Reference no: EM131655546

Question: Alamar Industries While driving home in northern Kentucky at 8:00 p.m., Juan Alamar wondered whether his father had done him any favor by retiring early and letting him take control of the family machine tool-restoration business. When his father started the business of overhauling machine tools (both for resale and on a contract basis), American companies dominated the tool manufacturing market. During the past 30 years, however, the original equipment industry had been devastated, first by competition from Germany and then from Japan. Although foreign competition had not yet invaded the overhaul segment of the business, Juan had heardabout foreign companies establishing operations on the West Coast. The foreign competitors were apparently stressing the highquality service and operations that had been responsible for their great inroads into the original equipment market. Last week, Juan attended a daylong conference on total quality management that had discussed the advantages of competing for the Baldrige Award, the national quality award established in 1987.

Presenters from past Baldrige winners, including Xerox, Federal Express, Cadillac, and Motorola, stressed the positive effects on their companies of winning and said similar effects would be possible for any company. This assertion of only positive effects was what Juan questioned. He was certain that the effect on his remaining free time would not be positive. The Baldrige Award considers seven corporate dimensions of quality. Although the award is not based on a numerical score, an overall score is calculated. The maximum score is 1,000, with most recent winners scoring about 800. Juan did not doubt the award was good for the winners, but he wondered about the nonwinners. In particular, he wondered about any relationship between attempting to improve quality according to the Baldrige dimensions and company profitability. Individual company scores are not released, but Juan was able to talk to one of the conference presenters, who shared some anonymous data, such as companies' scores in the year they applied, their returns on investment (ROIs) in the year applied, and returns on investment in the year after application. Juan decided to commit the company to a total quality management process if the data provided evidence that the process would lead to increased profitability.