5.4.3

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 the highest possible standard in order to achieve a 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

Business Activity & Influences on Business

1.1

Business Objectives

1.1.1Business Aims1.1.2Business Objectives1.1.3Business Objectives Change Over Time1.1.4End of Topic Test - Business Aims1.1.5Diagnostic Misconceptions - Profit
1.2

Types of Organisations

1.2.1Sole Traders & Partnerships1.2.2Limited Companies1.2.3Limited Liability1.2.4Unlimited vs Limited Liability1.2.5Not For Profit & Franchises1.2.6Multinational Companies1.2.7End of Topic Test - Business Ownership1.2.8Application Questions - Business Ownership1.2.9Diagnostic Misconceptions - Company vs Business1.2.10Diagnostic Misconceptions - Owners vs Shareholders
1.3

Classification of Businesses

1.3.1Sectors
1.4

Decisions on Location

1.4.1Location
1.5

Business & the International Economy

1.5.1Globalisation1.5.2Exchange Rates
1.6

Government Objectives & Policy

1.6.1Government Objectives1.6.2The Government & Business Activity1.6.3Interest Rates1.6.4Interest Rates - Calculations1.6.5Diagnostic Misconceptions - Recessions
1.7

External Factors

1.7.1External Factors
1.8

What Makes a Business Successful?

1.8.1Measuring Success1.8.2Reasons for Failure
2

People in Business

2.1

Internal & External Communication

2.1.1Communication
2.2

Recruitment & Selection Process

2.2.1Types of Employment2.2.2Recruitment Stages2.2.3Effective Recruitment2.2.4Legal Controls Over Employment2.2.5Diagnostic Misconceptions - Internal Recruitment
2.3

Training

2.3.1Training
2.4

Motivation & Rewards

2.4.1Motivation in the Workplace2.4.2Financial & Non-Financial Methods2.4.3End of Topic Test - The Workforce2.4.4Application Questions - The Workforce2.4.5Diagnostic Misconceptions - Money
2.5

Organisation Structures

2.5.1Organisational Structures2.5.2Centralised vs. Decentralised Structures2.5.3Tall & Flat Organisations2.5.4Functional Areas Within a Business2.5.5End of Topic Test - Org Structure
3

Business Finance

3.1

Sources of Finance

3.1.1Internal & External Sources of Finance3.1.2Factors Affecting Sources of Finance
3.2

Cash Flow Forecasting

3.2.1Cash Flow3.2.2Consequences of Cash Flow Problems3.2.3Cash Flow - Calculations3.2.4Solutions to Cash Flow Problems3.2.5Diagnostic Misconceptions - Cash Flow
3.3

Cost & Break-Even Analysis

3.3.1Costs, Revenue & Profit3.3.2Profit, Average Unit Cost & Interest3.3.3Costs - Calculations3.3.4Revenue - Calculations3.3.5Break-Even Analysis3.3.6Profit & Losses - Calculations3.3.7End of Topic Test - Finance3.3.8Grade 9 - Finance3.3.9Diagnostic Misconceptions - Fixed Costs3.3.10Diagnostic Misconceptions - Break-even
3.4

Financial Documents

3.4.1Financial Statements3.4.2Income Statement3.4.3Understanding Business Performance
3.5

Account Analysis

3.5.1Business Calculations3.5.2Gross Profit - Calculations3.5.3Net Profit - Calculations3.5.4Business Calculations 23.5.5Business Calculations 33.5.6Liquidity
4

Marketing

4.1

Market Research

4.1.1Market Research4.1.2Forms of Market Research
4.2

The Market

4.2.1Customer Needs4.2.2Satisfying Customer Needs4.2.3Market4.2.4The Competitive Environment4.2.5Market Segmentation4.2.6Market Mapping - Price vs Quality4.2.7End of Topic Test - Marketing4.2.8Application Questions - Marketing4.2.9Diagnostic Misconceptions - Competition
4.3

The Marketing Mix

4.3.1Price4.3.2Price Penetration4.3.3Other Forms of Pricing4.3.4Product Design4.3.5The Product Life Cycle4.3.6Extending Existing Products4.3.7New Products4.3.8Benefits and Risks of New Products4.3.9Promotion4.3.10Public Relations and Sales Promotion4.3.11Sponsorship & Social Media4.3.12Product Placements4.3.13Promotional Mix4.3.14Place4.3.15Place 24.3.16Place 34.3.17M-Commerce4.3.18Benefits & Drawbacks of M-Commerce4.3.19End of Topic Test - Marketing Mix4.3.20Grade 9 - Marketing Mix4.3.21Diagnostic Misconceptions - Decreasing Price4.3.22Diagnostic Misconceptions - Advertise vs Promote4.3.23Diagnostic Misconceptions - Social Media
5

Business Operations

5.1

Economies & Diseconomies of Scale

5.1.1Economies of Scale5.1.2Diagnostic Misconceptions - Economies of Scale
5.2

Production

5.2.1Production Processes5.2.2Flow and Batch Production5.2.3Production Efficiency5.2.4Technology & Production5.2.5Diagnostic Misconceptions - JIT vs JIC
5.3

Factors of Production

5.3.1Factors of Production
5.4

Quality

5.4.1Importance of Quality5.4.2Identifying Quality5.4.3Total Quality Management5.4.4End of Topic Test - Operational Decisions

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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Identifying Quality

End of Topic Test - Operational Decisions