Chapter 3

Global Quality and

International Quality
S. Thomas
Foster, Jr.
Awards
Boise State University
Slides Prepared by
Bruce R. Barringer
University of Central Florida

2001 Prentice-Hall

Chapter Overview
Slide 1 of 2

Managing Quality for the Multinational

Firm (MNF)
Quality Improvement: The American Way
The Malcolm Baldrige National Quality
Award (MBNQA)
Quality Improvement: The Japanese Way
Quality Improvement: The European Way
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Chapter Overview
Slide 2 of 2

ISO 9000
Are Quality Approaches Influenced by
Culture?

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Introduction
Certainly, the task of managing quality is
affected by the increased globalization.

2001 Prentice-Hall

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Managing Quality for the MNF

Figure 3.1 shows that although the trade
deficit has remained relatively constant
over time (until recent), both imports and
exports of products have been steadily
increasing.

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Managing Quality for the MNF

Figure 3.1 U.S. Trade 1960-2000

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Managing Quality for the MNF

Slide 1 of 5

Mechanisms That Firms Use In Globalizing

Licensing
By licensing, a U.S. corporation can allow foreign
firms to sell in restricted markets while using the
design of the original designer.

Partnering( or Joint Ventures)

This agreement is often reached when two firms
have technology, product, or access to markets that
each other wants.
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Managing Quality for the MNF

With both licensing and partnering, the risk
to the company is loss of proprietary
technology.
In this case, the Deming attribute of trust is
key to a successful working relationship.
The benefits of licensing and partnering
were that the exporting firm did not have to
globalize to make sales in international
markets.
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Managing Quality for the

MNF
Slide 2 of 5

Mechanisms That Firms Use In Globalizing

Globalization
. Globalization means that a firm
fundamentally changes the nature of its
business by establishing production and
marketing facilities in foreign countries.
We refer to these firms as multinational
corporations.
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Managing Quality for the

MNF
- Globalization
. By globalizing, firms significantly change the
physical environment, the task environment,
and the societal environment in which they
operate.
. By changing their physical environment
firms locate themselves near to or far away
from natural resources.
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Managing Quality for the

MNF
Physical environment
- The advantage of saving labor costs often
overemphasized when deciding to change the
physical environment.
- Figure 3.2 shows the fiscal contrast between
making an automobile in Mexico and in the
United States.

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Mechanisms That Firms Use In

Globalization

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Mechanisms That Firms Use In

Globalization
Task environment
- The task environment of the firm has to do with
the operating structure that the firm encounters
when globalizing.
- The economic structures, skills of the employees,
compensation structure, technologies, and
government agencies, all vary when globalizing.
- The regulatory structures that firms encounter
when globalizing require an understanding of
international law.
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Mechanisms That Firms Use In

Globalization
Social environment
- The social environment facing globalizing
corporations refers to cultural factors such as
language, business customs, customer
preferences, and patterns of communication.
- The cultural factors facing globalizing firms are
often the most complex and difficult issues they
will encounter.
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Mechanisms That Firms Use In

Globalization
Social environment
- From a quality point of view, the efficiencyminded American way of moving customers
through a system may not translate well to South
American. Customer who are used to more
personalized service.
- As shown in Figure 3.3, physical, task, and
societal environments have implications for the
choices made in improving quality, particularly
in the area of quality management.
2001 Prentice-Hall

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Mechanisms That Firms Use In

Globalization
Figure 3.3 Globalizing Factors That Affect
Quality-Related Decisions
Physical
Environment

Task
Environment
Quality
Management

Social Environment
2001 Prentice-Hall

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Mechanisms That Firms Use In

Globalization
Market diversity drives the need for culturespecific research and development.
This greatly increase the complexity of
international marketing and R&D.
Often globalized firms also must apply for
patents in different places in the world to
protect their domestic patents.

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Mechanisms That Firms Use In

Globalization
As shown in Table 3.1, only three of the top 11
applicants for patents in the United States in
1996 were American companies.
The other eight were Japanese companies.
Quality Highlight 3.1 shows how one company
has adapted itself to provide high quality
service on a worldwide basis.

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Mechanisms That Firms Use In

Globalization

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Managing Quality for the

MNF
Exporter
- Another means of entering international
marketing is to not globalize but become an
exporter.
- Many times pure exporters are subject to
limitations that resident companies do not have
in terms of import tariffs and import restrictions.
- Companies wishing to export to Japan have
found it easier to establish operations in Japan
than pure exportation.
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Managing Quality for the

MNF
Exporter
- Another issue with exporting is that the United
States developed a negative quality image during
1970s and 1980s.
- This image improves greatly in the 1990s as
America reached quality levels similar to Japans
in many markets.
- Recent research by Macy, Foster, and Barringer
shows that quality still a significant factor in
helping U.S. exporters achieve success.
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Managing Quality for the

MNF
Exporter
- Figure 3.4 shows an empirically derived model
for quality-based success for exporting
companies.
- For exporting firms, quality leads to low price
and greater export success.
- The global market is a reality that must be
addressed.
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Managing Quality for the

MNF
Slide 5 of 5

Export Quality Model ( Figure 3.4)

Firm
Characteristics

Product
Strategy

Performance

Low
LowPrice
Price
Entrepreneurship
Entrepreneurship
Export
ExportPlanning
Planning

2001 Prentice-Hall

High
HighQuality
Quality
Standardization
Standardization
Promotion
Promotion

Export
ExportSuccess
Success
Transparency 3-23

Quality improvement: The

American Way
American can be called the birthplace of modern
quality management because it is home to Shewhart,
Deming, Juran, and others.
The U.S. military also has been an early adopter of
many quality techniques.
Originally, the main interest in quality in the United
States was in the application of statistics to solve
quality problems.
In recent years, the approach has become much
more behavioral as teams and other approaches have
been applied.
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The Malcolm Baldrige National

Quality Award (MBNQA)
slide 1 of 10

Malcolm Baldrige National Quality Award

One of the most powerful self-assessment
mechanisms is the Malcolm Baldrige National
Quality Award.
The MBNQA process is open to small (less than
500 employees) and large firms (more than 500
employees) in the manufacturing and service
sectors.
In 1999, the criteria were adapted for health care
and educational institutes.
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The Malcolm Baldrige National Quality

Award (MBNQA)
It is not open to public-sector and not-forprofit organizations.
The criteria is available for assessment under
a variety of different mechanisms.
There can be only two winners per category
each year. That limits the number of yearly
awards to six.

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The Malcolm Baldrige National

Quality Award
Slide 2 of 10

Key Characteristics of the MBNQA

The criteria focus on business results.
Companies must shown outstanding results in
a variety of areas to win.
The Baldrige criteria are non-prescriptive and
adaptive. Although the focus on the Baldrige is
on results, the means for obtaining these
results are not prescribed.
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The Malcolm Baldrige National

Quality Award
Slide 3 of 10

Key Characteristics of the MBNQA (cont.)

The criteria support company-wide alignment
of goals and processes. Alignment between
strategic goals and operational sub-plans help
foster a learning-based system.
The criteria permit goal-based diagnosis. The
criteria and scoring guidelines provide
assessment dimensions.
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Baldrige Award
Framework
The model for the Malcolm Baldrige National
Quality Award consists of seven interrelated
categories that compose the organizational
system for performance, shown as Figure 3.5.

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The Malcolm Baldrige National

Quality Award
Slide 4 of 10

Figure 3.5 Baldrige Award Framework, 1999

Customer and Market Focused Strategy and Action Plans

2
Strategic
planning

5
HR develop. &
management

7
Business
results

1
Leadership
3
Customer and
market focus

6
Process
management

4
Information and analysis
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The Malcolm Baldrige National

Quality Award
The inter-related categories are varies from
year to year as modification from the award
winner.
Each of these seven categories is divided into
items and areas to address.
The number of items and areas are varies from
year to year as the award criteria are
constantly updated by the Baldrige staff,
examiners, and judges.
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The Malcolm Baldrige National

Quality Award
Slide 5 of 10

MBNQA Categories
Category 1(Table 3.2)

Category 2(Table 3.3)

Category 1 shows
the award criteria
for leadership

Category 2 focuses
on how the company
establishes strategic
directions and how it
sets it tactical actions
plans to implement
the strategic plans

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The Malcolm Baldrige

National Quality Award
Slide 6 of 10

MBNQA Categories
Category 3(Table 3.4)

Category 4(Table 3.5)

Category 3
addresses the
customer and
market focus.

Category 4,
information and
analysis, relates to
the firms selection,
management, and
use of information
to support company

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The Malcolm Baldrige National

Quality Award
Slide 7 of 10

MBNQA Categories
Category 5(Table 3.6)

Category 6(Table 3.7)

Category 5 deals
with human
resources and
development.

Category 6
examines the key
aspects of process
management.

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The Malcolm Baldrige National

Quality Award
MBNQA Categories
Category 7(Table 3.8)
Documents the results of the
other six categories and
requires a series of tables and
graphs that demonstrate the
operational and business
results of the firm

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A Closer Look at Quality 3.1

A Closer Look at Quality 3.1 gives some
details about MBNQAs life.

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The Malcolm Baldrige National

Quality Award
Slide 8 of 10

The Baldrige Process

The first step is eligibility determination.
Firms that are granted Baldrige site visits
sometimes refer to themselves as Baldrige
Qualified.
The site visit consists of a team of 4 to 6
examiners visiting a company over a period
not to exceed one week.
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The Malcolm Baldrige National

Quality Award
The purpose of the site visit is to verify and clarify
those portions of the Baldrige application having
the greatest impact on the judges scores.
One of the most important outcomes of the
Baldrige process is examiner feedback to
applicant companies.
As shown in Figure 3.6, feedback reports are
provided to the applicants as part of the
assessment process.
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The Malcolm Baldrige National

Quality Award
Slide 9 of 10

Baldrige Evaluation Process(Figure 3.6)

Receive
Receiveapplications
applications

Feedback report

Stage
Stage11
Independent
Independentreview
review

Select
Selectfor
for
consensus
consensusreview?
review?
Judges
Judges
No

Feedback report
to applicant
2001 Prentice-Hall

Yes

Stage
Stage22
Consensus
Consensusreview
review

Stage
Stage33
Site
Sitevisit
visitreview
review

Select
Selectfor
forsite
sitevisit?
visit?
Judges
Judges

Review
Reviewand
and
Recommend
Recommendwinners
winners
Judges
Judges

No

Feedback report
to applicant

Yes

No

Feedback report
to applicant
Transparency 3-39

Yes

The Malcolm Baldrige National

Quality Award
Many firms have found these comments of
feedback reports helpful in identifying gaps in
deployment in their improvement processes.
The feedback reports have become more
useful for improving overall management of
processes and systems.
The feedback report is one of the major
benefits of the Baldrige process.
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The Malcolm Baldrige National

Quality Award
The feedback report includes:
- The scoring summary which is a synthesis of the
most important strengths and areas for improvement
for each of the seven Baldrige categories.
- The individual scoring range which provides a 20point scoring range.
- The scoring distribution provides the percentage of
applicants for a particular year that scored in each of
the eight scoring bands.
- The examiner comments give feedback concerning
the organization.
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The Malcolm Baldrige National

Quality Award
The Baldrige applications are scored with supporting
written guidelines.
These guidelines are provided in Table 3.9. (1999,
old, not newest )
If you are doing everything according to the Baldrige
criteria, you will score 50%.
To score in the higher scoring bands, you must
demonstrate in the application that you not only
have all of the major aspects of a quality system, the
quality system must have been refined and improved
over an extended period of time.
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The Malcolm Baldrige National

Quality Award
Quality highlight 3.2 shows how Dana
Corporation won the Baldrige by improving
and refining its processes.

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The Malcolm Baldrige National

Quality Award
Slide 10 of 10

Being a Baldrige Examiner

Appointment to the board of Trustees for the
MBNQA Board of Examiners is a very
prestigious designations.
Examiners are unpaid volunteers, and must be
willing to give up approximately 10% of their
year to serve as an examiner.
All of these people have one thing in common:
They are committed to the core values of the
Baldrige award.
2001 Prentice-Hall
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The Malcolm Baldrige National

Quality Award
Being a Baldrige Examiner
Besides scoring applications, examiners are
asked to write cases, update the criteria, and
help to improve the Baldrige process
The examiners are expected to exhibit the
highest professionalism, maintain absolute
confidentially, and be prompt and organized in
responding to the requirements of the position.
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State Awards
First Approach: Full-Baldrige Approach (e.g.
Missouri, New York, and Florida)

Second Approach: Baldrige-Lite Approach, Use

Baldrige Criteria but with a simplified Process
( e.g. Massachusetts and California)

Third Approach: Multilevel Approach

- Top level: Full-Baldrige Criteria
- Second level: :Baldrige-Lite Approach
- Lower level: recognition is provided for firms
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Quality Improvement: The

Japanese Way
The Japanese must be credited for raising
worldwide quality to a new level of
competitiveness.
Using quality as a competitive weapon to win
orders in the marketplace, the Japanese
initiated a response from the rest of the world
that has benefited producers and customers all
over the world.
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Quality Improvement: The

Japanese Way
Slide 1 of 6

Deming Prize
The Deming Prize for quality was established
in 1951 by the Japanese Union of Scientists
and Engineers (JUSE).
Unlike the Baldrige, there is no limit on the
number of companies that can receive the
award in a given year.
The Deming Prize is much more focused on
processes than is the Baldrige.
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Quality Improvement: The

Japanese Way
Deming Prize
Table 3.10 compares categories of the
Deming , Baldrige, and European Quality
Award competitions.
A review of these categories shows the
Baldrige is more general and managerial. At
the same time, the Deming Prize is more
prescriptive.
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Quality Improvement: The

Japanese Way

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Quality Improvement: The

Japanese Way
Slide 2 of 6

Deming Prize Categories

Policy

The first category of

the Deming Prize
addresses the areas of
management of quality
policy, quality
formation, policy
correctness and
consistency, and
related topics.
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Org. and Development

The organization and
operation portion of the
Deming application
requires the applicant to
document processes for
clarifying authority and
responsibility, and
related topics.
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Quality Improvement: The

Japanese Way
Slide 3 of 6

Deming Prize Categories

Information
The information that
is collected for this
item includes
information that is
gathered on the
outside and inside.
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Analysis

The analysis category

of the Deming Prize
covers the areas of
selection of priority
problems and themes,
correct use of
analytical methods,
and use of statistical
methods.
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Quality Improvement: The

Japanese Way
Slide 4 of 6

Deming Prize Categories

Planning for the Future
To plan well for the
future, firms must
understand their
present condition
well, which is the
documentation
required for this
category.
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Education & Training

Applicants document
plans and
accomplishments
relating to education
and training.

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Quality Improvement: The

Japanese Way
Slide 5 of 6

Deming Prize Categories

Quality Assurance

Quality Effects

As discussed in
Chapter 1, quality
assurance has to do
with the design of
products and the new
product development
process.

Quality effects relate

to the documentation
of benefits,
outcomes, and
results of quality
improvement.

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Quality Improvement: The

Japanese Way
Slide 6 of 6

Deming Prize Categories

Standardization
The Deming Prize
rewards
standardization.

2001 Prentice-Hall

Control
Finally, the last
category of the Deming
Prize is control.
Essentially, the
applicants describe
how they are using
SQC, control points,
control items, and
related quality tools.
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Quality Improvement: The

Japanese Way
A can be seen, the focus of the Deming Prize is quite
different from that of the Baldrige.
Although the Baldrige has become very managerial
in nature, the Deming focuses more on the nuts and
bolts of the quality improvement.
The Deming is focused on the statistical methods, a
complete picture of the management system may not
emerge.
At the same time, because the Baldrige is so diffuse
in its focus, some of the fundamentals of quality
improvement may be overlooked by examiners.
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Other Japanese Contributions to

Quality Thought
Slide 1 of 7

Just-in-Time Production
Two views emerge in the literature that pertain
to just-in-time (JIT) manufacturing.
The first view of JIT is a philosophical view of
waste reduction. This view asserts that anything
in the process that does not add value for the
customer should be eliminated.
The second view of JIT is a systems view stating
the JIT is a group of techniques or systems
focused on optimizing quality processes.
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Other Japanese Contributions to

Quality Thought
Just-in-Time Production
We combine the philosophical and systems
views to define JIT as a productive system
whose focus is on optimizing processes through
the philosophy of continual improvement.
Shigeo Shingo identified a group of seven
wastes that workers could address in
improvement processes (Table 3.11).
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Other Japanese Contributions to Quality

Thought JIT as a Philosophy

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Other Japanese Contributions

to Quality Thought
Slide 2 of 7

Japanese Total Quality Control (TQC)

Just as the Japanese JIT approach requires
attention to detail in every aspect of the
process, so does the TQC approach.
This attention to detail runs deep in the
Japanese culture.
Beyond Demings 14 points, there are several
Japanese contributions to quality thought and
practice that we outline next.
2001 Prentice-Hall
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Other Japanese Contributions

to Quality Thought
Slide 3 of 7

Visibility
In the Japanese approach to quality, problems
must be made visible before they can be addressed.
Andon or warning lights
Line-stop authority

In-Process Inspection
With work in-process inspection, all work is
inspected at each stage of the process, and the
workers inspect their own work.
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Other Japanese Contributions

to Quality Thought
Slide 4 of 7

N = 2 Technique (only the first and last pieces

are needed for acceptance inspection)
The N = 2 technique is an alternative to acceptance
sampling. Usually, an acceptance sampling plan
involves rules such as:
1.If 2 or fewer defects, accept the lot.
2.If more than 2 defects, reject the lot.
. If the suppliers processes are in control and if the
first and last pieces in the lot meet specification,
then it is concluded that the entire lot of materials
will meet specification.

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Other Japanese Contributions

to Quality Thought
Slide 5 of 7

Total Involvement of Workforce

We all become responsible for the aspects of
quality we influence in a days work.
Horizontal deployment means that all
departments are involved in quality.
Vertical deployment means that all levels of
management and workers are actively involved
in quality.
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Other Japanese Contributions

to Quality Thought
Slide 6 of 7

The Five Ss. The five Ss are a sequential process that

companies follow to literally clean up their acts. The Five Ss

are:
Seri: organizing by getting rid of the unnecessary.
Seiton: neatness that is achieved by straightening offices and
work areas.
Seiso: cleaning plant and equipment to eliminate dirtiness
that can hide or obscure problems.
Seiketsu: standardizing locations for tools and other
materials.
Shetsuke: discipline in maintain the prior four Ss.
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Other Japanese Contributions

to Quality Thought
Slide 7 of 7

Quality Circles
Are natural work teams made up of workers that
are empowered to improve processes and are use
by Japanese companies to involve employees in
improving processes and process capability.

Preventive Maintenance (PM)

The idea behind this concept is that the worst
condition a machine should ever by is on the day
you purchase it.
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Quality Improvement: The

European Way
- ISO 9000 is the European standard for quality
that has been expanded worldwide.
- There is a perception in the quality community
that Europe is falling further behind the
Japanese and the United States in improving
quality.
- Culture plays a greater role in European quality
practices than it does in the United States.
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Quality Improvement: The

European Way
- There are only two examples of why, if service
is to be improved, not only business practices
will have to change in parts of Europe but also
ingrained culture must change.
- Two types of quality recognition are widely
used in Europe.
- These are the European Quality Award
(EQA) and ISO 9000 certification.
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Quality Improvement: The

European Way
European Quality Award (EQA)
The EQA has two levels. The highest level is the EQA
for the most accomplished applicant in a given year.
The second level given in the European Quality Prize
for other firms that meet the award criteria.
The model for the EQA is shown in Figure 3.7. (2000,
old, not newest)
The differences between EQA and MBNQA are found
primarily in the categories of people satisfaction,
impact on society, and business results.
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Quality Improvement: The

European Way
European Quality Award (EQA)

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Quality Improvement: The

European Way
A comparison of the Baldrige, Deming, and
European awards is presented in Table 3.12.
Like the Baldrige, the category of business
results focuses on operational and financial
results.
However, the EQA focus also on corporate social
responsibility in the corporate results category.
This includes an assessment of results relating to
social and ecological factors.
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European Quality Award (EQA)

Table 3.12

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ISO 9000
What is ISO 9000?
ISO 9000 is the European standard for quality
that has been expanded worldwide. ISO stands
for Organization for International Standards.

What is the Purpose of ISO 9000?

The purpose of ISO 9000 is to provide a
mechanism for firms to document their quality
systems in a series of manuals to facilitate
trade through supplier conformance.
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ISO 9000
Selecting a Registrar
- To many who have implemented ISO 9000, the selection
of the registrar is the most important step in the ISO
9000 process.
- There is no centralized authority that qualifies ISO
registrars.
- When selecting a registrar, firms must be careful. They
should check with customers and departments of
commerce and customers within the countries to which
they plan to export.
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ISO 9000
Limitations of ISO 9000
- Among the criticisms of ISO are that it is mainly
for exporting firms, is a barrier to trade, is time
consuming, is costly, is difficult for small firms to
afford, eats up human resources, discourages free
thinking and employee empowerment, and the
fact that not all countries accept all ISO
registrars (see Table 3.13).
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ISO 9000

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ISO 14000
What is ISO 14000 and ISO 14001?
ISO 14000 is an international standard for environmental
compliance.
The compliance standard is ISO 14001, Environmental
Management Systems.
This system may provide the basis for developing a
comprehensive environmental management system.
Table 3.14 presents the ISO 14001 Elements
A key process has to do with selecting the appropriate
registrar.
It is expected that firms with little environmental exposure
will adopt ISO 14000 first.
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ISO 14000

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Are Quality Approaches

Influenced By Culture?
Quality Approaches are Influence by Culture
The US approach
has historically
been commandand-control
oriented.

2001 Prentice-Hall

The Japanese
approach is based
on an ethic of
consistency and
emphasis on
reduction of waste.

The Europeans have

adopted broad
standards that can
be adapted to the
diverse nation states
of the EC.

Transparency 3-78

Are Quality Approaches

Influenced By Culture?
Are other cultures developing quality methods
that will be instructive for world competitors?
Several Asian Tiger nations, such as Malaysia,
South Korea, and Singapore, have begun to
make inroads in the field of quality and will
become formidable competitors in the future.
We will keep watching.

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