MASTER IN BUSINESS ADMINISTRATION (MBA)

CASE STUDY 2

COURSE: MBA6223 TOTAL QUALITY MANAGEMENT

By: A. HARIS AWANG(MBA2016-04-1001)

Submitted to:

Mr. Kumaran RamanDeputy Dean

Faculty of Business Asia Metropolitan UniversityTel: 03-9080 5888 Ext: 680

SECTION A (5Q*3%=15%)

CASE STUDY 2: TQM PRACTICES IN ZAMBIAN TOURISM INDUSTRY

Total Quality Management is a corporate business management philosophy which recognizes that customer needs and business goals are inseparable. It is applicable within both industry and commerce. TQM ensures maximum effectiveness and efficiency within a business and secures commercial leadership by putting in place processes and systems which will promote excellence, prevent errors and ensure that every aspect of the business is aligned to customer needs and the advancement of business goals without duplication or waste of effort. The TQM factors revealed by the study were the quality practices of the top management, employee involvement in the quality management system, customer focus, process and data quality management and quality tools and techniques implementation.

According to the findings, these factors significantly affect the companies' performance with respect to their internal procedures, customers, market share and the natural and social environment. The subjective data was dependent on the perceptions of quality from Tourism Organizations’ point of view and the fact that the sample organizations came from small tourism enterprises constitute the limitations. From the findings, it is evident that not much has been done in the Zambian tourism industry in relation to TQM. There is a need to improve infrastructure as well as transport networks to the remote areas. A clear lack of a quality policy formulation and a lack of funding have adversely affected marketing efforts. In addition to this, low wages and a bureaucratic system have contributed to a lack of motivation for employees.There is also a lack of training facilities leading to unskilled labor in the industry and Zambia was also found to be an expensive tourist destination.

Source: Kasongo & Moono (2000)

a) “TQM is a corporate business management philosophy which recognizes that customer needs and business goals are inseparable”. Evaluate this statement.

Answer:

The above statement is true. Customer needs and business goals are inseparable in any organization that places quality management system as a corporate business philosophy.

To justify, firstly, a look into how TQM is defined by various industries is necessary. Secondly, examples on business goals as well as customer needs will also be looked into.

Definitions of TQMThe United States Navy, where TQM was branded in 1985, emphasizes quality to be defined by customers' requirements as one of its TQM key concepts. [1]

Several other notable organizations have also attempted to define it.

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The United States Department of Defense (1988) defines TQM as a strategy for continuously improving performance at every level, and in all areas of responsibility that combines fundamental management techniques, existing improvement efforts, and specialized technical tools under a disciplined structure focused on continuously improving all processes. It further states that, improved performance is directed at satisfying such broad goals as cost, quality, schedule, and mission need and suitability and concludes that, increasing user satisfaction to be the overriding objective. [2]

A definition of TQM by British Standards Institution (standard BS 7850-1:1992) states that, “A management philosophy and company practices that aim to harness the human and material resources of an organization in the most effective way to achieve the objectives of the organization.” [3]

International Organization for Standardization (standard ISO 8402:1994) defines TQM as “A management approach of an organization centered on quality, based on the participation of all its members and aiming at long term success through customer satisfaction and benefits to all members of the organization and society.” [4]

The American Society for Quality defines TQM as a management approach to long-term success through customer satisfaction where it is based on all members of an organization participating in improving processes, products, services and the culture in which they work. [5]

The Chartered Quality Institute defines TQM as a philosophy for managing an organization in a way which enables it to meet stakeholder needs and expectations efficiently and effectively, without compromising ethical values. [6]

The organization I am currently working with, Onkyo Asia Electronics Sdn. Bhd., has a quality policy that reads, “Customer comes first. The next process is customer.”

Customer Needs and Business GoalsAs can be seen from the inclusion of “customer” in most of the definitions by various industries, one might ask, “Who are the customers?”

Customers are divided in two categories. One is internal and another is external. Internal customers can be the next process. For example, the administration department is responsible the hiring of new workers for the production department. In this case the production department is the customer. Moreover, the production manufacture products and send them to shipping department for export. In this case, the shipping department is the customer. So, everyone or every process in an organization can be a customer.

On the other hand, external customers can be buyers of a product or a service. For example, a buyer at a grocery store is a customer. A person who sends his car to a car wash is also a customer. Stakeholders of a company can also be a customer that the management has to satisfy.

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The following diagram summarizes the relationship between customer needs and business goals.

For example, when a company offers poor quality products or services to customers, it will lose its reputation, market share, sales or profit. Customers may complain and ask for a refund, or products may be returned for repair and so on which only adds costs to the company. If quality is not continuously improved, profitability will be hurt and the company may run of out of business sooner or later.

Conclusion In conclusion, for TQM to be successful in an organization, business goals and customer needs cannot be separated. They have to work in tandem with one complementing another. Without fulfilling customer needs, for example, quality, price, delivery and value, it is impossible for an organization to fulfill its business goals. TQM also emphasizes continuous quality improvement throughout all processes that not only ensures customer satisfaction but also targets long-term survival for an organization.

b) Analyze the relationship between the employee involvements in the quality management system company’s performance.

An analysis of how employee involvements affect company’s performance is discussed below.

Low employee involvement in the quality management system will only negatively affect company’s performance. For example, if only employees in the QA department are concerned with quality, while other employee think quality is not their job, the company will face serious

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Customer Needs

WHAT THEY WANTQualityPriceValueOn-time delivery

Business Goals

WHAT COMPANY WANTSProfitMarket ShareBrand ReputationSales

problems. For example, if the raw material purchaser believes that quality is not his or her concern, defective parts may be introduced into the process and may cost the company downtime, defective products and expensive reworks.

Another example is if the HR department hires employees without the required qualifications and experience, without considering the effect this may have on the next process, problems may happen as the newly hired employees may not be able to perform accordingly. Mistakes may happen along the way and may cause bad services or poor quality products. At the end, it may cost the company more money to fix the mistakes. Not only that, the company may also lose its reputation and customers may not be returning.

On the other hand, the more involved employees are in the quality management system, the better the performance the company will achieve. Ideally, in a TQM practicing company, everyone from top to bottom has to be involved in TQM – from cleaners, gardeners, guards, operators, supervisors, clerks, drivers, engineers, payroll officers, accountants, suppliers, canteen operators, managers, right up to the CEO.

TQM does not only cover product or service quality, but also the quality of each employee’s operation throughout the company. Everybody has to perform according to the SOP regardless of their position. The top management has to play their role in creating the climate suitable for everyone to participate in quality activities such as quality campaign, quality circles, quality audits, and quality awareness programs. They have to be seen by all employees as serious when it comes to quality.

Each process in a company has some relationship with other processes. Quality is no longer the responsibility of few individuals. Employees’ involvement means employees empowerment. Companies that empowers their employees can elevate itself to a higher level of quality management called Autonomous Quality Control (AQC), where decisions concerning quality can be made by employees at the shop floor level.

In a TQM work environment, employees are encouraged to use their expertise and knowledge to suggest methods for improvements in their work areas. These suggestions could relate to continuous improvements in the job, the product and the work environment. It is becoming popular for companies these days to venture into a participation-style of management by involving employees in the problem solving and decision making processes.

Companies that have achieved a close relationship between workers and managers are usually more successful.

Quality is everybody’s business.

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c) Evaluate the factors that significantly affect the companies' performance with respect to their internal procedures, customers, market share and the natural and social environment.

Factors that significantly affect company’s performance are evaluated based on each performance criterion as follows:

Internal proceduresInternal procedures, also known as standard operating procedures (SOP), are the backbone of operations in any industry. Total quality management system requires internal procedures to be in place so that performance at each stage of the operations can be defined, measured, analyzed, improved and controlled (DMAIC).

A failure in the operations may be the result of not having proper internal procedures or not following internal procedures. Usually, a company that performs well is a company that follows its internal procedures.

Factors that significantly affect the application of internal procedures are time pressure, workload, poor communication, staffing levels, insufficient training and supervision, and insufficient facilities which are quite common. Impractical SOPs also makes it difficult for employees to follow. SOPs enforcement is another factor that can lead to failure or success. [7]

For example, an operator is supposed to wear a protective mask when performing soldering process at the workstation as per the SOP. But the mask is not provided by the management. This is in clear violation of the SOP and when it comes to quality audit, a non-conformance is recorded and escalated. Since the operator is exposed to toxic vapor, health related issues may crop up and may result in high absenteeism.

CustomersThe measure of customer satisfaction is a very important indicator or a company’s performance. This can be assessed by surveys or from customer complaints records. Customers are buyers or clients that buy products or services from a company so it is important for a company to satisfy their customer expectations.

In a study by Hwang J & Zhao J (2010) on Factors Influencing Customer Satisfaction or Dissatisfaction in the Restaurant Business, customer satisfaction can be linked directly to sales. Their study indicates three perceived quality factors (good value, tasty food, and restaurant cleanness) most affected satisfied customers. Other three perceived quality factors (good value, tasty food, and employees’ knowledge of menu) most affected dissatisfied customers. [8]

Factors that significantly affect customer satisfaction is how well customer expectations are met in terms of quality, performance, delivery and value. A product that performs poorly can only result in dissatisfied customers who will not recommend the products to his friends and relatives.

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For example, a product that breaks down within two days can cause dissatisfaction to the customer. He may be asking for a refund or returning it to the seller for a replacement.

Market ShareThe market share is also a very important performance of a company. This is an indicator of its dominance in the industry. Maintaining its position in the market is crucial as this will likely ensures its survival in the competitive market.

Lacking continuous improvements on products innovation and quality is a significant factor that affects company’s performance in term of market share.

Take for example, Blackberry by Research in Motion (RIM). Yesterday, it was “the” phone brand embraced by many enterprises and even being spotted in the hand of President Obama’s. Today, it is reduced to almost non-existence with a barely noticeable market share of 0.2%. [9]

Blackberry phones were focused and targeted at enterprises while ignoring the individual market segment. The launched of Apple’s iPhone has changed the game. Despite the introduction of the Z10 and the Playbook, Blackberry was a little too late to respond in order to survive.

Natural and Social Environment

Natural environment consists of natural surroundings and is an important indicator of a company’s performance. A company’s day-to-day operations can pose an ongoing threat to the natural environment for example pollutions, waste and so on. To minimize the damage to the natural environment, several factors that significantly affect the natural environment are discussed as follows:

Environmental regulations: It is mandatory for a company not only to follow its internal procedures but government regulations as well. For example, ISO14001 as practiced in a company must include government environmental standards. Without that, a company may face severe penalty as its operations may damage the environment. As a result, natural environmental factors, such as clean water and clean air, dictate how companies conduct their operations.

Social environment on the other hand, consists of relationships with other people in an organization and is an important indicator that reflects performance.

One of the significant factors under social environment that affects company’s performance is job satisfaction among employees. People who are unhappy at their jobs may still do the job as usual but at times becoming disgruntled, uncooperative and counterproductive. Job dissatisfaction can lead to poor interpersonal relationships, thus creating a poor working environment. On the contrary, when the majority are happy and satisfied at their jobs, they are more likely to contribute positively to company culture.

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Teamwork is also a significant factor. Cooperation in the workplace contributes in helping the creation of a supportive social environment. People who work together on projects rather than competing, learn that their best interests are shared together which will only benefit all of them.

Office politics on the other hand, is a factor that can adversely affect company’s performance thus creating an unhealthy social environment. Office politics issues must be monitored and addressed by the leadership. Sensitive issues can range from gender relations to religion to race to actual politics, such as co-workers who become excessively adamant about supporting different political parties. Guidelines and rules of conduct designed to prevent this kind of disruption and interpersonal tension must be in place.

END OF THE PAPER

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References1. Houston, Archester (1988). A Total Quality Management Process Improvement Model. Navy

Personnel Research and Development Center. p. 1.

2. TOTAL QUALITY MANAGEMENT MASTER PLAN (1988). United States Department of Defense. p. 1.

3. Hoyle, David (2007). Quality Management Essentials, Oxford, United Kingdom. Butterworth-Heinemann, p. 200.

4. Pfeifer, Tilo (2002), Quality Management: Strategies, Methods, Techniques. Munich, Germany. Carl Hanser Verlag, p. 5.

5. Quality Glossary - T. asq.org. (2013). Milwaukee, Wisconsin: American Society for Quality.

6. Factsheet: Total quality management (TQM) (2013). www.thecqi.org. London, England: The Chartered Quality Institute.

7. Health and Safety Laboratory for the Health and Safety Executive (2012). Human factors that lead to non-compliance with standard operating procedures.

8. Hwang J & Zhao J, (2010). Factors Influencing Customer Satisfaction or Dissatisfaction in the Restaurant Business. Journal of Quality Assurance in Hospitality & Tourism, 11(2), 93 – 110.

9. Haselton, T. (2016). TechnoBuffalo. Retrieved 1 June, 2016, from http://www.technobuffalo.com/2016/02/18/mobile-os-market-share-gartner/

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