Page 23 - Business Principles and Management

Unit 1

On the other hand, Japanese cars had fewer initial problems and required little
service.
American producers learned important lessons about quality from the Japan-
ese. Today, American car producers are building products that are equaling their
Japanese and European counterparts. American car manufacturers and produc-
ers of many other products vigorously stress to their workers the importance of
using procedures that result in the highest quality. The concept is called total
quality management (TQM), which is a commitment to excellence that is ac-
complished by teamwork and continual improvement of work procedures and
products. Where TQM is practiced, managers and employees receive a great
deal of training on the topic of quality from experts. The result is a return to
what customers want—well-made products.

ACHIEVING EFFICIENCY
Not only must firms do the right things, such as offering high-quality prod-
ucts, but they must also produce their products efficiently. Efficiency is mea-
sured by output—the quantity produced within a given time. Productivity,
on the other hand, refers to producing the largest quantity in the least amount
of time by using efficient methods and modern equipment. Workers are more
productive when they are well equipped, well trained, and well managed.
Employee productivity in the United States has grown over the years in manu-
facturing firms, but the growth has not been as rapid as in a few other indus-
trialized nations.
Efficiency—including improved productivity—can be achieved in three ways:
1. Specialization of effort
2. Better technology and innovation
3. Reorganization of work activities

SPECIALIZATION In any business with more than a few employees, work can be
performed more efficiently by having workers become specialists. In a large auto-
& some workers specialize in body repair work whereas others specialize in repair-
facts mobile repair shop, for example, not all workers are general mechanics. Rather,

figures ing transmissions or engines. When workers specialize, they become expert at
their assigned tasks. As a result, specialization improves quality while increasing
the amount produced. Because specialization improves efficiency, it is no wonder
that businesses hire or train employees for many specialized jobs.
Competition based on quality Efficiency can also be improved through mass production. Mass production
has grown in importance world- is a manufacturing procedure actually started in the early 1900s. It combines the
wide. In the United States, the use of technology, specialized equipment, and an assembly line. Employees per-
Malcolm Baldrige National form efficient repetitive assembly methods to produce large quantities of identi-
Quality Award program is man- cal goods. Through mass production, the cost of goods manufactured decreases
aged by an agency of the fed- because it is possible to produce more items in less time. Today, computer-driven
eral government. Each year, equipment and robots make it possible to mass-produce large numbers of items
hundreds of firms apply for this with fewer workers.
distinctive national honor. Orga-
nizations that win an award TECHNOLOGY AND INNOVATION Efficiency can also be improved through the appli-
usually notice an upturn in de- cation of advanced technology. Technology includes equipment, manufacturing
mand for their products. Quality processes, and materials from which products are made. Because of new discov-
awards are also offered in other eries and inventions, better-quality goods and services are built at a faster pace
countries. The Japanese offer and often at a lower cost. Improved materials, for example, may weigh less, last
the Deming Award, which is longer, and permit faster product assembly. Examples of new technology are found
named after an American who in everyday items such as cars, clothing, computers, and electronic appliances.
was an expert on quality. Advanced technology helps companies stay ahead of competitors. And because

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