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CHAPTER 6: TOTAL QUALITY MANAGEMENT

1. Company practices in total quality management have achieved substantial success. Which majorbarriers do manufacturers and service providers have to face to continue improving the quality?

Despite of being one of the effective management methods in improving the quality of

products, the best way of satisfying the customer needs, and widely applied in many countries

around the world, interest and application in this management system are still limited because

of barriers following:

1. Perception of TQMPerception is considered to be the biggest barrier when approaching the TQM system. One

of the reasons making it difficult for enterprises to approach and construct TQM system is

lack of understanding of this system. One of the causes of this situation comes from the

actual level of management and quality management of the enterprise owners. They are not

qualified on expertise and management or professional training is inappropriate with job

duties.

A large portion of business owners is engineers, technician starting business on their own,

managing and directly participate in production; therefore, level of management is not high,

many businesses operate under family model and manage based on experiences.

Unqualified expertise and management of business executives not only reduce the

effectiveness of work they are in charge, but also their interest in the access to modern

management system like TQM.

Another reason comes from the system itself: TQM is a quality management system based

on a business philosophy and humanistic spirit, it is different from the quality management

system standards such as ISO 9000, GMP, HACCP Because of low management level,

together with always facing big obstacles in business, understanding and building TQM are

not appreciated by many companies. Besides, for enterprises, the rapid establishment in the

form of joint-stock companies, limited liability companies and private companies and rapid

dissolution and bankruptcy due to unprofitable operation cause the businesses to have less

interest in long-term management issues.

2. FinanceThe construction and application of TQM system acquire businesses to invest in certain

costs such as counseling activity, education training, applicable technical, statistics software,

management and administration and support for effective group work Depend on each

business and operating scale, costs are at different levels, but definitely occur in every

organizational department. However, businesses have low finance capability, which can be

seen from poor and deficient facilities, no fixed production sites, out-of-date technical

equipments and low expertise and management level therefore, it is difficult for

businesses to invest in business production, not to mention about investing in quality

management activities.

3. Management organization

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Application of TQM system acquires businesses to build a logical management model in

highly collective and humanistic spirit. That is a cross-functional management model, in

order to assist enterprises to coordinate function of the organs and different departments in

resolving issues related to quality.

In terms of personal relationships, TQM system requires managers to build an open

relationship, intimacy and promote the creative spirit of the staff. This means that managers

should often encourage employees to improve creative work. Businesses just require

employees to do the right tasks, no need for creativity or improvement. Doing the right

thing and a good job of individuals can bring great results to entire system if all tasks in the

system are conducted in a planned and clearly assigned, but this will make a passive

employees as they only listen to and follow the orders of their superiors without active

positive changes in handling affairs.

On measures to improve the quality, some companies choose the most important measures

which is to improve professional skills, a sense of responsibility for employees; others say,

the first factor to be the most concerned is management mechanism and quality control;

the remaining agree with the view to modernize equipment.

Although playing an important role in innovation and improving the quality, modernizing

equipment or appreciating mechanism for monitoring management are not long-term and

positive measures. With continuously growing science and technology, machinery and

equipment will often go outdated, which makes enterprises always have to face with the

problem of modernization of machinery and equipment. Appreciating management

monitoring mechanism will create a reinforced management, making employees to take

deal, not voluntarily, not to promote their skills and creativity.

Solution which is to invest in people, skills training, awareness and sense of responsibility

and coordination of all above factors would be the sustainable solution to improve and

enhance quality.

In ways of exchanging information, TQM requires managers to share all information to

employees in a public, comprehensive, accurate and timely manner. However, only few

enterprises apply this form of exchanging information, they almost tell employees the

necessary information. Be provided with transparent, full and accurate information will help

employees better understand the business, the objectives, tasks and responsibilities will

help them feel ownership of work and do the job better...

CHAPTER 8: PRODUCTIVITY

2. A boy building a lemonade stand on the corner of College and Air Park Avenue. Temperature ofarea is up to 100 degrees F in the summer. This intersection is located near a university and a

large construction site. Explain to the young entrepreneurs why his business could benefit from

economies of scale efficiency as well as some conditions which can lead to a reduction in

economic efficiency due to expanding scale.

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Answer:

Economies of scale (increasing returns to scale) means the long-term average cost decreases as

output increases. Non-economies of scale (diminishing returns to scale) means the long-term

average cost increases as output increases. Constant returns to scale means the long-term average

cost doesnt change as output increases.

At present:

Scale: small ( lemonade stand) Position: convenient

- corner of College and Air Park Avenueintersection, easy to see, visit and attract topassers.

- near a university and a large construction sitelabor and students bring a large potentialforce of customers in the surrounding area.

- Temperature of area is up to 100 degrees Fhigh temperature, high demand for coolingdrinks

Expanding scale:

Advantages:1. Effective specialization when output is larger, using professional labor and specialized

machinery ( hire specialized people to make upimprove quality of products, fast and firm

speed, release a large portion of qualified products in a short time.

2. Technical and superior manufacturing organization: when expanding the scale, the boy canuse automatic machine instead of manual preparation or replacement of single production

line with an ongoing series(such as packaging machines for customers to carry away, water-maker, water heater, tools taking lemon seeds, etc)quick service, shorten the time of

the preparation to meet the high demand, keeping customers.

3. The effectiveness of the purchase of raw materials ( sugar, ice, lemonade,) in largequantities thanks to quantities discount.

Disadvantages:1. Fixed costs increase (investment in machinery, equipment, hire qualified workers, etc)

Long-term average costs increase, production increased, LAC increased => efficiency

decreases with scale.

2. On the demand side, total market demand may not be sufficient to achieve minimumefficient scale after young entrepreneurs have invested in machinery, labor, space... to

expand scale.

3. If consumer demand for different products (the diversity of needs) such as cooling waterproducts, as well as more demand for fast food,... hinders the standardization and

processing for a long time.

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4. When construction is complete, or the temperature drops in the fall and winter, demand forlemon drops quickly.