Find the balance between quality and efficiency

How to find the balance between quality and efficiency?

Question: "Quality First" is our consistent goal, and for this goal, we pay attention to the improvement of quality all the time. But quality improvement requires a lot of investment, and sometimes an increase of 20% in investment yields less than 1% of the benefit. (Faith)

Answer: [bold]Quality is not the ultimate goal pursued by a business. [bold] Quality is like air and people for enterprises. Air is the condition for people's survival, not the goal of people's survival. Under the premise of meeting the needs of users, the enterprise aims to obtain reasonable profits and achieve sustainable operation. Therefore, quality is only one of the conditions or means for the enterprise to achieve the goal, not the ultimate goal of the enterprise.

Blind pursuit of quality hinders the achievement of goals. Satisfying user needs is the basic condition for the realization of enterprise goals, and user needs can be attributed to the requirements of "quality, price, and time". Affected by factors such as region, culture, economy, consumption habits, etc., users have differentiated cognition and demand for "quality, price, time". In different market segments, users have different psychological expectations for product quality and service quality.

Understanding, grasping and meeting the psychological expectations of target users for product quality and service quality is the basis for enterprises to formulate quality goals. Blind pursuit of quality first away from user needs may break the balance between quality and price, resulting in excess quality or product quality. unsalable.

Look for minimal effort to achieve quality goals. No matter what kind of quality goals are set, achieving quality goals with less investment is the fundamental requirement for enterprises, and quality cost management is the basic management ability that enterprises need to have.

Quality cost management needs to be guided by quality objectives, starting from the main links of the value process such as R&D, production, procurement, sales, service, etc., to find out the key driving factors and control points that affect product quality and service quality, and combine the actual situation of the enterprise. Develop systematic solutions.

Quality improvement is accompanied by cost. Quality cost can be divided into two categories: active cost (prevention cost, appraisal cost) and passive cost (internal failure cost, external failure cost). Judging from your reaction, your company It attaches great importance to product quality, and the active cost investment is too large but does not bring corresponding returns.

For this problem, firstly, on the premise of meeting the quality objectives, find the best combination point of active cost and passive cost (point K in the figure), and determine reasonable quality improvement input standards in different periods. The second should improve the quality and input efficiency and methods. That is, from each link of the enterprise value chain, find out the key factors affecting the quality, and formulate targeted prevention and identification measures. Part of the cost pressure of quality control is passed on to suppliers through systems such as quality claims and supplier review, so as to reduce the direct investment of enterprises.

How to formulate medium and long-term development plans for medium-sized enterprises?

Question: After four years of development, the company has gained a certain reputation in the industry, its technology is relatively mature, and its financial status is good. Currently, it is formulating a medium- and long-term development plan that fits the actual situation of the company. (A Gang)

Answer: The definition of domestic medium-sized enterprises generally refers to enterprises with annual sales revenue between 50 million and 1 billion RMB. Since the questioning company did not describe its company situation in detail, it can only make some basic suggestions based on the consulting company's experience.

Domestic medium-sized enterprises, based on their revenue scale, generally focus on developing within a single industry sector and may lead in one or several market segments. When an enterprise develops to a certain scale, it may face the limitation of market capacity and cannot support the further expansion of the enterprise in the existing industry field. In this case, medium-sized enterprises will seek to diversify their development paths to support their business development needs.

Enterprises' diversified investment often faces the problem of investment direction and opportunity selection. In response to this phenomenon, we recommend that when enterprises diversify their investments, the choice of new industries and new businesses should consider the synergy or complementarity with the original business, so as to form a related diversified investment pattern for the enterprise. In addition, the choice of new business should also consider its development cycle, and the three levels of business (cash cattle business, star business, seed business) will develop collaboratively to ensure sufficient cash income to support the long-term development of the enterprise.

How to break through the development bottleneck of an IT product company?

Question: We are an IT product company with great influence in the region, but due to the short cycle of product replacement and the pressure from big brands, the original market system is under unprecedented pressure. The merchants began to exclude and blackmail us. (Su Kai)

Answer: For the situation mentioned in the question, the solution is relatively clear, which is to implement a differentiated competitive strategy. It may involve differences in two aspects: product differentiation and service differentiation.

Product differentiation refers to selecting areas that large companies are unwilling to cover, or market areas that do not deserve special treatment, and serving special customer groups through differentiated products. These customer groups usually have some special needs and are willing to pay more than the market average for them. The most classic example of successful implementation of the differentiation strategy is Apple, which positioned the functions of its own personal computers such as Machitosh for graphics and image processing, which is especially suitable for advertising designers who have high requirements for graphics processing. Divided into customer groups, and this market segment is a market area that IBM, DELL, COMPAQ and other large computer manufacturers are unwilling to cover.

Service differentiation refers to providing differentiated and personalized services in the pre-sale, in-sale and after-sale of products to improve customer satisfaction and form a competitive advantage. The current IT consumer market is very competitive, and products of different brands are gradually approaching in terms of function and performance. This homogenization trend has led to the continuous decline of current brand loyalty. Whether customers buy or not depends largely on the quality of services and service differences.

In different sales areas, due to the income gap and different consumption habits of residents, there are huge differences in consumer demand and service demand, which may have an impact on distribution channels. For example, my country's home appliance consumer market has very significant regional differences, and IT products and home appliance products may have great similarities. Enterprises can seize these characteristics to guide the implementation of the differentiation strategy.

At the same time, as a professional consultant, I would like to remind some places that need special attention when implementing a differentiated strategy:

To implement a differentiated strategy, it is necessary to consider the market capacity and availability of the selected market segment. issues of sustainable development. The speed of upgrading IT products is relatively fast, and the problem is whether the company has enough ability to develop a series of products (product upgrades) to meet this market segment, that is, whether to choose to enter a market segment Can support the long-term development strategy of the enterprise itself.

The selection of target market segments should be based on the core competitiveness of the enterprise itself. For IT products, an obvious feature is that some products have high technical content, and no one can access them, and some products can be accessed by everyone. The key to the difference is whether it can form economies of scale, smooth distribution channels, and differences in services. This is the question of whether the enterprise itself can form a competitive advantage. For example, it is mentioned in the question that the company was originally influential in the region, we can start from this aspect, and we may get some conclusions after in-depth analysis.

Given the lack of specific information in the question, the answer to this question can only go so far.

Choose mature or immature markets?

Question: In the process of facing intensified competition, should commercial enterprises enter mature markets with fierce competition, or choose immature markets to expand their own strength? (Liu Dong)

Answer: When a commercial enterprise chooses whether to enter a market, the key is to objectively evaluate the advantageous resources and core competitiveness of the enterprise, and analyze the competitive elements of the target market and the relative competitive advantage of the enterprise entering.

Enterprises in mature markets operate with a clear profit model, and the competition is fierce. Enterprises mainly increase their profits by expanding their scale; in immature markets, the profit model is not mature, and enterprises mainly focus on the target market they operate. The key to profit lies in the target market. Analysis of customer base. In layman's terms, the goal of enterprises in mature markets is to "make consumers' money flow more into their own pockets"; the goal of enterprises in immature markets is to "make consumers take their money out".

Faced with intensified competition, commercial enterprises enter another mature market with fierce competition. The key lies in better exerting the core competitiveness of the enterprise and utilizing the superior resources of the enterprise. When choosing to enter an immature market, it is necessary to fully consider the adaptability of the characteristics of the business format and the target market, and the matching degree between the core competitiveness of the enterprise and the competition elements of the format.

For example, there are two nationally renowned retail giants in Shanghai. In the past few years, as competition intensified, supermarket customers were gradually diverted from more clearly positioned business formats. When choosing future business development, Company A chose to develop in the direction of large supermarkets, while Company B tried to develop community shopping centers. From the current point of view, the choices of companies A and B are very successful. The smooth development of company A lies in the expansion of the supermarket scale, which makes the company's logistics and distribution advantages play a greater role; the success of company B lies in accurately positioning the target regional market and giving full play to the various The comprehensive management capability of various retail formats.

Why are Chinese home appliance companies diversifying?

Question: Many home appliance companies have taken the path of diversification, such as Haier and Chunlan, which have successively entered some unrelated industries. I think it has something to do with the price war. So, should an enterprise like Gree insist on specialization, should it also take the path of diversification to reduce the impact of price wars on the enterprise? (Banway)

Answer: For the phenomenon of home appliance enterprises focusing on diversifying operations, fierce competition in the home appliance industry, price wars one after another, and overall profit margins are shrinking, which is an industry background that cannot be ignored. However, the choice of enterprise diversification strategy is also different due to the resources of the enterprise itself, the understanding and view of the industry environment, and the commitment to social obligations.

Judging from the brand resources of Haier and Gree air conditioners, there are obvious differences between the two. The Haier brand has always emphasized the image of "high quality". It has taken a diversified road to try to rely on its strong "Haier" brand to leverage various market fields, and maximize brand value through appropriate diversification. Transform intangible assets into tangible assets. In the eyes of the public, Gree air-conditioning is the brand image of "technology + professionalism + scale in the field of air conditioning", and this is also its core competitiveness. At present, this brand image is not suitable for entering other fields.

In addition, diversification is neither a "life-saving straw" when an enterprise encounters problems such as price wars in the process of business development, nor is it a "panacea" for a company to grow rapidly, and of course it should not be an "expansion" that is disgusting. trap". Diversification is only a strategic choice for enterprises to adapt to market changes and find new growth points on the premise of integrating their own resources and enhancing their core competitiveness.