Quality Progress - March 2018 - 35

operating each
business unit using
its established processes and values,
and the organizations accepted two
sets of operating
procedures.
Soon, another
issue surfaced. ABC
Engineering completed the design
of a new facility
and wanted to start construction. ABC Engineering
purchased a construction management organization to
supervise the construction, which was being performed
by an allied contractor.
The construction management organization was small,
and its activities were configured to sell its services to
different clients. When the issue of integration arose,
it was decided that the construction management
organization would be integrated with ABC Engineering
because it was purchased for the technical experience
it could provide to ABC Engineering-not to any other
client. The intention of the purchase was to obtain the
organization's construction management experience,
not its processes or values. Therefore, it made sense to
integrate the construction management organization
with ABC Engineering.
When an organization is purchased for its products
and services, it typically is logical for the parent organization to allow the acquired organization to continue
its business as usual by using its own processes and
values. The parent organization could infuse additional
resources into the acquired organization to speed up
its growth. However, if an organization is purchased for
its resources, it makes sense to integrate the acquired
organization with the parent organization.

Two classic examples highlighting this fact involve
the successful organizations Southwest Airlines and
IKEA. Southwest Airlines chooses to serve people who
typically travel by bus or car by inviting them to travel
via its reasonably priced airplanes. IKEA, which has the
highest growth in the furniture industry, chooses to serve
young families.
Choosing which customers to serve enables an organization to design a set of processes that are appropriate
for its chosen customers.

2. Choose which customers to serve.
In this example, ABC Engineering started a branch in Calgary to serve a unique category of investors (investors
from its own country) so it wouldn't have to compete
with North American engineering firms, which wouldn't
be a favorable outcome.
Serving a specific category of customers is the cornerstone of strategic positioning. Trying to serve many
customers with different needs will eliminate an organization's competitive advantage.

4. Tailor a set of processes.
An organization must design an activity system in which
one activity fits and enforces another, eliminating redundancy and wasted effort.
When processes are configured into a system, it is
difficult for the organization's competitors to imitate that
system. Achieving fit between activities also is difficult because decisions and actions must be integrated
among the organization subsets, once again making
imitation difficult.

When an organization
is purchased for its
products and services,
it typically is logical for
the parent organization
to allow the acquired
organization to continue
its business as usual
using its own processes
and values.

3. Choose what to do-and what not to do.
Freedom to choose is at the center of an organization's
business strategy. Without choice, an organization might
attempt to do everything for all customers, resulting in
no advantage to the organization's product or service.
Let's use the organizations from step two-Southwest
and IKEA-and see how each organization chooses what
to do.
Southwest's strategy is to provide convenient, lowpriced travel. It offers frequent flights from uncongested
airports, kiosks for automated flight check-in (which cuts
the cost of paying agents), friendly service, seat assignment and baggage transfer. It also cuts costs by not
offering meals on its flights. It selects activities that are
consistent with its low-cost strategy and avoids activities
that increase costs or inconvenience passengers.
IKEA also chose a low-cost strategy to serve young
families. For example, customers are responsible for transporting the furniture they purchase. After purchasing their
furniture in the IKEA showroom, the customer must go to
an IKEA warehouse to pick up his or her items.
Also, the furniture is organized in the showroom in a
way that suggests how customers can use and organize it in their own homes. This eliminates the need for
an interior decorator. IKEA stores also serve affordable
meals and snacks, and offer childcare services while
parents shop-all of which attract young families.

qualityprogress.com ❘ March 2018

QP 35


http://www.qualityprogress.com

Table of Contents for the Digital Edition of Quality Progress - March 2018

Seen and Heard
Expert Answers
Progress Report
Mr. Pareto Head
Career Coach
My Quality Story
In the Right Direction
A Different Kind of BBQ
Gaining Ground
Impeding Progress
Innovation Imperative
Statistics Spotlight
Standard Issues
Marketplace
Footnotes
Back to Basics
Quality Progress - March 2018 - INTRO
Quality Progress - March 2018 - cover1
Quality Progress - March 2018 - cover2
Quality Progress - March 2018 - 1
Quality Progress - March 2018 - 2
Quality Progress - March 2018 - 3
Quality Progress - March 2018 - 4
Quality Progress - March 2018 - 5
Quality Progress - March 2018 - Seen and Heard
Quality Progress - March 2018 - 7
Quality Progress - March 2018 - Expert Answers
Quality Progress - March 2018 - 9
Quality Progress - March 2018 - Progress Report
Quality Progress - March 2018 - 11
Quality Progress - March 2018 - 12
Quality Progress - March 2018 - Mr. Pareto Head
Quality Progress - March 2018 - Career Coach
Quality Progress - March 2018 - 15
Quality Progress - March 2018 - My Quality Story
Quality Progress - March 2018 - 17
Quality Progress - March 2018 - In the Right Direction
Quality Progress - March 2018 - 19
Quality Progress - March 2018 - 20
Quality Progress - March 2018 - 21
Quality Progress - March 2018 - 22
Quality Progress - March 2018 - 23
Quality Progress - March 2018 - A Different Kind of BBQ
Quality Progress - March 2018 - 25
Quality Progress - March 2018 - 26
Quality Progress - March 2018 - 27
Quality Progress - March 2018 - 28
Quality Progress - March 2018 - 29
Quality Progress - March 2018 - 30
Quality Progress - March 2018 - 31
Quality Progress - March 2018 - Gaining Ground
Quality Progress - March 2018 - 33
Quality Progress - March 2018 - 34
Quality Progress - March 2018 - 35
Quality Progress - March 2018 - 36
Quality Progress - March 2018 - Impeding Progress
Quality Progress - March 2018 - 38
Quality Progress - March 2018 - 39
Quality Progress - March 2018 - 40
Quality Progress - March 2018 - 41
Quality Progress - March 2018 - 42
Quality Progress - March 2018 - 43
Quality Progress - March 2018 - Innovation Imperative
Quality Progress - March 2018 - 45
Quality Progress - March 2018 - 46
Quality Progress - March 2018 - 47
Quality Progress - March 2018 - Statistics Spotlight
Quality Progress - March 2018 - 49
Quality Progress - March 2018 - 50
Quality Progress - March 2018 - 51
Quality Progress - March 2018 - 52
Quality Progress - March 2018 - 53
Quality Progress - March 2018 - Standard Issues
Quality Progress - March 2018 - 55
Quality Progress - March 2018 - 56
Quality Progress - March 2018 - 57
Quality Progress - March 2018 - Marketplace
Quality Progress - March 2018 - 59
Quality Progress - March 2018 - Footnotes
Quality Progress - March 2018 - 61
Quality Progress - March 2018 - 62
Quality Progress - March 2018 - 63
Quality Progress - March 2018 - Back to Basics
Quality Progress - March 2018 - cover3
Quality Progress - March 2018 - cover4
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