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Strategic Choice Formulation and Implementation

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IntroductionThe Centr plc is an organisation, which gives quality computer service to the

number of countries. The organisation is now using a standard costing and

budgetary system. But the organisation needs difficult to manage with thatsystem due to the large employers and financial performance of the

organisation. So the company needs another cost and budgetary system which

helps the organisation to meet its organisational objectives and customer needs.

Some of the staffs in Centra plc are saying about the introduction of a balanced

score card to analyse the organisations financial performance. But the operation

manager is asking about the introduction of a total quality management (tqm) to

meet the customer needs and organisational goal. So let us discuss the two

systems, balanced scorecard and the standard budgetary system based on the

Centra electronics and we can compare the difference between these two

systems.

Balanced Scorecard via Standard Cost and Budgetary

System in CentraLet us analyse the both standard budgetary system and balance scorecard

system on the basis of the centra electronics pc and can understand the

differences and advantages and disadvantages of both.

Standard cost and budgetary system

The standard cost and budgetary system planning and controlling the operations

of the organisation. It predicates the cost of the manufacturing products during

current and future manufacturing operations.

Advantages of Standard Costing System in CentraThere are many advantages of the standard costing system. They are:

It analyses all cost function and disclosing the inefficiencies of the

manufacturing operations.

It helps to make plan on efficient economical operations.

It defines the cost responsibility and authority.

It gives clear idea of the companys performance. It gives the picture of the variances between the actual performances. So

it helps to further manufacturing decisions.

The reporting data has no delay. We get the information quickly by using

the standard costing system. So the company can take actions very soon.

The uses of standard cost budgeting system are: It makes the budget

It controls the costs and measuring efficiencies

It will reduce the costs

It sets the prices of sales It decides the costs of inventories

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Let us look on the balanced scorecard and its implications in

Centra.

A balanced score card is a management tool which balances the organisations

financial performance, internal operations, innovations etc...

The balanced score card is using in all government and other organisations, and

globally to coordinate business activities through internal and external

communications and evaluate and monitor the organisational objectives.

Adapted from Robert S. Kaplan and David P. Norton, Using the Balanced Scorecard as a Strategic ManagementSystem, Harvard Business Review (January-February 1996): 76.

The balanced score card does not provide an accurate score and a clear

recommendations. It is only a list of matrices. This is one of the main

difficulty in applying the balanced score card. The balanced scorecard willnot answer the unanswered questions.

The four perspectives of the balanced score card are:

Financial

Customer

Internal process

Innovation and learning

From the two standard system for measuring manufacturing costs we can

understand that compared to the standard costing system in Centra ElectronicsPlc ,the balanced score card is not efficient. Because we can see that in balance

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score card it does not measure the accurate score. If the measurement is not

accurate it will affect the decision regarding the manufacturing operations. But

now a days we can see that there is wide applicability of balanced score card,

but from the study it can be noted that it is not suited for a company like CentraElectronics Plc. Centra Electronics Plc is a largest company which provides

computer upgrading and other services globally. If we choose, the balanced

Scorecard system there will be many problems regarding the anticipated

production. In standard cost system it measures the costs and prepares budget.

So the balanced score card system is not appropriate for a company like Centr

electronics plc.

Let us look on the concept TQM policy regarding Centra

Electronics Plc.The operation manager of the Centa Electronics suggested implementing the

Total Quality Management System (TQM) in the organisation and analysing the

possible costs and benefits associated with implementing TQM in the company.

Let us look on the concept of TQM.

TQMTqm is a management policy that helps to integrate all the functions of the

organisation. It includes production, marketing, design, customer needs etc.It

focuses on the need of customers and the objective of the organisation. It

organises the entire thing in an organisation. Previously it was applied only in themanufacturing area but presently it is applying in all the areas of organisation.

We can see the public sector organisation where tqm is applying as their

organisation strategy.

The main functions of tqm include

The contact between the management and employees

It meets the needs of the customers

It reduces the product cost and service cost

It empowers the employee

It brings involvement of employees

It helps to improve the plans of the organisation

Improves the leadership and team

It helps to strategic planning

The principles of tqm are the following Commitment to the management

It plans and directs the organisation

It check the activities

Employee empowerment Fact based

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Continuous improvement

Customer focus

The implementation of TQM

TQM helps to continuous improvement in work. By using tqm the corrections can

be made very easily. The most important benefits regarding the tqm are that the

mistakes can be eliminated. Let us look on the prevention method of TQM.

It prevents the mistakes occurring in an organisation

Where mistakes cant be cleared, then in the next process it detects to

prevent the mistakes to happen.

When mistake happened, it prevents the production and starts production

after clearing

Let us look on the Implementation and likely costs and benefits of a organisation

while the introduction of TQM.

The TQM can implement on the basis of the condition of the organistion.If an

organisation in a state where employers are sufficient. If the organisation has a

good tie up with environment and ready to accept the change, the tqm can be

easily implemented. If an organisation is week, lack of employment facilities,

production department, etc...The tqm implementation will not bring any benefit

to the organisation. In short the tqm can implement only if the organisation is

healthy. Certain level of threat is there for initiating the tqm.The organisation

and employers should ready to a change.

For the successful implementation of TQM a firm needs to

follow the eight key factors, they are: Ethics

Integrity

Trust

Training

Teamwork

Leadership

Recognition

Communication

These eight elements can be divided into four different

types on the basis of the functions.1. FoundationIt includes ethics, integrity and trust

2. Building Bricks.It includes training teamwork and leadership

3. Binding mortarCommunication

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4. Roof.Recognition

Without these four elements, we cannot successfully implement TQM.So there

should be a key concern on these elements before implementing TQM.A model ofthe TQM originated by a scholar called Oakland (1989) are the following. It is a 4

pillar model which brings the customers requirement into the model system.

The Four-Pillar Model Of TQM

The total quality management tool can Identify, analyse both qualitative and

quantitative data for business analysis.

The following tools are commonly using in understanding the

business problem. They are: Pie charts and Bar graphs

Histograms

Run chart

Pareto Charts analysis

Force field analysis Cause and effect, Fishbone diagram

Focus group

Brainstorming and affinity diagrams

Tree diagram

Flow charts and modelling diagram

The implementation of TQM will bring lots of benefits to the organisation because

by analysing all the functions of the organisation it helps the organisation to

make the decision regarding the production.

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It will bring the accurate results regarding the manufacturing costs of the

organisation.

The likely costs and benefits of implementing TQM in Centra Electronics Plc

The swot analyses of the company in a detailed manner are the following...

The Cost of TQMMost of the countries are thinking that the costs of the introduction of TQM exceed the

benefits it produces. So there is lots of research had been taken place regarding the costs ofimplementing TQM in an organisation. There were results that the direct and indirect costs ofquality problems exceed the costs of implementing TQM in an organisation.

There are prevention costs when implementing a TQM in an organisation. It is the costswhich occurred before the implementation. It includes

Prevention costs

The requirements of the product: The setting up of materials, the processes, the

services, products, etc are come under the requirement of the product. It is aprevention cost.

Quality check: The plan for the quality maintenance, reliability, the stability, theoperational production and inspections comes under here.

The assurance on quality: The proper evaluation about quality. Training: The proper development and preparation of training processes.

Appraisal costs

Verifications

The audits of quality Evaluation of vendor comes under the appraisal costs.

Failure costs.

The failure costs can be divided into three depending on the internal and external failure. Theinternal failure is occurring when the organisation cant meet the quality standards. Theseinclude

Waste: Holding of stocks because of errors, poor communication and poororganisation comes under this category.

Scrap-the defective material Rework: The clearance of the defective material

Failure analysis

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Let us look on the external failure costs

It means the costs, which happened when the product failed to meet the quality standards, butit will detect only after the customer receives the item.

Repair..servicing of the returned products Warranty...The costs for the items replaced for the warranty Complaints...The costs associated with the customers complaints Returns...Transportation, and handling of returned items.

With the introduction of TQM in Centra Electronics Plc, the organisation has some likelycosts and benefits. Let us go through in it.

Calculating costs

The money that invests for while implementing TQM is spending for the two different ways,either in the form of initial costs in the form of training and development or the spendingrequired maintaining the program without significant changes.

Initial costs

It includes the costs for implementing the TQM in an organisation. It includes the costs oftraining and development, most of them are comes under the category of opportunity cost. Itdoes not include the cash flow out of the economy.

Implementations of team skill and team development are one of the major factors forcompanys development. The training costs not considered the companys staffs. The mostof them are already trained skilled staffs. So it is not included in the initial costs.

Calculating benefits

The benefits of the TQM are the following Reduction in manufacturing costs...The calculations of manufacturing was based on

the companys management system. A reduction in cash flow and will reduce the useof temporary employees.

Reduction in scrap: Scrap reductions are the improvements of an organisation. Thiswill help the companies to make a direct relationship between the production teamand the operator. Reduction in material scrap will results an actual cash flow savings.Floor scrap was categorized by type and can reduce the efforts of production lineteams, scrap teams, the company's manufacturing and engineering groups, andsuppliers. By certifying its suppliers, the company was able to reduce the number oflots rejected and scrapped at receiving.

Reduction in overhead costs

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The TQM strategy helps to bring continuous improvement in the manufacturing sector .Thisstrategy helps to integrate the traditional quality control function to the production line.

Intangible benefits

The companies are always looking about the tangible benefits, but there are some intangiblebenefits associated with the company. The one of the major benefit of implementing TQM isthat it will change the culture of the peoples thinking, attitude etc, to the organisation. Due tothe continuous skill development, the employees will be improved.

So such employees will solve the problem very effectively. If any time a problem will happento the economy the employers will take crucial decisions regarding the problem because theemployers are working on the basis of TQM philosophy.

Another intangible benefits associated with the organisation is that it will bring a customersatisfaction with its products and services. The team spirit in the organisation will remove the

barriers of the organisation. So the employers will feel a good effect on themselves and alsoto the company and they will show a higher level of sincerity.

Conclusion

In this case, the authors found that implementation of TQM were a wise and worthwhileinvestment. If it is implemented properly and in true spirit, TQM can definitely keep anorganization at the leading edge in the marketplace.

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The tqm brings the problem solving techniques to the organisation. While

applying tqm in the companys business operation it will bring maximum return

over the investment. The implementation will bring an effective foundation for

human capabilities and the fuller utilisation of all the resources. This will bringthe business organisation into the path of excellence.

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