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CHAPTER 5 • Foundations of Planning 161
❷ employee skills and loyalty, ❸ innovation, ❹ quality, ❺ social media, and ❻ big data. benchmarking
We’ve covered customer service in previous chapters and will discuss employee-related matters The search for the best practices among
in Chapters 7 and 9 through 13. Look for a discussion related to innovation and strategy in this competitors or noncompetitors that lead to their
chapter’s Technology and the Manager’s Job box and in Chapter 8. That leaves the last three— superior performance
quality, social media, and big data—for us to look at.

Quality as a strategic Weapon. When W. K. Kellogg started manufacturing
cornflake cereal in 1906, his goal was to provide customers with a high-quality, nutritious
product that was enjoyable to eat. That emphasis on quality is still important today. Every
Kellogg employee is responsible for maintaining the high quality of its products.
Many organizations use quality practices to build competitive advantage and attract and
hold a loyal customer base. If implemented properly, quality can be a way for an organiza-
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tion to create a sustainable competitive advantage. And if a business is able to continuously
improve the quality and reliability of its products, it may have a competitive advantage that
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can’t be taken away. Incremental improvement is something that becomes an integrated part
of an organization’s operations and can develop into a considerable advantage.

Benchmark the best!

Managers in such diverse industries as health care, education, and financial services are dis-
covering what manufacturers have long recognized—the benefits of benchmarking, which
is the search for the best practices among competitors or noncompetitors that lead to their
superior performance. The basic idea of benchmarking is that managers can improve quality
by analyzing and then copying the methods of the leaders in various fields.

Try It 1!
If your professor has assigned this, go to the Assignments section of mymanagementlab.com to
complete the Simulation: Strategic Management.

::::::: Technology and the Manager’s Job :::::::

InnOvATIvE IT AnD STRATEgy

Very important . . . as two examples will illustrate! Caesars roam the store armed with PDAs so they could check whether items
Entertainment (formerly Harrah’s Entertainment) is fanatical about were in stock. Even the dressing rooms would have touch screens
customer service, and for good reason. Company research showed so customers could do the same. But the strategy didn’t work as
that customers who were satisfied with the service they received at planned. The equipment malfunctioned and the staff was over-
a Harrah’s casino increased their gaming expenditures by 10 percent, whelmed with trying to cope with crowds and equipment that didn’t
and those who were extremely satisfied work. It’s no wonder the multimillion-dol-
increased their gaming expenditures by How important is innovative lar investment might not have been the
24 percent. It discovered this important IT to a company’s strategy? best strategy. When an organization’s
customer service– expenditures con- innovative IT “works,” it can be a very
nection because of its incredibly powerful strategic tool!
sophisticated information system. But an organization’s IT investment If your professor has assigned this, go to the Assignments section of
may not always have such a positive payoff, as the next example mymanagementlab.com to complete these discussion questions.
shows! At Prada’s Manhattan flagship store, store designers were
hoping for a totally different shopping environment that combined TAlk AbouT IT 1: How should managers ensure that their
“ cutting-edge architecture and twenty-first-century customer ser- innovative IT efforts contribute to helping strategies succeed?
vice.” Or at least that was the strategy. Prada invested almost one- TAlk AbouT IT 2: How do your IT applications (smartphone or-
fourth of the new store’s budget into IT, including wireless networks ganizers and calendars, apps, text messaging, etc.) help you be a better
linked to an inventory database. As envisioned, sales staff would planner in your personal life?