Description
Based on the fact that the quality, both in theory and practice, has been promoted as the most important dimension of competitiveness, improvement of quality stands out as the primary task of enterprises in Serbia
1. INTRODUCTION
Global competition and more demanding
customers have been forcing enterprises to
continuously improve the quality of
operations and business, generally. For this
reason quality is indispensable issue of
theory and practice at the beginning of XXI
century. In this sense, the Crosby’s saying
"the quality is free", still has not lose its
SIGNIFICANCE OF BUSINESS QUALITY MANAGEMENT FOR
INCREASING COMPETITIVENESS OF SERBIAN ECONOMY
Marija Andjelkovi? Peši?
*
, Vesna Jankovi? Mili? and Jelena Stankovi?
University of Niš, Faculty of Economics, Serbia
Trg Kralja Aleksandra Ujedinitelja 11, 18000 Niš, Serbia
(Received 17 August 2011; accepted 24 December 2011)
Abstract
This paper points out some challenges Serbian economy is facing at the beginning of the XXI
century. Based on the fact that the quality, both in theory and practice, has been promoted as the most
important dimension of competitiveness, improvement of quality stands out as the primary task of
enterprises in Serbia. In the last part of the paper there are some results of the research, conducted
with purpose of identifying opportunities for improving the quality of business in Serbian economy.
The authors have been trying to establish the connection between Serbia’s competitiveness rating
according to research results of confidential institutions (World Bank’s Report on Business, Global
Competitiveness Report 2010-2011) and presence of quality management concepts and tools in
business practice in Serbia. The intention of the authors is to present the research results and to
indicate the possibilities for improving competitiveness of Serbian economy, primarily through
implementation of modern management concepts and models. The one that is suggested in this paper
is the Six Sigma concept.
Keywords: competitiveness, quality, statistic analysis, Six Sigma.
*
Corresponding author: [email protected]
Ser bi an
J our nal
of
Management
Serbian Journal of Management 7 (1) (2012) 149 - 170
www.sjm06.com
Letter to Editor
significance. However, due to the modern
terms, it should be modified. It actually
means that quality improvement should be
promoted through the saying "quality is a
cost effective", because quality improvement
assumes certain investments and
commitment, but the benefits and savings,
which it provides, outweigh the investment.
Quality can be interpreted and explained
in different ways. However, the fact is that
the starting point for the definition of this
term is collection of data about customers’
demands, since they are crucial arbiters of
quality assessment. If we have in mind the
results of numerous studies, according to
which quality means perfection, consistency,
elimination of defects, and/or reduction of
losses due to the elimination of defects,
delivery speed, compatibility with standards,
reliability, etc., it can be said that quality
should be viewed in a broader sense, or not
only as the quality of products and processes,
but also as a quality business (Soin, 1992;
Welch 1996; Kaplan & Norton, 2001; Brue,
2002).
Significance of quality, as the basis and
the mean for providing competitive
advantage, is pointed out by customers, since
they prefer to express their needs and
demand from the enterprises to keep their
promises. In order to help enterprises to meet
customers’ demands in the efficient way,
authors have been suggesting certain models
and tools. The fact is that there is no one and
only solution for all enterprises, neither is
one model or tool sufficient for providing
quality improvement and gaining
competitiveness advantage due to that.
However, managers have to use a various
tools and to make their own combination of
different models in order to adapt the
conclusions of many authors to the specific
context in which they operate.
2. QUALITY MANAGEMENT
APPROACHES AND CONTRIBUTORS
– THEORETICAL BACKGROUND
Quality has been present during the
human development history, and its
significance has not decreased yet. On the
contrary, the last few decades can be
considered as decades of quality and the
science that is concerned with quality issues
is accepted as quality management science.
Pioneers in the development of the quality
management science are Edwards Deming,
Joseph Juran and Armand Feigenbaum.
Although their first papers were published
even in the first half of the twentieth century,
they remained almost unknown for nearly
two decades. The work of the mentioned
authors was recognized in the late 1940’s and
since then has been embraced by Japanese
businessmen. In 1947 Deming held the first
lecture on quality control. The other famous
scientist concerning quality management
science development was Juran. He
emphasized the importance of vertical
management and technical methods. Except
Deming and Juran, Feigenbaum has gained
recognition due to his work in Japan. He is
known for developing the approach of Total
Quality Control – TQC (Feigenbaum, 1986).
The most famous among Japanese experts
in the field of quality are Kaoru Ishikawa,
Genichi Taguchi and Shigeo Shingo. They
are responsible for the further development
of Total Quality Control. Ishikawa argued
that the implementation of quality control
means the development, design, manufacture
and service of quality products, which is the
most economical, most useful way, and
which always meets the needs of customers.
Rounded Taguchi’s philosophy refers
primarily to the manufacturing process
management. Shingo has developed a
150 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
method known as Poka-Yoke (error
proofing) for such a production management
in which, theoretically, errors and
unnecessary costs cannot occur.
When Japanese enterprises, through their
business results, have confirmed the
importance of quality management, quality
started to occupies the attention of American
theoreticians and practitioners. According to
Simon (Simon, 1991), business modelling
system involves the definition of inputs,
processes and outputs with feedback. In the
context of quality management, this
principle implies connection of process
management and quality assurance processes
(Foster, 2004). During the 1970s and 1980s,
the greatest Philip Crosby and Claus Moller,
through their research and analysis of
research results, gave a great contribution to
development of science of quality. Philip
Crosby pointed out that quality is free
because the costs of prevention will always
be lower than the costs of identification and
elimination of errors and mistakes that have
already been made (Crosby, 1979). Claus
Moller in his work has pointed out the
quality of care for people. The foundation of
learning of Claus Moller is the focus on the
human factor. In this sense, he has
formulated 12 principles (Laguna &
Marklund, 2005) that may be useful in
improving quality.
A significant contribution to development
of science of quality in the last decade of
twentieth century and at the beginning of the
twentieth first century have given Bill Smith,
Mikel Harry, Jack Welch, Peter Pande,
George Michael. Bill Smith is known as
founder of the Six Sigma concept at
Motorola. He was inspired by many
innovations and achievements in the field of
quality production, all occurred continuously
since the Great Depression in the 1930s.
Smith (Smith, 2001) pointed out that the
enterprise, in order to eliminate variation and
defects, has to establish a special
infrastructure of people, expert in quality
management. Mikel Harry (Phelps,
Parayitam & Olson, 2007) studied the
variations, while Jack Welch is known for
advocating transformational leadership.
According to him, "the organization's ability
to continuously acquire new knowledge and
it’s rapidly translation it into action are the
basic conditions for providing competitive
advantage" (Welch, 1996).
To be able to "deal with" quality,
especially in order to promote the same,
managers must understand what quality
means for the enterprise and its stakeholders,
as well as what is its role in creating an
effective organization. Although quality can
be correlated with the efficiency, it primarily
affects the effectiveness. In this sense, we
can say that quality is the "right thing" which
has its own market or the customers that are
willing to pay for it. Increasing awareness of
the importance of quality (Oakland, 2007)
and defining quality from the perspective of
each stakeholder is the primary problem
concerned with the quality.
If the quality management is observed in
its evolutionary way, one can identify four
approaches to quality management:
- Approach based on the product - the
quality will be provided if the characteristics
or attributes of products have been
identified; according to those characteristics
and attributes, presence of quality is
ascertain; this approach assumes quality
control,
- Approach based on manufacturing - the
quality will be provided if the product has all
characteristics predicted by the engineers
specifications; this approach corresponds to
total quality control,
151 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
- Approach based on the product users -
the quality will be provided if it fully meets
the demands of customers or if it is "suitable
for use"; this approach assumes total quality
management,
- Approach based on values - the quality
will be provided if the product meets
customers’ needs, and also has an acceptable
price, or if the variability of the process in
which the product is produced is controlled
at an acceptable level of costs; this approach
corresponds to Six Sigma quality
management.
3. FACTORS AND IDEXES OF
COMPETITIVENESS
In the new economic era business is
extremely dynamic and, therefore, one of the
key challenges for enterprises is to transform
the organizational design into a modern,
more flexible. Functional silos and the
principle of “command and control” can
significantly interfere with implementation
of the strategy, so managers have to renounce
those (Kaplan & Norton, 2001). On the other
side, with process approach to management
and employee empowerment, managers
create conditions for understanding strategy
and talking about strategy, and also for its
successful implementation.
Accordingly, changes in way of
formulation and implementation of strategy
must be accompanied by changes in the way
of measuring the success of its
implementation. Not only financial criteria
should be considered, but also other criteria
should be noticed in long term and from all
aspects (Salehi & Behzad, 2011). This means
that, besides financial, managers need to use
non-financial measures and criteria, which
indicate the extent to which the enterprise
uses the intangible resources (Hanson &
Erikson, 2002). Non-financial measures
supplement the financial, as indicators of
future financial picture of the enterprise.
Concerning both, financial and non-
financial criteria and depending on what is
the basis of competitive advantage, few
dimensions of competitiveness can be
identified, and they are (Chase, et al., 2004):
- Costs (''make it cheap''),
- Quality (''make it good''),
- Delivery speed (''make it fast''),
- Delivery reliability (''deliver when
promised''),
- Volume flexibility (''change its volume''),
- Innovativeness (''change it'').
These factors of competitiveness can be
classified into three dimensions: costs (in
terms of product price), quality and
reliability (in terms of product functionality
and continuous fulfilment of customers’
requirements), time and flexibility (in the
sense that the product is always available to
customers and that is always delivered on
time, or that new products and processes are
introduced in time). According to Skinner
(Rao et al., 1996), the dimensions of
competitiveness are in the trade-off
relationship, because it is not possible to
simultaneously achieve high quality, low
costs and on-time delivery of products.
Guided by the above, in 1969 Skinner
formulated the trade-off model.
Unreasonableness of this model has been
confirmed many times in the practice of
successful enterprises. The best indication of
the nonexistence of model based on the
“trade-off” of the dimensions of
competitiveness are the Japanese enterprises
that have managed to provide the
improvement in all three dimensions. Their
production is characterized by low costs,
152 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
high quality, fast production and delivery.
A World Bank survey, presented in the
Report on Business 2009
(www.doingbusiness.org), shows
deterioration in business environment in the
Serbian economy and 94 position in the
ranking of 181 countries (91 position in
2007). Compared to the countries in the
region, Serbia had better position than
Croatia (106) and Bosnia and Herzegovina
(119), and poorer than Hungary (41),
Romania (47), Slovenia (54), Macedonia
(71), Albania (86) and Montenegro (90).
Comparative analysis of the dynamics and
pace of improving performance indicators
with countries in the region points to a
slowdown of economic reforms in Serbia
with all negative consequences on the overall
competitiveness of the economy
(www.doingbusiness.org).
In addition to the World Bank survey, it
may be useful to realize the measures of
competitiveness from the World Economic
Forum. World Economic Forum measures
competitiveness of national economies
through Business Competitiveness Index
(BCI,) Growth Competitiveness Index
(GCI), and Global Competitiveness Index.
(Önsel at al, 2008) Business
Competitiveness Index has been introduced
by Michael Porter, in 2000. This index is
based on microeconomics variables. Growth
Competitiveness Index was introduced by
Sachs and McArthur, in 2001. It is based on
a stronger academic fountain in economic
growth theory. The index that was last
mentioned is the latest compared to the
previous two. Therefore it is logic to expect
that it includes both macroeconomic and
microeconomic factors of competitiveness.
Since 2005, the World Economic Forum
has based its competitiveness analysis on the
Global Competitiveness Index, because it is
highly comprehensive index for measuring
national competitiveness, since it captures
the microeconomic and macroeconomic
foundations of national competitiveness.
This index is calculated as a weighted
average of many different components, each
measuring a different aspect of
competitiveness and ranking on the scale
from 1 to 7. These components are grouped
into 12 pillars of economic competitiveness:
institutions, infrastructure, macroeconomic
environment, health and primary education,
higher education and training, goods market
efficiency, labour market efficiency,
financial market development, technological
153 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Figure 1. Scores of 12 pillars for Serbia
Source: WEF_GlobalCompetitivenessReport_2010-11 and 2009-2010
readiness, market size, business
sophistication and innovation (Schwab,
2010). Scores for these components for
Serbia are given in the Figure 1.
According to Global Competitiveness
Report 2010-2011, at the top of the list is
Switzerland with GCI score of 5.63. Results
for Serbia and countries from the region are
given in the following table (table 1).
The average GCI score for these countries
is 4.08, which is quite low compared to the
country which is leader, but still not so bad.
However, as it is the case with any kind of
average, in this case also, GCI values for
countries as individuals express positive, on
one side, and negative variations, on the
other side. Variations for a certain countries
are presented in Figure 2.
The Report on Business from 2009
(World Bank survey) and Global
Competitiveness Report for 2010-2011,
unfortunately show the same fact –
deterioration of Serbian economy
competitiveness. According to the Report on
Business (www.doingbusiness.org), Serbia’s
ranking has decrease from 91 (in 2007) to 94
(in 2009). Also, according to Global
Competitiveness Report 2010-2011, Serbia’s
154 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Table 1. Rank and GCI value
2010-2011 2009-2010 Change
Country
Rank Score Rank Score Rank Score
Serbia 96 3.84 93 3.77 -3 + 1.8%
Croatia 77 4.04 72 4.03 -5 +0.2%
Montenegro 49 4.36 62 4.16 +13 +4.8%
Bosnia and
Herzegovina
102 3.70 109 3.53 +7 +4.8%
Macedonia 79 4.02 84 3.95 +5 +1.7%
Albania 88 3.94 96 3.72 +8 +5.9%
Hungary 52 4.33 58 4.22 +6 +2.6%
Romania 67 4.16 64 4.11 -3 +1.2%
Slovenia 45 4.42 37 4.55 -8 -2.8%
Greece 83 3.99 71 4.04 -8 -1.2%
Bulgaria 71 4.13 76 4.02 +5 +2.7%
Source: WEF_GlobalCompetitivenessReport_2010-11 and 2009-2010
Figure 2. Individual variations from the average GCI in 2010-2011
Source: WEF_GlobalCompetitivenessReport_2010-11 and 2009-2010
competitiveness has decreased from 93 (in
2010) to 96 (in 2011) place. These facts must
be a warning for creators of Serbian
economic policy and the basis for
improvement of conditions for doing
business in Serbia.
4. QUALITY AS A FACTOR OF
COMPETITIVENESS AND BUSINESS
RESULTS
One of the conditions for successful
Serbia's EU accession and efficient
performance in the international market
certainly is higher level of competitiveness
of Serbian products. However, products of
Serbian enterprises are generally not
competitive, when it is about price, and
quality, as well. The competitiveness of
Serbian enterprises is mainly based on export
of cooperative services (outsourcing), with
the usage of imported technology (licensing,
joint ventures). Therefore, the model of
industrial growth for period 2011-2020
assumes (www.ntp.rs):
- Dynamical growth of investments,
- Export rate growth,
- Industrial employment growth.
One of the ways for achieving these goals
is to increase the level of production quality,
and the quality of business in general.
Namely, higher quality of realization of
activities and processes leads to reduction of
variability and defects, and to increase of
finished products’ quality while provides
savings and cost reductions. Also, the effort
for improvement of quality results in
increase in higher productivity, satisfaction
and loyalty of customers, competitive
advantage, market share growth and, finally,
leads to increase of financial results. The
impact of quality improvement, therefore,
can be viewed internally and externally.
Internally, high quality means higher
productivity, which, consequently, allows
lower prices and higher competitiveness,
market share and profits. On the other hand,
high quality, in terms of reducing of
variations and defects, and therefore
reducing of costs and increasing value
added, also provides a positive effect on
financial results (Soin, 1992). From an
external point of view, higher quality means
increased customer satisfaction, creating a
good reputation of the enterprise and
155 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Figure 3. Influence of quality improvement on financial result of an enterprise
increasing the number of loyal customers
(Figure 3).
Development of new manufacturing and
information technologies allows flexible and
diversified production directed towards
satisfaction of the sophisticated demands of
customers (Dedhia, 1995). In fact, today
customers are more informed and educated,
and, due to that, more and more demanding
when it comes to features, speed of delivery
and price of the products. For this reason,
product quality must be defined by
customers. The image of the enterprise has
an important role when customers make the
decision concerning choice of producer, and
one of the most important factor that
influence image of enterprises is tested and
certified quality of products.
In order to deliver quality to customers, it
must be required from the suppliers. This
implies the establishment of cooperative
relationships with suppliers and in some
cases the long-term partnership. In the new
economy, knowledge economy, the role of
employees who are not on managerial
positions has been changing. They are people
who can help managers to solve the
problems, and not “variable” costs.
Therefore in addition to cooperation with
customers and suppliers, it is necessary to
establish cooperation between employees in
order to ensure their commitment.
Despite the fact that economic reforms in
Serbia deemed to be "slowed", the
enterprises themselves must strive to ensure
the improvement of their operations and
business performances (Evans et al.,, 2004),
particularly in terms of quality and
productivity improvement. According to the
Republic Development Bureau, index of
productivity in industry decreased in 2009
compared to 2008 year (www.odrzivi-
razvoj.gov.rs). In order to check the extent to
which Serbian enterprises follow the trends
in business improvement, and if they are on
track to increase quality and productivity and
to contribute to the improvement of
competitive position of the Serbian
economy, empirical research was conducted.
This research shows "as-is" state of the
Serbian economy, according to which it is
possible to formulate recommendations for
transferring into "to-be" state, as desirable
state for Serbian economy.
5. METHODOLOGICAL
FRAMEWORK OF RESEARCH
Modern management theory suggests
many new or renewed concepts, models and
techniques, whose application can help
managers to provide or sustain
competitiveness of enterprises in the crisis
conditions. The key question that concerns
competitiveness in crisis conditions is if
managers are willing to accept these
concepts, models and techniques, concerning
that their application demands certain
abdication in terms of time and money. The
assumption of the research this paper is
based on is formulated as it follows: The
implementation and continual application of
quality management concepts, models and
techniques has positive influence on business
performances and competitiveness of
enterprise, and therefore on business results.
The research was composed in the following
way:
1. Questionnaire formulation,
2. Sampling (choosing the enterprises
that will form the sample),
3. Collection of data (through survey of
Serbian enterprises’ managers),
4. Analysis of collected data, graphical
156 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
and statistical presentation of the research
results, and finally,
5. Making conclusions and formulating
suggestions for managers of Serbian
enterprises with the purpose of diminishing
expected negative effects of economic crisis.
The questionnaire has two parts. The first
one has comprised the basic questions
concerning enterprise size, capital origin,
industry, as well as the amount of profit
(loss). When the collection of data has been
repeated this year, the first part of the
questionnaire was supplemented with few
more questions concerning the most used
business performance (including financial)
indicators and those indicators’ level
compared to the state in 2007 (in terms of
increase or decrease in percentages).
The second part has comprised questions
concerning the implementation of modern
management concepts, models, techniques,
and methods. The intention was to evaluate if
managers are familiar with the tools of
modern strategic and quality management.
The accent was on the Balanced Scorecard
and Performance Prism, precisely on
implementation of the principles and
philosophy that these tools promote.
Concerning quality management, the focus
was on Total Quality Management and other
modern versions (like Six Sigma). One of the
respondents’ taks was to evaluate the
influence of certain ways (through price,
quality, service or promotion) for providing
competitivness advantage to customers’
satisfaction. The second group of questions
was related to process capability measures,
including statistical process control (Mishra
& Dangayach, 2009). Finally, it quality is
observed as a characteristic of business, and
not only of product or service, the last
question referes to evaluation of factors
affecting business quality. The questionnaire
form used for this investigation is presented
in appendix 1.
The data collected during the survey were
crossbreed and combined by certain
statistical software. The graphical
presentation of results has provided clarity of
information and facilitated making
conclusions in the economic way. Based on
the information provided after data analysis,
authors have formulated conclusions. Those
conclusions show how close or far practice
in Serbian enterprise is from the modern
management theory or in what extent
modern concepts, models, methods and
techniques have been implemented so far.
Conclusions based on the research results
represent the basis for formulating
recommendations for managers in Serbian
enterprises with purpose to provide the best
possible performances in the crisis
conditions. The following subtitle shows the
results of analysis of certain questions,
which concern quality models and tools
implementation in enterprises in Serbia.
6. THE RESEARCH RESULTS ON
IMPLEMENTATION OF QUALITY
MODELS AND TOOLS IN SERBIAN
ECONOMY
The task of the research was to determine
whether the enterprises in Serbia are familiar
with modern concepts and models of
business management, particularly quality
management, and whether they have been
trying to convey positive experiences of
enterprises in developed countries. Another
task of the research was to evaluate the level
of quality presence in Serbian economy or, in
the other words, to determine which of the
mentioned approaches is represented in
157 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
enterprises in Serbia. These tasks were
carried out in order to point out the
possibilities for improving of the
competitiveness of the Serbian economy.
The survey was conducted in two stages:
during July and August 2009 year and during
May and June 2011 year. The first time the
sample was randomly selected from the
group of enterprises from the Republic of
Serbia, and it included 60 enterprises. These
enterprises were randomly selected due to
the hypothesis that quality and business
excellence is not something that Serbian
economy can proud of. Therefore the sample
was not limited to one or few branches of
industry, which means that the population
was Serbian economy, as a whole. In order to
increase the relevance of the research, the
choice of enterprises in the sample was done
by using stratification. All enterprises were
divided into three groups: small, medium
and large. The sample was constructed
proportionally to the number of employees in
these enterprises. In addition, the criterion
for stratification was the number of
employees, because the assumption was that
all employees must be involved in quality
improvement and business in general, and
that all employees are agents of change.
Repeated survey, conducetd during 2011,
was carried out on the same sample, to
ensure the relevance of the data and the
reality of making conclusions.
When it is about concepts primarily aimed
to improvement of production quality,
research results in 2009 showed the
following state:
- Just-In-Time (JIT) concept was
implemented in only 15% of the enterprises
in the sample,
- Total Quality Management (TQM) in
31.6%, while
- Six Sigma was present in only 3.3% of
the enterprises in the sample (Figure 4a).
Sertaintly, it should be noted that a
significant number of managers did not
actually understand the meaning of
mentioned concepts, and some of them, who
neglected their application, changed their
minds after the explanation of these
concepts’ essence. Therefore, it may be
concluded that in certain number of
enterprises mentioned concepts have not
been implemented formally, but rather just
some of their principles and ideas. According
to the survey repeated in 2011, the situation
has not changed significantly (Figure 4b)).
The only difference is slightly larger share of
TQM presence (35%).
158 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Figure 4. The presence of the quality management concepts
a) Research conducted in 2009. b) Research conducted in 2011.
a) b)
Although according to the representation
of the quality improvement concepts (JIT,
TQM, Six Sigma) could be concluded that
enterprises in Serbia do not attach sufficient
importance to quality, as the dimension of
competitive advantage, the answers related
to the impact of assessment of certain ways
of providing competitive advantage (price,
quality, service, promotion) on the
orientation of customers (in terms of
selection of products of specific enterprise)
lead to the opposite conclusion (question
number 2 in the questionnaire). Given that in
the research have been used a qualitative
attributes (how managers find out ways for
providing competitive advantage), for their
measurement rating scale was used. In this
specific case rating scale with five points
was applied, in order to express the influence
of ways for providing competitive advantage
to customers choice numerically (huge
impact - 5, a major impact - 4, moderate
impact - 3, low impact - 2, a negligible
impact - 1), as well as to provided more
detailed analysis. According to the survey in
2009, the highest average rating received the
quality (4.56), as determinant of
competitiveness (Table 2). Also, the standard
deviation for quality was the lowest (0.51),
which means that the opinions of managers
on impact of quality on improving the
competitiveness are similar, and that the
quality is considered the most influential for
customers’ choice. Also, great impact on
customers’ choice has service, while price
and promotion, as a means for providing
competitive advantage are found to be less
important for the customers from managers’
point of view. Research results from 2011
confirmed that the quality in the enterprises
in Serbia is considered the best way to
improve competitiveness, because again the
average score for quality was highest (4.38).
These results indicate that managers of
enterprises in Serbia do realize the
importance of quality as a dimension of
competitiveness, but (if we take into account
the results concerning the representation of
concepts for quality improvement) they do
not behave in accordance with their beliefs.
An important instrument for improving
processes quality and, consequently, product
quality, is statistical process control
(Montgomery, 1991). An effective
organization knows that if they don’t have
enough information about process, product
or service, they can’t control that part
(Velimirovi?, Velimirovi?, Stankovi?, 2011,
65). However, the research results show that
quality control is still observed primarily in
terms of finished products. In this sense,
quality control of final products is present in
all enterprises in the sample (Figure 5a)).
Also, in more than half of the enterprises in
the sample there is control of unfinished
products and operations (65% for both types
of control according to a survey from 2009,
and 68% for the control of the unfinished
product, and 60% for the control of
individual operations according to a survey
from 2011). When it comes to control of
production quality, according to research
results statistical process control is still not
sufficiently present (23% according to a
survey from 2009 and 32% according to a
survey from 2011). On the other hand, the
results of iSixSigma Magazine, at the level
159 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Table 2. Evaluation of elements of
competitiveness influence on customers’
choice
Elements
Average
2009
St. dev.
2009
Average
2011
St. dev.
2011
Price 3.95 0.98 3.73 1.10
Quality 4.56 0.51 4.38 0.69
Services 4.12 0.74 4.08 0.85
Promotion 3.22 1.06 3.32 1.13
of the world economy, shows that statistical
process control is presented in about 80% of
the enterprises. These data indicate a
significant lag of the Serbian economy in
comparison with the world, although,
according to the latest research, some
progress can be noted (Figure 5b). If the
trend of increasing the presence of statistical
process control continues, the positive trend
for enterprises in Serbia in terms of their
competitiveness may be expected.
Considering that statistical process
control itself includes a number of
instruments, the research included a question
concerning the presence of these
instruments. When statistical process control
is seen in this way, one can conclude that
many enterprises apply certain instruments
of statistical process control. For example, a
flow chart is represented in 28 enterprises in
the sample according to the survey from
2009 and in 46 enterprises in the sample
according to the survey from 2011.
According to the research results it can be
said that "cause-and-effect" diagram
application also has possitive trend (24
enterprises in 2009 and 32 enterprises
according to a survey from 2011). However,
when it is about regression analysis,
significance testing, control charts and
Pareto diagram situation is not quite
satisfactory. According to the research in
160 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
a) b)
Figure 5. The presence of certain quality control forms
a) Research conducted in 2009. b) Research conducted in 2011.
Figure 6. Representation of statistical process control tools
both survey years, these instruments have
been applied in less than 20% of enterprises.
Bearing in mind that parallel with the
improvement of quality of processes,
managers have to ensure improvement of
quality of management, in addition to
questions relating to concepts and tools for
process quality improvement, the
questionnaire included the issues related to
the representation of models for the
formulation and implementation of business
strategy, as well as issues related to the
factors of enterprises’ quality management.
According to the research conducted in
2009, the models for the formulation and
implementation of business strategy (such as
the Balanced Scorecard and Performance
Prism) were implemented in only 28% of the
enterprises in the sample. Specifically,
enterprises that have implemented the
Balanced Scorecard model represent 20%,
while the enterprises that have implemented
the Performance Prism model represent only
8% of enterprises in the sample. The latest
study, from 2011, confirmed the findings
from 2009 (Balanced Scorecard 22%,
Performance prism 10%), which means that
managers of enterprises in Serbia have not
yet understood the importance of modern
management methods and concepts.
Although the connection between the
application of these or other methods and
concepts of management and competitive
advantages is not explicit, it certainly exists.
Specifically, Balanced Scorecard and
Performance Prism facilitates managers to
161 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Figure 7. Relative participation of enterprises
that have implemented modern management
concepts
Mark Dimensions of business quality 2009 2011 change
D1
Quality of business depends on amount of
costs
3.86 3.73 -3.37%
D2
Quality of business depends on the
structure of costs
3.75 3.72 -0.80%
D3
Quality of business depends on the
quality of product (service)
4.38 4.45 1.60%
D4
Quality of business depends on the
quality of business processes
4.16 4.32 3.85%
D5
Quality of business depends on creativity
and innovativeness
3.82 3.93 2.88%
D6
Quality of business depends on the speed
of process realization
4.00 4.05 1.25%
D7
Quality of business depends on the
product delivery speed
4.25 4.32 1.65%
D8
Quality of business depends on the
relationship with customers
4.18 4.30 2.87%
D9
Quality of business depends on the
relationship with suppliers
4.06 4.03 -0.74%
D10
Quality of business depends on the
employees’ competitiveness
4.59 4.48 -2.40%
D11
Quality of business depends on the
employees’ improvement
4.15 4.27 2.89%
D12
Quality of business depends on the
business culture
4.13 4.27 3.39%
Table 3. The rating of the factors influencing business quality
easily identify the connection between daily
operations and ways of realization of
business processes and to ensure customer
satisfaction (and the other stakeholders), and
provide competitive advantage.
When it is about factors of business
quality, respondents were offered the 12
dimensions presented in Table 3. The
obtained scores based on employees’ ratings
in 2009 and 2011 are presented in same
table.
In favour of the previously mentioned
findings, these results also show that
managers are aware of the importance of
product and processes quality, but that their
efforts to improve these aspects of the
business are insufficient. Factor analysis is a
generic term for a family of statistical
techniques concerned with the reduction of a
set of observable variables in terms of a
small number of latent factors.
(Chandrasekaran, Natarajan, Sivasundaram,
2010, 31). Factor analysis is a multivariate
method used for data reduction purposes.
The basic idea is to represent correlated
variables (dimensions of business quality in
this case) by a smaller set of “derived”
variables, which are called factors. These
factors can be thought of as underlying
constructs that cannot be measured by a
single variable (www.mlsc.lboro.ac.uk).
Testing the feasibility of factor analysis
application is performed by Bartlett’s test
and Kaiser-Meyer-Olkin (KMO) statistics.
Bartlett’s test, based on ?2 distribution, is
used to test the hypothesis that there is no
significant correlation between the original
variables. The table that follows (Table 4)
shows the results of this test (p-
value=0.000), which show that null
hypothesis is rejected. This means that there
is significant correlation between original
variables (D1, D2… D12). The rule of KMO
statistics says that if its’ value exceeds 0.5,
the application of factor analysis is
recommended.
As a criterion for factors allocation in
SPSS software (SPSS 14.0 for Windows, By:
SPSS Inc.) characteristic value is used and
the critical value of this criterion is one. In
this case the first two factors have
characteristics value greater than 1, and the
percentage of explained variance with these
two factors is 62.84%.
After the rotation of factors, factor matrix
was obtained. In this matrix high values of
factor loadings (associated with only a small
number of variables) can be clearly separated
for each factor (Table 6).
High factor loadings for the first ten
variables correspond to the first factor, while
high factor loadings for the last two variables
correspond to the second factor. Squares of
these factor loadings represent the
162 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Kaiser-Meyer-Olkin Measure of Sampling
Adequacy
.832
Approx. Chi-Square 409.374
df 66
Bartlett's Test of
Sphericity
Sig. .000
Table 4. KMO and Bartlett's Test
Component Initial Eigenvalues
Total % of Variance Cumulative %
1 6.043 50.356 50.356
2 1.498 12.482 62.838
3 .990 8.246 71.084
4 .626 5.220 76.304
5 .579 4.823 81.127
6 .539 4.491 85.618
7 .446 3.717 89.335
8 .386 3.217 92.552
9 .340 2.836 95.388
10 .254 2.119 97.507
11 .198 1.651 99.158
12 .101 .842 100.000
Table 5. Total Variance Explained
proportions of variance of certain variables,
which are attributed to the effects of a given
factor. Therefore, considering the data in
Table 6, for these factors proportion of
variance is calculated as it follows:
D1: (0,862)2 = 0.743 =74.3%
D2: (0,815)2 = 0.6642 = 66.42%
D3: (0,807)2 = 0.6512 = 65.12%
.
.
.
D11: (0,870)2 = 0.7569 =75.69%
D12: (0,851)2 = 0.7242 = 72.42%
This means that the first factor explains
74.3% of variance of variable D1, 66.42% of
variance of variable D2, 65.12% of variance
of variable D3, and so on. The second factor
explains 75.69% of variance of variable D11,
and 72.42% of variance of variable D12.
These two factors may be observed as new
variables, which can be used in further
analysis. Based on results presented above,
these two factors can be interpreted in the
following way:
• The first factor, considering variables
that it explains, can be defined as non-price
factor,
• The second factor, considering
variables that it explains, can be defined as
price factor.
7. THE SIX SIGMA CONCEPT –
RECOMMENDATION FOR SERBIAN
ENTERPRISES
Considering the research results, it can be
said that managers in Serbia are aware of
neccesity of business quality management.
They recognize the difference between
quality management and business quality
management. However, unfortunately, the
same research results show that the
contemporary quality management concepts
163 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Table 6. Rotated Component Matrix
Component
Mark Business quality dimensions
1 2
D1 Quality of business depends on the employees’ improvement .862 .202
D2 Quality of business depends on the employees’ competence .815
D3 Quality of business depends on the product delivery speed .807 .106
D4 Quality of business depends on the business culture .794
D5 Quality of business depends on the relationship with suppliers .780 .363
D6 Quality of business depends on business process quality .757
D7 Quality of business depends on the relationship with customers .661 .390
D8 Quality of business depends on creativity and innovativeness .620 .357
D9 Quality of business depends on the process realization speed .575 .472
D10 Quality of business depends on the quality of product (service) .496 .227
D11 Quality of business depends on the amount of costs .870
D12 Quality of business depends on the structure of costs .180 .851
and tools are not applied in sufficient number
of enterprises in order to provide critical
mass of enterprises to provide effect at the
Serbien economy level. In order to increase
the number of enterprises in which
managers, but the other employees too, think
and act in a way which provides
performances improvement and
competitiveness rising, the implementation
of the Six Sigma concept is recommended.
Despite its name, Six Sigma is not a
statistical tool that is used for decades, but
the business concept for improvement of the
business quality. The Six Sigma concept
involves a continuous process improvement,
incremental improvement or "kaizen"
(Japanese term for continuous
improvement), where the improvement
process is directed towards correcting of the
existing processes, focusing on key factors
that determine the results of the process. It
incorporates a methodology for
implementation of improvement projects.
Though authors usually speak about
incremental improvements, improvement
projects can be directed to the introduction of
radical changes, too. Due to its
characteristics, Six Sigma may be
interesting, usable concept for the enterprises
in Serbia, in the sense of their improvement
and facilitated inclusion in global market.
The Six Sigma concept implementation
includes five phases, known as DMAIC
process that must be always present in
business, and must be continuously enforced.
The first phase of this process is the define
phase and it includes defining customers’
requirements, key process for their
fulfilment and performance standards. After
defining, the next phase is measure, in which
managers have to establish a system of
measures and to evaluate the performance of
key processes and activities. Information
obtained by measurement become subject of
analysis, the phase during which managers
have to identify potential areas for
improvement. Implementation of the
improvement must be evaluated and
controlled, so therefore the control
represents the last phase of the DMAIC
process.
The path from the initiative for the
164 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Figure 8. The Six Sigma concept: from the initiative to implementation
establishment of the Six Sigma concept, till
the appearance of effects of the
implementation is not easy, but is
recommended if the enterprise wants to
provide or increase competitive advantage
(Figure 8). In order to spread the business
principles on which this concept rests,
through the enterprise, managers have to
ensure the acceptance of the same by the
other employees (except managers). To
implement this concept successfully, the
continuous collection of information,
education and training of employees, as well
as establishing a system of measurement is
necessary. All mentioned is in function of
selection of the processes
(www.isixsigma.com), which should
enhance or is in the function of successful
project management. Such “behaviour” of
the enterprise is an important condition for
achieving competitive advantage in the new
economy.
In order to avoid the confusion and ensure
uniformity of performance measurement for
activities and processes, this concept
recommends a measure known as sigma
quality level, which is based on the standard
deviation. The Six Sigma concept promotes
this measure of quality, because it assumes
that the enterprise should change its attitude
about quality, since it is no longer acceptable
to express defects in percentages. However,
enterprises, which from the Six Sigma
concept accept only sigma level, as measure
of quality, in order to control variations and
defects, do not have many chances for
success. Successful enterprises are the ones
that, apart from the quality measures, adopt
the Six Sigma as a business philosophy and
strategy. The Six Sigma concept is based on
Deming's idea of “striving for continuous
improvement” and Taguchi’s view according
to which “any deviation from the target value
causes an increase in costs”. The pursuit of
the Six Sigma concept is to reduce variation,
because decrease of variation causes increase
of productivity, measured either as the
amount of output per unit of input, or as the
amount of output per unit of time, and
therefore it is recommended for the Serbian
enterprises with purpose of competitiveness
improvement.
8. CONCLUSION
Based on the results of the research
conducted twice, in 2009 and in 2011 year,
when it is about considering quality and
quality improvement as factors of
competitiveness it can be said that there is
positive tendency, but not enough (which is
confirmed by official reports of the Republic
Institute for Development). It can be
concluded that managers are aware of the
importance of the process approach and the
process quality improvement, but the usage
of tools and instruments that can contribute
to discovering the opportunities for quality
improvement is not sufficient. In addition, a
significant problem is the fact that the
introduction of modern concepts and
methods for quality management is
characteristic for higher management levels.
Managers must understand that at the
operational level there are significant
opportunities for providing savings and
improving of competitiveness. For this
reason, it is considered that training for
managers and other employees for
implementation of measures and instruments
for analysis with purpose to identify possible
causes of problems is necessary. Taking
concrete steps to improve the quality
(primarily in terms of application of modern
concepts and tools) will greatly facilitate the
165 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Serbian enterprises’ struggle with the
competition in the domestic market, the
appearance to the European and world
market, and establishment of partnerships or
other forms of cooperation with enterprises
from developed countries.
The question managers often ask
themselves in new economy is: how to
become and remain competitive in the global
marketplace? Considering the complexity of
production systems and the lack of simple
solutions to numerous problems, the answer
to this question is not easy to give. However,
enterprises must choose which of the
available concepts, methods and models will
use in order to define their own solutions to
increase competitiveness. Regardless of
which model they choose, enterprises must
meet customers’ requirements concerning
quality, price (cost), speed of delivery and
flexibility.
If the enterprise wants to be in a group of
successful ones, it has to generate money -
achieve positive financial results, constantly,
day after day, but at the same time, it has to
build and develop businesses, which will
ensure that the achieved results will maintain
in the long run. The Six Sigma concept
should help managers in resolving the
paradox that assumes providing the short-
term financial results through improvement
projects, and, at the same time, development
166 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
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???????? ?????????????? ???????? ??????
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??????????? ? ????, ????????? ????????, ??????
?????
???? ??? ??????? ?? ???? ??????? ?? ?????? ?? ??????? ???????? ?????? ?? ??????? XXI ????.
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?????????????? 2010-2011) ? ????????????? ????????? ? ????? ?? ????????? ?????????? ?
????????? ?????? ? ??????. ?????? ?????? ????? ?? ??????? ????????? ??????????? ? ?? ?????
?? ?????????? ?? ?????????? ?????????????? ???????? ??????, ??????????? ?????
?????????????? ?????????? ??????????? ????????? ? ??????. ????? ?? ???, ????
?????????????? ?????? ????????, ????? ??????? Six Sigma.
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capacity for the future, through investment in
human capital and key processes.
According to factor analysis results, there
are two groups of factor that can be
identified. The first one considers non-price
factors, while the second considers price
factors. This classification indicates that
Serbian economy does not have an integrated
view of dimensions of business quality or
that some of enterprises use non-prices
dimensions for gaining competitive
advantage, while the other use price
dimensions for the same pupose. In order to
provide sustainable competitive advantage,
both groups of enterprises have to
understand the significance of all dimensions
of business quality and the necessity of
providing their optimal combination. Also,
this classification of factors may be
considered as an indicator for a questionnaire
structuring for further research, meaning that
the questionnaire which will be used for
future research may have the questions
belonging to these two groups clearly
separated.
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M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170 168
Apendix 1: Questionnaire for managers
Part I
1. Name of the enterprise: ____________________________________________
2. City: ___________________________________________________________
3. Industry: ________________________________________________________
4. Ownership: ______________________________________________________
5. Origin of the capital:
a. The most of it comes from the Serbia
b. The most of it comes from abroad
6. Function of the surveyed manager: ____________________________________
7. Number of employees:
a. Less than 50
b. 51 – 250
c. Over 250
169 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Part II
1. Have you adopted the principles of some modern concepts:
a. Just-In-Time
b. Total Quality Management (including statistical quality control and its tools)
c. Six Sigma
2. Evaluate the influence of the proposed ways for providing competitivness advantage to
customers’ satisfaction (the lowest mark or negligible impact = 1, the highest mark or
very large impact = 5):
a. price..........................................................................1 2 3 4 5
b. quality ......................................................................1 2 3 4 5
c. service ......................................................................1 2 3 4 5
d. promotion.................................................................1 2 3 4 5
3. How do you provide wanted quality of products (services):
a. Control of finished products (services)
b. Control of phased products
c. Control of certain operations
d. Statistical process control
4. Is the quality improvement based on application of some instruments, like:
a. Cause-and-effect diagram
b. Flow diagram
c. Pareto diagram
d. Control charts
e. Significance testing
f. Regression analysis
5. Do you use some of the models for strategy formulation and implementation:
a. Balanced Scorecard
b. Performance Prism
c. Something else (which one) _____________________________________
6. Evaluate the following assertions (the lowest mark = 1, the highest mark = 5):
a. Quality of business depends on amount of costs...................................1 2 3 4 5
b. Quality of business depends on the structure of costs ...........................1 2 3 4 5
c. Quality of business depends on the quality of product (service) ............1 2 3 4 5
d. Quality of business depends on the quality of business processes ..........1 2 3 4 5
e. Quality of business depends on creativity and innovativeness ...............1 2 3 4 5
f. Quality of business depends on the speed of process realization............1 2 3 4 5
g. Quality of business depends on the product delivery speed...................1 2 3 4 5
h. Quality of business depends on the relationship with customers............1 2 3 4 5
i. Quality of business depends on the relationship with suppliers .............1 2 3 4 5
j. Quality of business depends on the employees’ competitiveness ...........1 2 3 4 5
k. Quality of business depends on the employees’ improvement ...............1 2 3 4 5
l. Quality of business depends on the business culture.............................1 2 3 4 5
M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170 170
doc_566118938.pdf
Based on the fact that the quality, both in theory and practice, has been promoted as the most important dimension of competitiveness, improvement of quality stands out as the primary task of enterprises in Serbia
1. INTRODUCTION
Global competition and more demanding
customers have been forcing enterprises to
continuously improve the quality of
operations and business, generally. For this
reason quality is indispensable issue of
theory and practice at the beginning of XXI
century. In this sense, the Crosby’s saying
"the quality is free", still has not lose its
SIGNIFICANCE OF BUSINESS QUALITY MANAGEMENT FOR
INCREASING COMPETITIVENESS OF SERBIAN ECONOMY
Marija Andjelkovi? Peši?
*
, Vesna Jankovi? Mili? and Jelena Stankovi?
University of Niš, Faculty of Economics, Serbia
Trg Kralja Aleksandra Ujedinitelja 11, 18000 Niš, Serbia
(Received 17 August 2011; accepted 24 December 2011)
Abstract
This paper points out some challenges Serbian economy is facing at the beginning of the XXI
century. Based on the fact that the quality, both in theory and practice, has been promoted as the most
important dimension of competitiveness, improvement of quality stands out as the primary task of
enterprises in Serbia. In the last part of the paper there are some results of the research, conducted
with purpose of identifying opportunities for improving the quality of business in Serbian economy.
The authors have been trying to establish the connection between Serbia’s competitiveness rating
according to research results of confidential institutions (World Bank’s Report on Business, Global
Competitiveness Report 2010-2011) and presence of quality management concepts and tools in
business practice in Serbia. The intention of the authors is to present the research results and to
indicate the possibilities for improving competitiveness of Serbian economy, primarily through
implementation of modern management concepts and models. The one that is suggested in this paper
is the Six Sigma concept.
Keywords: competitiveness, quality, statistic analysis, Six Sigma.
*
Corresponding author: [email protected]
Ser bi an
J our nal
of
Management
Serbian Journal of Management 7 (1) (2012) 149 - 170
www.sjm06.com
Letter to Editor
significance. However, due to the modern
terms, it should be modified. It actually
means that quality improvement should be
promoted through the saying "quality is a
cost effective", because quality improvement
assumes certain investments and
commitment, but the benefits and savings,
which it provides, outweigh the investment.
Quality can be interpreted and explained
in different ways. However, the fact is that
the starting point for the definition of this
term is collection of data about customers’
demands, since they are crucial arbiters of
quality assessment. If we have in mind the
results of numerous studies, according to
which quality means perfection, consistency,
elimination of defects, and/or reduction of
losses due to the elimination of defects,
delivery speed, compatibility with standards,
reliability, etc., it can be said that quality
should be viewed in a broader sense, or not
only as the quality of products and processes,
but also as a quality business (Soin, 1992;
Welch 1996; Kaplan & Norton, 2001; Brue,
2002).
Significance of quality, as the basis and
the mean for providing competitive
advantage, is pointed out by customers, since
they prefer to express their needs and
demand from the enterprises to keep their
promises. In order to help enterprises to meet
customers’ demands in the efficient way,
authors have been suggesting certain models
and tools. The fact is that there is no one and
only solution for all enterprises, neither is
one model or tool sufficient for providing
quality improvement and gaining
competitiveness advantage due to that.
However, managers have to use a various
tools and to make their own combination of
different models in order to adapt the
conclusions of many authors to the specific
context in which they operate.
2. QUALITY MANAGEMENT
APPROACHES AND CONTRIBUTORS
– THEORETICAL BACKGROUND
Quality has been present during the
human development history, and its
significance has not decreased yet. On the
contrary, the last few decades can be
considered as decades of quality and the
science that is concerned with quality issues
is accepted as quality management science.
Pioneers in the development of the quality
management science are Edwards Deming,
Joseph Juran and Armand Feigenbaum.
Although their first papers were published
even in the first half of the twentieth century,
they remained almost unknown for nearly
two decades. The work of the mentioned
authors was recognized in the late 1940’s and
since then has been embraced by Japanese
businessmen. In 1947 Deming held the first
lecture on quality control. The other famous
scientist concerning quality management
science development was Juran. He
emphasized the importance of vertical
management and technical methods. Except
Deming and Juran, Feigenbaum has gained
recognition due to his work in Japan. He is
known for developing the approach of Total
Quality Control – TQC (Feigenbaum, 1986).
The most famous among Japanese experts
in the field of quality are Kaoru Ishikawa,
Genichi Taguchi and Shigeo Shingo. They
are responsible for the further development
of Total Quality Control. Ishikawa argued
that the implementation of quality control
means the development, design, manufacture
and service of quality products, which is the
most economical, most useful way, and
which always meets the needs of customers.
Rounded Taguchi’s philosophy refers
primarily to the manufacturing process
management. Shingo has developed a
150 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
method known as Poka-Yoke (error
proofing) for such a production management
in which, theoretically, errors and
unnecessary costs cannot occur.
When Japanese enterprises, through their
business results, have confirmed the
importance of quality management, quality
started to occupies the attention of American
theoreticians and practitioners. According to
Simon (Simon, 1991), business modelling
system involves the definition of inputs,
processes and outputs with feedback. In the
context of quality management, this
principle implies connection of process
management and quality assurance processes
(Foster, 2004). During the 1970s and 1980s,
the greatest Philip Crosby and Claus Moller,
through their research and analysis of
research results, gave a great contribution to
development of science of quality. Philip
Crosby pointed out that quality is free
because the costs of prevention will always
be lower than the costs of identification and
elimination of errors and mistakes that have
already been made (Crosby, 1979). Claus
Moller in his work has pointed out the
quality of care for people. The foundation of
learning of Claus Moller is the focus on the
human factor. In this sense, he has
formulated 12 principles (Laguna &
Marklund, 2005) that may be useful in
improving quality.
A significant contribution to development
of science of quality in the last decade of
twentieth century and at the beginning of the
twentieth first century have given Bill Smith,
Mikel Harry, Jack Welch, Peter Pande,
George Michael. Bill Smith is known as
founder of the Six Sigma concept at
Motorola. He was inspired by many
innovations and achievements in the field of
quality production, all occurred continuously
since the Great Depression in the 1930s.
Smith (Smith, 2001) pointed out that the
enterprise, in order to eliminate variation and
defects, has to establish a special
infrastructure of people, expert in quality
management. Mikel Harry (Phelps,
Parayitam & Olson, 2007) studied the
variations, while Jack Welch is known for
advocating transformational leadership.
According to him, "the organization's ability
to continuously acquire new knowledge and
it’s rapidly translation it into action are the
basic conditions for providing competitive
advantage" (Welch, 1996).
To be able to "deal with" quality,
especially in order to promote the same,
managers must understand what quality
means for the enterprise and its stakeholders,
as well as what is its role in creating an
effective organization. Although quality can
be correlated with the efficiency, it primarily
affects the effectiveness. In this sense, we
can say that quality is the "right thing" which
has its own market or the customers that are
willing to pay for it. Increasing awareness of
the importance of quality (Oakland, 2007)
and defining quality from the perspective of
each stakeholder is the primary problem
concerned with the quality.
If the quality management is observed in
its evolutionary way, one can identify four
approaches to quality management:
- Approach based on the product - the
quality will be provided if the characteristics
or attributes of products have been
identified; according to those characteristics
and attributes, presence of quality is
ascertain; this approach assumes quality
control,
- Approach based on manufacturing - the
quality will be provided if the product has all
characteristics predicted by the engineers
specifications; this approach corresponds to
total quality control,
151 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
- Approach based on the product users -
the quality will be provided if it fully meets
the demands of customers or if it is "suitable
for use"; this approach assumes total quality
management,
- Approach based on values - the quality
will be provided if the product meets
customers’ needs, and also has an acceptable
price, or if the variability of the process in
which the product is produced is controlled
at an acceptable level of costs; this approach
corresponds to Six Sigma quality
management.
3. FACTORS AND IDEXES OF
COMPETITIVENESS
In the new economic era business is
extremely dynamic and, therefore, one of the
key challenges for enterprises is to transform
the organizational design into a modern,
more flexible. Functional silos and the
principle of “command and control” can
significantly interfere with implementation
of the strategy, so managers have to renounce
those (Kaplan & Norton, 2001). On the other
side, with process approach to management
and employee empowerment, managers
create conditions for understanding strategy
and talking about strategy, and also for its
successful implementation.
Accordingly, changes in way of
formulation and implementation of strategy
must be accompanied by changes in the way
of measuring the success of its
implementation. Not only financial criteria
should be considered, but also other criteria
should be noticed in long term and from all
aspects (Salehi & Behzad, 2011). This means
that, besides financial, managers need to use
non-financial measures and criteria, which
indicate the extent to which the enterprise
uses the intangible resources (Hanson &
Erikson, 2002). Non-financial measures
supplement the financial, as indicators of
future financial picture of the enterprise.
Concerning both, financial and non-
financial criteria and depending on what is
the basis of competitive advantage, few
dimensions of competitiveness can be
identified, and they are (Chase, et al., 2004):
- Costs (''make it cheap''),
- Quality (''make it good''),
- Delivery speed (''make it fast''),
- Delivery reliability (''deliver when
promised''),
- Volume flexibility (''change its volume''),
- Innovativeness (''change it'').
These factors of competitiveness can be
classified into three dimensions: costs (in
terms of product price), quality and
reliability (in terms of product functionality
and continuous fulfilment of customers’
requirements), time and flexibility (in the
sense that the product is always available to
customers and that is always delivered on
time, or that new products and processes are
introduced in time). According to Skinner
(Rao et al., 1996), the dimensions of
competitiveness are in the trade-off
relationship, because it is not possible to
simultaneously achieve high quality, low
costs and on-time delivery of products.
Guided by the above, in 1969 Skinner
formulated the trade-off model.
Unreasonableness of this model has been
confirmed many times in the practice of
successful enterprises. The best indication of
the nonexistence of model based on the
“trade-off” of the dimensions of
competitiveness are the Japanese enterprises
that have managed to provide the
improvement in all three dimensions. Their
production is characterized by low costs,
152 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
high quality, fast production and delivery.
A World Bank survey, presented in the
Report on Business 2009
(www.doingbusiness.org), shows
deterioration in business environment in the
Serbian economy and 94 position in the
ranking of 181 countries (91 position in
2007). Compared to the countries in the
region, Serbia had better position than
Croatia (106) and Bosnia and Herzegovina
(119), and poorer than Hungary (41),
Romania (47), Slovenia (54), Macedonia
(71), Albania (86) and Montenegro (90).
Comparative analysis of the dynamics and
pace of improving performance indicators
with countries in the region points to a
slowdown of economic reforms in Serbia
with all negative consequences on the overall
competitiveness of the economy
(www.doingbusiness.org).
In addition to the World Bank survey, it
may be useful to realize the measures of
competitiveness from the World Economic
Forum. World Economic Forum measures
competitiveness of national economies
through Business Competitiveness Index
(BCI,) Growth Competitiveness Index
(GCI), and Global Competitiveness Index.
(Önsel at al, 2008) Business
Competitiveness Index has been introduced
by Michael Porter, in 2000. This index is
based on microeconomics variables. Growth
Competitiveness Index was introduced by
Sachs and McArthur, in 2001. It is based on
a stronger academic fountain in economic
growth theory. The index that was last
mentioned is the latest compared to the
previous two. Therefore it is logic to expect
that it includes both macroeconomic and
microeconomic factors of competitiveness.
Since 2005, the World Economic Forum
has based its competitiveness analysis on the
Global Competitiveness Index, because it is
highly comprehensive index for measuring
national competitiveness, since it captures
the microeconomic and macroeconomic
foundations of national competitiveness.
This index is calculated as a weighted
average of many different components, each
measuring a different aspect of
competitiveness and ranking on the scale
from 1 to 7. These components are grouped
into 12 pillars of economic competitiveness:
institutions, infrastructure, macroeconomic
environment, health and primary education,
higher education and training, goods market
efficiency, labour market efficiency,
financial market development, technological
153 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Figure 1. Scores of 12 pillars for Serbia
Source: WEF_GlobalCompetitivenessReport_2010-11 and 2009-2010
readiness, market size, business
sophistication and innovation (Schwab,
2010). Scores for these components for
Serbia are given in the Figure 1.
According to Global Competitiveness
Report 2010-2011, at the top of the list is
Switzerland with GCI score of 5.63. Results
for Serbia and countries from the region are
given in the following table (table 1).
The average GCI score for these countries
is 4.08, which is quite low compared to the
country which is leader, but still not so bad.
However, as it is the case with any kind of
average, in this case also, GCI values for
countries as individuals express positive, on
one side, and negative variations, on the
other side. Variations for a certain countries
are presented in Figure 2.
The Report on Business from 2009
(World Bank survey) and Global
Competitiveness Report for 2010-2011,
unfortunately show the same fact –
deterioration of Serbian economy
competitiveness. According to the Report on
Business (www.doingbusiness.org), Serbia’s
ranking has decrease from 91 (in 2007) to 94
(in 2009). Also, according to Global
Competitiveness Report 2010-2011, Serbia’s
154 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Table 1. Rank and GCI value
2010-2011 2009-2010 Change
Country
Rank Score Rank Score Rank Score
Serbia 96 3.84 93 3.77 -3 + 1.8%
Croatia 77 4.04 72 4.03 -5 +0.2%
Montenegro 49 4.36 62 4.16 +13 +4.8%
Bosnia and
Herzegovina
102 3.70 109 3.53 +7 +4.8%
Macedonia 79 4.02 84 3.95 +5 +1.7%
Albania 88 3.94 96 3.72 +8 +5.9%
Hungary 52 4.33 58 4.22 +6 +2.6%
Romania 67 4.16 64 4.11 -3 +1.2%
Slovenia 45 4.42 37 4.55 -8 -2.8%
Greece 83 3.99 71 4.04 -8 -1.2%
Bulgaria 71 4.13 76 4.02 +5 +2.7%
Source: WEF_GlobalCompetitivenessReport_2010-11 and 2009-2010
Figure 2. Individual variations from the average GCI in 2010-2011
Source: WEF_GlobalCompetitivenessReport_2010-11 and 2009-2010
competitiveness has decreased from 93 (in
2010) to 96 (in 2011) place. These facts must
be a warning for creators of Serbian
economic policy and the basis for
improvement of conditions for doing
business in Serbia.
4. QUALITY AS A FACTOR OF
COMPETITIVENESS AND BUSINESS
RESULTS
One of the conditions for successful
Serbia's EU accession and efficient
performance in the international market
certainly is higher level of competitiveness
of Serbian products. However, products of
Serbian enterprises are generally not
competitive, when it is about price, and
quality, as well. The competitiveness of
Serbian enterprises is mainly based on export
of cooperative services (outsourcing), with
the usage of imported technology (licensing,
joint ventures). Therefore, the model of
industrial growth for period 2011-2020
assumes (www.ntp.rs):
- Dynamical growth of investments,
- Export rate growth,
- Industrial employment growth.
One of the ways for achieving these goals
is to increase the level of production quality,
and the quality of business in general.
Namely, higher quality of realization of
activities and processes leads to reduction of
variability and defects, and to increase of
finished products’ quality while provides
savings and cost reductions. Also, the effort
for improvement of quality results in
increase in higher productivity, satisfaction
and loyalty of customers, competitive
advantage, market share growth and, finally,
leads to increase of financial results. The
impact of quality improvement, therefore,
can be viewed internally and externally.
Internally, high quality means higher
productivity, which, consequently, allows
lower prices and higher competitiveness,
market share and profits. On the other hand,
high quality, in terms of reducing of
variations and defects, and therefore
reducing of costs and increasing value
added, also provides a positive effect on
financial results (Soin, 1992). From an
external point of view, higher quality means
increased customer satisfaction, creating a
good reputation of the enterprise and
155 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Figure 3. Influence of quality improvement on financial result of an enterprise
increasing the number of loyal customers
(Figure 3).
Development of new manufacturing and
information technologies allows flexible and
diversified production directed towards
satisfaction of the sophisticated demands of
customers (Dedhia, 1995). In fact, today
customers are more informed and educated,
and, due to that, more and more demanding
when it comes to features, speed of delivery
and price of the products. For this reason,
product quality must be defined by
customers. The image of the enterprise has
an important role when customers make the
decision concerning choice of producer, and
one of the most important factor that
influence image of enterprises is tested and
certified quality of products.
In order to deliver quality to customers, it
must be required from the suppliers. This
implies the establishment of cooperative
relationships with suppliers and in some
cases the long-term partnership. In the new
economy, knowledge economy, the role of
employees who are not on managerial
positions has been changing. They are people
who can help managers to solve the
problems, and not “variable” costs.
Therefore in addition to cooperation with
customers and suppliers, it is necessary to
establish cooperation between employees in
order to ensure their commitment.
Despite the fact that economic reforms in
Serbia deemed to be "slowed", the
enterprises themselves must strive to ensure
the improvement of their operations and
business performances (Evans et al.,, 2004),
particularly in terms of quality and
productivity improvement. According to the
Republic Development Bureau, index of
productivity in industry decreased in 2009
compared to 2008 year (www.odrzivi-
razvoj.gov.rs). In order to check the extent to
which Serbian enterprises follow the trends
in business improvement, and if they are on
track to increase quality and productivity and
to contribute to the improvement of
competitive position of the Serbian
economy, empirical research was conducted.
This research shows "as-is" state of the
Serbian economy, according to which it is
possible to formulate recommendations for
transferring into "to-be" state, as desirable
state for Serbian economy.
5. METHODOLOGICAL
FRAMEWORK OF RESEARCH
Modern management theory suggests
many new or renewed concepts, models and
techniques, whose application can help
managers to provide or sustain
competitiveness of enterprises in the crisis
conditions. The key question that concerns
competitiveness in crisis conditions is if
managers are willing to accept these
concepts, models and techniques, concerning
that their application demands certain
abdication in terms of time and money. The
assumption of the research this paper is
based on is formulated as it follows: The
implementation and continual application of
quality management concepts, models and
techniques has positive influence on business
performances and competitiveness of
enterprise, and therefore on business results.
The research was composed in the following
way:
1. Questionnaire formulation,
2. Sampling (choosing the enterprises
that will form the sample),
3. Collection of data (through survey of
Serbian enterprises’ managers),
4. Analysis of collected data, graphical
156 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
and statistical presentation of the research
results, and finally,
5. Making conclusions and formulating
suggestions for managers of Serbian
enterprises with the purpose of diminishing
expected negative effects of economic crisis.
The questionnaire has two parts. The first
one has comprised the basic questions
concerning enterprise size, capital origin,
industry, as well as the amount of profit
(loss). When the collection of data has been
repeated this year, the first part of the
questionnaire was supplemented with few
more questions concerning the most used
business performance (including financial)
indicators and those indicators’ level
compared to the state in 2007 (in terms of
increase or decrease in percentages).
The second part has comprised questions
concerning the implementation of modern
management concepts, models, techniques,
and methods. The intention was to evaluate if
managers are familiar with the tools of
modern strategic and quality management.
The accent was on the Balanced Scorecard
and Performance Prism, precisely on
implementation of the principles and
philosophy that these tools promote.
Concerning quality management, the focus
was on Total Quality Management and other
modern versions (like Six Sigma). One of the
respondents’ taks was to evaluate the
influence of certain ways (through price,
quality, service or promotion) for providing
competitivness advantage to customers’
satisfaction. The second group of questions
was related to process capability measures,
including statistical process control (Mishra
& Dangayach, 2009). Finally, it quality is
observed as a characteristic of business, and
not only of product or service, the last
question referes to evaluation of factors
affecting business quality. The questionnaire
form used for this investigation is presented
in appendix 1.
The data collected during the survey were
crossbreed and combined by certain
statistical software. The graphical
presentation of results has provided clarity of
information and facilitated making
conclusions in the economic way. Based on
the information provided after data analysis,
authors have formulated conclusions. Those
conclusions show how close or far practice
in Serbian enterprise is from the modern
management theory or in what extent
modern concepts, models, methods and
techniques have been implemented so far.
Conclusions based on the research results
represent the basis for formulating
recommendations for managers in Serbian
enterprises with purpose to provide the best
possible performances in the crisis
conditions. The following subtitle shows the
results of analysis of certain questions,
which concern quality models and tools
implementation in enterprises in Serbia.
6. THE RESEARCH RESULTS ON
IMPLEMENTATION OF QUALITY
MODELS AND TOOLS IN SERBIAN
ECONOMY
The task of the research was to determine
whether the enterprises in Serbia are familiar
with modern concepts and models of
business management, particularly quality
management, and whether they have been
trying to convey positive experiences of
enterprises in developed countries. Another
task of the research was to evaluate the level
of quality presence in Serbian economy or, in
the other words, to determine which of the
mentioned approaches is represented in
157 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
enterprises in Serbia. These tasks were
carried out in order to point out the
possibilities for improving of the
competitiveness of the Serbian economy.
The survey was conducted in two stages:
during July and August 2009 year and during
May and June 2011 year. The first time the
sample was randomly selected from the
group of enterprises from the Republic of
Serbia, and it included 60 enterprises. These
enterprises were randomly selected due to
the hypothesis that quality and business
excellence is not something that Serbian
economy can proud of. Therefore the sample
was not limited to one or few branches of
industry, which means that the population
was Serbian economy, as a whole. In order to
increase the relevance of the research, the
choice of enterprises in the sample was done
by using stratification. All enterprises were
divided into three groups: small, medium
and large. The sample was constructed
proportionally to the number of employees in
these enterprises. In addition, the criterion
for stratification was the number of
employees, because the assumption was that
all employees must be involved in quality
improvement and business in general, and
that all employees are agents of change.
Repeated survey, conducetd during 2011,
was carried out on the same sample, to
ensure the relevance of the data and the
reality of making conclusions.
When it is about concepts primarily aimed
to improvement of production quality,
research results in 2009 showed the
following state:
- Just-In-Time (JIT) concept was
implemented in only 15% of the enterprises
in the sample,
- Total Quality Management (TQM) in
31.6%, while
- Six Sigma was present in only 3.3% of
the enterprises in the sample (Figure 4a).
Sertaintly, it should be noted that a
significant number of managers did not
actually understand the meaning of
mentioned concepts, and some of them, who
neglected their application, changed their
minds after the explanation of these
concepts’ essence. Therefore, it may be
concluded that in certain number of
enterprises mentioned concepts have not
been implemented formally, but rather just
some of their principles and ideas. According
to the survey repeated in 2011, the situation
has not changed significantly (Figure 4b)).
The only difference is slightly larger share of
TQM presence (35%).
158 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Figure 4. The presence of the quality management concepts
a) Research conducted in 2009. b) Research conducted in 2011.
a) b)
Although according to the representation
of the quality improvement concepts (JIT,
TQM, Six Sigma) could be concluded that
enterprises in Serbia do not attach sufficient
importance to quality, as the dimension of
competitive advantage, the answers related
to the impact of assessment of certain ways
of providing competitive advantage (price,
quality, service, promotion) on the
orientation of customers (in terms of
selection of products of specific enterprise)
lead to the opposite conclusion (question
number 2 in the questionnaire). Given that in
the research have been used a qualitative
attributes (how managers find out ways for
providing competitive advantage), for their
measurement rating scale was used. In this
specific case rating scale with five points
was applied, in order to express the influence
of ways for providing competitive advantage
to customers choice numerically (huge
impact - 5, a major impact - 4, moderate
impact - 3, low impact - 2, a negligible
impact - 1), as well as to provided more
detailed analysis. According to the survey in
2009, the highest average rating received the
quality (4.56), as determinant of
competitiveness (Table 2). Also, the standard
deviation for quality was the lowest (0.51),
which means that the opinions of managers
on impact of quality on improving the
competitiveness are similar, and that the
quality is considered the most influential for
customers’ choice. Also, great impact on
customers’ choice has service, while price
and promotion, as a means for providing
competitive advantage are found to be less
important for the customers from managers’
point of view. Research results from 2011
confirmed that the quality in the enterprises
in Serbia is considered the best way to
improve competitiveness, because again the
average score for quality was highest (4.38).
These results indicate that managers of
enterprises in Serbia do realize the
importance of quality as a dimension of
competitiveness, but (if we take into account
the results concerning the representation of
concepts for quality improvement) they do
not behave in accordance with their beliefs.
An important instrument for improving
processes quality and, consequently, product
quality, is statistical process control
(Montgomery, 1991). An effective
organization knows that if they don’t have
enough information about process, product
or service, they can’t control that part
(Velimirovi?, Velimirovi?, Stankovi?, 2011,
65). However, the research results show that
quality control is still observed primarily in
terms of finished products. In this sense,
quality control of final products is present in
all enterprises in the sample (Figure 5a)).
Also, in more than half of the enterprises in
the sample there is control of unfinished
products and operations (65% for both types
of control according to a survey from 2009,
and 68% for the control of the unfinished
product, and 60% for the control of
individual operations according to a survey
from 2011). When it comes to control of
production quality, according to research
results statistical process control is still not
sufficiently present (23% according to a
survey from 2009 and 32% according to a
survey from 2011). On the other hand, the
results of iSixSigma Magazine, at the level
159 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Table 2. Evaluation of elements of
competitiveness influence on customers’
choice
Elements
Average
2009
St. dev.
2009
Average
2011
St. dev.
2011
Price 3.95 0.98 3.73 1.10
Quality 4.56 0.51 4.38 0.69
Services 4.12 0.74 4.08 0.85
Promotion 3.22 1.06 3.32 1.13
of the world economy, shows that statistical
process control is presented in about 80% of
the enterprises. These data indicate a
significant lag of the Serbian economy in
comparison with the world, although,
according to the latest research, some
progress can be noted (Figure 5b). If the
trend of increasing the presence of statistical
process control continues, the positive trend
for enterprises in Serbia in terms of their
competitiveness may be expected.
Considering that statistical process
control itself includes a number of
instruments, the research included a question
concerning the presence of these
instruments. When statistical process control
is seen in this way, one can conclude that
many enterprises apply certain instruments
of statistical process control. For example, a
flow chart is represented in 28 enterprises in
the sample according to the survey from
2009 and in 46 enterprises in the sample
according to the survey from 2011.
According to the research results it can be
said that "cause-and-effect" diagram
application also has possitive trend (24
enterprises in 2009 and 32 enterprises
according to a survey from 2011). However,
when it is about regression analysis,
significance testing, control charts and
Pareto diagram situation is not quite
satisfactory. According to the research in
160 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
a) b)
Figure 5. The presence of certain quality control forms
a) Research conducted in 2009. b) Research conducted in 2011.
Figure 6. Representation of statistical process control tools
both survey years, these instruments have
been applied in less than 20% of enterprises.
Bearing in mind that parallel with the
improvement of quality of processes,
managers have to ensure improvement of
quality of management, in addition to
questions relating to concepts and tools for
process quality improvement, the
questionnaire included the issues related to
the representation of models for the
formulation and implementation of business
strategy, as well as issues related to the
factors of enterprises’ quality management.
According to the research conducted in
2009, the models for the formulation and
implementation of business strategy (such as
the Balanced Scorecard and Performance
Prism) were implemented in only 28% of the
enterprises in the sample. Specifically,
enterprises that have implemented the
Balanced Scorecard model represent 20%,
while the enterprises that have implemented
the Performance Prism model represent only
8% of enterprises in the sample. The latest
study, from 2011, confirmed the findings
from 2009 (Balanced Scorecard 22%,
Performance prism 10%), which means that
managers of enterprises in Serbia have not
yet understood the importance of modern
management methods and concepts.
Although the connection between the
application of these or other methods and
concepts of management and competitive
advantages is not explicit, it certainly exists.
Specifically, Balanced Scorecard and
Performance Prism facilitates managers to
161 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Figure 7. Relative participation of enterprises
that have implemented modern management
concepts
Mark Dimensions of business quality 2009 2011 change
D1
Quality of business depends on amount of
costs
3.86 3.73 -3.37%
D2
Quality of business depends on the
structure of costs
3.75 3.72 -0.80%
D3
Quality of business depends on the
quality of product (service)
4.38 4.45 1.60%
D4
Quality of business depends on the
quality of business processes
4.16 4.32 3.85%
D5
Quality of business depends on creativity
and innovativeness
3.82 3.93 2.88%
D6
Quality of business depends on the speed
of process realization
4.00 4.05 1.25%
D7
Quality of business depends on the
product delivery speed
4.25 4.32 1.65%
D8
Quality of business depends on the
relationship with customers
4.18 4.30 2.87%
D9
Quality of business depends on the
relationship with suppliers
4.06 4.03 -0.74%
D10
Quality of business depends on the
employees’ competitiveness
4.59 4.48 -2.40%
D11
Quality of business depends on the
employees’ improvement
4.15 4.27 2.89%
D12
Quality of business depends on the
business culture
4.13 4.27 3.39%
Table 3. The rating of the factors influencing business quality
easily identify the connection between daily
operations and ways of realization of
business processes and to ensure customer
satisfaction (and the other stakeholders), and
provide competitive advantage.
When it is about factors of business
quality, respondents were offered the 12
dimensions presented in Table 3. The
obtained scores based on employees’ ratings
in 2009 and 2011 are presented in same
table.
In favour of the previously mentioned
findings, these results also show that
managers are aware of the importance of
product and processes quality, but that their
efforts to improve these aspects of the
business are insufficient. Factor analysis is a
generic term for a family of statistical
techniques concerned with the reduction of a
set of observable variables in terms of a
small number of latent factors.
(Chandrasekaran, Natarajan, Sivasundaram,
2010, 31). Factor analysis is a multivariate
method used for data reduction purposes.
The basic idea is to represent correlated
variables (dimensions of business quality in
this case) by a smaller set of “derived”
variables, which are called factors. These
factors can be thought of as underlying
constructs that cannot be measured by a
single variable (www.mlsc.lboro.ac.uk).
Testing the feasibility of factor analysis
application is performed by Bartlett’s test
and Kaiser-Meyer-Olkin (KMO) statistics.
Bartlett’s test, based on ?2 distribution, is
used to test the hypothesis that there is no
significant correlation between the original
variables. The table that follows (Table 4)
shows the results of this test (p-
value=0.000), which show that null
hypothesis is rejected. This means that there
is significant correlation between original
variables (D1, D2… D12). The rule of KMO
statistics says that if its’ value exceeds 0.5,
the application of factor analysis is
recommended.
As a criterion for factors allocation in
SPSS software (SPSS 14.0 for Windows, By:
SPSS Inc.) characteristic value is used and
the critical value of this criterion is one. In
this case the first two factors have
characteristics value greater than 1, and the
percentage of explained variance with these
two factors is 62.84%.
After the rotation of factors, factor matrix
was obtained. In this matrix high values of
factor loadings (associated with only a small
number of variables) can be clearly separated
for each factor (Table 6).
High factor loadings for the first ten
variables correspond to the first factor, while
high factor loadings for the last two variables
correspond to the second factor. Squares of
these factor loadings represent the
162 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Kaiser-Meyer-Olkin Measure of Sampling
Adequacy
.832
Approx. Chi-Square 409.374
df 66
Bartlett's Test of
Sphericity
Sig. .000
Table 4. KMO and Bartlett's Test
Component Initial Eigenvalues
Total % of Variance Cumulative %
1 6.043 50.356 50.356
2 1.498 12.482 62.838
3 .990 8.246 71.084
4 .626 5.220 76.304
5 .579 4.823 81.127
6 .539 4.491 85.618
7 .446 3.717 89.335
8 .386 3.217 92.552
9 .340 2.836 95.388
10 .254 2.119 97.507
11 .198 1.651 99.158
12 .101 .842 100.000
Table 5. Total Variance Explained
proportions of variance of certain variables,
which are attributed to the effects of a given
factor. Therefore, considering the data in
Table 6, for these factors proportion of
variance is calculated as it follows:
D1: (0,862)2 = 0.743 =74.3%
D2: (0,815)2 = 0.6642 = 66.42%
D3: (0,807)2 = 0.6512 = 65.12%
.
.
.
D11: (0,870)2 = 0.7569 =75.69%
D12: (0,851)2 = 0.7242 = 72.42%
This means that the first factor explains
74.3% of variance of variable D1, 66.42% of
variance of variable D2, 65.12% of variance
of variable D3, and so on. The second factor
explains 75.69% of variance of variable D11,
and 72.42% of variance of variable D12.
These two factors may be observed as new
variables, which can be used in further
analysis. Based on results presented above,
these two factors can be interpreted in the
following way:
• The first factor, considering variables
that it explains, can be defined as non-price
factor,
• The second factor, considering
variables that it explains, can be defined as
price factor.
7. THE SIX SIGMA CONCEPT –
RECOMMENDATION FOR SERBIAN
ENTERPRISES
Considering the research results, it can be
said that managers in Serbia are aware of
neccesity of business quality management.
They recognize the difference between
quality management and business quality
management. However, unfortunately, the
same research results show that the
contemporary quality management concepts
163 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Table 6. Rotated Component Matrix
Component
Mark Business quality dimensions
1 2
D1 Quality of business depends on the employees’ improvement .862 .202
D2 Quality of business depends on the employees’ competence .815
D3 Quality of business depends on the product delivery speed .807 .106
D4 Quality of business depends on the business culture .794
D5 Quality of business depends on the relationship with suppliers .780 .363
D6 Quality of business depends on business process quality .757
D7 Quality of business depends on the relationship with customers .661 .390
D8 Quality of business depends on creativity and innovativeness .620 .357
D9 Quality of business depends on the process realization speed .575 .472
D10 Quality of business depends on the quality of product (service) .496 .227
D11 Quality of business depends on the amount of costs .870
D12 Quality of business depends on the structure of costs .180 .851
and tools are not applied in sufficient number
of enterprises in order to provide critical
mass of enterprises to provide effect at the
Serbien economy level. In order to increase
the number of enterprises in which
managers, but the other employees too, think
and act in a way which provides
performances improvement and
competitiveness rising, the implementation
of the Six Sigma concept is recommended.
Despite its name, Six Sigma is not a
statistical tool that is used for decades, but
the business concept for improvement of the
business quality. The Six Sigma concept
involves a continuous process improvement,
incremental improvement or "kaizen"
(Japanese term for continuous
improvement), where the improvement
process is directed towards correcting of the
existing processes, focusing on key factors
that determine the results of the process. It
incorporates a methodology for
implementation of improvement projects.
Though authors usually speak about
incremental improvements, improvement
projects can be directed to the introduction of
radical changes, too. Due to its
characteristics, Six Sigma may be
interesting, usable concept for the enterprises
in Serbia, in the sense of their improvement
and facilitated inclusion in global market.
The Six Sigma concept implementation
includes five phases, known as DMAIC
process that must be always present in
business, and must be continuously enforced.
The first phase of this process is the define
phase and it includes defining customers’
requirements, key process for their
fulfilment and performance standards. After
defining, the next phase is measure, in which
managers have to establish a system of
measures and to evaluate the performance of
key processes and activities. Information
obtained by measurement become subject of
analysis, the phase during which managers
have to identify potential areas for
improvement. Implementation of the
improvement must be evaluated and
controlled, so therefore the control
represents the last phase of the DMAIC
process.
The path from the initiative for the
164 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Figure 8. The Six Sigma concept: from the initiative to implementation
establishment of the Six Sigma concept, till
the appearance of effects of the
implementation is not easy, but is
recommended if the enterprise wants to
provide or increase competitive advantage
(Figure 8). In order to spread the business
principles on which this concept rests,
through the enterprise, managers have to
ensure the acceptance of the same by the
other employees (except managers). To
implement this concept successfully, the
continuous collection of information,
education and training of employees, as well
as establishing a system of measurement is
necessary. All mentioned is in function of
selection of the processes
(www.isixsigma.com), which should
enhance or is in the function of successful
project management. Such “behaviour” of
the enterprise is an important condition for
achieving competitive advantage in the new
economy.
In order to avoid the confusion and ensure
uniformity of performance measurement for
activities and processes, this concept
recommends a measure known as sigma
quality level, which is based on the standard
deviation. The Six Sigma concept promotes
this measure of quality, because it assumes
that the enterprise should change its attitude
about quality, since it is no longer acceptable
to express defects in percentages. However,
enterprises, which from the Six Sigma
concept accept only sigma level, as measure
of quality, in order to control variations and
defects, do not have many chances for
success. Successful enterprises are the ones
that, apart from the quality measures, adopt
the Six Sigma as a business philosophy and
strategy. The Six Sigma concept is based on
Deming's idea of “striving for continuous
improvement” and Taguchi’s view according
to which “any deviation from the target value
causes an increase in costs”. The pursuit of
the Six Sigma concept is to reduce variation,
because decrease of variation causes increase
of productivity, measured either as the
amount of output per unit of input, or as the
amount of output per unit of time, and
therefore it is recommended for the Serbian
enterprises with purpose of competitiveness
improvement.
8. CONCLUSION
Based on the results of the research
conducted twice, in 2009 and in 2011 year,
when it is about considering quality and
quality improvement as factors of
competitiveness it can be said that there is
positive tendency, but not enough (which is
confirmed by official reports of the Republic
Institute for Development). It can be
concluded that managers are aware of the
importance of the process approach and the
process quality improvement, but the usage
of tools and instruments that can contribute
to discovering the opportunities for quality
improvement is not sufficient. In addition, a
significant problem is the fact that the
introduction of modern concepts and
methods for quality management is
characteristic for higher management levels.
Managers must understand that at the
operational level there are significant
opportunities for providing savings and
improving of competitiveness. For this
reason, it is considered that training for
managers and other employees for
implementation of measures and instruments
for analysis with purpose to identify possible
causes of problems is necessary. Taking
concrete steps to improve the quality
(primarily in terms of application of modern
concepts and tools) will greatly facilitate the
165 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Serbian enterprises’ struggle with the
competition in the domestic market, the
appearance to the European and world
market, and establishment of partnerships or
other forms of cooperation with enterprises
from developed countries.
The question managers often ask
themselves in new economy is: how to
become and remain competitive in the global
marketplace? Considering the complexity of
production systems and the lack of simple
solutions to numerous problems, the answer
to this question is not easy to give. However,
enterprises must choose which of the
available concepts, methods and models will
use in order to define their own solutions to
increase competitiveness. Regardless of
which model they choose, enterprises must
meet customers’ requirements concerning
quality, price (cost), speed of delivery and
flexibility.
If the enterprise wants to be in a group of
successful ones, it has to generate money -
achieve positive financial results, constantly,
day after day, but at the same time, it has to
build and develop businesses, which will
ensure that the achieved results will maintain
in the long run. The Six Sigma concept
should help managers in resolving the
paradox that assumes providing the short-
term financial results through improvement
projects, and, at the same time, development
166 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
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???????? ?????????????? ???????? ??????
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??????????? ? ????, ????????? ????????, ??????
?????
???? ??? ??????? ?? ???? ??????? ?? ?????? ?? ??????? ???????? ?????? ?? ??????? XXI ????.
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????????? ?????? ? ??????. ?????? ?????? ????? ?? ??????? ????????? ??????????? ? ?? ?????
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?????????????? ?????? ????????, ????? ??????? Six Sigma.
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capacity for the future, through investment in
human capital and key processes.
According to factor analysis results, there
are two groups of factor that can be
identified. The first one considers non-price
factors, while the second considers price
factors. This classification indicates that
Serbian economy does not have an integrated
view of dimensions of business quality or
that some of enterprises use non-prices
dimensions for gaining competitive
advantage, while the other use price
dimensions for the same pupose. In order to
provide sustainable competitive advantage,
both groups of enterprises have to
understand the significance of all dimensions
of business quality and the necessity of
providing their optimal combination. Also,
this classification of factors may be
considered as an indicator for a questionnaire
structuring for further research, meaning that
the questionnaire which will be used for
future research may have the questions
belonging to these two groups clearly
separated.
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M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170 168
Apendix 1: Questionnaire for managers
Part I
1. Name of the enterprise: ____________________________________________
2. City: ___________________________________________________________
3. Industry: ________________________________________________________
4. Ownership: ______________________________________________________
5. Origin of the capital:
a. The most of it comes from the Serbia
b. The most of it comes from abroad
6. Function of the surveyed manager: ____________________________________
7. Number of employees:
a. Less than 50
b. 51 – 250
c. Over 250
169 M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170
Part II
1. Have you adopted the principles of some modern concepts:
a. Just-In-Time
b. Total Quality Management (including statistical quality control and its tools)
c. Six Sigma
2. Evaluate the influence of the proposed ways for providing competitivness advantage to
customers’ satisfaction (the lowest mark or negligible impact = 1, the highest mark or
very large impact = 5):
a. price..........................................................................1 2 3 4 5
b. quality ......................................................................1 2 3 4 5
c. service ......................................................................1 2 3 4 5
d. promotion.................................................................1 2 3 4 5
3. How do you provide wanted quality of products (services):
a. Control of finished products (services)
b. Control of phased products
c. Control of certain operations
d. Statistical process control
4. Is the quality improvement based on application of some instruments, like:
a. Cause-and-effect diagram
b. Flow diagram
c. Pareto diagram
d. Control charts
e. Significance testing
f. Regression analysis
5. Do you use some of the models for strategy formulation and implementation:
a. Balanced Scorecard
b. Performance Prism
c. Something else (which one) _____________________________________
6. Evaluate the following assertions (the lowest mark = 1, the highest mark = 5):
a. Quality of business depends on amount of costs...................................1 2 3 4 5
b. Quality of business depends on the structure of costs ...........................1 2 3 4 5
c. Quality of business depends on the quality of product (service) ............1 2 3 4 5
d. Quality of business depends on the quality of business processes ..........1 2 3 4 5
e. Quality of business depends on creativity and innovativeness ...............1 2 3 4 5
f. Quality of business depends on the speed of process realization............1 2 3 4 5
g. Quality of business depends on the product delivery speed...................1 2 3 4 5
h. Quality of business depends on the relationship with customers............1 2 3 4 5
i. Quality of business depends on the relationship with suppliers .............1 2 3 4 5
j. Quality of business depends on the employees’ competitiveness ...........1 2 3 4 5
k. Quality of business depends on the employees’ improvement ...............1 2 3 4 5
l. Quality of business depends on the business culture.............................1 2 3 4 5
M.An?elkovi? Peši? / SJM 7 (1) (2012) 149 - 170 170
doc_566118938.pdf