Management Chapter 15 Homework These Comparisons Enable Them See Whether The

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b. The U.S. has an opacity rating of 21, which is fairly low.

(1) In countries with higher ratings, financial figures are typically closely guarded

V. TOTAL QUALITY MANAGEMENT

INSTRUCTOR’S NOTES___________________________________________________________

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___________________________________________________________________________

Total quality management (TQM) is an organization-wide effort to infuse quality into every

A. TQM Techniques

1. Quality Circles

a. A quality circle is a group of six to 12 volunteer employees who meet regularly

2. Benchmarking

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a. Benchmarking is the continuous process of measuring products, services, and

3. Six Sigma

a. Six Sigma is a highly ambitious quality standard that specifies a goal of no more

than 3.4 defects per million parts.

b. Six Sigma has become a generic term for a quality control approach that takes

Discussion Question #6: Some critics argue that Six Sigma is a collection of superficial

changes that often result in doing a superb job of building the wrong product or offering the

wrong service. Do you agree or disagree? Explain.

Exhibit 15.7: The Importance of Quality Improvement Programs

4. Reduced Cycle Time

a. Cycle time refers to the steps taken to complete a company process, such as

5. Continuous Improvement

a. Continuous improvement is the implementation of a large number of small,

incremental improvements in all areas of the organization on an on-going basis.

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Benchmarking: Inclusive Business

“Business cannot succeed in societies that fail,” is the premise for the alliance between the

international development agency SNV and the World Business Council for Sustainable

Exhibit 15.8: Quality Program Success Factors

B. TQM Success Factors

1. Many contingency factors influence the success of a TQM program. Some of these

factors include:

a. Quality circles are most beneficial when employees have challenging jobs.

Discussion Question #8: Why is benchmarking an important component of total quality

management (TQM) programs? Do you believe a company could have a successful TQM

program without using benchmarking?

VI. TRENDS IN QUALITY CONTROL

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INSTRUCTOR’S NOTES___________________________________________________________

______________________________________________________________________________

___________________________________________________________________________

A. International Quality Standards

1. The increasing significance of the global economy provides one impetus for total

quality management in the United States. ISO 9000 standards represent an

international consensus of what constitutes effective quality management as outlined

by the International Organization for Standardization in Geneva, Switzerland.

a. Hundreds of thousands of organizations in 157 countries have been certified to

demonstrate their commitment to quality.

2. Corporate Governance

a. Corporate governance refers to the system of governing an organization so that

the interests of corporate shareholders are protected. The financial reporting

systems and the roles of boards of directors are being scrutinized in organizations

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Answers to Discussion Questions

1. You’re a manager who employs a participative control approach. You’ve concluded that

corrective action is necessary to improve customer satisfaction, but first you need to

convince your employees that the problem exists. What kind of evidence do you think

employees will find more compelling: quantitative measurements or anecdotes from your

interactions with customers? Explain your answer.

Students may suggest that some employees will be more convinced by quantitative

measurements because they consider them to be objective and factual rather than subjective and

2. Describe the advantages of using a balanced scorecard to measure and control

organizational performance. Suppose you created a balanced scorecard for Walmart. What

specific customer service measures would you include?

The balanced scorecard is a comprehensive management control system that balances traditional

financial measures with operational measures relating to a company’s critical success factors. A

balanced scorecard contains four major perspectives: financial performance, customer service,

3. In bottom-up budgeting, lower-level managers anticipate their departments’ resource needs

and pass them up to top management for approval. Identify the advantages of bottom-up

budgeting.

4. Most companies have policies that regulate employees’ personal use of work computers

during work hours. Some even monitor employee e-mails and track the Web sites that have

been visited. Do you consider this type of surveillance an invasion of privacy? What are the

advantages of restricting employee use of the Internet and e-mail at work?

Computers used for Internet and e-mail at work belong to the employer, not the employee, which

gives the employer the right to monitor how its computers are used. Restricting use of the

5. Think of a class you’ve taken in the past. What standards of performance did your professor

establish? How was your actual performance measured? How was your performance

compared to the standards? Do you think the standards and methods of measurement were

fair? Were they appropriate to your assigned work? Why or why not?

Performance standards are normally set forth by the professor in determining the grading

procedure of a course. An example could be 90-100 A’s, 80–89 B’s, 70–79 C’s, etc. The actual

6. Some critics argue that Six Sigma is a collection of superficial changes that often result in

doing a superb job of building the wrong product or offering the wrong service. Do you

agree or disagree? Explain.

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Based on the Greek letter sigma, which statisticians use to measure how far something deviates

from perfection, Six Sigma is a highly ambitious quality standard that specifies a goal of no more

than 3.4 defects per million parts. In recent years, Six Sigma has deviated from this precise

definition to become a generic term for a quality-control approach that takes nothing for granted

and emphasizes a disciplined and relentless pursuit of higher quality and lower costs. The

7. What types of analysis can managers perform to help them diagnose a company’s financial

condition? How might a review of financial statements help managers diagnose other kinds

of performance problems as well?

Managers can perform a financial analysis of an income statement and balance sheet of a

company to ascertain its strengths and weaknesses. The balance sheet shows the firm’s financial

position with respect to assets and liabilities at a specific point in time. The balance sheet

provides three types of information: assets, liabilities, and owners’ equity. Assets are what the

8. Why is benchmarking an important component of total quality management (TQM)

programs? Do you believe a company could have a successful TQM program without using

benchmarking?

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Benchmarking is an important component of total quality management because it is defined as

“the continuous process of measuring products, services, and practices against the toughest

9. How might activity-based costing provide better financial control tools for managers of a

company such as Kellogg that produces numerous food products?

Activity-based costing (ABC) provides better financial control for Kellogg because ABC

attempts to identify all the various activities needed to provide a product or service and allocate

10. What is ISO certification? Why would a global company like General Electric want ISO

certification?

ISO certification refers to International Quality Standards. Many countries have endorsed a

TEACHING NOTES FOR LEARNING EXERCISES

Self Learning: Is Your Budget in Control?

Students will range from having the most disciplined budgeting habits, to adequate budgeting

Group Learning: Create a Group Control System

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Students are asked to form groups and assume one member has been assigned to write a major

Action Learning: Schoolwork Standards

Students are to interview four other students who are not in this class about how they study, how

TEACHING NOTE FOR ETHICAL DILEMMA

The Wages of Sin?

1. Continue Westwind’s zero–tolerance policy toward shoplifting. It’s the right thing to do—

and it will pay off in the end in higher profitability because the chain’s reputation for being

tough on crime will reduce overall losses from theft.

2. Adopt Chris Dykstra’s proposed changes and show more leniency to first-time offenders. It

is a more cost-effective approach to the problem than the current policy, plus it stays close to

your father’s original intent.

This is probably the best approach. As Chris noted, by adopting this policy Westwind can

3. Adopt Chris Dykstra’s proposed changes with an even higher limit of $50 or $100, which is

still less than the cost of prosecution. In addition, make sure the policy isn’t publicized. That

way you’ll reduce costs even more and still benefit from your reputation for prosecuting all

shoplifters.

CASE FOR CRITICAL ANALYSIS

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Lincoln Electric

1. Does Lincoln follow a hierarchical or decentralized approach to management? Explain your

answer and give examples.

Although it contains elements of hierarchical control such as precisely defined tasks and the

requirement for individual employees to exceed strict performance goals in order to achieve top

2. Based on what you’ve just read, what do you think makes the Lincoln System so successful in

the United States?

3. What is the problem with transporting Lincoln’s control systems to other national cultures?

What suggestions would you make to Lincoln’s managers to make future international

manufacturing plants more successful?

As noted in the previous answer, the Lincoln system succeeds because of an organizational

culture based on openness and trust, shared control, and an egalitarian spirit. The company has

4. Should Lincoln borrow money and pay bonuses to avoid breaking trust with its U.S.

workers? Why or why not?

Since Lincoln has a policy of openness, the company should be honest about the financial

situation and admit that there is no money to pay for bonuses. Students may argue that Lincoln

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ON THE JOB VIDEO CASE

Barcelona Restaurant Group: Managing Quality and Performance

1. How do managers at Barcelona control the company’s financial performance?

In the video, Barcelona uses multiple methods of controlling financial performance. First,

managers hold weekly meetings during which chefs and general managers review financials.

2. What is the “balanced scorecard” approach to measuring corporate performance, and in

what ways does Barcelona utilize this approach?

Traditionally, most businesses have measured and controlled their financial performance by

analyzing sales, revenue, and profit. The balanced scorecard approach expands the bases around

3. List the four steps of the feedback control model and describe an instance where Barcelona

followed this process to improve its performance.

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BIZFLIX VIDEO CASE

In Bruges

Video Case Synopsis

Hit man Ray (Colin Farrell) botches the simple job of murdering a priest in a confessional. The

“botch” occurs when a bullet passes through the priest’s body into a young boy’s head. Deeply

troubled, Ray and fellow hit man Ken (Brendan Gleeson) go to the beautiful medieval Flemish

city of Bruges, Belgium. Ken engages in tourist activities which Ray finds highly boring.

Various characters, such as an American dwarf actor and a beautiful woman selling drugs on a

film set, add color and interest to this film.

This sequence has two parts that are separated by a title slide that reads, “And another interaction

for the ticket seller.” Watch Part I up to the title slide and pause the film. Answer the first two

questions. Restart the film sequence and play to the end. Answer the third question.

Part I. This sequence starts as Ken enters the tower to buy a ticket. It ends after he asks the

ticket seller (Rudy Blomme) whether he is happy. This sequence follows the discussion

Video Case Discussion Questions and Suggested Answers

1. Ken is the customer, and the ticket seller responds to him as a customer. Do you perceive the

ticket seller as having a customer focus as emphasized in this chapter? Why or why not?

The ticket seller does not show any aspect of a customer focus. Ken wants to use his coins

2. The ticket seller will interact with Ken and Harry Waters in Part II of this film sequence. Do

you predict that the ticket seller’s customer approach could result in negative results for

him? Why or why not?

3. Part II offers a lesson in customer focus. What did the ticket seller fail to understand about

his customers?