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Sunday, September 6, 2009

TQM as a long term strategy

As per bized, Total Quality Management (TQM) "is a business philosophy that seeks to encourage both individual and collective responsibility to quality at every stage of the production process from initial design and conception through to after sales service."
Total Quality has come a long way and it is now accepted globally. It started as an inspection function and the major duty of the operator was to check the end product. With the increase in the industrialization there came the need of separate inspection department. This department was responsible for standards, training, and recording of data and the accuracy of measuring equipment.
The emphasis then gradually shifted to the prevention of defects which led to the emergence of quality control department. In late 1940 companies began using statistical tools. In the early 1950's, quality management practices developed rapidly in Japanese plants, and by 1970s it was popular in US and Europe.
In 1969 the first international conference on quality control, sponsored by Japan, America and Europe, was held in Tokyo. In a paper given by Feigenbaum, the term "total quality" was used for the first time, and referred to wider issues such as planning, organisation and management responsibility. In 1980s west started adapting the quality management after some of the countries like UK started experiencing decline in world trade. The British Standard (BS) 5750 for quality systems had been published in 1979, and in 1983 the National Quality Campaign was launched, using BS5750 as its main theme. The aim was to bring to the attention of industry the importance of quality for competitiveness and survival in the world market place. Since then the International Standardisation Organisation (ISO) 9000 has become the internationally recognised standard for quality management systems. ISO 9000 is mainly concerned with quality management in relation to customer requirements, customer satisfaction, adherence to regulations and the pursuit of continuous improvement.
In this century TQ is used to improve the performance of the organization and it is now becoming the part of the process leading to excellence in business.
Organization can utilize TQ principle to improve its business process for accomplishment of business objectives. TQM recognizes the importance of internal customers and thus introduced the concept of quality circles. A Quality Circle consists of employees who are trained to identify, analyze and solve work-related problems and present their solutions to management in order to improve the performance of the organization, and motivate and enrich the work of employees. (Wikipedia, 2009). Quality circle helps in greater empowerment and in continuous improvement of the processes. TQM helps to change the attitude of the employees and the quality becomes embedded in each process. TQM should not be considered as a short term solution. Organization must take TQM as long term strategy.

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Sunday, August 30, 2009

Global Market Update

Read Global Market update -August 2009, on my website:

Thursday, June 11, 2009

Importance of Strategic Planning

Strategic management

As per "Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations".

In other words, strategy is about:

“* Where is the business trying to get to in the long-term (direction)

* Which markets should a business compete in and what kind of activities are involved in such markets? (markets; scope)

* How can the business perform better than the competition in those markets? (advantage)?

* What resources (skills, assets, finance, relationships, technical competence, facilities) are required in order to be able to compete? (resources)?

* What external, environmental factors affect the businesses' ability to compete? (environment)?

* What are the values and expectations of those who have power in and around the business? (stakeholders)”

As per quickmba, “Strategic planning clearly defines objectives and assesses both the internal and external situation to formulate strategy, implement the strategy, evaluate the progress, and make adjustments as necessary to stay on track.”

Importance of Strategic Management and Planning

Strategic management provides guidance to the organization and sets the future direction of the organization. It helps the organization in achieving the competitive advantage to the organization. It also tells about the organization about its market, values and the way to handle the resources in order to meet the objectives of the organization. Thus Strategy and planning will help the organizations in following manner:

1) Help in establishing objectives after analyzing the internal and external environment.

2) It will focus on the aspects which will make the organization unique to achieve competitive advantage. As per quickmba, Competitive advantage is a firm's ability to transform inputs into goods and services at a maximum profit on a sustained basis, better than competitors.

3) It will provide the future direction and path to the organization

4) It will help in optimal utilization of the resources

5) It will help in controlling the action of the organization

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Wednesday, May 13, 2009

What Every Manager Should Learn From Sales

I thought to share this nice article:

Business is all about customers and selling. That’s why every manager and executive should be a salesperson once in his career. The skills and lessons are indispensible and difficult to learn any other way.

I don’t care if you manage engineers, marketing, operations, or customer service; you’re still a salesperson. You sell every day. You don’t just sell products and services; you sell your projects, budget, ideas, and capabilities. And your customers aren’t just the paying kind; they include everybody you interface with.

I spent years in sales, even took a step back from a management career to learn the skills. It was the best career move I ever made. I learned some critical lessons along the way; here are five:

What Every Manager Should Learn From Sales

* Shut up and listen. Nothing you’ve ever read or learned is nearly as important as what the person across from you is about to say … if you just shut up and listen. When you talk first, you lock yourself into a position or path. But if you listen, you gain far more information.
* Problems create opportunities. Your biggest and best opportunities to make a difference will always be when things go wrong. How you respond in time of crisis, when somebody needs you, is a window into your true capability. And that spells opportunity if you rise to the occasion.
* It’s all about relationships. There are no companies or businesses, just people. Business is all about individuals and their interrelationships. When things go wrong, that’s the glue that holds everything together. There’s no such thing as a self-sustaining business.
* Your customer always does come first. Call it business Karma, but whatever you have going on, whatever you expect to accomplish on any given day, when somebody, anybody comes to you with a problem, help them first. Remember: you have way more customers than you think.
* Understand motives. When you think about what you’re going to say or do, you miss an opportunity to make a difference. If, on the other hand, you ask, “how can I help you,” or ask yourself “what’s in it for her,” you’ll be in a far better position to help … and recognize opportunities.

Last Word
The beauty of selling is that you learn under fire, which naturally accelerates the learning process. There truly is no better way to learn how business really works.

Wednesday, April 22, 2009

Financial Goals of Organization

The two important financial goals of organization can be profit maximization and wealth maximization. Out of this wealth maximization is most important because it is based on cash flows of the organizations. On the other profit maximization can be vague as there can be multiple interpretations of profits. Moreover profits do not take care of time value of money and ignore risk attached to the returns. Also profit maximization focus on short term profitability which may not lead to long term wealth creation. Hence financial management is concerned with value maximization.

Management's efforts are for increasing the value of the company for the shareholders. This requires investing in projects that are likely to provide positive returns to the company. Hence wealth maximization accounts for the timing and risk of the expected benefits.

Earnings are valued by deducting the total costs from total income. Hence Net Earnings = Total Income - Total costs. Cash flows will only take cash inflows and cash outflows. Increase in cash flows can lead to improvement in wealth maximization. Management decisions affect the stockholder wealth greatly. They can affect the wealth by following decisions:

• Present and future earnings per share
• Investment decision: This is related to deciding about the composition of fixed assets
• Financing decision: This is deciding about the mix of sources of funds
• Working capital managements
• Profit allocation decisions

We must understand that the firms' primary objective is maximizing the welfare of owners, but, in operational terms, they focus on the satisfaction of its customers through the production of goods and services needed by them. Firms state their vision, mission and values in broad terms. Wealth maximization is more appropriately a decision criterion, rather than an objective or a goal.

Pandey, I.M. Financial Management. (IXth edition, Vikas Publications)

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Monday, March 30, 2009

Business after recession

The word “Recession” is the buzzword around the globe these days and has become the most famous word. As I can’t say that it has become the most famous “brand”. Recession means slowdown in growth or may be no growth at all. There is a positive side too; now companies are becoming more focused, realizing the value of managing costs and taking action to improve the customer loyalty and Brand image. Moreover despite the global economic slowdown, Indian retailers are hopeful of India growth story. As per Mr Tarun Joshi, CEO and MD of Brandhouse Retails said “Fashion retail has not been impacted in a big way. Not even 0.5 per cent of the working population has been hit in India.” “The Indian economy is more stable than other economies across the world and one must not confuse India with the rest of the world”, reiterated Mr Sandeep Kulhalli, V-P, Retail and Marketing, Tanishq.

I would be discussing certain measures which a fashion organization can take to tackle recession in an effective manner. First measure that the fashion organizations should take is to have greater focus on their core competences. This means that organizations should focus their efforts on those activities which they do well and outsource non-core activities. This will give twin benefits of improving quality and reducing costs.

Another measure which I will suggest is to manage the costs in an effective manner. Let me discuss the case of Future group here. As per the economic times, “It is the only Indian retailer that has managed to grow sales by 25%. Its operating margin crossed the 10%-mark, up 1.4% year-on-year, while manpower and operating costs fell 1.33% and 1.78%, respectively.” This was possible due to their early start of cost cutting efforts. For this they outsourced the non core functions like I/T and started optimizing the costs. Moreover its rentals are less than the other players. I will give another example, but of a Non –Fashion company. Infosys, In an internal communication sent to employees, Infosys CEO Kris Gopalakrishnan “has urged the employees as the stake holders in the company to help in cutting the operating cost and controlling expenditure.” For this the company has created a website and is seeking suggestions and ideas from the employees. Up till not the company has already received 1000 plus ideas.

Last thing which I will suggest is to do the customer profiling. This is the right time to utilize the spare time for building tighter bond with the consumers. Fashion companies should consider the different sub-groups of customers they have and how they differ in terms of types of purchase, cost of purchases, servicing needs, communication methods, total purchase transaction time, post-purchase needs, complaint issues, and others. This will help in profiling. Profiling helps in understanding everything from how to best service the customer to delineating the best methods for marketing, selling, and retaining these customers. The rule of the thumb is to never assume anything about your customers.

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References: It is a snapshot of the page as it appeared on 20 Mar 2009 04:41:26 GMT.

About the Author:

Rahul Jain is an MBA from MDI (1998 batch) and holds his B Com (Hons) from Delhi’ Hansraj College. He is also a qualified fellow company secretary and is currently working as Director in - Sundeep Global Ltd and Sundeep Knitwear Industries Ltd. He is visiting faculty for various Education Institutions such as MDI Gurgaon, AIMA, JIMS, NIFM, Pearl Academy of Fashion, TIME, ICSI, ICAI for subjects including Financial Management, Financial and Management Accounting, Security Analysis & Portfolio Management, Corporate Finance, Corporate Strategy, Personality development etc. He has written numerous research papers and articles. He is the CEO of