Question

5. What does Total Quality management emphasize (or put stress on)? 6. What are the two factors that can prevent a manager to maximize profit ? 7. Give an example of (a) planning (b) decision making 8. What is employee empowerment ? 9. How can ethical conduct improve profitability of a company

Answer 1

Q.1

TQM can be summarized as a management system for a customer-focused organization that involves all employees in continual improvement. It uses strategy, data, and effective communications to integrate the quality discipline into the culture and activities of the organization. Many of these concepts are present in modern quality management systems, the successor to TQM. Here are the 8 principles of total quality management:

• Customer-focused: The customer ultimately determines the level of quality. No matter what an organization does to foster quality improvement—training employees, integrating quality into the design process, or upgrading computers or software—the customer determines whether the efforts were worthwhile.
• Total employee involvement: All employees participate in working toward common goals. Total employee commitment can only be obtained after fear has been driven from the workplace, when empowerment has occurred, and when management has provided the proper environment. High-performance work systems integrate continuous improvement efforts with normal business operations. Self-managed work teams are one form of empowerment.
• Process-centered: A fundamental part of TQM is a focus on process thinking. A process is a series of steps that take inputs from suppliers (internal or external) and transforms them into outputs that are delivered to customers (internal or external). The steps required to carry out the process are defined, and performance measures are continuously monitored in order to detect unexpected variation.
• Integrated system: Although an organization may consist of many different functional specialties often organized into vertically structured departments, it is the horizontal processes interconnecting these functions that are the focus of TQM.
  • Micro-processes add up to larger processes, and all processes aggregate into the business processes required for defining and implementing strategy. Everyone must understand the vision, mission, and guiding principles as well as the quality policies, objectives, and critical processes of the organization. Business performance must be monitored and communicated continuously.
  • An integrated business system may be modeled after the Baldrige Award criteria and/or incorporate the ISO 9000 standards. Every organization has a unique work culture, and it is virtually impossible to achieve excellence in its products and services unless a good quality culture has been fostered. Thus, an integrated system connects business improvement elements in an attempt to continually improve and exceed the expectations of customers, employees, and other stakeholders.
• Strategic and systematic approach: A critical part of the management of quality is the strategic and systematic approach to achieving an organization’s vision, mission, and goals. This process, called strategic planning or strategic management, includes the formulation of a strategic plan that integrates quality as a core component.
• Continual improvement: A large aspect of TQM is continual process improvement. Continual improvement drives an organization to be both analytical and creative in finding ways to become more competitive and more effective at meeting stakeholder expectations.
• Fact-based decision making: In order to know how well an organization is performing, data on performance measures are necessary. TQM requires that an organization continually collect and analyze data in order to improve decision making accuracy, achieve consensus, and allow prediction based on past history.
• Communications: During times of organizational change, as well as part of day-to-day operation, effective communications plays a large part in maintaining morale and in motivating employees at all levels. Communications involve strategies, method, and timeliness.

Q.2

Quantitative Factors

The most obvious, easily identifiable and broad numbers that affect your profit margin are your net profits, your sales earnings, and your merchandise costs. On your income statement, look at net revenues and cost of goods sold for a very general view of these major variables.

Dig a little deeper, and sales prices become very important factors. Increase your net profit margin by doing a good job of managing your merchandise costs, and you can increase your sales prices at the same time.

Inventory numbers matter, too. Even though inventory is recorded as an asset on the balance sheet, you do not record sales revenues until the transaction has actually taken place. Devalued inventory can hurt profit margins, and getting rid of inventory through increased sales can help profit margins.

An underrated variable – and one that you have very little control over – is taxation, since taxes affect net income.

Qualitative Factors

There are too many qualitative factors to list in a short article, but consider all of the elements that might affect the sale of any given product, such as market share, effective advertising, seasonal changes, consumer preferences, company leadership, sales reward programs, training programs for employees and the competition's strength.

Q.3

Planning

For example, manpower planning or human resource planning is a crucial planning process which ensures the right kind of people at the right place, and at the right time to fulfil the right type of jobs in the organizations. This process includes different activities in the planning process to meet organizational goals..

Decision making

For example, HR department issues like handling grievances related to leaves or attendance of employees require programmed decisions. Non-programmed decisions are made for tough situations where defining different alternatives are a challenging task. These types of decisions strategically affect organizations.

For example, decisions related to expanding the operation of an organization to other countries, launching a new product, introducing performance management system for the first time to the employees are non-programmed decisions where decision-making is a challenging task and these decisions are mostly taken by management or at the top-level.

Q.4

Empowerment is the process of giving employees in the organization the power, authority, responsibility, resources, freedom to take decisions and solve work related problems. In order to take such initiatives and decisions, they are given adequate authority and resources.

This allocation of authority is not based on the concept of “delegation” based relationship. In empowerment it is a “trust based relationship”, which is established between management and employees. It is a continuous process.

The empowered employee becomes “self-directed” and “self-controlled”. Empowerment focuses on employees to make use of their full potential. On the other hand, empowerment means giving up control on employees and letting every employee make decisions, set goals, accomplish results and receive rewards. It means making a person able to manage by himself. It is a process for helping right person at the right levels to makes the right decision for the right reasons.

Q.5

A long-term view of business success is critical for accurately measuring profitability. All the company’s stakeholders benefit from managers’ ethical conduct, which also increases a business’s goodwill and, in turn, supports profitability. Customers and clients tend to trust a business that gives evidence of its commitment to a positive long-term impact. By exercising corporate social responsibility, or CSR, a business views itself within a broader context, as a member of society with certain implicit social obligations and responsibility for its own effects on environmental and social well-being.