BSQ strategic formulationframework
A hybrid of balanced scorecard SWOTanalysis and quality function deployment
YK Ip and LC KooAsia International Open University (Macau) Hong Kong
Peoplersquos Republic of China
Keywords Balanced scorecard SWOT analysis Quality function deploymentStrategic objectives
Abstract The hybrid of the balanced scorecard SWOT analysis and quality function deploymentcreates a pragmatic approach for managerial and consultant practitioners to translate vaguestrategy into action Sun Tzursquos Art of War is further incorporated to develop a more structuredstrategic formulation framework Nevertheless many modern practitioners are in factunfamiliar with this profound principle of strategy that was written some 2400 years backDespite the establishment of a theoretical framework so far there have not been many publishedpapers about the pragmatic implementation and holistic strategy development Thus a case studyin the form of a strategy workshop of a professional institute in Hong Kong has been used todelineate the aforesaid translation of strategy
IntroductionThe combination of balanced scorecard (BSC) SWOT analysis and quality functiondeployment (QFD) provides a pragmatic approach for managerial and consultantpractitioners to build a strategic framework (Koo 1998) The term ldquoBSQrdquo strategicformulation framework adopted in this paper is an acronym for the above threeseparate strategic approaches being merged into one single effective tool
In addition to the aforesaid hybrid Ko and Lee (2000) further incorporate Sun TzursquosArt of War (STAW) to demonstrate a comprehensive strategic formulation framework(SFF) for the banking industry of Hong Kong STAW is recommended to people whoare interested in strategy (Chen 1994 Vroman 1997) STAW has also been formattedin various principles applicable to business people (McNeilly 1996) This masterpieceof strategy as one of the worldrsquos earliest and certainly its most unusual militarytreatise help readers improve their negotiating skills develop self-discipline andpinpoint obstacles that block opportunity (Wing 1988)
Nevertheless it is important to note that this profound 5600-word classic ofstrategy written by Sun Tzu centuries back was dedicated to ancient warfare notbusiness (Rarick 1996) The translated opening statement of STAW is ldquoWar is amatter of vital importance to the state the province of life or death the road to survivalor ruin It is mandatory that it is thoroughly studiedrdquo (Griffith 1982) The originalcontents were all about war military tactic combat battle weapon conflict and soforth The supreme aim of war according to STAW was not to win 100 victories in 100battles but to subdue the enemy without fighting Recent leading English translations
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
wwwemeraldinsightcomresearchregister wwwemeraldinsightcom0268-6902htm
The authors would like to thank Hong Kong Quality Management Association for its support
BSQ strategicformulationframework
533
Managerial Auditing JournalVol 19 No 4 2004
pp 533-543q Emerald Group Publishing Limited
0268-6902DOI 10110802686900410530538
have been written in a more general universal style that lend themselves to theapplicability of the Art of Strategy to anyone at anytime in any situation (McNeilly1996 Rarick 1996 Wing 1988) For instance the translation by Wing (1988) is inclinedto strategic management Take the same opening statement as an example ldquoStrategyis the great Work of the organization In Situations of life or death it is the Tao ofsurvival or extinction Its study cannot be neglectedrdquo If we read through the originalChinese script there are no supplementary comprehensible headings as are found inmost English translations Thus the suitability of translating the 13 themes exactlyinto 13 ldquoHowsrdquo for formulating a strategic framework is debatable (Ko and Lee 2000)
Sun Tzu expounded on the philosophical concept of strategy implicationspracticality and subtlety the latter being deeply rooted in Chinese intellectual traditionand historical past (Chang 1976) Not many Western modern practitioners are capableof formulating organizational vision by means of eg the profound philosophy of Taothe strategy of destroying and decision (Ko and Lee 2000) the use of camouflage andthe creation of illusion (Wing 1988)
User-friendliness as a prerequisite for a strategic management tool is gaining inpopularity It is risky for practitioners to employ the entire military strategy to SFF incase they are not sure about the underlying thoughts Even though STAW offersrichness of management thought and there must be parts of STAW which can beincorporated into SFF the application of the aforesaid hybrid model without STAW iscomplicated enough to confuse the average practitioner Thus use of SFF withoutSTAW the primitive model developed by Koo (1998) is recommended
Kaplan and Norton (1996) emphasize that financial perspective should be theultimate goal in BSC This paper also illustrates how Koorsquos model can be used totranslate the strategy into action for a non-profit-making organization A case study ofHKQMA in the form of a strategic workshop has been used to demonstrate the powerof the BSQ model Parts of the data have been altered to protect HKQMArsquos interestsHopefully this paper can serve as a piece of knowledge providing another pragmaticstrategic formulation framework using a similar but simpler approach
Review of BSC SWOT and QFDSWOT analysisSWOT analysis has been a popular platform of environmental analysis after JackWelch tripled General Motorrsquos productivity growth rate (Slocum et al 1994) Weihrich(1982) has further developed the model into a well-structured matrix Due to theemphasis on the influences of external factors threats and opportunities the analysisis also called ldquoTOWSrdquo The standalone conventional SWOT analysis composed largelyof catchall guidelines lacking explicit underpinnings is always challenged forgenerating shallow misleading results (Hill and Westbrook 1997 Valentin 2001)Thus integrating contemporary strategic management theory into SWOT analysis isproposed to gain more penetrating strategic insights (Valentin 2001)
Balanced scorecardBSC is considered as a radical approach to measurement and management (Hepworth1998) and enables linkage between an organizationrsquos strategies aiming at ultimatevision (Gadd 1995) The merits of BSC have been well documented (Brown andMcDonnell 1995 Kaplan and Norton 1996 Noci 1995) A holistic balanced
MAJ194
534
measurement of the four perspectives namely financial customer internal businessprocess and learning provides a better indication of the performance of an organizationthan merely the traditional financial data (Hepworth 1998)
Quality function deploymentQuality function deployment (QFD) has been used extensively in a manufacturingsetting for years The strength of QFD originally linked up direct customerrequirements with production design (Akao 1990) Koo (1998) inter alia pioneered theapplication of ldquoWhatsrdquo and ldquoHowsrdquo of QFD to BSC In his model QFD quantifies andprioritizes the relationships of (internalexternal) factors and actions structurally infinancial customer process and learning perspectives
BSQ methodologyBSQ frameworkThe methodology is based on an integrated framework composed of BSC SWOT andQFD HKQMA a non-profit-making association is used as a case study to demonstratehow to build an organizational strategic plan
Major assumptionThe executive committee (Exco) is composed of 13 members who are assumed torepresent ldquothe voice of the customerrdquo (Akao 1990) Through a two-day workshop thesurvey obtained through focus groups is able to translate the voice of the customer asper the horizontal portion of Figure 1
RatingIn contemporary quality management four response categories from strong frac14 9 tono frac14 1 (Ko and Lee 2000) are always used to indicate a contrasting degree ofagreement or disagreement In order to compare the findings with HKQMArsquos previoussurvey a ten-point Likert scale in which 1 refers to least important and 10 refers tomost important is used in this case
The strategic workshopThe Exco members of HKQMA a non-profit-making association in Hong Kongconvened a two-day strategic workshop at the end of 2002 to formulate and review itsstrategy and tactics for the coming year Through the focus group meetings with Excomembers they developed BSC measures It may not be easy for outsiders to fullyunderstand the below-mentioned headings written and shown on tables but theemphasis of this paper is on demonstrating procedural guidelines rather than ondisclosing the real strategy deployed by HKQMA Steps taken in developing BSC areshown as follows
The first step generating salient external factors by prioritizationBy means of nominal group technique tentative external factors of opportunitiesthreats were identified for the SWOT analysis Using the guideline of STEP (socialtechnical economic and political) the participants voiced their perceptions of externalfactors and voted on the rating of each attribute (Table I) The columns successprobability and attractiveness shown in Table I are calculated based on a ten-point
BSQ strategicformulationframework
535
Figure 1Building the house of QFDfor HKQMA
MAJ194
536
Likert scale The score of each success probability and attractiveness column is theaverage of the participantsrsquo rating
The importance-ranking (or priority) of Table I is operationally defined as theproduct of success probability and attractiveness In order to simplify the strategicformulation at this stage opportunities are rank-sorted in descending order and thoseof less importance are excluded The participants have agreed to eliminate those salientfactors with a probability ranking below the importance score of 42
Likewise the calculations of probability of occurrence and seriousness of threats areshown in Table II on the basis of the participantsrsquo perceptions similar to Table I Thosethreat rankings with less priority the boxes are excluded in Table II
The second step environmental analysis of internal factorsExternal factors opportunities and threats shown in Tables I and II are thoseuncontrollable factors while internal factors strengths and weaknesses are to acertain extent controllable and changeable within the control of the organization
Kotlerrsquos checklist for performing strengthsweaknesses analysis provides an effectivepreliminary identification of core performance measures (Kotler 2000 p 78) Organizationsusing this checklist should review the original measures and make necessary amendmentsif needed After minor modifications to meet HKQMArsquos needs the perceived importance ofeach measure in descending order is listed (Table III) The descriptions in Table III are inline with BSC perspectives eg financial customer internal process and learning
In addition to QFDrsquos strategic prioritization six sigma a rigorous and disciplinedmanagerial practice also emphasizes that identifying the critical to quality (CTQ) takesprecedence over all quality-management processes When applying the concept of CTQ
OpportunitiesSuccess
probability AttractivenessImportance-
ranking
O1 Lack of recognized certifications in HK 67 80 54O2 The demands of quality service 64 79 51O3 (Quality Award Index (QAI) 66 70 46O4 Lack of operational standards for SMEs 69 64 44O5 The cooperation between China HK and Macau 61 69 42O6 SME grants 44 71 32O7 Popularity of the Internet 47 63 30O8 Government recommendations for high-tech 31 43 13
Table IImportance-ranking of
opportunities
ThreatsProbability
of occurrence SeriousnessImportance-
ranking
T1AIndividual financial deterioration 77 79 61T2AEconomic recession 77 79 61T3ARetrenchments of corporate members 76 79 59T4ALess support from local government 57 60 34T5ACompetitions 54 46 25T6AHigh-tech 39 41 16
Table IIImportance-ranking of
threats
BSQ strategicformulationframework
537
to the service industries HKQMA has to exclude less important factors the boxes sothat HKQMA can focus on those really ldquoimportantrdquo internal factors There might bedangers in excluding if HKQMA was a newly born association Nevertheless HKQMAhas been established for more than 20 years and it has kept records of all thesestrategic workshops longitudinally Reviewing these records can minimize the risk ofexcluding In addition HKQMA is navigated by a team of experienced practitionersand academics It is fair to assume that the Exco is unlikely to exclude significantfactors from the strategic formulation framework
ldquoPerformance gaprdquo is operationally defined as the difference between importancescore and performance score The higher the performance gap the higher the need forHKQMA to improve in that particular aspect This is shown in Table IV
To classify the internal factors into strengths and weaknesses as per SWOT thosefactors scoring lower than 68 were agreed by the HKQMA Exco members asweaknesses The results are shown in Table V
The third step completing the development of the SWOT matrixThe third step is to combine high priority importance ranking of opportunities withinternal factors based on BSCrsquos four perspectives to develop the SWOT matrix inwhich a set of strategies is identified as per Table VI After completing thedevelopment of the matrix it is always meaningful to compare the latest SWOT matrixwith the previous one so as to trace the longitudinal trend of HKQMA In this aspectHKQMA has adopted SWOT analysis to develop its strategies over the past few years
Performing strengthsweaknesses analysis Importance score Performance score Performance gap
Income (financial) 94 A ANumber of membership (financial) 90 A ACustomer retentionAcustomerA 88 A AVisionary capable leadershipAlearningA 83 A ACustomer satisfactionAcustomerA 81 A AService quality AcustomerA 81 A ACompany reputationAcustomerA 76 A AFlexible or responsiveAlearningA 71 A AGeographical coverageAcustomerA 65 A AVision (learning) 65 A AFinancial stabilityAfinancialA 64 A AEntrepreneurial orientation AlearningA 64 A AProduct quality AcustomerA 64 A ASales force effectiveness AcustomerA 59 A AInnovation effectiveness AcustomerA 59 A APromotion effectivenessAcustomerA 56 A ACash flowAfinancialA 55 A AAbility to produce on timeAprocessA 54 A ATechnical manufacturing skillAprocessA 50 A ADistribution effectiveness AcustomerA 49 A APricing effectiveness AcustomerA 48 A AMarket share AcustomerA 41 A AFacilities AprocessA 41 A ACapacity AprocessA 36 A AEconomics of scale AprocessA 25 A A
Table IIIInternal (strengths andweaknesses) analysis
MAJ194
538
The fourth step building the house of qualityBased on the data collected from the previous steps the elements are accommodated inthe house of quality of QFD shown in Figure 1 QFD was used to developsystematically subjective cause-and-effect relationships among the BSC financialperspective In other words financial stability income and number of members are theldquoWhatsrdquo on the horizontal portion while geographical coverage organizationreputation service quality and the like are the ldquoHowsrdquo on the vertical portion Thebottom of the figure provides more detailed explanations of the ldquoHowsrdquo
In this case the circular spots shown on the roof of the house are the correlationsamong ldquoHowsrdquo Having the attitudinal ratings on causal relationship in numericalvalue in the middle of the house HKQMA can prioritize the actual implementations
The final step strategic prioritizationIn Figure 2 the higher score has the higher importance for the HKQMA The boldarrows represent the scores of 10 the highest causal linkage as perceived by theHKQMA Exco members
Performing strengthsweaknesses analysis Importance score Performance score Performance gap
Income (financial) 94 63 31Number of membership (financial) 90 43 47Customer retentionAcustomerA 88 40 48Visionary capable leadershipAlearningA 83 69 14Customer satisfactionAcustomerA 81 56 25Service quality AcustomerA 81 63 18Company reputationAcustomerA 76 70 06Flexible or responsiveAlearningA 71 60 11Geographical coverageAcustomerA 65 71 206Vision (learning) 65 64 01Financial stabilityAfinancialA 64 78 214Entrepreneurial orientation AlearningA 64 68 204Product quality AcustomerA 64 70 206
Table IVVariation of importancendash performance analysis
Internal measures Importance score Performance score Performance gap
StrengthsS1 Financial stabilityAfinancialA 64 78 214S2 Geographical coverageAcustomerA 65 71 206S3 Company reputationAcustomerA 76 70 06S4 Product quality AcustomerA 64 70 206S5 Visionary capable leadershipAlearningA 83 69 14S6 Entrepreneurial orientation AlearningA 64 68 204Weaknesses A A AW1 Vision (learning) 65 64 01W2 Income (financial) 94 63 31W3 Service quality AcustomerA 81 63 18W4 Flexible or responsiveAlearningA 71 60 11W5 Customer satisfactionAcustomerA 81 56 25W6 Number of membership (financial) 90 43 47W7 Customer retentionAcustomerA 88 40 48
Table VPerformance gap
BSQ strategicformulationframework
539
HK
QM
AS
WO
Tan
aly
sis
2002
-200
3S
tren
gths
Wea
knes
ses
S1
Fin
anci
alst
abil
ityA
fin
anci
alA
W1
Vis
ion
(lea
rnin
g)
S2
Geo
gra
ph
ical
cov
erag
eAcu
stom
erA
W2
Inco
me
(fin
anci
al)
S3
Com
pan
yre
pu
tati
onA
cust
omerA
W3
Ser
vic
eq
ual
ityA
cust
omerA
S4
Pro
du
ctq
ual
ityA
cust
omerA
W4
Fle
xib
leor
resp
onsi
veA
lear
nin
gA
S5
Vis
ion
ary
ca
pab
lele
ader
shipA
lear
nin
gA
W5
Cu
stom
ersa
tisf
acti
onA
cust
omerA
S6
En
trep
ren
euri
alor
ien
tati
onA
lear
nin
gA
W6
Nu
mb
erof
mem
ber
ship
(fin
anci
al)
W7
Cu
stom
erre
ten
tionA
cust
omerA
Opp
ortu
nit
ies
Maxi
Maxi
Min
iM
axi
O1
Lac
kof
reco
gn
ized
cert
ifica
tion
sS
OO
1O4S
1-S
6O
rgan
ize
loca
lp
rofe
ssio
nal
exam
WO
W2O
1A
pp
lyIS
Oce
rtifi
cati
onfo
rH
KQ
MA
O2
Th
ed
eman
ds
ofq
ual
ity
serv
ice
O2O
4S1-
S6
Reg
ula
tese
rvic
ein
dex
W3W
5W6W
7O2
En
han
cese
rvic
eto
mem
ber
O3
Qu
alit
yA
war
dIn
dex
(QA
I)O
4O3S
1-S
6P
rov
ide
pro
fess
ion
alaw
ard
sch
eme
O4
Lac
kof
oper
atio
nal
stan
dar
ds
for
SM
Es
O4S
1-S
6E
xp
and
serv
ice
toth
eg
reat
erC
hin
are
gio
nO
2S1-
S6
Ad
voc
ate
QC
Cto
sch
ools
inH
KO
5T
he
coop
erat
ion
bet
wee
nC
hin
aH
Kan
dM
acau
Min
iM
ini
Thre
ats
T1
Ind
ivid
ual
fin
anci
ald
eter
iora
tion
Maxi
Min
iS
TS
3S5S
6T1-
T3
En
han
ceco
nsu
ltan
cyse
rvic
eW
TW
1W2W
5W6T
1-T
3E
nh
ance
life
-lon
gle
arn
ing
serv
ice
tom
emb
erp
oten
tial
mem
ber
T2
Eco
nom
icre
cess
ion
T3
Ret
ren
chm
ents
ofco
rpor
ate
mem
ber
s
Table VIHKQMA SWOT matrixfor the year 2002-2003
MAJ194
540
Figure 3 shows how each strategy is compared to one another on a pair-wise basis Asa result the top strategies are (a) local qualification in quality (g) enhance membershipservice (i) life long learning for members and so forth in descending order
After the participants had formulated the holistic strategic plan for HKQMA at thetop level the Exco then initiated a more detail action plan and assigned its members totake action accordingly Another similar framework can be formulated beginning withSWOT analysis to further develop the specific strategy at an operational level
ConclusionTheoretically Ko and Lee (2000) using 13 ldquoHowsrdquo of STAW into SFF are impressiveNevertheless it is complicated for the average Western practitioner to master this
Figure 2A strategy into action
Figure 3Pair-wise comparison of
strategies
BSQ strategicformulationframework
541
ancient strategy which was originally applied to warfare When preparing a SFF thenecessity of using STAW is in doubt The authors have delineated a similar strategicformulation framework without STAW ldquoHowsrdquo developed in this case are largelybased on Kotlerrsquos checklist for performing internal (strengths and weaknesses)analysis Having a well-structured framework with using familiar managerialterminology such as market share customer satisfaction and product quality thechecklist provides practitioners with an effective preliminary identification of coreperformance measures at an early stage
Managerial implicationsBSQ framework is a powerful management tool Compared with Ko and Leersquos model itis easier for participants to develop their own BSQ frameworks However it still takestime for the average participant to digest these quantitative processes In such a case itis recommended to invite someone knowledgeable about the quality tools to sit in thestrategic formulation meetings
This strategic formulation framework is developed on the basis of perceivedimportance and performance This is because ldquorubbish in ndash rubbish outrdquo amisinterpretation of the environmental external and internal factors by theparticipants may derail an organization from the right track Remedial actions suchas leading the meeting by an experienced moderator lecturing the participants aboutthe methodology asking the participants to prepare for the meetings in advanceencouraging the involvement of the participants making an interactive discussion andexhausting more environmental factors for selection can minimize the derailment
HKQMA a small non-profit-making association is a kind of unitarist organizationwhere there is no conflict of interests among the members However in the pluralistenterprises strategic prioritization is sometimes subjected to the aforesaid conflict Acertain group of participants may dominate the enterprisersquos directions against ldquothevoice of the customerrdquo
Using traditional focus groups is an effective strategy to produce data and insightsNevertheless with facial expressions and body language a small group of memberscan dominate the ways of translating strategy into action It may be the case that thosewho desire to please the interested party involved may second the proposal for nothingmore than a political reason If not properly managed a well-structured managerialapproach can be distorted into a political tool that tells ldquotrue liesrdquo in a convincingformat Thus the moderator has to judge if a secret ballot or any other appropriateform of voting is needed
References
Akao Y (1990) Quality Function Deployment Integrating Customer Requirement intoProduction Design Productivity Press Cambridge MA
Brown JB and McDonnell B (1995) ldquoThe balanced scorecard short-term guest or long-termresidentrdquo International Journal of Contemporary Hospitality Management Vol 7 No 2
Chang YN (1976) ldquoEarly Chinese management thoughtrdquo California Management ReviewVol XIX No 2
Chen M (1994) ldquoSun Tzursquos strategic thinking and contemporary businessrdquo Business HorizonsVol 37 No 2 00076813
MAJ194
542
Gadd KW (1995) ldquoBusiness self-assessmentrdquo Business Process Re-engineering and ManagementJournal Vol 1 No 3
Griffith S (1982) Sun Tzu The Art of War Oxford University Press London
Hepworth P (1998) ldquoWeighting it up ndash a literature review for the balanced scorecardrdquo Journal ofManagement Development Vol 17 No 8
Hill T and Westbrook R (1997) ldquoSWOT analysis itrsquos time for a product recallrdquo Long RangePlanning Vol 30 pp 46-52
Kaplan RS and Norton DP (1996) The Balanced Scorecard Translating Strategy into ActionHarvard Business School Press Boston MA
Ko ASO and Lee SF (2000) ldquoImplementing the strategic formulation framework for thebanking industry of Hong Kongrdquo Managerial Auditing Journal Vol 15 No 9 pp 469-77
Koo LC (1998) ldquoBuilding balanced scorecard on the house of qualityrdquo The 1st IndustrialEngineering and Management (IEM) Symposium Transformational Strategy towards the21st Century Hong Kong 20-21 November
Kotler P (2000) Marketing Management Analysis Planning Implementation and ControlMillennium ed International Series in Marketing Prentice-Hall Englewood Cliffs NJ
McNeilly MR (1996) Sun Tzu and the Art of Business Oxford University Press Oxford
Noci G (1995) ldquoAccounting and non-accounting measures of quality-based performances insmall firmsrdquo International Journal of Operations amp Production Management Vol 15 No 7
Rarick CA (1996) ldquoAncient Chinese advice for modern business strategistsrdquo SAM AdvancedManagement Journal (1984) Vol 61 No 1
Slocum JW Jr and McGill M (1994) ldquoThe new learning strategy anytime anythinganywhererdquo Organizational Dynamics Vol 23 No 2 pp 33-47
Valentin EK (2001) ldquoSWOT analysis from a resource-based viewrdquo Journal of Marketingpp 52-69
Vroman HW (1997) ldquoReviews the book Sun Tzu and the Art of Businessrdquo Academy ofManagement Executive Vol 11 No 1 p 129
Weihrich H (1982) ldquoThe TOWS matrix ndash a tool for situational analysisrdquo Journal of Long RangePlanning Vol 15 No 2
Wing RL (1988) The Art of Strategy The Leading Modern Translation of Sun Tzursquos ClassicDoubleday New York NY
Further reading
Koo LC (1997) ldquoImproving quality service through balanced scorecardrdquo The 2nd InternationalConference on Quality and Reliability Transactions of Nanjing University of Aeronauticsand Astronautics China (TNUAA) Vol 15 No 1 pp 147-53
Kotler P (1999) ldquoBoards should tune in to corporate marketing programsrdquo Directorship Vol 25No 7 pp 12-16
BSQ strategicformulationframework
543
have been written in a more general universal style that lend themselves to theapplicability of the Art of Strategy to anyone at anytime in any situation (McNeilly1996 Rarick 1996 Wing 1988) For instance the translation by Wing (1988) is inclinedto strategic management Take the same opening statement as an example ldquoStrategyis the great Work of the organization In Situations of life or death it is the Tao ofsurvival or extinction Its study cannot be neglectedrdquo If we read through the originalChinese script there are no supplementary comprehensible headings as are found inmost English translations Thus the suitability of translating the 13 themes exactlyinto 13 ldquoHowsrdquo for formulating a strategic framework is debatable (Ko and Lee 2000)
Sun Tzu expounded on the philosophical concept of strategy implicationspracticality and subtlety the latter being deeply rooted in Chinese intellectual traditionand historical past (Chang 1976) Not many Western modern practitioners are capableof formulating organizational vision by means of eg the profound philosophy of Taothe strategy of destroying and decision (Ko and Lee 2000) the use of camouflage andthe creation of illusion (Wing 1988)
User-friendliness as a prerequisite for a strategic management tool is gaining inpopularity It is risky for practitioners to employ the entire military strategy to SFF incase they are not sure about the underlying thoughts Even though STAW offersrichness of management thought and there must be parts of STAW which can beincorporated into SFF the application of the aforesaid hybrid model without STAW iscomplicated enough to confuse the average practitioner Thus use of SFF withoutSTAW the primitive model developed by Koo (1998) is recommended
Kaplan and Norton (1996) emphasize that financial perspective should be theultimate goal in BSC This paper also illustrates how Koorsquos model can be used totranslate the strategy into action for a non-profit-making organization A case study ofHKQMA in the form of a strategic workshop has been used to demonstrate the powerof the BSQ model Parts of the data have been altered to protect HKQMArsquos interestsHopefully this paper can serve as a piece of knowledge providing another pragmaticstrategic formulation framework using a similar but simpler approach
Review of BSC SWOT and QFDSWOT analysisSWOT analysis has been a popular platform of environmental analysis after JackWelch tripled General Motorrsquos productivity growth rate (Slocum et al 1994) Weihrich(1982) has further developed the model into a well-structured matrix Due to theemphasis on the influences of external factors threats and opportunities the analysisis also called ldquoTOWSrdquo The standalone conventional SWOT analysis composed largelyof catchall guidelines lacking explicit underpinnings is always challenged forgenerating shallow misleading results (Hill and Westbrook 1997 Valentin 2001)Thus integrating contemporary strategic management theory into SWOT analysis isproposed to gain more penetrating strategic insights (Valentin 2001)
Balanced scorecardBSC is considered as a radical approach to measurement and management (Hepworth1998) and enables linkage between an organizationrsquos strategies aiming at ultimatevision (Gadd 1995) The merits of BSC have been well documented (Brown andMcDonnell 1995 Kaplan and Norton 1996 Noci 1995) A holistic balanced
MAJ194
534
measurement of the four perspectives namely financial customer internal businessprocess and learning provides a better indication of the performance of an organizationthan merely the traditional financial data (Hepworth 1998)
Quality function deploymentQuality function deployment (QFD) has been used extensively in a manufacturingsetting for years The strength of QFD originally linked up direct customerrequirements with production design (Akao 1990) Koo (1998) inter alia pioneered theapplication of ldquoWhatsrdquo and ldquoHowsrdquo of QFD to BSC In his model QFD quantifies andprioritizes the relationships of (internalexternal) factors and actions structurally infinancial customer process and learning perspectives
BSQ methodologyBSQ frameworkThe methodology is based on an integrated framework composed of BSC SWOT andQFD HKQMA a non-profit-making association is used as a case study to demonstratehow to build an organizational strategic plan
Major assumptionThe executive committee (Exco) is composed of 13 members who are assumed torepresent ldquothe voice of the customerrdquo (Akao 1990) Through a two-day workshop thesurvey obtained through focus groups is able to translate the voice of the customer asper the horizontal portion of Figure 1
RatingIn contemporary quality management four response categories from strong frac14 9 tono frac14 1 (Ko and Lee 2000) are always used to indicate a contrasting degree ofagreement or disagreement In order to compare the findings with HKQMArsquos previoussurvey a ten-point Likert scale in which 1 refers to least important and 10 refers tomost important is used in this case
The strategic workshopThe Exco members of HKQMA a non-profit-making association in Hong Kongconvened a two-day strategic workshop at the end of 2002 to formulate and review itsstrategy and tactics for the coming year Through the focus group meetings with Excomembers they developed BSC measures It may not be easy for outsiders to fullyunderstand the below-mentioned headings written and shown on tables but theemphasis of this paper is on demonstrating procedural guidelines rather than ondisclosing the real strategy deployed by HKQMA Steps taken in developing BSC areshown as follows
The first step generating salient external factors by prioritizationBy means of nominal group technique tentative external factors of opportunitiesthreats were identified for the SWOT analysis Using the guideline of STEP (socialtechnical economic and political) the participants voiced their perceptions of externalfactors and voted on the rating of each attribute (Table I) The columns successprobability and attractiveness shown in Table I are calculated based on a ten-point
BSQ strategicformulationframework
535
Figure 1Building the house of QFDfor HKQMA
MAJ194
536
Likert scale The score of each success probability and attractiveness column is theaverage of the participantsrsquo rating
The importance-ranking (or priority) of Table I is operationally defined as theproduct of success probability and attractiveness In order to simplify the strategicformulation at this stage opportunities are rank-sorted in descending order and thoseof less importance are excluded The participants have agreed to eliminate those salientfactors with a probability ranking below the importance score of 42
Likewise the calculations of probability of occurrence and seriousness of threats areshown in Table II on the basis of the participantsrsquo perceptions similar to Table I Thosethreat rankings with less priority the boxes are excluded in Table II
The second step environmental analysis of internal factorsExternal factors opportunities and threats shown in Tables I and II are thoseuncontrollable factors while internal factors strengths and weaknesses are to acertain extent controllable and changeable within the control of the organization
Kotlerrsquos checklist for performing strengthsweaknesses analysis provides an effectivepreliminary identification of core performance measures (Kotler 2000 p 78) Organizationsusing this checklist should review the original measures and make necessary amendmentsif needed After minor modifications to meet HKQMArsquos needs the perceived importance ofeach measure in descending order is listed (Table III) The descriptions in Table III are inline with BSC perspectives eg financial customer internal process and learning
In addition to QFDrsquos strategic prioritization six sigma a rigorous and disciplinedmanagerial practice also emphasizes that identifying the critical to quality (CTQ) takesprecedence over all quality-management processes When applying the concept of CTQ
OpportunitiesSuccess
probability AttractivenessImportance-
ranking
O1 Lack of recognized certifications in HK 67 80 54O2 The demands of quality service 64 79 51O3 (Quality Award Index (QAI) 66 70 46O4 Lack of operational standards for SMEs 69 64 44O5 The cooperation between China HK and Macau 61 69 42O6 SME grants 44 71 32O7 Popularity of the Internet 47 63 30O8 Government recommendations for high-tech 31 43 13
Table IImportance-ranking of
opportunities
ThreatsProbability
of occurrence SeriousnessImportance-
ranking
T1AIndividual financial deterioration 77 79 61T2AEconomic recession 77 79 61T3ARetrenchments of corporate members 76 79 59T4ALess support from local government 57 60 34T5ACompetitions 54 46 25T6AHigh-tech 39 41 16
Table IIImportance-ranking of
threats
BSQ strategicformulationframework
537
to the service industries HKQMA has to exclude less important factors the boxes sothat HKQMA can focus on those really ldquoimportantrdquo internal factors There might bedangers in excluding if HKQMA was a newly born association Nevertheless HKQMAhas been established for more than 20 years and it has kept records of all thesestrategic workshops longitudinally Reviewing these records can minimize the risk ofexcluding In addition HKQMA is navigated by a team of experienced practitionersand academics It is fair to assume that the Exco is unlikely to exclude significantfactors from the strategic formulation framework
ldquoPerformance gaprdquo is operationally defined as the difference between importancescore and performance score The higher the performance gap the higher the need forHKQMA to improve in that particular aspect This is shown in Table IV
To classify the internal factors into strengths and weaknesses as per SWOT thosefactors scoring lower than 68 were agreed by the HKQMA Exco members asweaknesses The results are shown in Table V
The third step completing the development of the SWOT matrixThe third step is to combine high priority importance ranking of opportunities withinternal factors based on BSCrsquos four perspectives to develop the SWOT matrix inwhich a set of strategies is identified as per Table VI After completing thedevelopment of the matrix it is always meaningful to compare the latest SWOT matrixwith the previous one so as to trace the longitudinal trend of HKQMA In this aspectHKQMA has adopted SWOT analysis to develop its strategies over the past few years
Performing strengthsweaknesses analysis Importance score Performance score Performance gap
Income (financial) 94 A ANumber of membership (financial) 90 A ACustomer retentionAcustomerA 88 A AVisionary capable leadershipAlearningA 83 A ACustomer satisfactionAcustomerA 81 A AService quality AcustomerA 81 A ACompany reputationAcustomerA 76 A AFlexible or responsiveAlearningA 71 A AGeographical coverageAcustomerA 65 A AVision (learning) 65 A AFinancial stabilityAfinancialA 64 A AEntrepreneurial orientation AlearningA 64 A AProduct quality AcustomerA 64 A ASales force effectiveness AcustomerA 59 A AInnovation effectiveness AcustomerA 59 A APromotion effectivenessAcustomerA 56 A ACash flowAfinancialA 55 A AAbility to produce on timeAprocessA 54 A ATechnical manufacturing skillAprocessA 50 A ADistribution effectiveness AcustomerA 49 A APricing effectiveness AcustomerA 48 A AMarket share AcustomerA 41 A AFacilities AprocessA 41 A ACapacity AprocessA 36 A AEconomics of scale AprocessA 25 A A
Table IIIInternal (strengths andweaknesses) analysis
MAJ194
538
The fourth step building the house of qualityBased on the data collected from the previous steps the elements are accommodated inthe house of quality of QFD shown in Figure 1 QFD was used to developsystematically subjective cause-and-effect relationships among the BSC financialperspective In other words financial stability income and number of members are theldquoWhatsrdquo on the horizontal portion while geographical coverage organizationreputation service quality and the like are the ldquoHowsrdquo on the vertical portion Thebottom of the figure provides more detailed explanations of the ldquoHowsrdquo
In this case the circular spots shown on the roof of the house are the correlationsamong ldquoHowsrdquo Having the attitudinal ratings on causal relationship in numericalvalue in the middle of the house HKQMA can prioritize the actual implementations
The final step strategic prioritizationIn Figure 2 the higher score has the higher importance for the HKQMA The boldarrows represent the scores of 10 the highest causal linkage as perceived by theHKQMA Exco members
Performing strengthsweaknesses analysis Importance score Performance score Performance gap
Income (financial) 94 63 31Number of membership (financial) 90 43 47Customer retentionAcustomerA 88 40 48Visionary capable leadershipAlearningA 83 69 14Customer satisfactionAcustomerA 81 56 25Service quality AcustomerA 81 63 18Company reputationAcustomerA 76 70 06Flexible or responsiveAlearningA 71 60 11Geographical coverageAcustomerA 65 71 206Vision (learning) 65 64 01Financial stabilityAfinancialA 64 78 214Entrepreneurial orientation AlearningA 64 68 204Product quality AcustomerA 64 70 206
Table IVVariation of importancendash performance analysis
Internal measures Importance score Performance score Performance gap
StrengthsS1 Financial stabilityAfinancialA 64 78 214S2 Geographical coverageAcustomerA 65 71 206S3 Company reputationAcustomerA 76 70 06S4 Product quality AcustomerA 64 70 206S5 Visionary capable leadershipAlearningA 83 69 14S6 Entrepreneurial orientation AlearningA 64 68 204Weaknesses A A AW1 Vision (learning) 65 64 01W2 Income (financial) 94 63 31W3 Service quality AcustomerA 81 63 18W4 Flexible or responsiveAlearningA 71 60 11W5 Customer satisfactionAcustomerA 81 56 25W6 Number of membership (financial) 90 43 47W7 Customer retentionAcustomerA 88 40 48
Table VPerformance gap
BSQ strategicformulationframework
539
HK
QM
AS
WO
Tan
aly
sis
2002
-200
3S
tren
gths
Wea
knes
ses
S1
Fin
anci
alst
abil
ityA
fin
anci
alA
W1
Vis
ion
(lea
rnin
g)
S2
Geo
gra
ph
ical
cov
erag
eAcu
stom
erA
W2
Inco
me
(fin
anci
al)
S3
Com
pan
yre
pu
tati
onA
cust
omerA
W3
Ser
vic
eq
ual
ityA
cust
omerA
S4
Pro
du
ctq
ual
ityA
cust
omerA
W4
Fle
xib
leor
resp
onsi
veA
lear
nin
gA
S5
Vis
ion
ary
ca
pab
lele
ader
shipA
lear
nin
gA
W5
Cu
stom
ersa
tisf
acti
onA
cust
omerA
S6
En
trep
ren
euri
alor
ien
tati
onA
lear
nin
gA
W6
Nu
mb
erof
mem
ber
ship
(fin
anci
al)
W7
Cu
stom
erre
ten
tionA
cust
omerA
Opp
ortu
nit
ies
Maxi
Maxi
Min
iM
axi
O1
Lac
kof
reco
gn
ized
cert
ifica
tion
sS
OO
1O4S
1-S
6O
rgan
ize
loca
lp
rofe
ssio
nal
exam
WO
W2O
1A
pp
lyIS
Oce
rtifi
cati
onfo
rH
KQ
MA
O2
Th
ed
eman
ds
ofq
ual
ity
serv
ice
O2O
4S1-
S6
Reg
ula
tese
rvic
ein
dex
W3W
5W6W
7O2
En
han
cese
rvic
eto
mem
ber
O3
Qu
alit
yA
war
dIn
dex
(QA
I)O
4O3S
1-S
6P
rov
ide
pro
fess
ion
alaw
ard
sch
eme
O4
Lac
kof
oper
atio
nal
stan
dar
ds
for
SM
Es
O4S
1-S
6E
xp
and
serv
ice
toth
eg
reat
erC
hin
are
gio
nO
2S1-
S6
Ad
voc
ate
QC
Cto
sch
ools
inH
KO
5T
he
coop
erat
ion
bet
wee
nC
hin
aH
Kan
dM
acau
Min
iM
ini
Thre
ats
T1
Ind
ivid
ual
fin
anci
ald
eter
iora
tion
Maxi
Min
iS
TS
3S5S
6T1-
T3
En
han
ceco
nsu
ltan
cyse
rvic
eW
TW
1W2W
5W6T
1-T
3E
nh
ance
life
-lon
gle
arn
ing
serv
ice
tom
emb
erp
oten
tial
mem
ber
T2
Eco
nom
icre
cess
ion
T3
Ret
ren
chm
ents
ofco
rpor
ate
mem
ber
s
Table VIHKQMA SWOT matrixfor the year 2002-2003
MAJ194
540
Figure 3 shows how each strategy is compared to one another on a pair-wise basis Asa result the top strategies are (a) local qualification in quality (g) enhance membershipservice (i) life long learning for members and so forth in descending order
After the participants had formulated the holistic strategic plan for HKQMA at thetop level the Exco then initiated a more detail action plan and assigned its members totake action accordingly Another similar framework can be formulated beginning withSWOT analysis to further develop the specific strategy at an operational level
ConclusionTheoretically Ko and Lee (2000) using 13 ldquoHowsrdquo of STAW into SFF are impressiveNevertheless it is complicated for the average Western practitioner to master this
Figure 2A strategy into action
Figure 3Pair-wise comparison of
strategies
BSQ strategicformulationframework
541
ancient strategy which was originally applied to warfare When preparing a SFF thenecessity of using STAW is in doubt The authors have delineated a similar strategicformulation framework without STAW ldquoHowsrdquo developed in this case are largelybased on Kotlerrsquos checklist for performing internal (strengths and weaknesses)analysis Having a well-structured framework with using familiar managerialterminology such as market share customer satisfaction and product quality thechecklist provides practitioners with an effective preliminary identification of coreperformance measures at an early stage
Managerial implicationsBSQ framework is a powerful management tool Compared with Ko and Leersquos model itis easier for participants to develop their own BSQ frameworks However it still takestime for the average participant to digest these quantitative processes In such a case itis recommended to invite someone knowledgeable about the quality tools to sit in thestrategic formulation meetings
This strategic formulation framework is developed on the basis of perceivedimportance and performance This is because ldquorubbish in ndash rubbish outrdquo amisinterpretation of the environmental external and internal factors by theparticipants may derail an organization from the right track Remedial actions suchas leading the meeting by an experienced moderator lecturing the participants aboutthe methodology asking the participants to prepare for the meetings in advanceencouraging the involvement of the participants making an interactive discussion andexhausting more environmental factors for selection can minimize the derailment
HKQMA a small non-profit-making association is a kind of unitarist organizationwhere there is no conflict of interests among the members However in the pluralistenterprises strategic prioritization is sometimes subjected to the aforesaid conflict Acertain group of participants may dominate the enterprisersquos directions against ldquothevoice of the customerrdquo
Using traditional focus groups is an effective strategy to produce data and insightsNevertheless with facial expressions and body language a small group of memberscan dominate the ways of translating strategy into action It may be the case that thosewho desire to please the interested party involved may second the proposal for nothingmore than a political reason If not properly managed a well-structured managerialapproach can be distorted into a political tool that tells ldquotrue liesrdquo in a convincingformat Thus the moderator has to judge if a secret ballot or any other appropriateform of voting is needed
References
Akao Y (1990) Quality Function Deployment Integrating Customer Requirement intoProduction Design Productivity Press Cambridge MA
Brown JB and McDonnell B (1995) ldquoThe balanced scorecard short-term guest or long-termresidentrdquo International Journal of Contemporary Hospitality Management Vol 7 No 2
Chang YN (1976) ldquoEarly Chinese management thoughtrdquo California Management ReviewVol XIX No 2
Chen M (1994) ldquoSun Tzursquos strategic thinking and contemporary businessrdquo Business HorizonsVol 37 No 2 00076813
MAJ194
542
Gadd KW (1995) ldquoBusiness self-assessmentrdquo Business Process Re-engineering and ManagementJournal Vol 1 No 3
Griffith S (1982) Sun Tzu The Art of War Oxford University Press London
Hepworth P (1998) ldquoWeighting it up ndash a literature review for the balanced scorecardrdquo Journal ofManagement Development Vol 17 No 8
Hill T and Westbrook R (1997) ldquoSWOT analysis itrsquos time for a product recallrdquo Long RangePlanning Vol 30 pp 46-52
Kaplan RS and Norton DP (1996) The Balanced Scorecard Translating Strategy into ActionHarvard Business School Press Boston MA
Ko ASO and Lee SF (2000) ldquoImplementing the strategic formulation framework for thebanking industry of Hong Kongrdquo Managerial Auditing Journal Vol 15 No 9 pp 469-77
Koo LC (1998) ldquoBuilding balanced scorecard on the house of qualityrdquo The 1st IndustrialEngineering and Management (IEM) Symposium Transformational Strategy towards the21st Century Hong Kong 20-21 November
Kotler P (2000) Marketing Management Analysis Planning Implementation and ControlMillennium ed International Series in Marketing Prentice-Hall Englewood Cliffs NJ
McNeilly MR (1996) Sun Tzu and the Art of Business Oxford University Press Oxford
Noci G (1995) ldquoAccounting and non-accounting measures of quality-based performances insmall firmsrdquo International Journal of Operations amp Production Management Vol 15 No 7
Rarick CA (1996) ldquoAncient Chinese advice for modern business strategistsrdquo SAM AdvancedManagement Journal (1984) Vol 61 No 1
Slocum JW Jr and McGill M (1994) ldquoThe new learning strategy anytime anythinganywhererdquo Organizational Dynamics Vol 23 No 2 pp 33-47
Valentin EK (2001) ldquoSWOT analysis from a resource-based viewrdquo Journal of Marketingpp 52-69
Vroman HW (1997) ldquoReviews the book Sun Tzu and the Art of Businessrdquo Academy ofManagement Executive Vol 11 No 1 p 129
Weihrich H (1982) ldquoThe TOWS matrix ndash a tool for situational analysisrdquo Journal of Long RangePlanning Vol 15 No 2
Wing RL (1988) The Art of Strategy The Leading Modern Translation of Sun Tzursquos ClassicDoubleday New York NY
Further reading
Koo LC (1997) ldquoImproving quality service through balanced scorecardrdquo The 2nd InternationalConference on Quality and Reliability Transactions of Nanjing University of Aeronauticsand Astronautics China (TNUAA) Vol 15 No 1 pp 147-53
Kotler P (1999) ldquoBoards should tune in to corporate marketing programsrdquo Directorship Vol 25No 7 pp 12-16
BSQ strategicformulationframework
543
measurement of the four perspectives namely financial customer internal businessprocess and learning provides a better indication of the performance of an organizationthan merely the traditional financial data (Hepworth 1998)
Quality function deploymentQuality function deployment (QFD) has been used extensively in a manufacturingsetting for years The strength of QFD originally linked up direct customerrequirements with production design (Akao 1990) Koo (1998) inter alia pioneered theapplication of ldquoWhatsrdquo and ldquoHowsrdquo of QFD to BSC In his model QFD quantifies andprioritizes the relationships of (internalexternal) factors and actions structurally infinancial customer process and learning perspectives
BSQ methodologyBSQ frameworkThe methodology is based on an integrated framework composed of BSC SWOT andQFD HKQMA a non-profit-making association is used as a case study to demonstratehow to build an organizational strategic plan
Major assumptionThe executive committee (Exco) is composed of 13 members who are assumed torepresent ldquothe voice of the customerrdquo (Akao 1990) Through a two-day workshop thesurvey obtained through focus groups is able to translate the voice of the customer asper the horizontal portion of Figure 1
RatingIn contemporary quality management four response categories from strong frac14 9 tono frac14 1 (Ko and Lee 2000) are always used to indicate a contrasting degree ofagreement or disagreement In order to compare the findings with HKQMArsquos previoussurvey a ten-point Likert scale in which 1 refers to least important and 10 refers tomost important is used in this case
The strategic workshopThe Exco members of HKQMA a non-profit-making association in Hong Kongconvened a two-day strategic workshop at the end of 2002 to formulate and review itsstrategy and tactics for the coming year Through the focus group meetings with Excomembers they developed BSC measures It may not be easy for outsiders to fullyunderstand the below-mentioned headings written and shown on tables but theemphasis of this paper is on demonstrating procedural guidelines rather than ondisclosing the real strategy deployed by HKQMA Steps taken in developing BSC areshown as follows
The first step generating salient external factors by prioritizationBy means of nominal group technique tentative external factors of opportunitiesthreats were identified for the SWOT analysis Using the guideline of STEP (socialtechnical economic and political) the participants voiced their perceptions of externalfactors and voted on the rating of each attribute (Table I) The columns successprobability and attractiveness shown in Table I are calculated based on a ten-point
BSQ strategicformulationframework
535
Figure 1Building the house of QFDfor HKQMA
MAJ194
536
Likert scale The score of each success probability and attractiveness column is theaverage of the participantsrsquo rating
The importance-ranking (or priority) of Table I is operationally defined as theproduct of success probability and attractiveness In order to simplify the strategicformulation at this stage opportunities are rank-sorted in descending order and thoseof less importance are excluded The participants have agreed to eliminate those salientfactors with a probability ranking below the importance score of 42
Likewise the calculations of probability of occurrence and seriousness of threats areshown in Table II on the basis of the participantsrsquo perceptions similar to Table I Thosethreat rankings with less priority the boxes are excluded in Table II
The second step environmental analysis of internal factorsExternal factors opportunities and threats shown in Tables I and II are thoseuncontrollable factors while internal factors strengths and weaknesses are to acertain extent controllable and changeable within the control of the organization
Kotlerrsquos checklist for performing strengthsweaknesses analysis provides an effectivepreliminary identification of core performance measures (Kotler 2000 p 78) Organizationsusing this checklist should review the original measures and make necessary amendmentsif needed After minor modifications to meet HKQMArsquos needs the perceived importance ofeach measure in descending order is listed (Table III) The descriptions in Table III are inline with BSC perspectives eg financial customer internal process and learning
In addition to QFDrsquos strategic prioritization six sigma a rigorous and disciplinedmanagerial practice also emphasizes that identifying the critical to quality (CTQ) takesprecedence over all quality-management processes When applying the concept of CTQ
OpportunitiesSuccess
probability AttractivenessImportance-
ranking
O1 Lack of recognized certifications in HK 67 80 54O2 The demands of quality service 64 79 51O3 (Quality Award Index (QAI) 66 70 46O4 Lack of operational standards for SMEs 69 64 44O5 The cooperation between China HK and Macau 61 69 42O6 SME grants 44 71 32O7 Popularity of the Internet 47 63 30O8 Government recommendations for high-tech 31 43 13
Table IImportance-ranking of
opportunities
ThreatsProbability
of occurrence SeriousnessImportance-
ranking
T1AIndividual financial deterioration 77 79 61T2AEconomic recession 77 79 61T3ARetrenchments of corporate members 76 79 59T4ALess support from local government 57 60 34T5ACompetitions 54 46 25T6AHigh-tech 39 41 16
Table IIImportance-ranking of
threats
BSQ strategicformulationframework
537
to the service industries HKQMA has to exclude less important factors the boxes sothat HKQMA can focus on those really ldquoimportantrdquo internal factors There might bedangers in excluding if HKQMA was a newly born association Nevertheless HKQMAhas been established for more than 20 years and it has kept records of all thesestrategic workshops longitudinally Reviewing these records can minimize the risk ofexcluding In addition HKQMA is navigated by a team of experienced practitionersand academics It is fair to assume that the Exco is unlikely to exclude significantfactors from the strategic formulation framework
ldquoPerformance gaprdquo is operationally defined as the difference between importancescore and performance score The higher the performance gap the higher the need forHKQMA to improve in that particular aspect This is shown in Table IV
To classify the internal factors into strengths and weaknesses as per SWOT thosefactors scoring lower than 68 were agreed by the HKQMA Exco members asweaknesses The results are shown in Table V
The third step completing the development of the SWOT matrixThe third step is to combine high priority importance ranking of opportunities withinternal factors based on BSCrsquos four perspectives to develop the SWOT matrix inwhich a set of strategies is identified as per Table VI After completing thedevelopment of the matrix it is always meaningful to compare the latest SWOT matrixwith the previous one so as to trace the longitudinal trend of HKQMA In this aspectHKQMA has adopted SWOT analysis to develop its strategies over the past few years
Performing strengthsweaknesses analysis Importance score Performance score Performance gap
Income (financial) 94 A ANumber of membership (financial) 90 A ACustomer retentionAcustomerA 88 A AVisionary capable leadershipAlearningA 83 A ACustomer satisfactionAcustomerA 81 A AService quality AcustomerA 81 A ACompany reputationAcustomerA 76 A AFlexible or responsiveAlearningA 71 A AGeographical coverageAcustomerA 65 A AVision (learning) 65 A AFinancial stabilityAfinancialA 64 A AEntrepreneurial orientation AlearningA 64 A AProduct quality AcustomerA 64 A ASales force effectiveness AcustomerA 59 A AInnovation effectiveness AcustomerA 59 A APromotion effectivenessAcustomerA 56 A ACash flowAfinancialA 55 A AAbility to produce on timeAprocessA 54 A ATechnical manufacturing skillAprocessA 50 A ADistribution effectiveness AcustomerA 49 A APricing effectiveness AcustomerA 48 A AMarket share AcustomerA 41 A AFacilities AprocessA 41 A ACapacity AprocessA 36 A AEconomics of scale AprocessA 25 A A
Table IIIInternal (strengths andweaknesses) analysis
MAJ194
538
The fourth step building the house of qualityBased on the data collected from the previous steps the elements are accommodated inthe house of quality of QFD shown in Figure 1 QFD was used to developsystematically subjective cause-and-effect relationships among the BSC financialperspective In other words financial stability income and number of members are theldquoWhatsrdquo on the horizontal portion while geographical coverage organizationreputation service quality and the like are the ldquoHowsrdquo on the vertical portion Thebottom of the figure provides more detailed explanations of the ldquoHowsrdquo
In this case the circular spots shown on the roof of the house are the correlationsamong ldquoHowsrdquo Having the attitudinal ratings on causal relationship in numericalvalue in the middle of the house HKQMA can prioritize the actual implementations
The final step strategic prioritizationIn Figure 2 the higher score has the higher importance for the HKQMA The boldarrows represent the scores of 10 the highest causal linkage as perceived by theHKQMA Exco members
Performing strengthsweaknesses analysis Importance score Performance score Performance gap
Income (financial) 94 63 31Number of membership (financial) 90 43 47Customer retentionAcustomerA 88 40 48Visionary capable leadershipAlearningA 83 69 14Customer satisfactionAcustomerA 81 56 25Service quality AcustomerA 81 63 18Company reputationAcustomerA 76 70 06Flexible or responsiveAlearningA 71 60 11Geographical coverageAcustomerA 65 71 206Vision (learning) 65 64 01Financial stabilityAfinancialA 64 78 214Entrepreneurial orientation AlearningA 64 68 204Product quality AcustomerA 64 70 206
Table IVVariation of importancendash performance analysis
Internal measures Importance score Performance score Performance gap
StrengthsS1 Financial stabilityAfinancialA 64 78 214S2 Geographical coverageAcustomerA 65 71 206S3 Company reputationAcustomerA 76 70 06S4 Product quality AcustomerA 64 70 206S5 Visionary capable leadershipAlearningA 83 69 14S6 Entrepreneurial orientation AlearningA 64 68 204Weaknesses A A AW1 Vision (learning) 65 64 01W2 Income (financial) 94 63 31W3 Service quality AcustomerA 81 63 18W4 Flexible or responsiveAlearningA 71 60 11W5 Customer satisfactionAcustomerA 81 56 25W6 Number of membership (financial) 90 43 47W7 Customer retentionAcustomerA 88 40 48
Table VPerformance gap
BSQ strategicformulationframework
539
HK
QM
AS
WO
Tan
aly
sis
2002
-200
3S
tren
gths
Wea
knes
ses
S1
Fin
anci
alst
abil
ityA
fin
anci
alA
W1
Vis
ion
(lea
rnin
g)
S2
Geo
gra
ph
ical
cov
erag
eAcu
stom
erA
W2
Inco
me
(fin
anci
al)
S3
Com
pan
yre
pu
tati
onA
cust
omerA
W3
Ser
vic
eq
ual
ityA
cust
omerA
S4
Pro
du
ctq
ual
ityA
cust
omerA
W4
Fle
xib
leor
resp
onsi
veA
lear
nin
gA
S5
Vis
ion
ary
ca
pab
lele
ader
shipA
lear
nin
gA
W5
Cu
stom
ersa
tisf
acti
onA
cust
omerA
S6
En
trep
ren
euri
alor
ien
tati
onA
lear
nin
gA
W6
Nu
mb
erof
mem
ber
ship
(fin
anci
al)
W7
Cu
stom
erre
ten
tionA
cust
omerA
Opp
ortu
nit
ies
Maxi
Maxi
Min
iM
axi
O1
Lac
kof
reco
gn
ized
cert
ifica
tion
sS
OO
1O4S
1-S
6O
rgan
ize
loca
lp
rofe
ssio
nal
exam
WO
W2O
1A
pp
lyIS
Oce
rtifi
cati
onfo
rH
KQ
MA
O2
Th
ed
eman
ds
ofq
ual
ity
serv
ice
O2O
4S1-
S6
Reg
ula
tese
rvic
ein
dex
W3W
5W6W
7O2
En
han
cese
rvic
eto
mem
ber
O3
Qu
alit
yA
war
dIn
dex
(QA
I)O
4O3S
1-S
6P
rov
ide
pro
fess
ion
alaw
ard
sch
eme
O4
Lac
kof
oper
atio
nal
stan
dar
ds
for
SM
Es
O4S
1-S
6E
xp
and
serv
ice
toth
eg
reat
erC
hin
are
gio
nO
2S1-
S6
Ad
voc
ate
QC
Cto
sch
ools
inH
KO
5T
he
coop
erat
ion
bet
wee
nC
hin
aH
Kan
dM
acau
Min
iM
ini
Thre
ats
T1
Ind
ivid
ual
fin
anci
ald
eter
iora
tion
Maxi
Min
iS
TS
3S5S
6T1-
T3
En
han
ceco
nsu
ltan
cyse
rvic
eW
TW
1W2W
5W6T
1-T
3E
nh
ance
life
-lon
gle
arn
ing
serv
ice
tom
emb
erp
oten
tial
mem
ber
T2
Eco
nom
icre
cess
ion
T3
Ret
ren
chm
ents
ofco
rpor
ate
mem
ber
s
Table VIHKQMA SWOT matrixfor the year 2002-2003
MAJ194
540
Figure 3 shows how each strategy is compared to one another on a pair-wise basis Asa result the top strategies are (a) local qualification in quality (g) enhance membershipservice (i) life long learning for members and so forth in descending order
After the participants had formulated the holistic strategic plan for HKQMA at thetop level the Exco then initiated a more detail action plan and assigned its members totake action accordingly Another similar framework can be formulated beginning withSWOT analysis to further develop the specific strategy at an operational level
ConclusionTheoretically Ko and Lee (2000) using 13 ldquoHowsrdquo of STAW into SFF are impressiveNevertheless it is complicated for the average Western practitioner to master this
Figure 2A strategy into action
Figure 3Pair-wise comparison of
strategies
BSQ strategicformulationframework
541
ancient strategy which was originally applied to warfare When preparing a SFF thenecessity of using STAW is in doubt The authors have delineated a similar strategicformulation framework without STAW ldquoHowsrdquo developed in this case are largelybased on Kotlerrsquos checklist for performing internal (strengths and weaknesses)analysis Having a well-structured framework with using familiar managerialterminology such as market share customer satisfaction and product quality thechecklist provides practitioners with an effective preliminary identification of coreperformance measures at an early stage
Managerial implicationsBSQ framework is a powerful management tool Compared with Ko and Leersquos model itis easier for participants to develop their own BSQ frameworks However it still takestime for the average participant to digest these quantitative processes In such a case itis recommended to invite someone knowledgeable about the quality tools to sit in thestrategic formulation meetings
This strategic formulation framework is developed on the basis of perceivedimportance and performance This is because ldquorubbish in ndash rubbish outrdquo amisinterpretation of the environmental external and internal factors by theparticipants may derail an organization from the right track Remedial actions suchas leading the meeting by an experienced moderator lecturing the participants aboutthe methodology asking the participants to prepare for the meetings in advanceencouraging the involvement of the participants making an interactive discussion andexhausting more environmental factors for selection can minimize the derailment
HKQMA a small non-profit-making association is a kind of unitarist organizationwhere there is no conflict of interests among the members However in the pluralistenterprises strategic prioritization is sometimes subjected to the aforesaid conflict Acertain group of participants may dominate the enterprisersquos directions against ldquothevoice of the customerrdquo
Using traditional focus groups is an effective strategy to produce data and insightsNevertheless with facial expressions and body language a small group of memberscan dominate the ways of translating strategy into action It may be the case that thosewho desire to please the interested party involved may second the proposal for nothingmore than a political reason If not properly managed a well-structured managerialapproach can be distorted into a political tool that tells ldquotrue liesrdquo in a convincingformat Thus the moderator has to judge if a secret ballot or any other appropriateform of voting is needed
References
Akao Y (1990) Quality Function Deployment Integrating Customer Requirement intoProduction Design Productivity Press Cambridge MA
Brown JB and McDonnell B (1995) ldquoThe balanced scorecard short-term guest or long-termresidentrdquo International Journal of Contemporary Hospitality Management Vol 7 No 2
Chang YN (1976) ldquoEarly Chinese management thoughtrdquo California Management ReviewVol XIX No 2
Chen M (1994) ldquoSun Tzursquos strategic thinking and contemporary businessrdquo Business HorizonsVol 37 No 2 00076813
MAJ194
542
Gadd KW (1995) ldquoBusiness self-assessmentrdquo Business Process Re-engineering and ManagementJournal Vol 1 No 3
Griffith S (1982) Sun Tzu The Art of War Oxford University Press London
Hepworth P (1998) ldquoWeighting it up ndash a literature review for the balanced scorecardrdquo Journal ofManagement Development Vol 17 No 8
Hill T and Westbrook R (1997) ldquoSWOT analysis itrsquos time for a product recallrdquo Long RangePlanning Vol 30 pp 46-52
Kaplan RS and Norton DP (1996) The Balanced Scorecard Translating Strategy into ActionHarvard Business School Press Boston MA
Ko ASO and Lee SF (2000) ldquoImplementing the strategic formulation framework for thebanking industry of Hong Kongrdquo Managerial Auditing Journal Vol 15 No 9 pp 469-77
Koo LC (1998) ldquoBuilding balanced scorecard on the house of qualityrdquo The 1st IndustrialEngineering and Management (IEM) Symposium Transformational Strategy towards the21st Century Hong Kong 20-21 November
Kotler P (2000) Marketing Management Analysis Planning Implementation and ControlMillennium ed International Series in Marketing Prentice-Hall Englewood Cliffs NJ
McNeilly MR (1996) Sun Tzu and the Art of Business Oxford University Press Oxford
Noci G (1995) ldquoAccounting and non-accounting measures of quality-based performances insmall firmsrdquo International Journal of Operations amp Production Management Vol 15 No 7
Rarick CA (1996) ldquoAncient Chinese advice for modern business strategistsrdquo SAM AdvancedManagement Journal (1984) Vol 61 No 1
Slocum JW Jr and McGill M (1994) ldquoThe new learning strategy anytime anythinganywhererdquo Organizational Dynamics Vol 23 No 2 pp 33-47
Valentin EK (2001) ldquoSWOT analysis from a resource-based viewrdquo Journal of Marketingpp 52-69
Vroman HW (1997) ldquoReviews the book Sun Tzu and the Art of Businessrdquo Academy ofManagement Executive Vol 11 No 1 p 129
Weihrich H (1982) ldquoThe TOWS matrix ndash a tool for situational analysisrdquo Journal of Long RangePlanning Vol 15 No 2
Wing RL (1988) The Art of Strategy The Leading Modern Translation of Sun Tzursquos ClassicDoubleday New York NY
Further reading
Koo LC (1997) ldquoImproving quality service through balanced scorecardrdquo The 2nd InternationalConference on Quality and Reliability Transactions of Nanjing University of Aeronauticsand Astronautics China (TNUAA) Vol 15 No 1 pp 147-53
Kotler P (1999) ldquoBoards should tune in to corporate marketing programsrdquo Directorship Vol 25No 7 pp 12-16
BSQ strategicformulationframework
543
Figure 1Building the house of QFDfor HKQMA
MAJ194
536
Likert scale The score of each success probability and attractiveness column is theaverage of the participantsrsquo rating
The importance-ranking (or priority) of Table I is operationally defined as theproduct of success probability and attractiveness In order to simplify the strategicformulation at this stage opportunities are rank-sorted in descending order and thoseof less importance are excluded The participants have agreed to eliminate those salientfactors with a probability ranking below the importance score of 42
Likewise the calculations of probability of occurrence and seriousness of threats areshown in Table II on the basis of the participantsrsquo perceptions similar to Table I Thosethreat rankings with less priority the boxes are excluded in Table II
The second step environmental analysis of internal factorsExternal factors opportunities and threats shown in Tables I and II are thoseuncontrollable factors while internal factors strengths and weaknesses are to acertain extent controllable and changeable within the control of the organization
Kotlerrsquos checklist for performing strengthsweaknesses analysis provides an effectivepreliminary identification of core performance measures (Kotler 2000 p 78) Organizationsusing this checklist should review the original measures and make necessary amendmentsif needed After minor modifications to meet HKQMArsquos needs the perceived importance ofeach measure in descending order is listed (Table III) The descriptions in Table III are inline with BSC perspectives eg financial customer internal process and learning
In addition to QFDrsquos strategic prioritization six sigma a rigorous and disciplinedmanagerial practice also emphasizes that identifying the critical to quality (CTQ) takesprecedence over all quality-management processes When applying the concept of CTQ
OpportunitiesSuccess
probability AttractivenessImportance-
ranking
O1 Lack of recognized certifications in HK 67 80 54O2 The demands of quality service 64 79 51O3 (Quality Award Index (QAI) 66 70 46O4 Lack of operational standards for SMEs 69 64 44O5 The cooperation between China HK and Macau 61 69 42O6 SME grants 44 71 32O7 Popularity of the Internet 47 63 30O8 Government recommendations for high-tech 31 43 13
Table IImportance-ranking of
opportunities
ThreatsProbability
of occurrence SeriousnessImportance-
ranking
T1AIndividual financial deterioration 77 79 61T2AEconomic recession 77 79 61T3ARetrenchments of corporate members 76 79 59T4ALess support from local government 57 60 34T5ACompetitions 54 46 25T6AHigh-tech 39 41 16
Table IIImportance-ranking of
threats
BSQ strategicformulationframework
537
to the service industries HKQMA has to exclude less important factors the boxes sothat HKQMA can focus on those really ldquoimportantrdquo internal factors There might bedangers in excluding if HKQMA was a newly born association Nevertheless HKQMAhas been established for more than 20 years and it has kept records of all thesestrategic workshops longitudinally Reviewing these records can minimize the risk ofexcluding In addition HKQMA is navigated by a team of experienced practitionersand academics It is fair to assume that the Exco is unlikely to exclude significantfactors from the strategic formulation framework
ldquoPerformance gaprdquo is operationally defined as the difference between importancescore and performance score The higher the performance gap the higher the need forHKQMA to improve in that particular aspect This is shown in Table IV
To classify the internal factors into strengths and weaknesses as per SWOT thosefactors scoring lower than 68 were agreed by the HKQMA Exco members asweaknesses The results are shown in Table V
The third step completing the development of the SWOT matrixThe third step is to combine high priority importance ranking of opportunities withinternal factors based on BSCrsquos four perspectives to develop the SWOT matrix inwhich a set of strategies is identified as per Table VI After completing thedevelopment of the matrix it is always meaningful to compare the latest SWOT matrixwith the previous one so as to trace the longitudinal trend of HKQMA In this aspectHKQMA has adopted SWOT analysis to develop its strategies over the past few years
Performing strengthsweaknesses analysis Importance score Performance score Performance gap
Income (financial) 94 A ANumber of membership (financial) 90 A ACustomer retentionAcustomerA 88 A AVisionary capable leadershipAlearningA 83 A ACustomer satisfactionAcustomerA 81 A AService quality AcustomerA 81 A ACompany reputationAcustomerA 76 A AFlexible or responsiveAlearningA 71 A AGeographical coverageAcustomerA 65 A AVision (learning) 65 A AFinancial stabilityAfinancialA 64 A AEntrepreneurial orientation AlearningA 64 A AProduct quality AcustomerA 64 A ASales force effectiveness AcustomerA 59 A AInnovation effectiveness AcustomerA 59 A APromotion effectivenessAcustomerA 56 A ACash flowAfinancialA 55 A AAbility to produce on timeAprocessA 54 A ATechnical manufacturing skillAprocessA 50 A ADistribution effectiveness AcustomerA 49 A APricing effectiveness AcustomerA 48 A AMarket share AcustomerA 41 A AFacilities AprocessA 41 A ACapacity AprocessA 36 A AEconomics of scale AprocessA 25 A A
Table IIIInternal (strengths andweaknesses) analysis
MAJ194
538
The fourth step building the house of qualityBased on the data collected from the previous steps the elements are accommodated inthe house of quality of QFD shown in Figure 1 QFD was used to developsystematically subjective cause-and-effect relationships among the BSC financialperspective In other words financial stability income and number of members are theldquoWhatsrdquo on the horizontal portion while geographical coverage organizationreputation service quality and the like are the ldquoHowsrdquo on the vertical portion Thebottom of the figure provides more detailed explanations of the ldquoHowsrdquo
In this case the circular spots shown on the roof of the house are the correlationsamong ldquoHowsrdquo Having the attitudinal ratings on causal relationship in numericalvalue in the middle of the house HKQMA can prioritize the actual implementations
The final step strategic prioritizationIn Figure 2 the higher score has the higher importance for the HKQMA The boldarrows represent the scores of 10 the highest causal linkage as perceived by theHKQMA Exco members
Performing strengthsweaknesses analysis Importance score Performance score Performance gap
Income (financial) 94 63 31Number of membership (financial) 90 43 47Customer retentionAcustomerA 88 40 48Visionary capable leadershipAlearningA 83 69 14Customer satisfactionAcustomerA 81 56 25Service quality AcustomerA 81 63 18Company reputationAcustomerA 76 70 06Flexible or responsiveAlearningA 71 60 11Geographical coverageAcustomerA 65 71 206Vision (learning) 65 64 01Financial stabilityAfinancialA 64 78 214Entrepreneurial orientation AlearningA 64 68 204Product quality AcustomerA 64 70 206
Table IVVariation of importancendash performance analysis
Internal measures Importance score Performance score Performance gap
StrengthsS1 Financial stabilityAfinancialA 64 78 214S2 Geographical coverageAcustomerA 65 71 206S3 Company reputationAcustomerA 76 70 06S4 Product quality AcustomerA 64 70 206S5 Visionary capable leadershipAlearningA 83 69 14S6 Entrepreneurial orientation AlearningA 64 68 204Weaknesses A A AW1 Vision (learning) 65 64 01W2 Income (financial) 94 63 31W3 Service quality AcustomerA 81 63 18W4 Flexible or responsiveAlearningA 71 60 11W5 Customer satisfactionAcustomerA 81 56 25W6 Number of membership (financial) 90 43 47W7 Customer retentionAcustomerA 88 40 48
Table VPerformance gap
BSQ strategicformulationframework
539
HK
QM
AS
WO
Tan
aly
sis
2002
-200
3S
tren
gths
Wea
knes
ses
S1
Fin
anci
alst
abil
ityA
fin
anci
alA
W1
Vis
ion
(lea
rnin
g)
S2
Geo
gra
ph
ical
cov
erag
eAcu
stom
erA
W2
Inco
me
(fin
anci
al)
S3
Com
pan
yre
pu
tati
onA
cust
omerA
W3
Ser
vic
eq
ual
ityA
cust
omerA
S4
Pro
du
ctq
ual
ityA
cust
omerA
W4
Fle
xib
leor
resp
onsi
veA
lear
nin
gA
S5
Vis
ion
ary
ca
pab
lele
ader
shipA
lear
nin
gA
W5
Cu
stom
ersa
tisf
acti
onA
cust
omerA
S6
En
trep
ren
euri
alor
ien
tati
onA
lear
nin
gA
W6
Nu
mb
erof
mem
ber
ship
(fin
anci
al)
W7
Cu
stom
erre
ten
tionA
cust
omerA
Opp
ortu
nit
ies
Maxi
Maxi
Min
iM
axi
O1
Lac
kof
reco
gn
ized
cert
ifica
tion
sS
OO
1O4S
1-S
6O
rgan
ize
loca
lp
rofe
ssio
nal
exam
WO
W2O
1A
pp
lyIS
Oce
rtifi
cati
onfo
rH
KQ
MA
O2
Th
ed
eman
ds
ofq
ual
ity
serv
ice
O2O
4S1-
S6
Reg
ula
tese
rvic
ein
dex
W3W
5W6W
7O2
En
han
cese
rvic
eto
mem
ber
O3
Qu
alit
yA
war
dIn
dex
(QA
I)O
4O3S
1-S
6P
rov
ide
pro
fess
ion
alaw
ard
sch
eme
O4
Lac
kof
oper
atio
nal
stan
dar
ds
for
SM
Es
O4S
1-S
6E
xp
and
serv
ice
toth
eg
reat
erC
hin
are
gio
nO
2S1-
S6
Ad
voc
ate
QC
Cto
sch
ools
inH
KO
5T
he
coop
erat
ion
bet
wee
nC
hin
aH
Kan
dM
acau
Min
iM
ini
Thre
ats
T1
Ind
ivid
ual
fin
anci
ald
eter
iora
tion
Maxi
Min
iS
TS
3S5S
6T1-
T3
En
han
ceco
nsu
ltan
cyse
rvic
eW
TW
1W2W
5W6T
1-T
3E
nh
ance
life
-lon
gle
arn
ing
serv
ice
tom
emb
erp
oten
tial
mem
ber
T2
Eco
nom
icre
cess
ion
T3
Ret
ren
chm
ents
ofco
rpor
ate
mem
ber
s
Table VIHKQMA SWOT matrixfor the year 2002-2003
MAJ194
540
Figure 3 shows how each strategy is compared to one another on a pair-wise basis Asa result the top strategies are (a) local qualification in quality (g) enhance membershipservice (i) life long learning for members and so forth in descending order
After the participants had formulated the holistic strategic plan for HKQMA at thetop level the Exco then initiated a more detail action plan and assigned its members totake action accordingly Another similar framework can be formulated beginning withSWOT analysis to further develop the specific strategy at an operational level
ConclusionTheoretically Ko and Lee (2000) using 13 ldquoHowsrdquo of STAW into SFF are impressiveNevertheless it is complicated for the average Western practitioner to master this
Figure 2A strategy into action
Figure 3Pair-wise comparison of
strategies
BSQ strategicformulationframework
541
ancient strategy which was originally applied to warfare When preparing a SFF thenecessity of using STAW is in doubt The authors have delineated a similar strategicformulation framework without STAW ldquoHowsrdquo developed in this case are largelybased on Kotlerrsquos checklist for performing internal (strengths and weaknesses)analysis Having a well-structured framework with using familiar managerialterminology such as market share customer satisfaction and product quality thechecklist provides practitioners with an effective preliminary identification of coreperformance measures at an early stage
Managerial implicationsBSQ framework is a powerful management tool Compared with Ko and Leersquos model itis easier for participants to develop their own BSQ frameworks However it still takestime for the average participant to digest these quantitative processes In such a case itis recommended to invite someone knowledgeable about the quality tools to sit in thestrategic formulation meetings
This strategic formulation framework is developed on the basis of perceivedimportance and performance This is because ldquorubbish in ndash rubbish outrdquo amisinterpretation of the environmental external and internal factors by theparticipants may derail an organization from the right track Remedial actions suchas leading the meeting by an experienced moderator lecturing the participants aboutthe methodology asking the participants to prepare for the meetings in advanceencouraging the involvement of the participants making an interactive discussion andexhausting more environmental factors for selection can minimize the derailment
HKQMA a small non-profit-making association is a kind of unitarist organizationwhere there is no conflict of interests among the members However in the pluralistenterprises strategic prioritization is sometimes subjected to the aforesaid conflict Acertain group of participants may dominate the enterprisersquos directions against ldquothevoice of the customerrdquo
Using traditional focus groups is an effective strategy to produce data and insightsNevertheless with facial expressions and body language a small group of memberscan dominate the ways of translating strategy into action It may be the case that thosewho desire to please the interested party involved may second the proposal for nothingmore than a political reason If not properly managed a well-structured managerialapproach can be distorted into a political tool that tells ldquotrue liesrdquo in a convincingformat Thus the moderator has to judge if a secret ballot or any other appropriateform of voting is needed
References
Akao Y (1990) Quality Function Deployment Integrating Customer Requirement intoProduction Design Productivity Press Cambridge MA
Brown JB and McDonnell B (1995) ldquoThe balanced scorecard short-term guest or long-termresidentrdquo International Journal of Contemporary Hospitality Management Vol 7 No 2
Chang YN (1976) ldquoEarly Chinese management thoughtrdquo California Management ReviewVol XIX No 2
Chen M (1994) ldquoSun Tzursquos strategic thinking and contemporary businessrdquo Business HorizonsVol 37 No 2 00076813
MAJ194
542
Gadd KW (1995) ldquoBusiness self-assessmentrdquo Business Process Re-engineering and ManagementJournal Vol 1 No 3
Griffith S (1982) Sun Tzu The Art of War Oxford University Press London
Hepworth P (1998) ldquoWeighting it up ndash a literature review for the balanced scorecardrdquo Journal ofManagement Development Vol 17 No 8
Hill T and Westbrook R (1997) ldquoSWOT analysis itrsquos time for a product recallrdquo Long RangePlanning Vol 30 pp 46-52
Kaplan RS and Norton DP (1996) The Balanced Scorecard Translating Strategy into ActionHarvard Business School Press Boston MA
Ko ASO and Lee SF (2000) ldquoImplementing the strategic formulation framework for thebanking industry of Hong Kongrdquo Managerial Auditing Journal Vol 15 No 9 pp 469-77
Koo LC (1998) ldquoBuilding balanced scorecard on the house of qualityrdquo The 1st IndustrialEngineering and Management (IEM) Symposium Transformational Strategy towards the21st Century Hong Kong 20-21 November
Kotler P (2000) Marketing Management Analysis Planning Implementation and ControlMillennium ed International Series in Marketing Prentice-Hall Englewood Cliffs NJ
McNeilly MR (1996) Sun Tzu and the Art of Business Oxford University Press Oxford
Noci G (1995) ldquoAccounting and non-accounting measures of quality-based performances insmall firmsrdquo International Journal of Operations amp Production Management Vol 15 No 7
Rarick CA (1996) ldquoAncient Chinese advice for modern business strategistsrdquo SAM AdvancedManagement Journal (1984) Vol 61 No 1
Slocum JW Jr and McGill M (1994) ldquoThe new learning strategy anytime anythinganywhererdquo Organizational Dynamics Vol 23 No 2 pp 33-47
Valentin EK (2001) ldquoSWOT analysis from a resource-based viewrdquo Journal of Marketingpp 52-69
Vroman HW (1997) ldquoReviews the book Sun Tzu and the Art of Businessrdquo Academy ofManagement Executive Vol 11 No 1 p 129
Weihrich H (1982) ldquoThe TOWS matrix ndash a tool for situational analysisrdquo Journal of Long RangePlanning Vol 15 No 2
Wing RL (1988) The Art of Strategy The Leading Modern Translation of Sun Tzursquos ClassicDoubleday New York NY
Further reading
Koo LC (1997) ldquoImproving quality service through balanced scorecardrdquo The 2nd InternationalConference on Quality and Reliability Transactions of Nanjing University of Aeronauticsand Astronautics China (TNUAA) Vol 15 No 1 pp 147-53
Kotler P (1999) ldquoBoards should tune in to corporate marketing programsrdquo Directorship Vol 25No 7 pp 12-16
BSQ strategicformulationframework
543
Likert scale The score of each success probability and attractiveness column is theaverage of the participantsrsquo rating
The importance-ranking (or priority) of Table I is operationally defined as theproduct of success probability and attractiveness In order to simplify the strategicformulation at this stage opportunities are rank-sorted in descending order and thoseof less importance are excluded The participants have agreed to eliminate those salientfactors with a probability ranking below the importance score of 42
Likewise the calculations of probability of occurrence and seriousness of threats areshown in Table II on the basis of the participantsrsquo perceptions similar to Table I Thosethreat rankings with less priority the boxes are excluded in Table II
The second step environmental analysis of internal factorsExternal factors opportunities and threats shown in Tables I and II are thoseuncontrollable factors while internal factors strengths and weaknesses are to acertain extent controllable and changeable within the control of the organization
Kotlerrsquos checklist for performing strengthsweaknesses analysis provides an effectivepreliminary identification of core performance measures (Kotler 2000 p 78) Organizationsusing this checklist should review the original measures and make necessary amendmentsif needed After minor modifications to meet HKQMArsquos needs the perceived importance ofeach measure in descending order is listed (Table III) The descriptions in Table III are inline with BSC perspectives eg financial customer internal process and learning
In addition to QFDrsquos strategic prioritization six sigma a rigorous and disciplinedmanagerial practice also emphasizes that identifying the critical to quality (CTQ) takesprecedence over all quality-management processes When applying the concept of CTQ
OpportunitiesSuccess
probability AttractivenessImportance-
ranking
O1 Lack of recognized certifications in HK 67 80 54O2 The demands of quality service 64 79 51O3 (Quality Award Index (QAI) 66 70 46O4 Lack of operational standards for SMEs 69 64 44O5 The cooperation between China HK and Macau 61 69 42O6 SME grants 44 71 32O7 Popularity of the Internet 47 63 30O8 Government recommendations for high-tech 31 43 13
Table IImportance-ranking of
opportunities
ThreatsProbability
of occurrence SeriousnessImportance-
ranking
T1AIndividual financial deterioration 77 79 61T2AEconomic recession 77 79 61T3ARetrenchments of corporate members 76 79 59T4ALess support from local government 57 60 34T5ACompetitions 54 46 25T6AHigh-tech 39 41 16
Table IIImportance-ranking of
threats
BSQ strategicformulationframework
537
to the service industries HKQMA has to exclude less important factors the boxes sothat HKQMA can focus on those really ldquoimportantrdquo internal factors There might bedangers in excluding if HKQMA was a newly born association Nevertheless HKQMAhas been established for more than 20 years and it has kept records of all thesestrategic workshops longitudinally Reviewing these records can minimize the risk ofexcluding In addition HKQMA is navigated by a team of experienced practitionersand academics It is fair to assume that the Exco is unlikely to exclude significantfactors from the strategic formulation framework
ldquoPerformance gaprdquo is operationally defined as the difference between importancescore and performance score The higher the performance gap the higher the need forHKQMA to improve in that particular aspect This is shown in Table IV
To classify the internal factors into strengths and weaknesses as per SWOT thosefactors scoring lower than 68 were agreed by the HKQMA Exco members asweaknesses The results are shown in Table V
The third step completing the development of the SWOT matrixThe third step is to combine high priority importance ranking of opportunities withinternal factors based on BSCrsquos four perspectives to develop the SWOT matrix inwhich a set of strategies is identified as per Table VI After completing thedevelopment of the matrix it is always meaningful to compare the latest SWOT matrixwith the previous one so as to trace the longitudinal trend of HKQMA In this aspectHKQMA has adopted SWOT analysis to develop its strategies over the past few years
Performing strengthsweaknesses analysis Importance score Performance score Performance gap
Income (financial) 94 A ANumber of membership (financial) 90 A ACustomer retentionAcustomerA 88 A AVisionary capable leadershipAlearningA 83 A ACustomer satisfactionAcustomerA 81 A AService quality AcustomerA 81 A ACompany reputationAcustomerA 76 A AFlexible or responsiveAlearningA 71 A AGeographical coverageAcustomerA 65 A AVision (learning) 65 A AFinancial stabilityAfinancialA 64 A AEntrepreneurial orientation AlearningA 64 A AProduct quality AcustomerA 64 A ASales force effectiveness AcustomerA 59 A AInnovation effectiveness AcustomerA 59 A APromotion effectivenessAcustomerA 56 A ACash flowAfinancialA 55 A AAbility to produce on timeAprocessA 54 A ATechnical manufacturing skillAprocessA 50 A ADistribution effectiveness AcustomerA 49 A APricing effectiveness AcustomerA 48 A AMarket share AcustomerA 41 A AFacilities AprocessA 41 A ACapacity AprocessA 36 A AEconomics of scale AprocessA 25 A A
Table IIIInternal (strengths andweaknesses) analysis
MAJ194
538
The fourth step building the house of qualityBased on the data collected from the previous steps the elements are accommodated inthe house of quality of QFD shown in Figure 1 QFD was used to developsystematically subjective cause-and-effect relationships among the BSC financialperspective In other words financial stability income and number of members are theldquoWhatsrdquo on the horizontal portion while geographical coverage organizationreputation service quality and the like are the ldquoHowsrdquo on the vertical portion Thebottom of the figure provides more detailed explanations of the ldquoHowsrdquo
In this case the circular spots shown on the roof of the house are the correlationsamong ldquoHowsrdquo Having the attitudinal ratings on causal relationship in numericalvalue in the middle of the house HKQMA can prioritize the actual implementations
The final step strategic prioritizationIn Figure 2 the higher score has the higher importance for the HKQMA The boldarrows represent the scores of 10 the highest causal linkage as perceived by theHKQMA Exco members
Performing strengthsweaknesses analysis Importance score Performance score Performance gap
Income (financial) 94 63 31Number of membership (financial) 90 43 47Customer retentionAcustomerA 88 40 48Visionary capable leadershipAlearningA 83 69 14Customer satisfactionAcustomerA 81 56 25Service quality AcustomerA 81 63 18Company reputationAcustomerA 76 70 06Flexible or responsiveAlearningA 71 60 11Geographical coverageAcustomerA 65 71 206Vision (learning) 65 64 01Financial stabilityAfinancialA 64 78 214Entrepreneurial orientation AlearningA 64 68 204Product quality AcustomerA 64 70 206
Table IVVariation of importancendash performance analysis
Internal measures Importance score Performance score Performance gap
StrengthsS1 Financial stabilityAfinancialA 64 78 214S2 Geographical coverageAcustomerA 65 71 206S3 Company reputationAcustomerA 76 70 06S4 Product quality AcustomerA 64 70 206S5 Visionary capable leadershipAlearningA 83 69 14S6 Entrepreneurial orientation AlearningA 64 68 204Weaknesses A A AW1 Vision (learning) 65 64 01W2 Income (financial) 94 63 31W3 Service quality AcustomerA 81 63 18W4 Flexible or responsiveAlearningA 71 60 11W5 Customer satisfactionAcustomerA 81 56 25W6 Number of membership (financial) 90 43 47W7 Customer retentionAcustomerA 88 40 48
Table VPerformance gap
BSQ strategicformulationframework
539
HK
QM
AS
WO
Tan
aly
sis
2002
-200
3S
tren
gths
Wea
knes
ses
S1
Fin
anci
alst
abil
ityA
fin
anci
alA
W1
Vis
ion
(lea
rnin
g)
S2
Geo
gra
ph
ical
cov
erag
eAcu
stom
erA
W2
Inco
me
(fin
anci
al)
S3
Com
pan
yre
pu
tati
onA
cust
omerA
W3
Ser
vic
eq
ual
ityA
cust
omerA
S4
Pro
du
ctq
ual
ityA
cust
omerA
W4
Fle
xib
leor
resp
onsi
veA
lear
nin
gA
S5
Vis
ion
ary
ca
pab
lele
ader
shipA
lear
nin
gA
W5
Cu
stom
ersa
tisf
acti
onA
cust
omerA
S6
En
trep
ren
euri
alor
ien
tati
onA
lear
nin
gA
W6
Nu
mb
erof
mem
ber
ship
(fin
anci
al)
W7
Cu
stom
erre
ten
tionA
cust
omerA
Opp
ortu
nit
ies
Maxi
Maxi
Min
iM
axi
O1
Lac
kof
reco
gn
ized
cert
ifica
tion
sS
OO
1O4S
1-S
6O
rgan
ize
loca
lp
rofe
ssio
nal
exam
WO
W2O
1A
pp
lyIS
Oce
rtifi
cati
onfo
rH
KQ
MA
O2
Th
ed
eman
ds
ofq
ual
ity
serv
ice
O2O
4S1-
S6
Reg
ula
tese
rvic
ein
dex
W3W
5W6W
7O2
En
han
cese
rvic
eto
mem
ber
O3
Qu
alit
yA
war
dIn
dex
(QA
I)O
4O3S
1-S
6P
rov
ide
pro
fess
ion
alaw
ard
sch
eme
O4
Lac
kof
oper
atio
nal
stan
dar
ds
for
SM
Es
O4S
1-S
6E
xp
and
serv
ice
toth
eg
reat
erC
hin
are
gio
nO
2S1-
S6
Ad
voc
ate
QC
Cto
sch
ools
inH
KO
5T
he
coop
erat
ion
bet
wee
nC
hin
aH
Kan
dM
acau
Min
iM
ini
Thre
ats
T1
Ind
ivid
ual
fin
anci
ald
eter
iora
tion
Maxi
Min
iS
TS
3S5S
6T1-
T3
En
han
ceco
nsu
ltan
cyse
rvic
eW
TW
1W2W
5W6T
1-T
3E
nh
ance
life
-lon
gle
arn
ing
serv
ice
tom
emb
erp
oten
tial
mem
ber
T2
Eco
nom
icre
cess
ion
T3
Ret
ren
chm
ents
ofco
rpor
ate
mem
ber
s
Table VIHKQMA SWOT matrixfor the year 2002-2003
MAJ194
540
Figure 3 shows how each strategy is compared to one another on a pair-wise basis Asa result the top strategies are (a) local qualification in quality (g) enhance membershipservice (i) life long learning for members and so forth in descending order
After the participants had formulated the holistic strategic plan for HKQMA at thetop level the Exco then initiated a more detail action plan and assigned its members totake action accordingly Another similar framework can be formulated beginning withSWOT analysis to further develop the specific strategy at an operational level
ConclusionTheoretically Ko and Lee (2000) using 13 ldquoHowsrdquo of STAW into SFF are impressiveNevertheless it is complicated for the average Western practitioner to master this
Figure 2A strategy into action
Figure 3Pair-wise comparison of
strategies
BSQ strategicformulationframework
541
ancient strategy which was originally applied to warfare When preparing a SFF thenecessity of using STAW is in doubt The authors have delineated a similar strategicformulation framework without STAW ldquoHowsrdquo developed in this case are largelybased on Kotlerrsquos checklist for performing internal (strengths and weaknesses)analysis Having a well-structured framework with using familiar managerialterminology such as market share customer satisfaction and product quality thechecklist provides practitioners with an effective preliminary identification of coreperformance measures at an early stage
Managerial implicationsBSQ framework is a powerful management tool Compared with Ko and Leersquos model itis easier for participants to develop their own BSQ frameworks However it still takestime for the average participant to digest these quantitative processes In such a case itis recommended to invite someone knowledgeable about the quality tools to sit in thestrategic formulation meetings
This strategic formulation framework is developed on the basis of perceivedimportance and performance This is because ldquorubbish in ndash rubbish outrdquo amisinterpretation of the environmental external and internal factors by theparticipants may derail an organization from the right track Remedial actions suchas leading the meeting by an experienced moderator lecturing the participants aboutthe methodology asking the participants to prepare for the meetings in advanceencouraging the involvement of the participants making an interactive discussion andexhausting more environmental factors for selection can minimize the derailment
HKQMA a small non-profit-making association is a kind of unitarist organizationwhere there is no conflict of interests among the members However in the pluralistenterprises strategic prioritization is sometimes subjected to the aforesaid conflict Acertain group of participants may dominate the enterprisersquos directions against ldquothevoice of the customerrdquo
Using traditional focus groups is an effective strategy to produce data and insightsNevertheless with facial expressions and body language a small group of memberscan dominate the ways of translating strategy into action It may be the case that thosewho desire to please the interested party involved may second the proposal for nothingmore than a political reason If not properly managed a well-structured managerialapproach can be distorted into a political tool that tells ldquotrue liesrdquo in a convincingformat Thus the moderator has to judge if a secret ballot or any other appropriateform of voting is needed
References
Akao Y (1990) Quality Function Deployment Integrating Customer Requirement intoProduction Design Productivity Press Cambridge MA
Brown JB and McDonnell B (1995) ldquoThe balanced scorecard short-term guest or long-termresidentrdquo International Journal of Contemporary Hospitality Management Vol 7 No 2
Chang YN (1976) ldquoEarly Chinese management thoughtrdquo California Management ReviewVol XIX No 2
Chen M (1994) ldquoSun Tzursquos strategic thinking and contemporary businessrdquo Business HorizonsVol 37 No 2 00076813
MAJ194
542
Gadd KW (1995) ldquoBusiness self-assessmentrdquo Business Process Re-engineering and ManagementJournal Vol 1 No 3
Griffith S (1982) Sun Tzu The Art of War Oxford University Press London
Hepworth P (1998) ldquoWeighting it up ndash a literature review for the balanced scorecardrdquo Journal ofManagement Development Vol 17 No 8
Hill T and Westbrook R (1997) ldquoSWOT analysis itrsquos time for a product recallrdquo Long RangePlanning Vol 30 pp 46-52
Kaplan RS and Norton DP (1996) The Balanced Scorecard Translating Strategy into ActionHarvard Business School Press Boston MA
Ko ASO and Lee SF (2000) ldquoImplementing the strategic formulation framework for thebanking industry of Hong Kongrdquo Managerial Auditing Journal Vol 15 No 9 pp 469-77
Koo LC (1998) ldquoBuilding balanced scorecard on the house of qualityrdquo The 1st IndustrialEngineering and Management (IEM) Symposium Transformational Strategy towards the21st Century Hong Kong 20-21 November
Kotler P (2000) Marketing Management Analysis Planning Implementation and ControlMillennium ed International Series in Marketing Prentice-Hall Englewood Cliffs NJ
McNeilly MR (1996) Sun Tzu and the Art of Business Oxford University Press Oxford
Noci G (1995) ldquoAccounting and non-accounting measures of quality-based performances insmall firmsrdquo International Journal of Operations amp Production Management Vol 15 No 7
Rarick CA (1996) ldquoAncient Chinese advice for modern business strategistsrdquo SAM AdvancedManagement Journal (1984) Vol 61 No 1
Slocum JW Jr and McGill M (1994) ldquoThe new learning strategy anytime anythinganywhererdquo Organizational Dynamics Vol 23 No 2 pp 33-47
Valentin EK (2001) ldquoSWOT analysis from a resource-based viewrdquo Journal of Marketingpp 52-69
Vroman HW (1997) ldquoReviews the book Sun Tzu and the Art of Businessrdquo Academy ofManagement Executive Vol 11 No 1 p 129
Weihrich H (1982) ldquoThe TOWS matrix ndash a tool for situational analysisrdquo Journal of Long RangePlanning Vol 15 No 2
Wing RL (1988) The Art of Strategy The Leading Modern Translation of Sun Tzursquos ClassicDoubleday New York NY
Further reading
Koo LC (1997) ldquoImproving quality service through balanced scorecardrdquo The 2nd InternationalConference on Quality and Reliability Transactions of Nanjing University of Aeronauticsand Astronautics China (TNUAA) Vol 15 No 1 pp 147-53
Kotler P (1999) ldquoBoards should tune in to corporate marketing programsrdquo Directorship Vol 25No 7 pp 12-16
BSQ strategicformulationframework
543
to the service industries HKQMA has to exclude less important factors the boxes sothat HKQMA can focus on those really ldquoimportantrdquo internal factors There might bedangers in excluding if HKQMA was a newly born association Nevertheless HKQMAhas been established for more than 20 years and it has kept records of all thesestrategic workshops longitudinally Reviewing these records can minimize the risk ofexcluding In addition HKQMA is navigated by a team of experienced practitionersand academics It is fair to assume that the Exco is unlikely to exclude significantfactors from the strategic formulation framework
ldquoPerformance gaprdquo is operationally defined as the difference between importancescore and performance score The higher the performance gap the higher the need forHKQMA to improve in that particular aspect This is shown in Table IV
To classify the internal factors into strengths and weaknesses as per SWOT thosefactors scoring lower than 68 were agreed by the HKQMA Exco members asweaknesses The results are shown in Table V
The third step completing the development of the SWOT matrixThe third step is to combine high priority importance ranking of opportunities withinternal factors based on BSCrsquos four perspectives to develop the SWOT matrix inwhich a set of strategies is identified as per Table VI After completing thedevelopment of the matrix it is always meaningful to compare the latest SWOT matrixwith the previous one so as to trace the longitudinal trend of HKQMA In this aspectHKQMA has adopted SWOT analysis to develop its strategies over the past few years
Performing strengthsweaknesses analysis Importance score Performance score Performance gap
Income (financial) 94 A ANumber of membership (financial) 90 A ACustomer retentionAcustomerA 88 A AVisionary capable leadershipAlearningA 83 A ACustomer satisfactionAcustomerA 81 A AService quality AcustomerA 81 A ACompany reputationAcustomerA 76 A AFlexible or responsiveAlearningA 71 A AGeographical coverageAcustomerA 65 A AVision (learning) 65 A AFinancial stabilityAfinancialA 64 A AEntrepreneurial orientation AlearningA 64 A AProduct quality AcustomerA 64 A ASales force effectiveness AcustomerA 59 A AInnovation effectiveness AcustomerA 59 A APromotion effectivenessAcustomerA 56 A ACash flowAfinancialA 55 A AAbility to produce on timeAprocessA 54 A ATechnical manufacturing skillAprocessA 50 A ADistribution effectiveness AcustomerA 49 A APricing effectiveness AcustomerA 48 A AMarket share AcustomerA 41 A AFacilities AprocessA 41 A ACapacity AprocessA 36 A AEconomics of scale AprocessA 25 A A
Table IIIInternal (strengths andweaknesses) analysis
MAJ194
538
The fourth step building the house of qualityBased on the data collected from the previous steps the elements are accommodated inthe house of quality of QFD shown in Figure 1 QFD was used to developsystematically subjective cause-and-effect relationships among the BSC financialperspective In other words financial stability income and number of members are theldquoWhatsrdquo on the horizontal portion while geographical coverage organizationreputation service quality and the like are the ldquoHowsrdquo on the vertical portion Thebottom of the figure provides more detailed explanations of the ldquoHowsrdquo
In this case the circular spots shown on the roof of the house are the correlationsamong ldquoHowsrdquo Having the attitudinal ratings on causal relationship in numericalvalue in the middle of the house HKQMA can prioritize the actual implementations
The final step strategic prioritizationIn Figure 2 the higher score has the higher importance for the HKQMA The boldarrows represent the scores of 10 the highest causal linkage as perceived by theHKQMA Exco members
Performing strengthsweaknesses analysis Importance score Performance score Performance gap
Income (financial) 94 63 31Number of membership (financial) 90 43 47Customer retentionAcustomerA 88 40 48Visionary capable leadershipAlearningA 83 69 14Customer satisfactionAcustomerA 81 56 25Service quality AcustomerA 81 63 18Company reputationAcustomerA 76 70 06Flexible or responsiveAlearningA 71 60 11Geographical coverageAcustomerA 65 71 206Vision (learning) 65 64 01Financial stabilityAfinancialA 64 78 214Entrepreneurial orientation AlearningA 64 68 204Product quality AcustomerA 64 70 206
Table IVVariation of importancendash performance analysis
Internal measures Importance score Performance score Performance gap
StrengthsS1 Financial stabilityAfinancialA 64 78 214S2 Geographical coverageAcustomerA 65 71 206S3 Company reputationAcustomerA 76 70 06S4 Product quality AcustomerA 64 70 206S5 Visionary capable leadershipAlearningA 83 69 14S6 Entrepreneurial orientation AlearningA 64 68 204Weaknesses A A AW1 Vision (learning) 65 64 01W2 Income (financial) 94 63 31W3 Service quality AcustomerA 81 63 18W4 Flexible or responsiveAlearningA 71 60 11W5 Customer satisfactionAcustomerA 81 56 25W6 Number of membership (financial) 90 43 47W7 Customer retentionAcustomerA 88 40 48
Table VPerformance gap
BSQ strategicformulationframework
539
HK
QM
AS
WO
Tan
aly
sis
2002
-200
3S
tren
gths
Wea
knes
ses
S1
Fin
anci
alst
abil
ityA
fin
anci
alA
W1
Vis
ion
(lea
rnin
g)
S2
Geo
gra
ph
ical
cov
erag
eAcu
stom
erA
W2
Inco
me
(fin
anci
al)
S3
Com
pan
yre
pu
tati
onA
cust
omerA
W3
Ser
vic
eq
ual
ityA
cust
omerA
S4
Pro
du
ctq
ual
ityA
cust
omerA
W4
Fle
xib
leor
resp
onsi
veA
lear
nin
gA
S5
Vis
ion
ary
ca
pab
lele
ader
shipA
lear
nin
gA
W5
Cu
stom
ersa
tisf
acti
onA
cust
omerA
S6
En
trep
ren
euri
alor
ien
tati
onA
lear
nin
gA
W6
Nu
mb
erof
mem
ber
ship
(fin
anci
al)
W7
Cu
stom
erre
ten
tionA
cust
omerA
Opp
ortu
nit
ies
Maxi
Maxi
Min
iM
axi
O1
Lac
kof
reco
gn
ized
cert
ifica
tion
sS
OO
1O4S
1-S
6O
rgan
ize
loca
lp
rofe
ssio
nal
exam
WO
W2O
1A
pp
lyIS
Oce
rtifi
cati
onfo
rH
KQ
MA
O2
Th
ed
eman
ds
ofq
ual
ity
serv
ice
O2O
4S1-
S6
Reg
ula
tese
rvic
ein
dex
W3W
5W6W
7O2
En
han
cese
rvic
eto
mem
ber
O3
Qu
alit
yA
war
dIn
dex
(QA
I)O
4O3S
1-S
6P
rov
ide
pro
fess
ion
alaw
ard
sch
eme
O4
Lac
kof
oper
atio
nal
stan
dar
ds
for
SM
Es
O4S
1-S
6E
xp
and
serv
ice
toth
eg
reat
erC
hin
are
gio
nO
2S1-
S6
Ad
voc
ate
QC
Cto
sch
ools
inH
KO
5T
he
coop
erat
ion
bet
wee
nC
hin
aH
Kan
dM
acau
Min
iM
ini
Thre
ats
T1
Ind
ivid
ual
fin
anci
ald
eter
iora
tion
Maxi
Min
iS
TS
3S5S
6T1-
T3
En
han
ceco
nsu
ltan
cyse
rvic
eW
TW
1W2W
5W6T
1-T
3E
nh
ance
life
-lon
gle
arn
ing
serv
ice
tom
emb
erp
oten
tial
mem
ber
T2
Eco
nom
icre
cess
ion
T3
Ret
ren
chm
ents
ofco
rpor
ate
mem
ber
s
Table VIHKQMA SWOT matrixfor the year 2002-2003
MAJ194
540
Figure 3 shows how each strategy is compared to one another on a pair-wise basis Asa result the top strategies are (a) local qualification in quality (g) enhance membershipservice (i) life long learning for members and so forth in descending order
After the participants had formulated the holistic strategic plan for HKQMA at thetop level the Exco then initiated a more detail action plan and assigned its members totake action accordingly Another similar framework can be formulated beginning withSWOT analysis to further develop the specific strategy at an operational level
ConclusionTheoretically Ko and Lee (2000) using 13 ldquoHowsrdquo of STAW into SFF are impressiveNevertheless it is complicated for the average Western practitioner to master this
Figure 2A strategy into action
Figure 3Pair-wise comparison of
strategies
BSQ strategicformulationframework
541
ancient strategy which was originally applied to warfare When preparing a SFF thenecessity of using STAW is in doubt The authors have delineated a similar strategicformulation framework without STAW ldquoHowsrdquo developed in this case are largelybased on Kotlerrsquos checklist for performing internal (strengths and weaknesses)analysis Having a well-structured framework with using familiar managerialterminology such as market share customer satisfaction and product quality thechecklist provides practitioners with an effective preliminary identification of coreperformance measures at an early stage
Managerial implicationsBSQ framework is a powerful management tool Compared with Ko and Leersquos model itis easier for participants to develop their own BSQ frameworks However it still takestime for the average participant to digest these quantitative processes In such a case itis recommended to invite someone knowledgeable about the quality tools to sit in thestrategic formulation meetings
This strategic formulation framework is developed on the basis of perceivedimportance and performance This is because ldquorubbish in ndash rubbish outrdquo amisinterpretation of the environmental external and internal factors by theparticipants may derail an organization from the right track Remedial actions suchas leading the meeting by an experienced moderator lecturing the participants aboutthe methodology asking the participants to prepare for the meetings in advanceencouraging the involvement of the participants making an interactive discussion andexhausting more environmental factors for selection can minimize the derailment
HKQMA a small non-profit-making association is a kind of unitarist organizationwhere there is no conflict of interests among the members However in the pluralistenterprises strategic prioritization is sometimes subjected to the aforesaid conflict Acertain group of participants may dominate the enterprisersquos directions against ldquothevoice of the customerrdquo
Using traditional focus groups is an effective strategy to produce data and insightsNevertheless with facial expressions and body language a small group of memberscan dominate the ways of translating strategy into action It may be the case that thosewho desire to please the interested party involved may second the proposal for nothingmore than a political reason If not properly managed a well-structured managerialapproach can be distorted into a political tool that tells ldquotrue liesrdquo in a convincingformat Thus the moderator has to judge if a secret ballot or any other appropriateform of voting is needed
References
Akao Y (1990) Quality Function Deployment Integrating Customer Requirement intoProduction Design Productivity Press Cambridge MA
Brown JB and McDonnell B (1995) ldquoThe balanced scorecard short-term guest or long-termresidentrdquo International Journal of Contemporary Hospitality Management Vol 7 No 2
Chang YN (1976) ldquoEarly Chinese management thoughtrdquo California Management ReviewVol XIX No 2
Chen M (1994) ldquoSun Tzursquos strategic thinking and contemporary businessrdquo Business HorizonsVol 37 No 2 00076813
MAJ194
542
Gadd KW (1995) ldquoBusiness self-assessmentrdquo Business Process Re-engineering and ManagementJournal Vol 1 No 3
Griffith S (1982) Sun Tzu The Art of War Oxford University Press London
Hepworth P (1998) ldquoWeighting it up ndash a literature review for the balanced scorecardrdquo Journal ofManagement Development Vol 17 No 8
Hill T and Westbrook R (1997) ldquoSWOT analysis itrsquos time for a product recallrdquo Long RangePlanning Vol 30 pp 46-52
Kaplan RS and Norton DP (1996) The Balanced Scorecard Translating Strategy into ActionHarvard Business School Press Boston MA
Ko ASO and Lee SF (2000) ldquoImplementing the strategic formulation framework for thebanking industry of Hong Kongrdquo Managerial Auditing Journal Vol 15 No 9 pp 469-77
Koo LC (1998) ldquoBuilding balanced scorecard on the house of qualityrdquo The 1st IndustrialEngineering and Management (IEM) Symposium Transformational Strategy towards the21st Century Hong Kong 20-21 November
Kotler P (2000) Marketing Management Analysis Planning Implementation and ControlMillennium ed International Series in Marketing Prentice-Hall Englewood Cliffs NJ
McNeilly MR (1996) Sun Tzu and the Art of Business Oxford University Press Oxford
Noci G (1995) ldquoAccounting and non-accounting measures of quality-based performances insmall firmsrdquo International Journal of Operations amp Production Management Vol 15 No 7
Rarick CA (1996) ldquoAncient Chinese advice for modern business strategistsrdquo SAM AdvancedManagement Journal (1984) Vol 61 No 1
Slocum JW Jr and McGill M (1994) ldquoThe new learning strategy anytime anythinganywhererdquo Organizational Dynamics Vol 23 No 2 pp 33-47
Valentin EK (2001) ldquoSWOT analysis from a resource-based viewrdquo Journal of Marketingpp 52-69
Vroman HW (1997) ldquoReviews the book Sun Tzu and the Art of Businessrdquo Academy ofManagement Executive Vol 11 No 1 p 129
Weihrich H (1982) ldquoThe TOWS matrix ndash a tool for situational analysisrdquo Journal of Long RangePlanning Vol 15 No 2
Wing RL (1988) The Art of Strategy The Leading Modern Translation of Sun Tzursquos ClassicDoubleday New York NY
Further reading
Koo LC (1997) ldquoImproving quality service through balanced scorecardrdquo The 2nd InternationalConference on Quality and Reliability Transactions of Nanjing University of Aeronauticsand Astronautics China (TNUAA) Vol 15 No 1 pp 147-53
Kotler P (1999) ldquoBoards should tune in to corporate marketing programsrdquo Directorship Vol 25No 7 pp 12-16
BSQ strategicformulationframework
543
The fourth step building the house of qualityBased on the data collected from the previous steps the elements are accommodated inthe house of quality of QFD shown in Figure 1 QFD was used to developsystematically subjective cause-and-effect relationships among the BSC financialperspective In other words financial stability income and number of members are theldquoWhatsrdquo on the horizontal portion while geographical coverage organizationreputation service quality and the like are the ldquoHowsrdquo on the vertical portion Thebottom of the figure provides more detailed explanations of the ldquoHowsrdquo
In this case the circular spots shown on the roof of the house are the correlationsamong ldquoHowsrdquo Having the attitudinal ratings on causal relationship in numericalvalue in the middle of the house HKQMA can prioritize the actual implementations
The final step strategic prioritizationIn Figure 2 the higher score has the higher importance for the HKQMA The boldarrows represent the scores of 10 the highest causal linkage as perceived by theHKQMA Exco members
Performing strengthsweaknesses analysis Importance score Performance score Performance gap
Income (financial) 94 63 31Number of membership (financial) 90 43 47Customer retentionAcustomerA 88 40 48Visionary capable leadershipAlearningA 83 69 14Customer satisfactionAcustomerA 81 56 25Service quality AcustomerA 81 63 18Company reputationAcustomerA 76 70 06Flexible or responsiveAlearningA 71 60 11Geographical coverageAcustomerA 65 71 206Vision (learning) 65 64 01Financial stabilityAfinancialA 64 78 214Entrepreneurial orientation AlearningA 64 68 204Product quality AcustomerA 64 70 206
Table IVVariation of importancendash performance analysis
Internal measures Importance score Performance score Performance gap
StrengthsS1 Financial stabilityAfinancialA 64 78 214S2 Geographical coverageAcustomerA 65 71 206S3 Company reputationAcustomerA 76 70 06S4 Product quality AcustomerA 64 70 206S5 Visionary capable leadershipAlearningA 83 69 14S6 Entrepreneurial orientation AlearningA 64 68 204Weaknesses A A AW1 Vision (learning) 65 64 01W2 Income (financial) 94 63 31W3 Service quality AcustomerA 81 63 18W4 Flexible or responsiveAlearningA 71 60 11W5 Customer satisfactionAcustomerA 81 56 25W6 Number of membership (financial) 90 43 47W7 Customer retentionAcustomerA 88 40 48
Table VPerformance gap
BSQ strategicformulationframework
539
HK
QM
AS
WO
Tan
aly
sis
2002
-200
3S
tren
gths
Wea
knes
ses
S1
Fin
anci
alst
abil
ityA
fin
anci
alA
W1
Vis
ion
(lea
rnin
g)
S2
Geo
gra
ph
ical
cov
erag
eAcu
stom
erA
W2
Inco
me
(fin
anci
al)
S3
Com
pan
yre
pu
tati
onA
cust
omerA
W3
Ser
vic
eq
ual
ityA
cust
omerA
S4
Pro
du
ctq
ual
ityA
cust
omerA
W4
Fle
xib
leor
resp
onsi
veA
lear
nin
gA
S5
Vis
ion
ary
ca
pab
lele
ader
shipA
lear
nin
gA
W5
Cu
stom
ersa
tisf
acti
onA
cust
omerA
S6
En
trep
ren
euri
alor
ien
tati
onA
lear
nin
gA
W6
Nu
mb
erof
mem
ber
ship
(fin
anci
al)
W7
Cu
stom
erre
ten
tionA
cust
omerA
Opp
ortu
nit
ies
Maxi
Maxi
Min
iM
axi
O1
Lac
kof
reco
gn
ized
cert
ifica
tion
sS
OO
1O4S
1-S
6O
rgan
ize
loca
lp
rofe
ssio
nal
exam
WO
W2O
1A
pp
lyIS
Oce
rtifi
cati
onfo
rH
KQ
MA
O2
Th
ed
eman
ds
ofq
ual
ity
serv
ice
O2O
4S1-
S6
Reg
ula
tese
rvic
ein
dex
W3W
5W6W
7O2
En
han
cese
rvic
eto
mem
ber
O3
Qu
alit
yA
war
dIn
dex
(QA
I)O
4O3S
1-S
6P
rov
ide
pro
fess
ion
alaw
ard
sch
eme
O4
Lac
kof
oper
atio
nal
stan
dar
ds
for
SM
Es
O4S
1-S
6E
xp
and
serv
ice
toth
eg
reat
erC
hin
are
gio
nO
2S1-
S6
Ad
voc
ate
QC
Cto
sch
ools
inH
KO
5T
he
coop
erat
ion
bet
wee
nC
hin
aH
Kan
dM
acau
Min
iM
ini
Thre
ats
T1
Ind
ivid
ual
fin
anci
ald
eter
iora
tion
Maxi
Min
iS
TS
3S5S
6T1-
T3
En
han
ceco
nsu
ltan
cyse
rvic
eW
TW
1W2W
5W6T
1-T
3E
nh
ance
life
-lon
gle
arn
ing
serv
ice
tom
emb
erp
oten
tial
mem
ber
T2
Eco
nom
icre
cess
ion
T3
Ret
ren
chm
ents
ofco
rpor
ate
mem
ber
s
Table VIHKQMA SWOT matrixfor the year 2002-2003
MAJ194
540
Figure 3 shows how each strategy is compared to one another on a pair-wise basis Asa result the top strategies are (a) local qualification in quality (g) enhance membershipservice (i) life long learning for members and so forth in descending order
After the participants had formulated the holistic strategic plan for HKQMA at thetop level the Exco then initiated a more detail action plan and assigned its members totake action accordingly Another similar framework can be formulated beginning withSWOT analysis to further develop the specific strategy at an operational level
ConclusionTheoretically Ko and Lee (2000) using 13 ldquoHowsrdquo of STAW into SFF are impressiveNevertheless it is complicated for the average Western practitioner to master this
Figure 2A strategy into action
Figure 3Pair-wise comparison of
strategies
BSQ strategicformulationframework
541
ancient strategy which was originally applied to warfare When preparing a SFF thenecessity of using STAW is in doubt The authors have delineated a similar strategicformulation framework without STAW ldquoHowsrdquo developed in this case are largelybased on Kotlerrsquos checklist for performing internal (strengths and weaknesses)analysis Having a well-structured framework with using familiar managerialterminology such as market share customer satisfaction and product quality thechecklist provides practitioners with an effective preliminary identification of coreperformance measures at an early stage
Managerial implicationsBSQ framework is a powerful management tool Compared with Ko and Leersquos model itis easier for participants to develop their own BSQ frameworks However it still takestime for the average participant to digest these quantitative processes In such a case itis recommended to invite someone knowledgeable about the quality tools to sit in thestrategic formulation meetings
This strategic formulation framework is developed on the basis of perceivedimportance and performance This is because ldquorubbish in ndash rubbish outrdquo amisinterpretation of the environmental external and internal factors by theparticipants may derail an organization from the right track Remedial actions suchas leading the meeting by an experienced moderator lecturing the participants aboutthe methodology asking the participants to prepare for the meetings in advanceencouraging the involvement of the participants making an interactive discussion andexhausting more environmental factors for selection can minimize the derailment
HKQMA a small non-profit-making association is a kind of unitarist organizationwhere there is no conflict of interests among the members However in the pluralistenterprises strategic prioritization is sometimes subjected to the aforesaid conflict Acertain group of participants may dominate the enterprisersquos directions against ldquothevoice of the customerrdquo
Using traditional focus groups is an effective strategy to produce data and insightsNevertheless with facial expressions and body language a small group of memberscan dominate the ways of translating strategy into action It may be the case that thosewho desire to please the interested party involved may second the proposal for nothingmore than a political reason If not properly managed a well-structured managerialapproach can be distorted into a political tool that tells ldquotrue liesrdquo in a convincingformat Thus the moderator has to judge if a secret ballot or any other appropriateform of voting is needed
References
Akao Y (1990) Quality Function Deployment Integrating Customer Requirement intoProduction Design Productivity Press Cambridge MA
Brown JB and McDonnell B (1995) ldquoThe balanced scorecard short-term guest or long-termresidentrdquo International Journal of Contemporary Hospitality Management Vol 7 No 2
Chang YN (1976) ldquoEarly Chinese management thoughtrdquo California Management ReviewVol XIX No 2
Chen M (1994) ldquoSun Tzursquos strategic thinking and contemporary businessrdquo Business HorizonsVol 37 No 2 00076813
MAJ194
542
Gadd KW (1995) ldquoBusiness self-assessmentrdquo Business Process Re-engineering and ManagementJournal Vol 1 No 3
Griffith S (1982) Sun Tzu The Art of War Oxford University Press London
Hepworth P (1998) ldquoWeighting it up ndash a literature review for the balanced scorecardrdquo Journal ofManagement Development Vol 17 No 8
Hill T and Westbrook R (1997) ldquoSWOT analysis itrsquos time for a product recallrdquo Long RangePlanning Vol 30 pp 46-52
Kaplan RS and Norton DP (1996) The Balanced Scorecard Translating Strategy into ActionHarvard Business School Press Boston MA
Ko ASO and Lee SF (2000) ldquoImplementing the strategic formulation framework for thebanking industry of Hong Kongrdquo Managerial Auditing Journal Vol 15 No 9 pp 469-77
Koo LC (1998) ldquoBuilding balanced scorecard on the house of qualityrdquo The 1st IndustrialEngineering and Management (IEM) Symposium Transformational Strategy towards the21st Century Hong Kong 20-21 November
Kotler P (2000) Marketing Management Analysis Planning Implementation and ControlMillennium ed International Series in Marketing Prentice-Hall Englewood Cliffs NJ
McNeilly MR (1996) Sun Tzu and the Art of Business Oxford University Press Oxford
Noci G (1995) ldquoAccounting and non-accounting measures of quality-based performances insmall firmsrdquo International Journal of Operations amp Production Management Vol 15 No 7
Rarick CA (1996) ldquoAncient Chinese advice for modern business strategistsrdquo SAM AdvancedManagement Journal (1984) Vol 61 No 1
Slocum JW Jr and McGill M (1994) ldquoThe new learning strategy anytime anythinganywhererdquo Organizational Dynamics Vol 23 No 2 pp 33-47
Valentin EK (2001) ldquoSWOT analysis from a resource-based viewrdquo Journal of Marketingpp 52-69
Vroman HW (1997) ldquoReviews the book Sun Tzu and the Art of Businessrdquo Academy ofManagement Executive Vol 11 No 1 p 129
Weihrich H (1982) ldquoThe TOWS matrix ndash a tool for situational analysisrdquo Journal of Long RangePlanning Vol 15 No 2
Wing RL (1988) The Art of Strategy The Leading Modern Translation of Sun Tzursquos ClassicDoubleday New York NY
Further reading
Koo LC (1997) ldquoImproving quality service through balanced scorecardrdquo The 2nd InternationalConference on Quality and Reliability Transactions of Nanjing University of Aeronauticsand Astronautics China (TNUAA) Vol 15 No 1 pp 147-53
Kotler P (1999) ldquoBoards should tune in to corporate marketing programsrdquo Directorship Vol 25No 7 pp 12-16
BSQ strategicformulationframework
543
HK
QM
AS
WO
Tan
aly
sis
2002
-200
3S
tren
gths
Wea
knes
ses
S1
Fin
anci
alst
abil
ityA
fin
anci
alA
W1
Vis
ion
(lea
rnin
g)
S2
Geo
gra
ph
ical
cov
erag
eAcu
stom
erA
W2
Inco
me
(fin
anci
al)
S3
Com
pan
yre
pu
tati
onA
cust
omerA
W3
Ser
vic
eq
ual
ityA
cust
omerA
S4
Pro
du
ctq
ual
ityA
cust
omerA
W4
Fle
xib
leor
resp
onsi
veA
lear
nin
gA
S5
Vis
ion
ary
ca
pab
lele
ader
shipA
lear
nin
gA
W5
Cu
stom
ersa
tisf
acti
onA
cust
omerA
S6
En
trep
ren
euri
alor
ien
tati
onA
lear
nin
gA
W6
Nu
mb
erof
mem
ber
ship
(fin
anci
al)
W7
Cu
stom
erre
ten
tionA
cust
omerA
Opp
ortu
nit
ies
Maxi
Maxi
Min
iM
axi
O1
Lac
kof
reco
gn
ized
cert
ifica
tion
sS
OO
1O4S
1-S
6O
rgan
ize
loca
lp
rofe
ssio
nal
exam
WO
W2O
1A
pp
lyIS
Oce
rtifi
cati
onfo
rH
KQ
MA
O2
Th
ed
eman
ds
ofq
ual
ity
serv
ice
O2O
4S1-
S6
Reg
ula
tese
rvic
ein
dex
W3W
5W6W
7O2
En
han
cese
rvic
eto
mem
ber
O3
Qu
alit
yA
war
dIn
dex
(QA
I)O
4O3S
1-S
6P
rov
ide
pro
fess
ion
alaw
ard
sch
eme
O4
Lac
kof
oper
atio
nal
stan
dar
ds
for
SM
Es
O4S
1-S
6E
xp
and
serv
ice
toth
eg
reat
erC
hin
are
gio
nO
2S1-
S6
Ad
voc
ate
QC
Cto
sch
ools
inH
KO
5T
he
coop
erat
ion
bet
wee
nC
hin
aH
Kan
dM
acau
Min
iM
ini
Thre
ats
T1
Ind
ivid
ual
fin
anci
ald
eter
iora
tion
Maxi
Min
iS
TS
3S5S
6T1-
T3
En
han
ceco
nsu
ltan
cyse
rvic
eW
TW
1W2W
5W6T
1-T
3E
nh
ance
life
-lon
gle
arn
ing
serv
ice
tom
emb
erp
oten
tial
mem
ber
T2
Eco
nom
icre
cess
ion
T3
Ret
ren
chm
ents
ofco
rpor
ate
mem
ber
s
Table VIHKQMA SWOT matrixfor the year 2002-2003
MAJ194
540
Figure 3 shows how each strategy is compared to one another on a pair-wise basis Asa result the top strategies are (a) local qualification in quality (g) enhance membershipservice (i) life long learning for members and so forth in descending order
After the participants had formulated the holistic strategic plan for HKQMA at thetop level the Exco then initiated a more detail action plan and assigned its members totake action accordingly Another similar framework can be formulated beginning withSWOT analysis to further develop the specific strategy at an operational level
ConclusionTheoretically Ko and Lee (2000) using 13 ldquoHowsrdquo of STAW into SFF are impressiveNevertheless it is complicated for the average Western practitioner to master this
Figure 2A strategy into action
Figure 3Pair-wise comparison of
strategies
BSQ strategicformulationframework
541
ancient strategy which was originally applied to warfare When preparing a SFF thenecessity of using STAW is in doubt The authors have delineated a similar strategicformulation framework without STAW ldquoHowsrdquo developed in this case are largelybased on Kotlerrsquos checklist for performing internal (strengths and weaknesses)analysis Having a well-structured framework with using familiar managerialterminology such as market share customer satisfaction and product quality thechecklist provides practitioners with an effective preliminary identification of coreperformance measures at an early stage
Managerial implicationsBSQ framework is a powerful management tool Compared with Ko and Leersquos model itis easier for participants to develop their own BSQ frameworks However it still takestime for the average participant to digest these quantitative processes In such a case itis recommended to invite someone knowledgeable about the quality tools to sit in thestrategic formulation meetings
This strategic formulation framework is developed on the basis of perceivedimportance and performance This is because ldquorubbish in ndash rubbish outrdquo amisinterpretation of the environmental external and internal factors by theparticipants may derail an organization from the right track Remedial actions suchas leading the meeting by an experienced moderator lecturing the participants aboutthe methodology asking the participants to prepare for the meetings in advanceencouraging the involvement of the participants making an interactive discussion andexhausting more environmental factors for selection can minimize the derailment
HKQMA a small non-profit-making association is a kind of unitarist organizationwhere there is no conflict of interests among the members However in the pluralistenterprises strategic prioritization is sometimes subjected to the aforesaid conflict Acertain group of participants may dominate the enterprisersquos directions against ldquothevoice of the customerrdquo
Using traditional focus groups is an effective strategy to produce data and insightsNevertheless with facial expressions and body language a small group of memberscan dominate the ways of translating strategy into action It may be the case that thosewho desire to please the interested party involved may second the proposal for nothingmore than a political reason If not properly managed a well-structured managerialapproach can be distorted into a political tool that tells ldquotrue liesrdquo in a convincingformat Thus the moderator has to judge if a secret ballot or any other appropriateform of voting is needed
References
Akao Y (1990) Quality Function Deployment Integrating Customer Requirement intoProduction Design Productivity Press Cambridge MA
Brown JB and McDonnell B (1995) ldquoThe balanced scorecard short-term guest or long-termresidentrdquo International Journal of Contemporary Hospitality Management Vol 7 No 2
Chang YN (1976) ldquoEarly Chinese management thoughtrdquo California Management ReviewVol XIX No 2
Chen M (1994) ldquoSun Tzursquos strategic thinking and contemporary businessrdquo Business HorizonsVol 37 No 2 00076813
MAJ194
542
Gadd KW (1995) ldquoBusiness self-assessmentrdquo Business Process Re-engineering and ManagementJournal Vol 1 No 3
Griffith S (1982) Sun Tzu The Art of War Oxford University Press London
Hepworth P (1998) ldquoWeighting it up ndash a literature review for the balanced scorecardrdquo Journal ofManagement Development Vol 17 No 8
Hill T and Westbrook R (1997) ldquoSWOT analysis itrsquos time for a product recallrdquo Long RangePlanning Vol 30 pp 46-52
Kaplan RS and Norton DP (1996) The Balanced Scorecard Translating Strategy into ActionHarvard Business School Press Boston MA
Ko ASO and Lee SF (2000) ldquoImplementing the strategic formulation framework for thebanking industry of Hong Kongrdquo Managerial Auditing Journal Vol 15 No 9 pp 469-77
Koo LC (1998) ldquoBuilding balanced scorecard on the house of qualityrdquo The 1st IndustrialEngineering and Management (IEM) Symposium Transformational Strategy towards the21st Century Hong Kong 20-21 November
Kotler P (2000) Marketing Management Analysis Planning Implementation and ControlMillennium ed International Series in Marketing Prentice-Hall Englewood Cliffs NJ
McNeilly MR (1996) Sun Tzu and the Art of Business Oxford University Press Oxford
Noci G (1995) ldquoAccounting and non-accounting measures of quality-based performances insmall firmsrdquo International Journal of Operations amp Production Management Vol 15 No 7
Rarick CA (1996) ldquoAncient Chinese advice for modern business strategistsrdquo SAM AdvancedManagement Journal (1984) Vol 61 No 1
Slocum JW Jr and McGill M (1994) ldquoThe new learning strategy anytime anythinganywhererdquo Organizational Dynamics Vol 23 No 2 pp 33-47
Valentin EK (2001) ldquoSWOT analysis from a resource-based viewrdquo Journal of Marketingpp 52-69
Vroman HW (1997) ldquoReviews the book Sun Tzu and the Art of Businessrdquo Academy ofManagement Executive Vol 11 No 1 p 129
Weihrich H (1982) ldquoThe TOWS matrix ndash a tool for situational analysisrdquo Journal of Long RangePlanning Vol 15 No 2
Wing RL (1988) The Art of Strategy The Leading Modern Translation of Sun Tzursquos ClassicDoubleday New York NY
Further reading
Koo LC (1997) ldquoImproving quality service through balanced scorecardrdquo The 2nd InternationalConference on Quality and Reliability Transactions of Nanjing University of Aeronauticsand Astronautics China (TNUAA) Vol 15 No 1 pp 147-53
Kotler P (1999) ldquoBoards should tune in to corporate marketing programsrdquo Directorship Vol 25No 7 pp 12-16
BSQ strategicformulationframework
543
Figure 3 shows how each strategy is compared to one another on a pair-wise basis Asa result the top strategies are (a) local qualification in quality (g) enhance membershipservice (i) life long learning for members and so forth in descending order
After the participants had formulated the holistic strategic plan for HKQMA at thetop level the Exco then initiated a more detail action plan and assigned its members totake action accordingly Another similar framework can be formulated beginning withSWOT analysis to further develop the specific strategy at an operational level
ConclusionTheoretically Ko and Lee (2000) using 13 ldquoHowsrdquo of STAW into SFF are impressiveNevertheless it is complicated for the average Western practitioner to master this
Figure 2A strategy into action
Figure 3Pair-wise comparison of
strategies
BSQ strategicformulationframework
541
ancient strategy which was originally applied to warfare When preparing a SFF thenecessity of using STAW is in doubt The authors have delineated a similar strategicformulation framework without STAW ldquoHowsrdquo developed in this case are largelybased on Kotlerrsquos checklist for performing internal (strengths and weaknesses)analysis Having a well-structured framework with using familiar managerialterminology such as market share customer satisfaction and product quality thechecklist provides practitioners with an effective preliminary identification of coreperformance measures at an early stage
Managerial implicationsBSQ framework is a powerful management tool Compared with Ko and Leersquos model itis easier for participants to develop their own BSQ frameworks However it still takestime for the average participant to digest these quantitative processes In such a case itis recommended to invite someone knowledgeable about the quality tools to sit in thestrategic formulation meetings
This strategic formulation framework is developed on the basis of perceivedimportance and performance This is because ldquorubbish in ndash rubbish outrdquo amisinterpretation of the environmental external and internal factors by theparticipants may derail an organization from the right track Remedial actions suchas leading the meeting by an experienced moderator lecturing the participants aboutthe methodology asking the participants to prepare for the meetings in advanceencouraging the involvement of the participants making an interactive discussion andexhausting more environmental factors for selection can minimize the derailment
HKQMA a small non-profit-making association is a kind of unitarist organizationwhere there is no conflict of interests among the members However in the pluralistenterprises strategic prioritization is sometimes subjected to the aforesaid conflict Acertain group of participants may dominate the enterprisersquos directions against ldquothevoice of the customerrdquo
Using traditional focus groups is an effective strategy to produce data and insightsNevertheless with facial expressions and body language a small group of memberscan dominate the ways of translating strategy into action It may be the case that thosewho desire to please the interested party involved may second the proposal for nothingmore than a political reason If not properly managed a well-structured managerialapproach can be distorted into a political tool that tells ldquotrue liesrdquo in a convincingformat Thus the moderator has to judge if a secret ballot or any other appropriateform of voting is needed
References
Akao Y (1990) Quality Function Deployment Integrating Customer Requirement intoProduction Design Productivity Press Cambridge MA
Brown JB and McDonnell B (1995) ldquoThe balanced scorecard short-term guest or long-termresidentrdquo International Journal of Contemporary Hospitality Management Vol 7 No 2
Chang YN (1976) ldquoEarly Chinese management thoughtrdquo California Management ReviewVol XIX No 2
Chen M (1994) ldquoSun Tzursquos strategic thinking and contemporary businessrdquo Business HorizonsVol 37 No 2 00076813
MAJ194
542
Gadd KW (1995) ldquoBusiness self-assessmentrdquo Business Process Re-engineering and ManagementJournal Vol 1 No 3
Griffith S (1982) Sun Tzu The Art of War Oxford University Press London
Hepworth P (1998) ldquoWeighting it up ndash a literature review for the balanced scorecardrdquo Journal ofManagement Development Vol 17 No 8
Hill T and Westbrook R (1997) ldquoSWOT analysis itrsquos time for a product recallrdquo Long RangePlanning Vol 30 pp 46-52
Kaplan RS and Norton DP (1996) The Balanced Scorecard Translating Strategy into ActionHarvard Business School Press Boston MA
Ko ASO and Lee SF (2000) ldquoImplementing the strategic formulation framework for thebanking industry of Hong Kongrdquo Managerial Auditing Journal Vol 15 No 9 pp 469-77
Koo LC (1998) ldquoBuilding balanced scorecard on the house of qualityrdquo The 1st IndustrialEngineering and Management (IEM) Symposium Transformational Strategy towards the21st Century Hong Kong 20-21 November
Kotler P (2000) Marketing Management Analysis Planning Implementation and ControlMillennium ed International Series in Marketing Prentice-Hall Englewood Cliffs NJ
McNeilly MR (1996) Sun Tzu and the Art of Business Oxford University Press Oxford
Noci G (1995) ldquoAccounting and non-accounting measures of quality-based performances insmall firmsrdquo International Journal of Operations amp Production Management Vol 15 No 7
Rarick CA (1996) ldquoAncient Chinese advice for modern business strategistsrdquo SAM AdvancedManagement Journal (1984) Vol 61 No 1
Slocum JW Jr and McGill M (1994) ldquoThe new learning strategy anytime anythinganywhererdquo Organizational Dynamics Vol 23 No 2 pp 33-47
Valentin EK (2001) ldquoSWOT analysis from a resource-based viewrdquo Journal of Marketingpp 52-69
Vroman HW (1997) ldquoReviews the book Sun Tzu and the Art of Businessrdquo Academy ofManagement Executive Vol 11 No 1 p 129
Weihrich H (1982) ldquoThe TOWS matrix ndash a tool for situational analysisrdquo Journal of Long RangePlanning Vol 15 No 2
Wing RL (1988) The Art of Strategy The Leading Modern Translation of Sun Tzursquos ClassicDoubleday New York NY
Further reading
Koo LC (1997) ldquoImproving quality service through balanced scorecardrdquo The 2nd InternationalConference on Quality and Reliability Transactions of Nanjing University of Aeronauticsand Astronautics China (TNUAA) Vol 15 No 1 pp 147-53
Kotler P (1999) ldquoBoards should tune in to corporate marketing programsrdquo Directorship Vol 25No 7 pp 12-16
BSQ strategicformulationframework
543
ancient strategy which was originally applied to warfare When preparing a SFF thenecessity of using STAW is in doubt The authors have delineated a similar strategicformulation framework without STAW ldquoHowsrdquo developed in this case are largelybased on Kotlerrsquos checklist for performing internal (strengths and weaknesses)analysis Having a well-structured framework with using familiar managerialterminology such as market share customer satisfaction and product quality thechecklist provides practitioners with an effective preliminary identification of coreperformance measures at an early stage
Managerial implicationsBSQ framework is a powerful management tool Compared with Ko and Leersquos model itis easier for participants to develop their own BSQ frameworks However it still takestime for the average participant to digest these quantitative processes In such a case itis recommended to invite someone knowledgeable about the quality tools to sit in thestrategic formulation meetings
This strategic formulation framework is developed on the basis of perceivedimportance and performance This is because ldquorubbish in ndash rubbish outrdquo amisinterpretation of the environmental external and internal factors by theparticipants may derail an organization from the right track Remedial actions suchas leading the meeting by an experienced moderator lecturing the participants aboutthe methodology asking the participants to prepare for the meetings in advanceencouraging the involvement of the participants making an interactive discussion andexhausting more environmental factors for selection can minimize the derailment
HKQMA a small non-profit-making association is a kind of unitarist organizationwhere there is no conflict of interests among the members However in the pluralistenterprises strategic prioritization is sometimes subjected to the aforesaid conflict Acertain group of participants may dominate the enterprisersquos directions against ldquothevoice of the customerrdquo
Using traditional focus groups is an effective strategy to produce data and insightsNevertheless with facial expressions and body language a small group of memberscan dominate the ways of translating strategy into action It may be the case that thosewho desire to please the interested party involved may second the proposal for nothingmore than a political reason If not properly managed a well-structured managerialapproach can be distorted into a political tool that tells ldquotrue liesrdquo in a convincingformat Thus the moderator has to judge if a secret ballot or any other appropriateform of voting is needed
References
Akao Y (1990) Quality Function Deployment Integrating Customer Requirement intoProduction Design Productivity Press Cambridge MA
Brown JB and McDonnell B (1995) ldquoThe balanced scorecard short-term guest or long-termresidentrdquo International Journal of Contemporary Hospitality Management Vol 7 No 2
Chang YN (1976) ldquoEarly Chinese management thoughtrdquo California Management ReviewVol XIX No 2
Chen M (1994) ldquoSun Tzursquos strategic thinking and contemporary businessrdquo Business HorizonsVol 37 No 2 00076813
MAJ194
542
Gadd KW (1995) ldquoBusiness self-assessmentrdquo Business Process Re-engineering and ManagementJournal Vol 1 No 3
Griffith S (1982) Sun Tzu The Art of War Oxford University Press London
Hepworth P (1998) ldquoWeighting it up ndash a literature review for the balanced scorecardrdquo Journal ofManagement Development Vol 17 No 8
Hill T and Westbrook R (1997) ldquoSWOT analysis itrsquos time for a product recallrdquo Long RangePlanning Vol 30 pp 46-52
Kaplan RS and Norton DP (1996) The Balanced Scorecard Translating Strategy into ActionHarvard Business School Press Boston MA
Ko ASO and Lee SF (2000) ldquoImplementing the strategic formulation framework for thebanking industry of Hong Kongrdquo Managerial Auditing Journal Vol 15 No 9 pp 469-77
Koo LC (1998) ldquoBuilding balanced scorecard on the house of qualityrdquo The 1st IndustrialEngineering and Management (IEM) Symposium Transformational Strategy towards the21st Century Hong Kong 20-21 November
Kotler P (2000) Marketing Management Analysis Planning Implementation and ControlMillennium ed International Series in Marketing Prentice-Hall Englewood Cliffs NJ
McNeilly MR (1996) Sun Tzu and the Art of Business Oxford University Press Oxford
Noci G (1995) ldquoAccounting and non-accounting measures of quality-based performances insmall firmsrdquo International Journal of Operations amp Production Management Vol 15 No 7
Rarick CA (1996) ldquoAncient Chinese advice for modern business strategistsrdquo SAM AdvancedManagement Journal (1984) Vol 61 No 1
Slocum JW Jr and McGill M (1994) ldquoThe new learning strategy anytime anythinganywhererdquo Organizational Dynamics Vol 23 No 2 pp 33-47
Valentin EK (2001) ldquoSWOT analysis from a resource-based viewrdquo Journal of Marketingpp 52-69
Vroman HW (1997) ldquoReviews the book Sun Tzu and the Art of Businessrdquo Academy ofManagement Executive Vol 11 No 1 p 129
Weihrich H (1982) ldquoThe TOWS matrix ndash a tool for situational analysisrdquo Journal of Long RangePlanning Vol 15 No 2
Wing RL (1988) The Art of Strategy The Leading Modern Translation of Sun Tzursquos ClassicDoubleday New York NY
Further reading
Koo LC (1997) ldquoImproving quality service through balanced scorecardrdquo The 2nd InternationalConference on Quality and Reliability Transactions of Nanjing University of Aeronauticsand Astronautics China (TNUAA) Vol 15 No 1 pp 147-53
Kotler P (1999) ldquoBoards should tune in to corporate marketing programsrdquo Directorship Vol 25No 7 pp 12-16
BSQ strategicformulationframework
543
Gadd KW (1995) ldquoBusiness self-assessmentrdquo Business Process Re-engineering and ManagementJournal Vol 1 No 3
Griffith S (1982) Sun Tzu The Art of War Oxford University Press London
Hepworth P (1998) ldquoWeighting it up ndash a literature review for the balanced scorecardrdquo Journal ofManagement Development Vol 17 No 8
Hill T and Westbrook R (1997) ldquoSWOT analysis itrsquos time for a product recallrdquo Long RangePlanning Vol 30 pp 46-52
Kaplan RS and Norton DP (1996) The Balanced Scorecard Translating Strategy into ActionHarvard Business School Press Boston MA
Ko ASO and Lee SF (2000) ldquoImplementing the strategic formulation framework for thebanking industry of Hong Kongrdquo Managerial Auditing Journal Vol 15 No 9 pp 469-77
Koo LC (1998) ldquoBuilding balanced scorecard on the house of qualityrdquo The 1st IndustrialEngineering and Management (IEM) Symposium Transformational Strategy towards the21st Century Hong Kong 20-21 November
Kotler P (2000) Marketing Management Analysis Planning Implementation and ControlMillennium ed International Series in Marketing Prentice-Hall Englewood Cliffs NJ
McNeilly MR (1996) Sun Tzu and the Art of Business Oxford University Press Oxford
Noci G (1995) ldquoAccounting and non-accounting measures of quality-based performances insmall firmsrdquo International Journal of Operations amp Production Management Vol 15 No 7
Rarick CA (1996) ldquoAncient Chinese advice for modern business strategistsrdquo SAM AdvancedManagement Journal (1984) Vol 61 No 1
Slocum JW Jr and McGill M (1994) ldquoThe new learning strategy anytime anythinganywhererdquo Organizational Dynamics Vol 23 No 2 pp 33-47
Valentin EK (2001) ldquoSWOT analysis from a resource-based viewrdquo Journal of Marketingpp 52-69
Vroman HW (1997) ldquoReviews the book Sun Tzu and the Art of Businessrdquo Academy ofManagement Executive Vol 11 No 1 p 129
Weihrich H (1982) ldquoThe TOWS matrix ndash a tool for situational analysisrdquo Journal of Long RangePlanning Vol 15 No 2
Wing RL (1988) The Art of Strategy The Leading Modern Translation of Sun Tzursquos ClassicDoubleday New York NY
Further reading
Koo LC (1997) ldquoImproving quality service through balanced scorecardrdquo The 2nd InternationalConference on Quality and Reliability Transactions of Nanjing University of Aeronauticsand Astronautics China (TNUAA) Vol 15 No 1 pp 147-53
Kotler P (1999) ldquoBoards should tune in to corporate marketing programsrdquo Directorship Vol 25No 7 pp 12-16
BSQ strategicformulationframework
543
Top Related