Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 35

Quality and Productivity Each summer the Harbour Report (www.oliverwyman.com/ow/ automotive.htm) rates the productivity of the major automakers, including the Detroit Big 3, Toyota, Honda, and many other brands. The report is closely watched as a barometer of the future profitability of the firms. However, some have argued that the productivity reports are insufficient. For example, a company can temporarily raise its productivity by laying off or “buying out” employees. Also, some would argue that the focus on productivity fails to draw attention to other key strategic factors such as quality, design, and customer service. For example, the J.D. Power organization (www.jdpower.com/autos) rates the initial quality of many new cars.

Required What do you think are the priorities for the auto companies: quality, productivity, customer service, design, or some other key strategic success factor? Briefly explain your answer.

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