Total Quality Management
Essay Preview: Total Quality Management
Report this essay
Introduction
There was a time when quality was treated just a technical discipline in 1970s. Quality could be dispensed with till the time the goods and services could be delivered at low costs. However quality now finds a mention in every agenda of all top managements across all companies and departments. Quality is a central to profitability and crucial to success of every organisation. Born (1994) and Muhlemann, Oakland and Lockyer (1992).
Definition of Quality
In general terms, quality can be defined as the ability of a product or service to meets the customer’s requirement. Different people have different definitions of quality but they all have the same central theme. For example, Juran defines quality as “fitness for use”. Philip Crosby defines quality as “conformance of requirement”. However the definition of quality that best suits our topic of assessment is the definition by American Society for Quality. They define quality as “the totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs”.
Total Quality Management
According to the Chartered Quality Institute, TQM is a strategy to achieve manufacturing and service excellence. It is a concept that focuses on combined efforts of all the employees of the organisation including the management and other staff to satisfy customer expectations by continuous improvement. TQM is not a one time phenomenon but a continuous process. As quality is indispensable, TQM is necessary for the survival of any organisation. Improvement in quality can help the firm to increase sales, reduce costs and improve their reputation and thus profitability. For TQM to be successful, it must be applied in all departments of the organisation like production, sales, finance, marketing, design, purchasing etc. Heizer and Render (2004).
Motilal Oswal Financial Services
Motilal Oswal Financial Services (MOFSL) is a US $1.1bn market capitalisation company is listed on the National Stock Exchange of India and Bombay Stock Exchange. It is a well diversified financial services group having business interests in equity broking, commodity broking, investment banking and venture capital funding.
History of the Company and Products and Services
Motilal Oswal Group was founded in 1987 with just two people, Mr Motilal Oswal and Mr Ramdev Agrawal, as a sub-broking unit. Both are qualified Chartered Accountants and presently the largest shareholders of the company.
From a small sub-broking unit, the group now has 1300 business locations and more than 385,000 customers and over 2000 employees across 425 cities in India and abroad. MOFSL offers its products and services through four subsidiaries.
Investment Banking and Corporate Advisory Services — It is offered by Motilal Oswal Investment Advisors Pvt Ltd.
Commodity Trading — This service is offered by Motilal Oswal Commodities Broker Pvt Ltd.
Venture Capital Fund — MOFSL has its own Venture Capital fund (India focused Business Excellence Fund) worth US $100mn. It is managed by Motilal Oswal Venture Capital Advisors Pvt Ltd.
Broking Business – Motilal Oswal Securities is a leading research and advisory based stock broking house in India, with a dominant position in both institutional equities and wealth management.
In March 2006, AQ Research, a firm that analyses the accuracy of broker’s research calls, declared Motilal Oswal Securities as the best independent research house for Indian stocks.
Customers
MOFSL caters to the retail, high net worth individuals as well as institutional clients. Majority of the revenue of the company comes from Institutional Broking and the remaining is distributed between retail broking, commodity broking, and Investment Banking fees and commissions.
Company Financials
For the full financial year ended 31st March, 2007, MOFSL had Income from Operations of Rs 3765mn or US $95mn and Profit after Tax of Rs 70mn or US $1.75mn
Market and Operational Challenges faced by MOFSL
The broking business is seasonal and is linked to the global and national economic environment. The main challenge for MOFSL was to maintain constant flow of revenue throughout the volatile phases of ups and downs. The fixed costs would remain the same; however the revenue stream was not constant. There was pressure on our company to maintain the operating margins on an annual and quarterly basis. And to add to all that, the foreign companies with huge financial resources were entering and doing business at very low margins. The challenge was to retain existing customers as well as to grow the business. Thus there was a need to cut costs and develop efficient operations to deliver best service to clients.
Total Quality Management (TQM)
TQM is a way of managing and improving the effectiveness and competitiveness of a business. It involves the whole company getting organised and focused approach by all employees at all levels.
According to Lee & Schniederjans (1994) “TQM is primarily concerned with the principles and overall philosophy that drives an organisation to seek quality in the products and services that it provides to customers”.
Principles of TQM
According to The Chartered Quality Institute there are eight principles of TQM.
•
Customer Focused Organisation — organisations must understand the current and future needs of the customers and work hard to satisfy or rather exceed the expectations.
•
Leadership — Leaders establish sense of unity and give direction to the organisation. They must create an atmosphere where people get involved in achieving the goals of the organisation.
•
Involvement of People — Full involvement of people is essential. Also participation of all levels of employees