Building balanced scorecard with SWOT analysis , and implementing " Sun Tzu ' s The Art of Business Management Strategies " on QFD methodology

Article Summary) Conjoining the SWOT matrix with the balanced scorecard (BSC) makes a systematic and holistic strategic management system. The SWOT matrix clearly identifies the critical success factors that can be implemented into the identification of the different aspects toward the balanced scorecard. It is, therefore, a more structural approach in setting up the foundation of the balanced scorecard; instead of simply identifying the key performance indicators (KPI) via gut feeling or by brainstorming. The next step of the whole process is to make use of the quality function deployment (QFD) methodology with the balanced scorecard (BSC) attributes identified as the Whats on the vertical axis, and the major strategies of The Art of Business Management Sun Tzu's as the horizontal Hows axis. The relationships are then studied in the body of the QFD matrix. Consideration is then given as to how the model presented can be customised to allow companies using this approach to develop and implement their corporate business strategic plan. Full Text (5087 words) Copyright MCB UP Limited (MCB) 2000 S.F. Lee: Hong Kong Institute of Vocational Education, Vocational Training Council, HongKong, China Andrew Sai On Ko: International Management Centre, Oxford Brookes, UK 1. Overview Almost every successful manager understands the importance of offering quality service to gain a distinctive advantage over the competition. After all, gaining an advantage is the key to success and even for the sake of survival. However, many of the so-called organizational strategies that companies depend on are not endurable. Why? These strategies may not be well structured and cannot stand the test of time. Nevertheless, powerful organizational tactics cannot easily be imitated; things like a patented algorithm, exclusive right to a special resource, and brand name recognition. "If only I knew then what I know now, I would have done things differently". People always make this comment after they have implemented the wrong corporate strategies. Since we live in times of entwining complexity, acceleration, and change, making the right decision is extremely important for strategic planning. It is fair to say that every organization and individuals have their unique set of strengths, weaknesses, opportunities, and threats. It is very important that an organization determines its strengths, weaknesses, opportunities, and threats, as well as the competitions'. By linking the SWOT analysis with the balanced scorecard, an organization can balance its strengths against its competitions' weaknesses, and optimise its opportunities within the market. Sun Tzu's The Art of War is the most famous work on military operations in ancient China and it is also one of the most revered and well-known military texts outside China. Being the oldest military treatise in the world, it becomes one of the greatest cultural legacies of the Chinese nation. The significance of Sun Tzu's works and military statements in influencing military thoughts has seldom been questioned and were used extensively during the Warring States Period in Chinese history. Sun Tzu's philosophy has become part of the collective unconscious of most educated Chinese. These strategies encapsulated in mnemonic phrases; many of them passed into proverbs and are very widely known in the Chinese cultural sphere. In anticipation of the global economy competitions and business and trade wars among countries, the words of Sun Tzu are particularly useful and appropriate for evaluating business management strategies. Sun Tzu's main philosophy in military situations are identified and correlated to actual business environment. Apparently, relating modern management philosophies and organization behaviours to Sun Tzu's strategies by looking into the philosophies advocated by him and the situation of top management seems to be difficult and unrealistic. It is, however, essential to identify the differences between the ancient and modern times and also between military and business operations before proper management strategies were launched. His strategic planning in waging war in ancient China highlights the strategic management in today's corporations. The objective is to emulate the model set by Sun Tzu, presenting the essences in organising for strategy. Organizations should have their strategic plans constantly reviewed, continuously shaped and positioned in the struggle of continuous competition. QFD maintains customer ideas and requirements throughout the process that in turn leads to customer satisfaction. A further customer expectation is for the next purchase to be a better product. However, this is identified at no extra cost. When the satisfaction is not achieved, a competitor's product is likely to be chosen. QFD is a powerful technique that enables companies to anticipate and prioritise customer needs in their totality and to incorporate them effectively into the product and service provided for the end-user (Wassermann, 1993). 2. The SWOT analysis When implementing a SWOT analysis to devise a set of strategies, the following guidelines should be utilised. Strengths (Weihrich, 1982) Determine your organization's strong points. This should be from both your internal and external customers. Do not be humble; be as pragmatic as possible. Are there any unique or distinct advantages that makes your organization stand out in the crowd? What makes the customers choose your organization over the competition's? Are there any products or services in which your competition cannot imitate (now and in the future)? Weaknesses (Weihrich, 1982) Determine your organization's weaknesses, not only from your point of view, but also more importantly, from your customers. Although it may be difficult for an organization to acknowledge its weaknesses, it is best to handle the bitter reality without procrastination. Are there any operations or procedures that can be streamlined? What and why do your competition operate better than your organization? Is there any avoidance that your organization should be aware of? Does your competition have a certain market segment conquered? Opportunities (Weihrich, 1982) Another major factor is to determine how your organization can continue to grow within the marketplace. After all, opportunities are everywhere, such as changes in technology, government policy, social patterns, and so on. Where and what are the attractive opportunities within your marketplace? Are there any new emerging trends within the market? What does your organization predict in the future that may depict new opportunities? Threats (Weihrich, 1982) No one likes to think about threats, but we still have to face them, despite the fact that they are external factors that are out of our control. For example, the recent major economic slump in Asia. It is vital to be prepared and face threats even during turbulent situations. What is your competition doing that is suppressing your organizational development? Are there any changes in consumer demand, which call for new requirements of your products or services? Is the changing technology hurting your organization's position within the marketplace? 2.1 The wizardry of SWOT The wizardry of SWOT is the matching of specific internal and external factors, which creates a strategic matrix, which makes sense. (Note: The internal factors are within the control of your organization, such as operations, finance, marketing, and in other areas. The external factors are out of your organization's control, such as political and economic factors, technology, competition, and in other areas). The four combinations are called the Maxi-Maxi (Strengths/Opportunities), Maxi-Mini (Strengths/Threats), Mini-Maxi (Weakness/Opportunities), and Mini-Mini (Weaknesses/Threats). (See Figure 1.) 1 Maxi-Maxi (S/O): this combination shows the organization's strengths and opportunities. In essence, an organization should strive to maximise its strengths to capitalise on new opportunities (Weihrich, 1982). 2 Maxi-Mini (S/T): this combination shows the organization's strengths in consideration of threats, e.g. from competitors. In essence, an organization should strive to use its strengths to parry or minimise threats (Weihrich, 1982). 3 Mini-Maxi (W/O): this combination shows the organization's weaknesses in tandem with opportunities. It is an exertion to conquer the organization's weaknesses by making the most out of any new opportunities (Weihrich, 1982). 4 Mini-Mini (W/T): this combination shows the organization's weaknesses by comparison with the current external threats. This is most definitely defensive strategy, to minimise an organization's internal weaknesses and avoid external threats (Weihrich, 1982). 2.2 Collateral insight of SWOT As mentioned, the wizardry of SWOT is the matching of specific internal and external factors. However, what about the matching items within internal factors and items within external factors. The primary reason is that matching these factors will create strategies that will not make sense. For example, with a combination of strength and weakness (both are internal factors), lets say one of your organization's strengths is "plenty of cash" and one of your weaknesses is "lack of training". Therefore, mixing these two factors together, your management team might simply decide to plan more training for the staff members. The obvious remark for this purposeless strategy will be "so what!" Mainly because you should not train, just for the sake of training. A successful training program must have a specific target in response to external changes. You have to determine your organization's specific needs for training in line with the external and internal factors. In other words, the strategy must have an external factor as a trigger in order for it to be feasible. 3. The balanced scorecard Professor Robert Kaplan and David Norton developed the balanced scorecard (BS