Quality in a Small Service Organization and its Relation with Sand Cone Model

Transcription

1 Quality in a Small Service Organization and its Relation with Sand Cone Model Braga C 1, Migowski S 2, Libânio C 3, Spindler G 4, Duarte F 5 Abstract The present study is based on the analysis of economic and financial sustainability of a small business, which overcame the average period of bankruptcies of small companies in Brazil. For the study, it was tested the Sand Cone Theory in Nostro Sabore Restaurant, located in Porto Alegre, with reference of the competitive priorities pyramid suggested by the authors Ferdows and De Meyer (1990), who relate quality as basis and main competitive priority, able to allow sustainability or contribute with other priorities. In this sense, besides investigating what motivates the sustainability of the company, through a survey with the costumers, it was possible to know their characteristics, motivations and preferences. Of the approximate eight thousand customers monthly, the sample size was calculated to ensure a confidence level of 95% in the results and totaled 198 people. The interpretation of the survey data was aided by the SPSS Statistics software, version 18, which means the results can identify opportunities for improvements in the company aiming at customer satisfaction and business continuity as well as respond if quality is indeed the foundation of its sustainability, as proposed by the Ferdows and De Meyer (1990). Keywords: Sand Cone, Restaurant, Quality 1 Caroline Freitas Braga ( ninabraga@hotmail.com) Centro Universitário UniRitter, Porto Alegre (RS) Brasil. 2 Sérgio Almeida Migowski ( sergio_migowski@uniritter.edu.br) Centro Universitário UniRitter, Porto Alegre (RS) Brasil. 3 Claudia de Souza Libânio ( claudia_libanio@uniritter.edu.br) Centro Universitário UniRitter, Porto Alegre (RS) Brasil. 4 Giselle Spindler ( giselle@uniritter.edu.br) Centro Universitário UniRitter, Porto Alegre (RS) Brasil. 5 Francisco Dias Duarte ( francisco@serdil.com.br) Fundação Saint Pastous, Porto Alegre (RS) Brasil. 197

2 1 Introduction Small and medium sized businesses are considered the supporting pillars of the Brazilian economy. These companies face, with greater difficulty, the obstacles imposed by the competition. For this reason, it is essential to have and make use of consistent and complete information from its sector for decision making. In Brazil, more than 1.2 million new formal enterprises are registered annually. Of this total, more than 99% include micro and small enterprises and Individual Entrepreneurs (IE), according to SEBRAE (2011). Micro and small enterprises have a significant role in the occupation of the Brazilian population. They are responsible for more than half of the formal jobs in the country. In addition, considering the occupation that entrepreneurs create for themselves, it is noticeable that the companies of micro and small businesses are responsible for two-thirds of all occupations in the private sector of our economy (Center for Studies and Research of SEBRAE - October/2011). Regarding to the economic aspect, micro and small enterprises (MSEs) play a fundamental role in the development of the country and, when compared to large organizations, present distinguished characteristics, such as versatility and flexibility, agility in business management and technology diversity. These are also responsible for absorbing most part of the formal labor force in the country, considered a strong alternative occupation, business opportunity, and besides, are valuable providers of employment and income generation, according to current information from ABIA Brazilian Association of Food Industry (2012), which indicates that the sector encompasses two million establishments and employs six million people, with a revenue of R $ 65.2 billion in According to a survey released on April 10th, 2012 by Serasa, from January to March this year, the Serasa Experian Indicator for Bankruptcy and Recoveries pointed 449 bankruptcies requests across the country, against 437 in the first trimester of Considering the total requests in 2012, 253 were made by micro and small enterprises, 116 by medium and 80 by large. Economists from Serasa attribute the advancement of records bankruptcy to interest rates which are still high, to high consumer delinquency and to fluctuations in economic activity. Running a business in a sustainable manner way is certainly a difficult equation to be solved not only by the meaning of its terms, but also for its strategic representation in reducing unemployment rates, due to the increase in MSBs life expectancy. Within this scenario of high mortality, however, there are some small companies in the restaurants segment that remain sustainable by using different strategies. The pursuit by Brazilian consumers for bars and restaurants is driven both as a means of entertainment such as to meet the basic need, which is carrying out their daily meals. According Chacon (2011, p. 1), "The IBGE (Brazilian Institute of Geography and Statistics) and the Brazilian Association of Bars and Restau- 198

3 rants realize that 25% of Brazilians spending with food are out of their houses and that this percentage may reach 40% in the next 15 year." Wheelwright (1984) once defined as the basic purpose of a strategy is to develop and support a durable competitive advantage, which may be able to answer the questions about the continuing activities of some companies over others. Based on the concept of Cone Sand Model, created by Ferdows and De Meyer (1990), which contains quality as the support base, it seeks to respond: why some small business segment restaurants are able to maintain their activities, while others do not have the same success? 2 Literature Review The food service industry is one that has shown significant rise, according to ABRASEL (2012). This is due to the increasing trend in the number of meals outside the home, as well as the number of establishments that provide varied options for lunch, happy hour and dinner, from the traditional "a la carte", self - service buffet, bars, deliveries and others. The research informs approximately one million food companies registered, distributed among bars, restaurants and similar activities, accounting for approximately 2.4% of Brazilian GDP. In the same publication, in 2008 the revenue of the sector was close to 25 billion dollars, an increase of 5% in the activities compared to the previous year and also indicates that almost 26% of Brazilian spending are outside of households, therefore approximately one quarter of the population usually have their meals in restaurants, bars and similar establishments. In this context, SEBRAE (2012) reports that the food industry away from home grew by 13.8% from 2007 to 2008 and according to the Household Budget Survey (POF 2008/09) made by the Brazilian Institute of Geography and Statistics - IBGE (2012), "in six years, the urban share of outside the home food in spending on food rose a quarter (25.7%) to one-third (33.1%), and the meantime rural increased from 13.1% to 17.5%." 2.1 Entrepreneurship In the last decades, in Brazil, the subject entrepreneurship has been frequently addressed by several authors that generate hypotheses related to natural aspects of human beings, as well as development of professional skills. For Dolabela (2008), the term entrepreneurship is known and referenced since many years, which means that is not innovation anymore. Considered an upgrade to business models, Dornelas (2005) argues that we are living in the era of entrepreneurship, while 199

4 other authors (Schramm and Litan, 2008) are limited to characterize the stage as the beginning of an entrepreneurial capitalism. People are attracted to the venture by numerous incentives or rewards that can be grouped basically into three categories: profit, independence and a joyful lifestyle (Longenecker, Moore and Petty, 2004). Entrepreneurship originated "primarily in the United States, a country where capitalism is the main feature (Dornelas, 2005, p.17). Dornelas (2005, p.15) describes entrepreneurship as "the involvement of people and processes that collectively lead to the transformation of ideas into opportunities." With an economic scenario that is constantly in motion, new needs arise all the time, with strong appreciation to the ability of an entrepreneur to find opportunities and transforming ideas into business. The entrepreneur becomes a responsible player for generating income, moving the economy through the absorption of hand labor, innovating and diversifying the context in which it operates. On the other hand, some studies suggest caution with the common stereotype of the entrepreneur who usually emphasizes characteristics such as need for achievement, willingness to take moderate risks, and a strong self-confidence. Considering only these qualities, it should be noted that there is no scientific proof of the importance of these traits and that individuals who do not fit this profile, they can still succeed as entrepreneurs (Longenecker, Moore and Petty, 2004). It is common for entrepreneurs to feel attracted to the food sector due to the tradition of being a market that provides high short term profit and for being establishments able to provide service along with consumer items, taking advantage of strong trend and need of people perform their daily meals away from home (ABRASEL, 2012). In this sense, the concept of Fitzsimmons and Fitzsimmons (2000) can be pointed out by considering that the services are at the center of economic activity in any society. The authors also highlight the importance of restaurants because they belong to the group of social / personal services, which is essential to attend one of the main human needs, food. The fact is that economically, entrepreneurs are "eliminating trade and cultural barriers, shortening distances, globalizing and renewing economic concepts, creating new working relationships and new jobs, breaking paradigms and generating wealth for society (Dornelas, 2005, p. 6)." In this search for breaking paradigms, many companies question themselves over which area should be concerned about quality. Duran and Gryna (1991) stand for the idea that each specialized department is responsible for implementing its designated function, as well as the execution of certain business functions such as human relations, finance and quality. Thus, it is understood that in addition to the company intends to run, quality is a feature that should be inherent in any operation. So, the role of quality in business sphere enhances the concept that the quality of product and service is the gathering force of all departments, with a single goal: to meet the needs and expectations of customers (Falconi, 1999). 200

5 2.2 Quality According J.M Duran and Frank M. Gryna (1991, p. 11), "quality is the specification of a product at the expense of customer needs, enabling satisfy them regarding to the product." Companies providing services and care to offer a quality service, measuring and exceeding customer expectations, are being effective in their activity. For Berry (1996), strategically, the role of quality services should support the principles of: Credibility (offering reliable services); Surprise (surprise customers and extrapolate their expectations); Recovery (if the service was poor, seek regain customer) and Integrity (respect between company and customer). As long as well defined, these fundamentals are important to strengthen the appreciation of service by the customer, and can even affect the perceived cost-benefit ratio for the same. For this, Las Casas (2000) aware of the need to set up a sequence of procedures that involve research, creating organizational culture, continuous training, creating an organizational climate, communication plan and process involved in the establishment of control mechanisms. For this reason, the fierce competition of operations has been characterized by the development of competitive priorities, driving companies to develop superior skills in different aspects. 2.3 Competitive Priorities Several studies have been developed to improve organizational performance. Among them, the model of cumulative priorities proposed by Nakane (1986) which provides a sequential development of competitive priorities in operations, in order to improve priorities antecedents serve to further aid without causing problems or limitations. Based on the practices of Japanese manufacturing companies that showed competitive advantage in a large amount of variables against their competition, Nakane (1986) proposed the following sequence for the development of competitive priorities: quality, timeliness, cost and flexibility. This model was reinforced by another very similar (Hall, 1987) which stated that the best priority sequence was prioritizing the base as a form of guarantee and improvement of improvements obtained in priorities near the top, like a pyramid. Important studies were done by Ferdows and De Meyer (1990), concluding data related to the European industrial organizations in 1988, but did not confirm the sequence of priorities suggested by that model. However, the data analysis of 1988 on the U.S. portion of this segment, by Roth and Miller (1992), indicated the following priorities: quality, delivery, market scope, flexibility and cost. This study aimed to find differences involving the priorities of leading companies (those that reach their full business goals) compared to companies that are followers (ones the part that reach just part of their business goals). 201

6 Contrary to the idea of focusing on a single gain competitive advantage or competitive trade-offs, Ferdows and De Meyer (1990) found that static method, compromising the monitoring of the dynamics of the external environment. To do this, create a new concept or model and named the Earl of Sand (Sand Cone). They have improved the study of competitive priorities cumulative model subsequently through a slightly different sequence. Ferdows and De Meyer (1990) believed that quality and punctuality should be based on priorities, serving as a starting point and further flexibility (and in his study, meaning responsiveness) and cost, as the latest improvement to be observed in operations. They called this pyramidal structure of competitive priorities Sand Cone. In general, studies involving the cumulative model has always been linked to tests that aimed to validate a sequence of development priorities, but without empirical validation of success recorded so far, making it the subject of discussions about its applicability due to noticeable stiffness that presents itself and its limitations. It is also known that such studies were limited to validate the ability to develop a set of two or more concurrent priorities in the same organization and is not considered synonymous with sequential development test by the authors. About rigidity aspect, Ferdows and De Meyer (1990) stated that unless a company is developing its operations below the levels of qualification in its field, it should maintain focus on priorities more problematic, in order to categorize these as paramount. Fig. 1 Cone Sand (Sand Cone). Source: Carvalho, 2005, p. 32 adapted from Ferdows and De Meyer (1990) Despite the difficulty of validating a model of cumulative priorities, this study aimed to find empirical evidence on the assumption that quality is the priority that underpins all other improvements. Once chosen and tested, the model can oppose or extend the model of competitive priorities Cone Sand Theory. This study may also remain without conclusive findings, as others already tested or come to the conclusion that more closely resembles a choice of this or that, with no trade-offs. Therefore, these are the following are hypotheses of this research: H1: the suggested sequence for the development of competitive priorities is the one proposed by Ferdows and De Mayer (1990); H2: quality is the first competitive priority to be developed, but does not follow the model proposed by Ferdows and De Mayer (1990), and 202

7 H3: There is positive reflection of competitive priorities model on economic performance and the sustainability of the company studied. 3 Methodology This chapter discussed the methodology used to collect data from this study, that according Thums (2000), should not be considered only a secondary knowledge, but the condition instrument of accomplishing something. It is understood then, that the method guides and facilitates the researcher to develop a search. For Thums (2003), the methodology is the form or manner of accomplishing something. Therefore, it was defined the case study as a research strategy, the preparation and data collection, analysis of their evidence and prepare a roadmap where it observes the need and relevance of large and deep issues, as proposed by Yin (2010 ). For the development of this case study, a qualitative study was carried out based on a semi-structured questionnaire with closed questions. This research was conducted through random interviews with customers of the restaurant, because according to Malhotra (2005), qualitative research with small samples takes place to able context understanding and comprehension in which it is inserted. As a support tool in the analysis of correlation of data obtained from surveys, the present study used the IBM SPSS Statistics software version 18, which is able to suggest if there is an association between the questions and answer choices that result in a Pearson coefficient of less than 5%. According to Roesch (1999), in the case of small and medium businesses, the definition of the target costumer, usually involves the entire organization in their restructuring proposals. The purpose of this study was to develop a market research, addressing the Nostro Sabore restaurant clients, aiming to know your main preferences, needs and motivations. Therefore, the survey was conducted using a sample of 198 respondents representing a population of 8,000 clients monthly object of study, located in Porto Alegre (Brazil). The survey instrument used was a questionnaire that consisted of 7 questions with several sub items seeking to relate the respondents' answers to the reasons that led them to attend the object of study. The sample size was calculated statistically inferred confidence level of 95% in the results. 203

8 4 Results Presentation The tables below present the results of some of the questions in the questionnaire: Table 1 Correlation between questions 1 and 7 of the questionnaire 1 How often do you come to Nostro Sabore Restaurant? x 7 Come for the quality e variety of the hot dishes? Options No / Residual Adjust Yes / Residual Adjust Once a week 38 / 0,2 36 / -0,2 Twice a week 13 / -1,5 21 / 1,5 Three times a week 11 / -1,6 19 / 1,6 Four times a week or more 37 / 2,3 22 / -2,3 Total Table 2 Chi-square (χ2) de Pearson Test of Table 1 Value df Bi-lateral Test Chi-square de Pearson Test 7,878ª 3 0,049 Probability Reason 7, ,047 Linear Association 1, ,268 Number of Valid Cases 197 a. 0 cells (,0%) count less than 5. The minimum value is 14,92 As the test of Pearson Coefficient shown in Table 2, there is an association between "How often come to the Nostro Sabore Restaurant and attend for quality and variety of hot dishes" because the p-value resulted in 0.049, the indicates that the association between the two variables. Even through the analysis of adjusted residuals, you can check that customers, who frequent the restaurant 4 or more times a week, do not do it based on the quality and variety of hot dishes. Table 3 Correlation between questions 1 e 4.4 from questionnaire 1 - How often do you come to Nostro Sabore Restaurant? x 7 Come for quality and variety of meat? Options No / Residual Adjust Yes / Residual Adjust Once a week 61 / 3,1 13 / -3,1 Twice a week 18 / -2,3 16 / 2,3 Three times a week 16 / / 2 Four times a week 42 / 0,2 18 / -0,2 Total

9 Table 4 Chi-square (χ2) Pearson Test of Table 3 Value df Bi-lateral Test Pearson chi-square Test 13,856ª 3 0,003 Probability Reason 13, ,003 Linear Association 2, ,098 Number of Valid Cases 198 a. 0 cells (,0%) count less than 5. The minimum value is 9,24 Table 4 shows the intersection between issues 1 and 4.4 dividing the results by frequency band. The chi-square test presented in Table 29 was significant at 5% (p-value = 0.003), demonstrating that there is an association between the questions: How often do you come to the Nostro Sabore Restaurant? Do you come for the quality and variety of meat? The direction of the association is observed through analysis of the residue adjusted suggesting that those who attend the restaurant two or three times a week, they do so depending on the quality and variety of meats, while other attending only once or four times or more per week, do not take this fact into account. Table 5 Correlation between questions 1 and How often do you come to Nostro Sabore Restaurant?? x 4,8 Come for nice and fast service? Options No / Residual Adjust Yes / Residual Adjust Once a week 58 / 1,9 16 / -1,9 Twice a week 24 / 0,1 10 / -0,1 Three times a week 14 / -3,1 16 / 3,1 Four times a week or more 43 / 0,3 17 / -0,3 Total Table 6 Chi-square (χ2) Pearson Test of Table 5 Value df Bi-lateral Test Pearson chi-square Test 10,373ª 3 0,016 Probability Reason 9, ,021 Linear Association 1, ,163 Number of Valid Cases 198 a. 0 cells (,0%) count less than 5. The minimum value is 8,94. Table 6 lists the above questions 1 and 4.8, in order to verify whether there is an association between the questions: How often do you come to the restaurant Nostro Sabore? Do you come for nice and fast service? The Pearson coefficient obtained in Table 31 (p-value = 0.016) suggests a relationship between people 205

10 who frequent the restaurant 3 times a week and the service friendly and responsive, because the analysis of their respective adjustment waste. Table 7 Correlation between issues 1 and How often do you come to Nostro Sabore Restaurant? X 7.4 Come for the easiness due the location? Options No / Residual Adjust Yes / Residual Adjust Once a week 51 / 4,8 23 / -4,8 Twice a week 15 / -0,4 19 / 0,4 Three times a week 12 / -0,8 18 / 0,8 Four times a week or more 15 / -4,1 45 / 4,1 Total Table 8 Chi-square (χ2) Pearson Test of Table 7 Value df Bi-lateral Test Chi-square Pearson Test 26,636ª 3 0,00 Probability Reason 27, ,00 Linear Association 25, ,00 Number of Valid Cases 198 a. 0 cells (,0%) count less than 5. The minimum value is 14,09. The correlation between the questions: How often do you come to the Nostro Sabore Restaurant? Come for the easiness due to the location? It can be seen in Table 8, with the division schedules. According to the resulting p-value (0.000), there is indication of a strong association between the location and frequency of those going four or more times weekly, in Nostro Sabore. 5 Conclusion This study was an opportunity to test a theory that values an important characteristic which is quality, analyzed from the consumer point of view. In considering whether there is a relationship between these features found in the questionnaire responses and priority competitive Cone Sand Theory, one could suggest that the base of the pyramid Cone Sand proposed by Ferdows and De Meyer (1999), find similarity to the study conducted at Restaurant Nostro Sabore Restaurant. The quality is perceived as relevant by customers who attend 2 to 3 times and appreciate the quality and variety of meats and hot dishes. The competitive priority relia- 206

11 bility relates to the satisfaction of those who attend 1-2 times per week and highlight satisfaction with meals. The location is a major factor in deciding where to lunch, while cost efficiency does not seem to be relevant in choosing this property for 64.6% (128 people in the sample). There were no significant demands for fast delivery, in this case represented by the friendliness of the waiters and agility, as determinant of choice for this organization for 70.2% (139 people). For reasons of space, several tables were omitted from the analysis of this study. Thus, no relationship was observed between the order of competitive priorities (quality, reliability, speed and cost) established by the authors (Ferdows and DE MEYER, 1990) and the continuity of this restaurant, and the quality factor important association with its sustainability. Therefore, the Sand Cone model is validated by this specific case study for this organization. About the research hypotheses mentioned, we found that H2 and H3 were confirmed, and H2: "quality is the first priority competitive to be developed, but does not follow the model proposed by Ferdows and De Mayer (1990)" and H3: "There is a positive reflection of the model competitive priorities on economic performance and the sustainability of the company researched." Both were coherent with the results obtained in this work. It is suggested to continue the study, by conducting further research on investigative nature that enable monitoring and external market dynamics, opposed the idea of gain competitive advantage through a single competitive advantage or trade-offs, as encouraged by the authors Ferdows and De Meyer (1990) through the theory of Sand Cone. 6 References Abia (2012) Associação Brasileira Indústrias de Alimentação. Available at: < Accessed in: May, 2012 Abrasel (2012) Associação Brasileira de Bares e Restaurantes. Available at: < Accessed in: May, 2012 Berry, L (1996) Serviços de Satisfação Máxima. Rio de Janeiro: Campus Carvalho, R (2005) Estratégias de operações na indústria metal-mecânica brasileira: formulação, implementação e impactos sobre o desempenho empresarial. Business Dissertation, Universidade Federal do Rio de Janeiro, RJ, 2005 Chacon, L (2011) Agito na cozinha reflete movimento intenso da rua. Available at: < Accessed in: April, 2011 Dolabela, F (2008) O segredo de Luísa. Rio de Janeiro: Sextante Dornelas, JCA (2005) Empreendedorismo: transformando idéias em negócios. 2.ed. Rio de Janeiro: Elsevier Falconi, C (1999) Controle da qualidade total: no estilo japonês. Minas Gerais: Fundação Cristiano Ottoni 207

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