2.3.7

Total Quality Management

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Total Quality Management

Total Quality Management (TQM) is a set of management principles that places quality at the heart of everything a business does. Every employee must do every aspect of their job to the highest possible standard in order to achieve high customer satisfaction.

Quality focus

Quality focus

  • TQM is a culture of quality that ensures quality in production, sales and after-sales customer service.
Costly

Costly

  • TQM is often very beneficial for an organisation, but it can be expensive. It can mean training the employees in the principles and making sure they embrace the culture.
    • Businesses like Casper mattresses offer a free 100 night trial on their products because they are confident that their product quality is good and that consumers will like their mattresses.
Customer feedback

Customer feedback

  • TQM values customer feedback highly in order to keep improving the product.
  • Through this, the organisation aims to keep improving and producing products of the highest standard to give customers the best experience possible.

Benefits of Maintaining High Product/Service Quality

High quality can lead to additional sales. If firms compete on quality (as well as price) then keeping quality high could increase a firm’s sales. They may attract more new customers and existing customers may be more satisfied and buy the product again.

Image/reputation

Image/reputation

  • When customers are satisfied with a product’s quality, they view the business and the brand as being a high quality brand.
  • This positive reputation can win more customers and let the company charge a higher price.
Higher price

Higher price

  • Having a high quality product means that a business is able to charge customers more for the product.
  • Customers are often willing to pay a premium for a good product. Consumers pay a lot of money for Apple products like the MacBook laptop computer and the iPhone because they are perceived as very high quality.
  • Being able to charge a higher price means a firm is able to earn more profit (providing the costs of TQM aren’t too much).
Avoid product recalls

Avoid product recalls

  • If a business has a high quality product, it is unlikely to have to recall it for quality or safety issues, like Volkswagen did with their cars in 2015.

Costs of Maintaining High Quality/Service

There are some costs of maintaining higher quality products and services:

Inspection costs

Inspection costs

  • There are costs associated with inspecting and identifying quality problems throughout the production process.
Staff training

Staff training

  • It costs firms money to train employees and get them to embrace a culture of quality (TQM).
Provision of services

Provision of services

  • Providing services like customer service to ensure high quality will cost the business money.
Jump to other topics
1

Investigating Small Business

1.1

Enterprise & Entrepreneurship

1.1.1The Dynamic Nature of Businesses1.1.2Risk & Reward1.1.3The Role of Business Enterprise1.1.4The Role of Business Enterprise 21.1.5The Role of the Entrepreneur1.1.6End of Topic Test - Dynamic Nature of Business1.1.7Grade 9 - Dynamic Nature of Business
1.2

Spotting a Business Opportunity

1.2.1Customer Needs1.2.2Market Research1.2.3Market Segmentation1.2.4The Competitive Environment1.2.5Primary & Secondary Market Research1.2.6End of Topic Test - Business Opportunities1.2.7Application Questions - Business Opportunities1.2.8Exam-Style Questions - Market Segmentation1.2.9Diagnostic Misconceptions - Competition
1.3

Putting a Business Idea into Practice

1.3.1Business Aims1.3.2Business Objectives1.3.3Business Revenues & Costs1.3.4Costs - Calculations1.3.5Revenue - Calculations1.3.6Business Profits & Break-Even Analysis1.3.7Profits & Losses - Calculations1.3.8Interest - Calculations1.3.9Cash & Cash Flow1.3.10Cash & Cash Flow 21.3.11Cash Flow - Calculations1.3.12Sources of Business Finance1.3.13End of Topic Test - Business in Practice1.3.14Grade 9 - Business in Practice1.3.15Exam-Style Questions - Business in Practice1.3.16Diagnostic Misconceptions - Profit1.3.17Diagnostic Misconceptions - Company vs Business1.3.18Diagnostic Misconceptions - Economies of Scale1.3.19Diagnostic Misconceptions - Cash Flow1.3.20Diagnostic Misconceptions - Break-even1.3.21Diagnostic Misconceptions - Fixed Costs
1.4

Making the Business Effective

1.4.1The Options for Start-Up & Small Businesses1.4.2Limited Liability1.4.3Franchising & Not-For-Profits1.4.4Business Location1.4.5The Marketing Mix1.4.6Business Plans1.4.7End of Topic Test - Effective Business1.4.8Application Questions - Effective Business1.4.9Exam-Style Questions - Business Plans
1.5

Business Stakeholders

1.5.1Business Stakeholders1.5.2Technology & Business1.5.3Legislation & Business1.5.4Legislation & Business 21.5.5The Economy & Business1.5.6External Influences1.5.7End of Topic Test - Business Stakeholders1.5.8Grade 9 - Business Stakeholders1.5.9Diagnostic Misconceptions - Recessions
2

Building a Business

2.1

Growing the Business

2.1.1Business Growth2.1.2Finance2.1.3Changes in Business Aims & Globalisation2.1.4Ethics & Business2.1.5The Environment & Business2.1.6End of Topic Test - Growing a Business2.1.7Application Questions - Growing a Business2.1.8Exam-Style Questions - Business Growth
2.2

Making Marketing Decisions

2.2.1Product2.2.2Product Life Cycle2.2.3Price2.2.4Pricing Methods2.2.5End of Topic Test - Product & Price2.2.6Grade 9 - Product & Price2.2.7Promotion & Advertising2.2.8PR & Sales Promotions2.2.9Sponsorship & Product Placement2.2.10Promotional Mix2.2.11End of Topic Test - Promotion2.2.12Application Questions - Promotion2.2.13Exam-Style Questions - Promotional Mix2.2.14Place & Wholesalers2.2.15Direct to Consumer2.2.16E-commerce & M-commerce2.2.17Diagnostic Misconceptions - Decreasing Price2.2.18Diagnostic Misconceptions - Advertise vs Promote2.2.19Diagnostic Misconceptions - Social Media
2.3

Making Operational Decisions

2.3.1Job Production2.3.2Batch & Flow Production2.3.3Working with Suppliers2.3.4Effective Supply Chains2.3.5Just In Time & Just In Case2.3.6Managing Quality2.3.7Total Quality Management2.3.8The Sales Process2.3.9End of Topic Test - Operational Decisions2.3.10Grade 9 - Operational Decisions2.3.11Exam-Style Questions - Managing Stock2.3.12Diagnostic Misconceptions - JIT vs JIC
2.4

Making Financial Decisions

2.4.1Gross Profit & Net Profit - Definitions2.4.2Gross Profit - Calculations2.4.3Net Profit - Calculations2.4.4Rate of Return2.4.5Rate of Return - Calculations2.4.6Research & Financial Data2.4.7Marketing Data2.4.8Percentage Change - Calculations
2.5

Making Human Resource Decisions

2.5.1Organisational Structures2.5.2Organisational Structures 22.5.3Recruitment2.5.4Effective Recruitment2.5.5Training a Workforce2.5.6Motivating a Workforce2.5.7End of Topic Tests - Human Resources2.5.8Application Questions - Human Resources2.5.9Exam-Style Questions - Human Resources2.5.10Diagnostic Misconceptions - Owners vs Shareholders2.5.11Diagnostic Misconceptions - Internal Recruitment2.5.12Diagnostic Misconceptions - Employee Motivation

Practice questions on Total Quality Management

Can you answer these? Test yourself with free interactive practice on Seneca — used by over 10 million students.

  1. 1
    Features of Total Quality Management (TQM): True / false
  2. 2
    TQM is a set of management principles that places quality at the heart of everything a business does. What does TQM stand for?Multiple choice
  3. 3
    What is the main reason companies use Total Quality Management?Multiple choice
  4. 4
    What are the benefits of maintaining high product/service quality?Fill in the list
  5. 5
    Apple products like the MacBook laptop computer and the iPhone are perceived as very high quality. Why is this good for business?Multiple choice
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Managing Quality

The Sales Process