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Chapter 3 Operations strategy 69
Figure 3.6 Different competitive factors imply different performance objectives
Order-winning and qualifying objectives
Order-winning factors
Qualifying factors
Less important factors
A particularly useful way of determining the relative importance of competitive factors is to
distinguish between ‘order-winning’ and ‘qualifying’ factors. 6 Order-winning factors are those
things which directly and significantly contribute to winning business. They are regarded by
customers as key reasons for purchasing the product or service. Raising performance in an
order-winning factor will either result in more business or improve the chances of gaining more
business. Qualifying factors may not be the major competitive determinants of success, but are
important in another way. They are those aspects of competitiveness where the operation’s performance
has to be above a particular level just to be considered by the customer. Performance
below this ‘qualifying’ level of performance will possibly disqualify the company from being
considered by many customers. But any further improvement above the qualifying level is
unlikely to gain the company much competitive benefit. To order-winning and qualifying
factors can be added less important factors which are neither order-winning nor qualifying.
They do not influence customers in any significant way. They are worth mentioning here only
because they may be of importance in other parts of the operation’s activities.
Figure 3.7 shows the difference between order-winning, qualifying and less important
factors in terms of their utility or worth to the competitiveness of the organization. The curves
illustrate the relative amount of competitiveness (or attractiveness to customers) as the
operation’s performance at the factor varies. Order-winning factors show a steady and significant
increase in their contribution to competitiveness as the operation gets better at providing
them. Qualifying factors are ‘givens’; they are expected by customers and can severely disadvantage
the competitive position of the operation if it cannot raise its performance above
the qualifying level. Less important objectives have little impact on customers no matter how
well the operation performs in them.
Different customer needs imply different objectives
If, as is likely, an operation produces goods or services for more than one customer group, it
will need to determine the order-winning, qualifying and less important competitive factors
for each group. For example, Table 3.1 shows two ‘product’ groups in the banking industry.