European Foundation for Quality Management Excellence Model - Essay Example

EFQM EXCELLENCE MODEL of the of the Contents Contents 2 Introduction 3 Describing EFQM Excellence Model 4 Core Capabilities 5 Value Configuration 6 Target Customers 6 Partner Network 7 Customer Relationships 8 Distribution Channel 9 Value Proposition 9 Market Analysis and Structure 10 Revenue Structure 11 Conclusion 11 References 13 Introduction Organizations need to excel in all possible fields so as to sustain in a competitive market place. This study would be focused towards identifying loopholes within an organization that prevents a firm from improving. Continuous improvement is an essential factor in the modern world as there is high rate of competition. However there are some organizations which prefer to operate in their traditional business sector rather than shifting into some innovative platform. There can be various reasons behind this approach but the main reason involved is financial and operational risk. It can be stated that a firm focused towards continuous improvement tend to achieve better profit margins in comparison to other players in the industry. In this study a hypothetical company shall be taken into consideration in order to analyze areas for further improvement. This organization belongs to food industry and is located in London, United Kingdom. The hypothetical firm is known as “Steak Factory” and it deals in limited steak items. In overall context, the firm is able to attract target group of customers to certain extent through its delicious food items and exceptional customer service. Steak Factory needs to undertake a thorough market research as customer taste and preferences is changing at a rapid pace. There are other firms operating in the same sector like Steak Factory but they offer innovative menu items to its end customers. This clearly indicates that Steak Factory is not being able to cope up with changing business environmental scenario. In order to stay aligned with the growing competition, the company needs to continuously improve in every possible business dimension. However the firm might witness some problems during continuous improvement phase such as financial crunch, restructuring of entire operational procedure and difficulties in aligning team members with new set of business goals or objectives. Describing EFQM Excellence Model EFQM or European Foundation for Quality Management Excellence Model is a framework proposed for organizational management systems. It was basically designed so as to help organizations towards becoming more competitive in the market place. Figure 1: EFQM Excellence Model (Source: Gluck, 2005) This model is refined and reviewed on a continuous basis. Appropriate management systems need to be established in every firm irrespective of their size, maturity, sector or structure. EFQM Excellence Model is considered to be a practical tool that enables firms to measure their position in the excellence path, helping them analyze probable gaps and finally stimulate solutions. It provides a structure through which firms can determine their respective current excellence level and where they shall focus in terms of improvement efforts. This model even ensures that all business decisions are made by taking into consideration stakeholder’s needs. It can be stated as a common reference tool that supports organizations to strive towards excellence. EFQM Excellence Model offers a performance improvement tool set to all its users for sustaining as well as achieving excellence and results (David, 2011). New ideas, learning and concepts are eventually incorporated within the model after being reviewed on a regular basis. As per figure1, there are few aspects within business operations that facilitate innovation and learning within an organization. Enablers and results are two dimension of this framework. Enablers are all about what an organization does such as leadership, strategy or policy, people, partnerships and processes. Whereas results is the final outcome and encompasses customer results, people results, society results and key performance results. Ongoing learning and innovation is a key aspect of this model (Hitt, Duane & Hoskisson, 2012). This model will support Steak Factory to achieve desirable results. It can address wide array of problems witnessed by the firm in relation to changing traditional process, effective management of people and proper utilization of resources. On the other hand, this framework shall reveal the areas where the company is lacking and outline best practices for future growth and development. Core Capabilities The core capabilities of an organization can be regarded as a pillar needed to succeed towards business goals. There are wide array of capabilities which can be possessed by a firm such as technical expertise, operational expertise, skilled workforce, etc. In this study, Steak Factory comprises of operational capabilities since it is operating in the market segment from the past twenty years. The firm is able to deliver quality products to its target customers but is not aligned with ever changing business environment (Graves & Moran, 2004). For instance, Steak Factory is not able to offer customized products since it is functioning in a rigid framework. This is the first gap in its core capabilities and the other one is in its technical capabilities. Steak Factory can focus on market research techniques so as to identify the recent consumer trends. Improvement in core capabilities can be in the form of following a democratic leadership approach in the firm. This would enable employees to come up with innovative ideas and even put across any issue regarding their dealings with customers. Technical capabilities can even be enhanced by incorporating information system in the workplace so as to make tasks simpler and easier. It would even reduce manual error caused during operational procedure and increase the overall effectiveness of the system. Value Configuration Value configuration is the key activities performed by an organization. The beginning phase of any business operation is resource allocation and an operation ends with product delivery to end user. However there are series of steps between these two phases that determines success or failure of an organization. For instance in Steak Factory the major improvement needs to be done in context of shaping their menu items as per customer choice. As per EFQM Excellence Model, value configuration can be denoted as process. The firm can outsource materials needed to prepare their food items. After materials have been collected it should be forwarded to highly skilled workforce who can prepare desirable menu items. Apart from developing better ambience in the restaurant in terms of incorporating old English songs, architecture, etc., Steak Factory can even offer home delivery service. The product design should be followed by appropriate promotional activities, such as TV commercials, advertisements in social networking sites, radio, and even leaflet distribution outside schools, universities and offices. Steak Factory need to improve upon its sales margin and this can be done by offering products at low prices. Superior quality products at low prices shall help to acquire greater percentage of market share. Quality factor would be standardized both for dine-in as well as home deliveries. Target Customers Target customers can be defined as a group whose needs or wants are well aligned with product or service offerings of a company. Steak Factory initially targeted high end customers as its business objective was to offer quality food items at higher prices. However with the strategy of continuous improvement the firm needs to alter its target market. The main reason behind this action plan is to gain increased profit margin. Steak Factory in order to eliminate performance gap can target middle income group customers. This shall extend the market opportunities for the company. On the other hand, the firm can even target students of schools or colleges who prefer to have steaks of different types. An economically competitive menu needs to be designed first for this purpose. Products can be classified into small and large versions so as to meet demand of each section of target group. Social networking sites are an innovative platform in terms of establishing communication between customers and a company. Steak Factory can even connect with its large customer base through this platform in order to identify their hidden demands. On basis of these demands further modification with menu items can be done by the firm. This in turn shall even facilitate customer retention since they will feel a sense of ownership towards the organization. Partner Network Partner Network is also one of the enablers as stated in EFQM Excellence Model. Partnerships and resources are vital factors in growth and development of a firm. Steak Factory in this strategic change management process shall encompass customers, employees and suppliers as there key partners. Employees would be solely responsible for delivering high quality products to customers. On the other hand they even need to adapt technical expertise so as to fulfil requirements of IT solutions. Suppliers are another business partner of Steak Factory because in food industry specifically there is a high need for timely delivery of food products. Strong relationships need to be maintained with suppliers which are not present in case of Steak Factory. This is where the company needs to set high standards as regular switch in suppliers might disrupt image of the company. On the contrary, maintaining healthy relationships with suppliers would even lower down their bargaining power. Finally, customers will act as business partners by contributing their opinion or views for organizational success. Like, blogs or other social networking sites can be utilized by the firm to interact with visitors in order to know what they liked or disliked about Steak Factory. There would be a feedback form, introduced in the service design structure so that customers can highlight those areas of Steak Factory which needs further improvement. Customer Relationships One of the business related issues being faced by Steak Factory is customer retention. The market segment in which Steak Factory operates is highly competitive by nature, encompassing wide array of established players and offering diverse food items. This factor has been well judged using the excellence model as outcomes related to customer results is second lowest amongst all other restaurant chains dealing in similar food products. Identified gap in operational procedure of the firm can be mitigated through incorporating customer loyalty programs (Simerson, 2011). These programs would encompass generating coupons in customer’s name so that they can avail discounts in their next visit. This in turn can prove to be an effective measure for customer retention. Apart from issuing coupons the firm can even introduce a concept within the system whereby on a specific day customers will be allowed to design their products in terms of ingredients to be used or kind of steak most preferred (Lasserre, 2012). This shall enhance the level of customer preference towards a restaurant chain. Personal details need to be kept confidential by the firm and it can be used for sending greetings on special occasions. Relationship building with customers should not be restricted within the restaurant but there has to be efficient after sales service. Steak Factory shall even organize a cooking competition for its existing customers and initiate a strong bonding with target group. Distribution Channel The distribution channel is an enabler as defined in figure1 and is considered as a process. This form of channel contributes greatly towards key performance results and is the medium for getting in touch with customers. Steak Factory will have two different distribution channels like web channel and restaurant outlet. Web channel would be an online store of Steak Factory where customers can view wide range of food items and place an order online. Home delivery option has made this process more convenient for customers. On the other hand, through this web channel a customer can even register any complaint or suggestions regarding operations of Steak Factory (Neil, 2010). The other channel is store outlet located across London market. A well structured restaurant chain helps in conveying required message to end customers. Steak Factory will mainly focus on developing an artistic ambience where customers can relish their meals. Store location would be changed so as to ensure that customers can access the restaurant easily. This channel will be the prime focus of the firm as maximum market share can be acquired through this platform. Steak factory has established its market position with the support of this channel and hence it needs to be further improved. Value Proposition Value proposition has a direct association with final results or outcomes mentioned in EFQM Excellence Model. There are different methods by which values can be directly communicated to end customers. The service design platform of Steak Factory needs to be most innovative in order to handle tough competitors in the market place. This platform shall incorporate not only product features but even exceptional customer service delivered by the firm. On basis of the model it can be stated that Steak Factory majorly lacks in customer results since they are not able to create value for customers. In order to deliver value to customers the firm needs to adopt best strategy. Value can be created by offering extra facilities to customers such as including a provision whereby customers can organize their personal parties in the restaurant. Service design shall even encompass giving personal attention to every individual at the restaurant and even enabling quick home delivery (Pringle, 2008). Advertisements given by Steak Factory would even create value by spreading awareness amongst customers that they offer delicious food items with high quality. Value was initially not created by the company through advertisement campaigns and this can be stated as an operational gap as per the model. It can effectively be addressed by highlighting that they utilize environmental friendly measures and healthy ingredients to develop food items. Market Analysis and Structure Market analysis and structure determines the position of a company in the market place. EFQM Excellence Model clearly indicates that enablers need to be well aligned with business objectives to obtain best possible outcomes. Steak Factory operates in an intensely competitive market segment of London. Mostly restaurants present in this market either utilize market penetration strategy or market development strategy. Premium priced food products has a specific market to target whereas those restaurant chains offering low price has a different target group. Steak Factory will be implementing a new strategy in its business operation so as to eradicate all possible gaps (Cole, 2003). This strategy shall be inclined towards acquiring greater percentage of market share and maintaining low operational costs. The food industry comprises of fluctuating consumer demand and hence flexibility is a critical component. Steak Factory will now develop a flexible system in order to improve upon their business process and take into consideration diverse set of ideas from team members or customers. This kind of system shall increase profit margins of the firm as they would be offering food items based on customer demand. Customized menu is not a prime focus for restaurant chains in London. Thus it will be a competitive advantage for Steak Factory in the market place. Revenue Structure The revenue structure of Steak Factory shall be framed on the basis of expected sales margins. After product innovation and creation of customized menu the firm can expect an increase in revenue margins. Different categories of steaks would have different prices, such as chicken steak in olive sauce will be 8 Pounds. There shall even be meals incorporated in the new menu. Meals would comprise of chicken or beef or pork steak with garlic bread and wine or any other beverage. These meals will be classified as family or junior meals. The price per meal is 12 Pounds. Expected customers in the outlets as well as on online portals are approximately 70 customers per day. Out of these customers it is assumed that 50 customers shall opt for meals. This results into 50 customers X 12 Pounds per meal = 600 Pounds. On a daily basis 600 Pounds will be the total revenue and hence for an entire month it shall be 18000 Pounds (600 Pounds X 30 days). The company is conducting extensive advertisement campaigns and it shall positively affect flow of business operations. In the next three to four months, the overall revenue of the firm shall increase by 10 to 15%. Conclusion As per the study, it is clearly evident that EFQM Excellence Model is highly effective in identifying performance gap of a company. Steak Factory is a hypothetical company which needs to improve upon its business performance so as to survive in the competitive industry. In this study various dimensions of food industry has been highlighted. Steak Factory as per the model is lacking in certain areas such as customer results and people results. Employees need to be motivated by involving them in strategic decision making process. On the other hand, implementation of online platform shall facilitate effective communication with customers. Steak Factory will be overcoming major obstacle of competition by re-designing the food menu. The new menu will encompass innovative meals, combos, delicious steaks and even economical products. EFQM Excellence Model states that customers and process are the most important enablers in business operations. Hence customer oriented approach in majority cases lead to success of a firm. Advertising has also been suggested as a tool to eradicate performance gaps. With support of the model it can further be classified that Steak Factory shall improve upon customer dealings and internal business process to acquire maximum market share. References Cole, G.A. (2003). Strategic Management. Singapore: Cengage Learning EMEA. David, F. R. (2011). Strategic management and cases. New Jersey: Prentice Hall. Gluck, F. W. (2005). A fresh look at strategic management. Journal of Business Strategy, 12 (3), pp. 19-31. Graves, S., & Moran, J. (2004). The pitfalls associated with strategic and operational planning. The Quality Management Forum, 25 (2), pp. 34-78. Hitt, M., Duane, R., & Hoskisson, R. (2012). Strategic Management Cases: Competitiveness and Globalization. USA: Cengage Learning. Lasserre, P. (2012). Global Strategic Management. Singapore: Palgrave Macmillan. Neil, B. O. (2010). Acting as a Business: Strategies for Success. New York : Random House LLC Pringle, H. (2008). Brand Immortality: How Brands Can Live Long and Prosper. Great Britain: Kogan Page Publishers. Simerson, B.K. (2011). Strategic Planning: A Practical Guide to Strategy Formulation and Execution. USA: ABC-CLIO. Read More