ENHANCING GLOBAL COMPETITIVENESS OF SMALL AND MID-SIZED FIRMS: A RAPID ASSESSMENT...

ABSTRACT

The global market offers opportunities for selling small to medium-sized manufacturer's products and services. However, small to medium-sized manufacturing firms are ill equipped to capitalize on these opportunities. One reason is that globalization is a complex issue, and

often a substantial commitment of time and resources is required just to determine whether it is feasible to compete within the global arena. What is needed is an efficient cost-effective way to assess the business' readiness for global market development and competitiveness. Then an informed strategic decision can be made and a systematic approach can be implemented to ensure a cost effective entry.

This paper offers a rapid assessment methodology (RAM) as a means for jump starting the small to medium-sized manufacturer's attempts at globalization. The results of the rapid assessment provide a roadmap for closing gaps between the business' current capabilities and those required to succeed globally. In addition, this approach provides a practical approach for avoiding the adverse consequences of a major failure that could occur if the company prematurely enters the global arena.

INTRODUCTION

The Tennessee Business Association and the Global Competitiveness Council estimate that the vast majority of small to medium-sized businesses in Tennessee have little, if any, experience when it comes to global market development and competitiveness. That is to say, most businesses are beginning to express interest in pursuing international markets, however, these businesses lack the knowledge and skills essential for success. In order to overcome this shortfall, the Tennessee Global Competitiveness Program is being designed to help companies, communities, and government and non-government organizations understand the global economy, develop the agility and flexibility to react to it, and successfully meet global competition and prosper in the 21st century. The Rapid Assessment Methodology discussed later in this paper is central to this program. It provides senior leaders with a quick-cost-effective assessment of their organization's ability to perform in the global environment.

A SYSTEMATIC PERSPECTIVE OF GLOBALIZATION

A systematic perspective of global market development and competitiveness is given in Figure 1. This perspective is consistent with the Malcolm Baldrige Criteria for Performance Excellence and the Tennessee Quality Award process. In this context, the global environment provides forcing functions and constraints on the customers, marketplace, and the business system's ability to compete as depicted in Figure 1. Leadership and managerial influence is based upon information and analysis of the global environment, customers and competitors, the business operational efficiency, and business results. This influence is directed externally to provide customer and market focus in an attempt to be consistent with the demands and realities of the global environment itself. Internally, the leadership and managerial influence is directed toward internal change through efforts which are guided by a human resource focus. Evolutionary changes are often the result of continuous improvement programs. Benefits realized from these changes in the business model are captured in terms of standardized work instructions and standardized processes and procedures. Often, these are precursors to ISO Certification. Changes most often are introduced through a systematic strategic and operational planning process. Success is ultimately determined by the organization's ability to execute.

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This is underscored in Figure 1 by the plan, do, check, act loop shown in Figure 1: Plan (Strategic and Operational Planning), Do (Business System Execution), Check (Business Results), and Act (Leadership and Managerial Influence).

The key to being able to effectively execute may be embedded in the timely, comprehensive, complete, and accurate analysis of information to support strategic and operational decisions. Included in the information and analysis block is a comprehensive database. Dotted lines in Figure 1 show the exchange of information and knowledge throughout the global business network.

RAPID ASSESSMENT METHODOLOGY (RAM)

The RAM incorporates the systematic perspective of the global market discussed above. The RAM is a strategically driven assessment of the organization's global competitiveness designed to facilitate the initiation and expansion of a comprehensive program to gain necessary knowledge and skills. In this context, benchmarking is considered to be an integral part of the rapid assessment methodology. It is to be noted here that the RAM is not offered as a substitute for a comprehensive global assessment approach, rather it is intended to initialize the process. Having undergone a rapid assessment, an organization may choose to pursue a comprehensive global business effort or stop. Either way, the benefits of the RAM are achieved at a relatively low cost.

The RAM is designed to provide a method for evaluating an organization's readiness for global competition on the same basis as the Malcolm Baldrige National Quality Award Criteria. The RAM has the following attractive features. First, the time frame in which the assessment can be conducted is rather short. Second, the cost associated with RAM is relatively low. The RAM can be conducted in just a few hours for each category of the Malcolm Baldrige National Quality Award Criteria and requires the effort of only a few individuals. Furthermore, recommendations based on the strengths and opportunities for improvement that are generated from the RAM can be readily available to management for immediate action. Finally, the RAM approach can focus on any or all of seven core values consistent with the Malcolm Baldrige Award Criteria. These core values include leadership, strategic planning, customer and market focus, information and analysis, human resource focus, process management, and business results.

RAM is different from the Total Quality Management (TQM) assessment methodology because it extracts few highly germane dimensions of the Juran measurements. Thus, it is not as overwhelming as TQM. In this context, the RAM places a limited time burden on the focus group participants, yet collects an extensive knowledge base. While the RAM capitalizes on the Baldrige framework, it doesn't require the time and money needed to undergo a Baldrige assessment. Therefore, RAM is an attractive methodology especially for small and medium-sized manufacturing firms which are often subject to scarce resources.

The rationale behind the RAM is illustrated in Figures 2 and 3. Figure 2 depicts organizational success factors in the context of a quality approach and a global competitiveness orientation.

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Central to the RAM application is a thorough understanding of the organization's current operating and strategic realities. This is needed to facilitate the identification of key success factors and opportunities for improvement.

Figure 2 underscores the importance of this first stage, as the results obtained from this stage serve as input to the next stage outlined in Figure 3. Figure 3 presents an overview of the RAM and illustrates how it can be used in a synergistic and systematic fashion.

This stage of the RAM can be viewed as a stepping-stone to a higher strategic end. In this context, the results of the RAM could be used to provide the input needed to pursue a complete quality and global competitiveness orientation.

Starting with an open system view of the organization, the RAM gathers input from a focus group of internal and external entities. This input is then analyzed and classified into strengths and opportunities for improvement. Opportunities for improvement are then prioritized and workable action plans are developed for the most important opportunities. The implementation and monitoring of these action plans are conducted based on an organizational integrated effort that is guided by both internal and external benchmarks. Exhibit 1 provides the instrument for conducting the global competitiveness RAM.

EXHIBIT 1
Critical Questions To Ask In the Context Of Rapid Assessment
Methodology For Global Competitiveness

EVALUATION STATEMENTS

    Self-Rating Scale

0   NOT SURE how our organization compares to this statement.

1   STRONGLY DISAGREE: This statement DOES NOT DESCRIBE our
    company at all. There is little evidence of this activity
    in our organization.

2   DISAGREE: This statement generally DOES NOT DESCRIBE our
    company. There is little evidence of this activity in our
    organization.

3   AGREE: This statement GENERALLY DESCRIBES our company. There
    is a great deal of evidence of this activity in our organization.

4   STRONGLY AGREE: This statement DEFINITELY DESCRIBES our
    company. This activity pervades our organization.

                                                     Circle one

1. Our company's leadership, strategic            0   1   2   3   4
   planning, and customer and market
   focus are directed towards development
   and/or strengthening of global areas of
   business.

2. Our leaders are effective in setting           0   1   2   3   4
   direction and seeking international
   opportunities.

3. Our leaders effectively communicate and        0   1   2   3   4
   incorporate a global focus within the
   company.

4. Our leaders use continuous learning to         0   1   2   3   4
   improve the company's global focus.

5. Our company is effective in identifying        0   1   2   3   4
   and evaluating qualitative and
   quantitative global business information
   to recognize international opportunities
   and to adapt the company's strategic and
   business plans to pursue these
   opportunities.

6. Our company is effective in determining        0   1   2   3   4
   current and future requirements, needs,
   and expectations of customers in current
   and/or potential international markets.

7. We are effective in selecting and using        0   1   2   3   4
   global information to prepare for entry
   into internal markets preparing for
   competition with existing companies in
   international markets and benefiting
   from and influencing global market trends,
   and preparing for competition from
   potential new international entrants into
   the company's current markets.

8. We have developed and communicated a           0   1   2   3   4
   global perspective throughout our
   workforce and work force practices as it
   pertains to business requirements in
   applicable markets.

9. The unique requirements of international       0   1   2   3   4
   markets are an important consideration in
   designing, managing and improving key
   product, service, production/delivery,
   support and partnering processes.

10.Current levels and trends of customer          0   1   2   3   4
   satisfaction and market performance in
   international markets are favorable and
   compare well with other excellent
   companies in this area.

11.Current levels and trends in key measures      0   1   2   3   4
   of performance in international markets or
   segments are favorable and compare well
   with other excellent companies in this
   area.

12.Current financial performance in               0   1   2   3   4
   international markets is strong and trends
   compare favorably with other excellent
   companies.

13.Key measures of operational performance in     0   1   2   3   4
   international markets are strong and trends
   compare well with other excellent
   companies.

IMPLEMENTATION OF THE PROPOSED APPROACH

Guided by the frameworks in Figures 2 and 3, a facilitator can lead senior leaders through a rapid assessment of the organization's global market development and competitiveness.

Senior leaders are gathered in a focus group setting and asked to complete the self assessment instrument provided in Exhibit 1. The importance and value of communicating their individual perspective is stressed by the facilitator. Participants should be assured that individual reactions or statement will not be attributed to them. Experience shows that this approach tends to encourage a frank and open dialogue about the company's strengths and improvement opportunities. Strengths and improvement opportunities may be captured using the template as in Table 1.

TABLE 1
Integration Of Strengths And Opportunities With Key Success Factors

Key Success Factor          Strengths            Opportunities

List organization's   Capture strengths from   Capture improvement
key success factors   Exhibit 1 answers and    opportunities from
      here            cross-reference to key   Exhibit 1 and cross-
                          success factors        reference to key
                                                 success factors

Building on the strengths identified for each success factor, action plans are developed to implement the improvement opportunities. A template for capturing the action plans is suggested in Table 2. Champions, or senior executives responsible for implementation should be identified. It is important to note that the many improvement opportunities are cross-functional in nature. Therefore, the champion will rarely have all individuals responsible for completing the project plan in her or his organization. Some discussion of servant leadership is often helpful to pave the way for successful implementation.

TABLE 2
Template For Action Plans

Key Success Factor   State the Key Success Factor
Champion:            Identify the Senior Executive Responsible for
                     Implementation
Goal:                Define Requirements and Measurement

      TASKS              RESPONSIBLE            PLANNED
                          INDIVIDUAL         COMPLETION DATE

List specific tasks   Name the person       List the dates for
                      responsible for       completion
                      completing the task

Progress in implementing individual plans can be tracked on the template provided in Table 2. When this is done, it is recommended that two additional columns be added for the schedule portion of the chart: Outlook and Actual. The original date listed under planned completion is held fixed and is never changed.

Recognizing that every date cannot be met, the second column is called outlook, or revised completion date. When tasks are related, one can quickly see the impact of missing a scheduled completion date. This column also helps everyone see when a date is missed and, in that sense, helps make the process self policing. Responsible individuals do not want to miss their commitments. The actual completion date is recorded in the final column. Experience has shown that this simplified project management approach significantly improves the effectiveness of implementation of all action plans. When multiple improvement opportunities are identified for a specific key success factor, priorities are introduced. Then measures for successful completion are defined.

The RAM approach conceptually presented in this paper has recently been successfully applied in three firms. Although the results of this limited sample do not provide statistically significant evidence with respect to the full spectrum of firms, they do indicate the practical potential of the RAM methodology advocated in this paper.

SUMMARY

This paper offers a conceptual practical systematic approach toward facilitating small to medium sized manufacturing organizations' globalization efforts. In this context, a rapid assessment methodology is presented as a practical approach for identifying and closing gaps between the business' current capabilities and those demanded by the global market place. The approach advocated by RAM provides leaders with a quick-cost-effective assessment methodology of their organization's ability to perform in the global environment. Senior leaders can rapidly turn the results of this assessment into actions aimed at gaining a global competitive advantage. Often early success will help provide the motivation and financial justification needed for the long-term commitments that are essential to ensure future growth and success. The approach presented here is a step in the right direction toward that end.

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Andrew Czuchry is affiliated with East Tennessee State University.

Mahmoud M. Yasin is a Professor of Management at East Tennessee State University.