Business Finance - Management Assignment 9. See Instructions

Total Quality Management

Kong, et.al., (2025) explained, “Total quality management (TQM) is an integrated organizational effort designed to improve quality at every level of the enterprise” . The American Society for Quality (ASQ) defines TQM as “a management approach to longterm success through customer satisfaction”. This mindset, where all management and employees consistently look for ways to improve aspects of the organization is inclusive of all organizational members.

The mindset is a longterm system in which improving customer satisfaction is paramount. This type of culture requires the involvement of everyone within an organization. TQM relies heavily on a strategic approach to reaching organizational goals and decision making based on facts and data.

Customer satisfaction implies that the products or services customers buy meet customers’ actual needs. Companies conduct market and consumer research to determine precisely what those needs are and to ultimately obtain their patronage, Companies then invest in activities that better align the products with the customers’ needs.

Customers might look for lower prices, so activities that reduce costs could be explored so the price can be lowered; for example, improving quality on the production line to reduce defects or finding a supplier that provides lowercost materials. Performance may also interest customers; for example, Intel and Apple have engaged in a decadeslong battle to make faster technology devices.

There has been access to TQM initiatives in the simulation since Week 4, round 4 of the competition.

This lesson, you will examine the TQM initiatives in your CAPSIM company; each has its benefits and will help you better to align your products with the customers’ buying criteria. 

These are the 8 Elements of TQM according to asq.org: 

Customer-focused. Accordion 1 of 8.

The customer ultimately determines the level of quality. No matter what an organization does to foster quality improvement—training employees, integrating quality into the design process, or upgrading computers or software—the customer determines whether the efforts were worthwhile.

Total employee involvement. Accordion 2 of 8.

All employees participate in working toward common goals. Total employee commitment can only be obtained after fear has been driven from the workplace, when empowerment has occurred, and when management has provided the proper environment. High-performance work systems integrate continuous improvement efforts with normal business operations. Self-managed work teams are one form of empowerment.

Process-centered. Accordion 3 of 8.

A fundamental part of TQM is a focus on process thinking. A process is a series of steps that take inputs from suppliers (internal or external) and transforms them into outputs that are delivered to customers (internal or external). The steps required to carry out the process are defined, and performance measures are continuously monitored in order to detect unexpected variation.

Integrated system. Accordion 4 of 8.

Although an organization may consist of many different functional specialties often organized into vertically structured departments, it is the horizontal processes interconnecting these functions that are the focus of TQM.

· Micro-processes add up to larger processes, and all processes aggregate into the business processes required for defining and implementing strategy. Everyone must understand the vision, mission, and guiding principles as well as the quality policies, objectives, and critical processes of the organization. Business performance must be monitored and communicated continuously.

· An integrated business system may be modeled after the Baldrige Award criteria and/or incorporate the ISO 9000 standards. Every organization has a unique work culture, and it is virtually impossible to achieve excellence in its products and services unless a good quality culture has been fostered. Thus, an integrated system connects business improvement elements in an attempt to continually improve and exceed the expectations of customers, employees, and other stakeholders.

Strategic and systematic approach. Accordion 5 of 8.

A critical part of the management of quality is the strategic and systematic approach to achieving an organization’s vision, mission, and goals. This process, called strategic planning or strategic management, includes the formulation of a strategic plan that integrates quality as a core component.

Continual improvement. Accordion 6 of 8.

A large aspect of TQM is continual process improvement. Continual improvement drives an organization to be both analytical and creative in finding ways to become more competitive and more effective at meeting stakeholder expectations.

Fact-based decision making. Accordion 7 of 8.

In order to know how well an organization is performing, data on performance measures are necessary. TQM requires that an organization continually collect and analyze data in order to improve decision making accuracy, achieve consensus, and allow prediction based on past history.

Communications. Accordion 8 of 8.

During times of organizational change, as well as part of day-to-day operation, effective communications plays a large part in maintaining morale and in motivating employees at all levels. Communications involve strategies, method, and timeliness.

Organizational Culture and Ethics

Peter F. Drucker (1909–2005) was an Austrian-born American management consultant, educator, and author widely regarded as the father of modern management. His ideas fundamentally shaped the way organizations, especially businesses and nonprofits, think about leadership, strategy, and social responsibility.

To Drucker, ethics and integrity were the bedrock of all business and personal practices. He recognized that there were differences in cultures and many challenges in operating from this bedrock (Cohen, 2020).

Peter Drucker argued that belief is the only genuine foundation for ethical behavior: laws, rules, or external incentives are necessary but not sufficient; what truly matters is the internal conviction of what is right. More recent perspectives, however, such as those presented by Chen et al. (2025), move beyond these belief- or principle-driven foundations toward multi-dimensional models of corporate social responsibility (CSR). Chen and colleagues show that CSR in international business today is shaped by contextual variables such as industry type, cultural expectations, stakeholder pressure, and technological innovation. Their work illustrates how ethics and responsibility have evolved from singular, internal convictions to dynamic, interdependent frameworks that adapt to global and institutional complexity. Organizational leaders must ensure that they are always acting in an ethical manner, regardless of the business situation.

From a historical business perspective, in 1494, the Medici Bank in Florence, Italy, became insolvent over the Medici family's misuse of bank funds. Enron closed in 2001 after it was discovered that large losses were illegally hidden by executives and board members. Most recently in short-term gains due to unethical practices are never worth the long-term losses – the examples of misconduct above, and in other cases, losses to owners and investors, and in some cases even jail time for the perpetrators. 

Businesses embarking on a new venture, whether home or abroad, need some structure that provides a consistent format for analysis. A tool that is frequently used to examine the environment is called PEST, meaning Political, Economic, Socio-Cultural, and Technological. This model has been expanded to PESTEL, which also includes Ecological/Environmental Factors and Legal Factors.

This module’s readings will provide an overview of PESTEL . In earlier modules, you used SWOT and the 5 Forces model to look at your company. In this module, you will look at the external global environment in more detail using the PESTEL model.  

References 

ASQ. (n.d.). What is Total Quality Management (TQM)?  ASQ. 

Chen, S., Zhang, J. & Tan, H. Comparing the Effects of Internationalization on CSR in Service and Non-Service MNEs.  Manag Int Rev 65, 459–485 (2025).  https://doi.org/10.1007/s11575-025-00576-6 

Cohen, W. (2020, February 13). Peter F. Drucker on doing the right thing.  Corporate Learning Network. Retrieved from  https://www.corporatelearningnetwork.com/leadership/columns/peter-f-drucker-on-doing-the-right-thing 

Kong, X., Wang, H., Chen, Y., Luo, J., Xie, T., Peng, M., Ding, M., & Li, X. (2025). Innovative application of total quality management in sustainable tourism development: framework development and empirical analysis.  Humanities and Social Sciences Communications, 12, Article 1055.  https://doi.org/10.1057/s41599-025-05139-6

Total Quality Management

Kong, et.al., (2025) explained, “Total quality management (TQM) is an integrated organizational effort designed to improve quality at every level of the enterprise” . The American Society for Quality (ASQ) defines TQM as “a management approach to longterm success through customer satisfaction”. This mindset, where all management and employees consistently look for ways to improve aspects of the organization is inclusive of all organizational members.

The mindset is a longterm system in which improving customer satisfaction is paramount. This type of culture requires the involvement of everyone within an organization. TQM relies heavily on a strategic approach to reaching organizational goals and decision making based on facts and data.

Customer satisfaction implies that the products or services customers buy meet customers’ actual needs. Companies conduct market and consumer research to determine precisely what those needs are and to ultimately obtain their patronage, Companies then invest in activities that better align the products with the customers’ needs.

Customers might look for lower prices, so activities that reduce costs could be explored so the price can be lowered; for example, improving quality on the production line to reduce defects or finding a supplier that provides lowercost materials. Performance may also interest customers; for example, Intel and Apple have engaged in a decadeslong battle to make faster technology devices.

There has been access to TQM initiatives in the simulation since Week 4, round 4 of the competition.

This lesson, you will examine the TQM initiatives in your CAPSIM company; each has its benefits and will help you better to align your products with the customers’ buying criteria. 

These are the 8 Elements of TQM according to asq.org: 

Customer-focused. Accordion 1 of 8.

The customer ultimately determines the level of quality. No matter what an organization does to foster quality improvement—training employees, integrating quality into the design process, or upgrading computers or software—the customer determines whether the efforts were worthwhile.

Total employee involvement. Accordion 2 of 8.

All employees participate in working toward common goals. Total employee commitment can only be obtained after fear has been driven from the workplace, when empowerment has occurred, and when management has provided the proper environment. High-performance work systems integrate continuous improvement efforts with normal business operations. Self-managed work teams are one form of empowerment.

Process-centered. Accordion 3 of 8.

A fundamental part of TQM is a focus on process thinking. A process is a series of steps that take inputs from suppliers (internal or external) and transforms them into outputs that are delivered to customers (internal or external). The steps required to carry out the process are defined, and performance measures are continuously monitored in order to detect unexpected variation.

Integrated system. Accordion 4 of 8.

Although an organization may consist of many different functional specialties often organized into vertically structured departments, it is the horizontal processes interconnecting these functions that are the focus of TQM.

· Micro-processes add up to larger processes, and all processes aggregate into the business processes required for defining and implementing strategy. Everyone must understand the vision, mission, and guiding principles as well as the quality policies, objectives, and critical processes of the organization. Business performance must be monitored and communicated continuously.

· An integrated business system may be modeled after the Baldrige Award criteria and/or incorporate the ISO 9000 standards. Every organization has a unique work culture, and it is virtually impossible to achieve excellence in its products and services unless a good quality culture has been fostered. Thus, an integrated system connects business improvement elements in an attempt to continually improve and exceed the expectations of customers, employees, and other stakeholders.

Strategic and systematic approach. Accordion 5 of 8.

A critical part of the management of quality is the strategic and systematic approach to achieving an organization’s vision, mission, and goals. This process, called strategic planning or strategic management, includes the formulation of a strategic plan that integrates quality as a core component.

Continual improvement. Accordion 6 of 8.

A large aspect of TQM is continual process improvement. Continual improvement drives an organization to be both analytical and creative in finding ways to become more competitive and more effective at meeting stakeholder expectations.

Fact-based decision making. Accordion 7 of 8.

In order to know how well an organization is performing, data on performance measures are necessary. TQM requires that an organization continually collect and analyze data in order to improve decision making accuracy, achieve consensus, and allow prediction based on past history.

Communications. Accordion 8 of 8.

During times of organizational change, as well as part of day-to-day operation, effective communications plays a large part in maintaining morale and in motivating employees at all levels. Communications involve strategies, method, and timeliness.

Organizational Culture and Ethics

Peter F. Drucker (1909–2005) was an Austrian-born American management consultant, educator, and author widely regarded as the father of modern management. His ideas fundamentally shaped the way organizations, especially businesses and nonprofits, think about leadership, strategy, and social responsibility.

To Drucker, ethics and integrity were the bedrock of all business and personal practices. He recognized that there were differences in cultures and many challenges in operating from this bedrock (Cohen, 2020).

Peter Drucker argued that belief is the only genuine foundation for ethical behavior: laws, rules, or external incentives are necessary but not sufficient; what truly matters is the internal conviction of what is right. More recent perspectives, however, such as those presented by Chen et al. (2025), move beyond these belief- or principle-driven foundations toward multi-dimensional models of corporate social responsibility (CSR). Chen and colleagues show that CSR in international business today is shaped by contextual variables such as industry type, cultural expectations, stakeholder pressure, and technological innovation. Their work illustrates how ethics and responsibility have evolved from singular, internal convictions to dynamic, interdependent frameworks that adapt to global and institutional complexity. Organizational leaders must ensure that they are always acting in an ethical manner, regardless of the business situation.

From a historical business perspective, in 1494, the Medici Bank in Florence, Italy, became insolvent over the Medici family's misuse of bank funds. Enron closed in 2001 after it was discovered that large losses were illegally hidden by executives and board members. Most recently in short-term gains due to unethical practices are never worth the long-term losses – the examples of misconduct above, and in other cases, losses to owners and investors, and in some cases even jail time for the perpetrators. 

Businesses embarking on a new venture, whether home or abroad, need some structure that provides a consistent format for analysis. A tool that is frequently used to examine the environment is called PEST, meaning Political, Economic, Socio-Cultural, and Technological. This model has been expanded to PESTEL, which also includes Ecological/Environmental Factors and Legal Factors.

This module’s readings will provide an overview of PESTEL . In earlier modules, you used SWOT and the 5 Forces model to look at your company. In this module, you will look at the external global environment in more detail using the PESTEL model.  

References 

ASQ. (n.d.). What is Total Quality Management (TQM)?  ASQ. 

Chen, S., Zhang, J. & Tan, H. Comparing the Effects of Internationalization on CSR in Service and Non-Service MNEs.  Manag Int Rev 65, 459–485 (2025).  https://doi.org/10.1007/s11575-025-00576-6 

Cohen, W. (2020, February 13). Peter F. Drucker on doing the right thing.  Corporate Learning Network. Retrieved from  https://www.corporatelearningnetwork.com/leadership/columns/peter-f-drucker-on-doing-the-right-thing 

Kong, X., Wang, H., Chen, Y., Luo, J., Xie, T., Peng, M., Ding, M., & Li, X. (2025). Innovative application of total quality management in sustainable tourism development: framework development and empirical analysis.  Humanities and Social Sciences Communications, 12, Article 1055.  https://doi.org/10.1057/s41599-025-05139-6