as an essential method of facilitating trade and economic growth. Comparative advantage focuses on the companies or nations that produce the goods and services at which they are most efficient and trades them for products that can be manufactured more efficiently in other nations. While considered mutually beneficial, comparative trading did not directly take quality into account as a competitive advantage and instead focused on the cost of producing goods rather than their ultimate viability and durability once completed.
Every competitive industry tries to distinguish itself by manipulating several key factors. This includes the price charged for goods and services, convenient locations from which they can be provided, and establishing a loyal customer base. Where quality as a competitive advantage comes into play is a supporting or supportive role as it has a direct impact on all other aspects of a business strategy. A premium price can be charged for products based on perceived superior quality, and this creates a tendency for customers to be naturally loyal to a brand, facilitating faster expansion than competitors can achieve in the same industry. Quality also adds an element of strategic advantage to companies, as it negates the majority of negative feedback and feedback from customers and reduces scrap and rework expenses in the manufacturing process.
In a 2011 survey, 70% of 3,400 general small and medium-sized businesses in 34 different national economies ranked quality as a competitive advantage as their top concern. Only exceptions were seen in India and China, with Indian companies also ranking quality very important, but placing more emphasis on brand recognition and price than elsewhere. Of the Chinese companies surveyed, only 46% ranked quality as a top concern in being competitive, which may not be surprising given that China has stood out internationally for being more competitive on price than most products in other economies. China also remains an exception to the rule as it continues to achieve success globally by focusing on the comparative advantage of its products and services. Among nations where companies ranked quality as a competitive advantage more highly than in other parts of the world included 84% of Latin American companies surveyed considering it most important, and 92% in Vietnam and 85% in Taiwan, considering quality extremely important for commercial success.
A more complex view of quality as a competitive advantage in the business environment comes under what is known as QFD (Quality Function Deployment). QFD tries to divide quality into positive and negative aspects as a guide for companies to focus their efforts on positive quality advantages over everything else as this is seen as a stronger factor for company creation. An example of negative quality aspects that can be overly focused on by companies include dealing with disappointed customers to an excessive degree. Instead, if a business focuses on customers who are most satisfied with its products or services and finds ways to improve that aspect of the business, it is more likely to move forward.
As quality is a subjective term that can be defined quite differently by commercial rivals, attempts have been made to break it down into several different objective categories, such as design quality and conformance quality. Design quality is primarily concerned with the functionality and durability of the product, in terms of what the customer really wants to use it for. Conformity quality, on the other hand, focuses on the original intent for which the product was manufactured, regardless of the various uses to which it is put on the market. Together, the complex aspects of both approaches to analyzing products are incorporated into what is known as Total Quality Management (TQM), which must remain customer-centric to facilitate the survival and growth of all business ventures.
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