In 1987, the Harvard Business Review conducted a survey of its readers regarding the U.S. performance in the world markets. The study indicated that the U.S. had a deep‐seated problem of inadequate international competitiveness (Scott, 1987). More recently, Ernst & Young/American Quality Foundation undertook an International Quality Study which examined quality practices in Canada, Germany, Japan and the U.S. (See Bowles, 1992). The study revealed that 22 per cent of U.S. business always or almost always translate customer expectations into the design of new products and service. In Germany and Japan, the figure was 40 per cent and 58 per cent respectively. The results induced, Joshua Hammond, president of the American Quality Foundation, to state that “It is clear … that quality performance has a long way to go before it reaches parity with financial performance as a matter of primary importance to America's senior executives”. What makes the situation more complex and urgent is the fact that international competition has changed the structure of global markets and the rules of the business game. Furthermore, U.S. businesses no longer command the lead in the global marketplace and new international competitors are not only aggressive and competent, but appear to give priority to customer needs and expectations. For example, many Japanese companies view customer satisfaction as a way of building loyalty, thereby generating repeat sales. In contrast, U.S. executives have often aimed not at producing customer satisfaction, but at preventing customer dissatisfaction (Bowles, 1992). Similarly, the Fortune Global 500 List (Fortune 1995) showed that three countries accounted for the majority of the top 500 firms in the world; U.S. (151 firms), Japan (149 firms), and Germany (44 firms). Nevertheless, the list indicated that more Japanese companies have made it to the top ten (from three in 1993 to six in 1994), while the number of the U.S. firms stayed the same (three) in both years.
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