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Chapter 2

MGEB06H3 Chapter Notes - Chapter 2: Total Quality Management, Gross Domestic Product

Economics for Management Studies
Course Code
Ted Petit

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Chapter 2(Increasing Productivity & Quality)
Productivity: measure of economic performance. It measure to how much is produced relative to the
resources used to produce it.
(Considers both the amounts and the quality of what is produced)
Quality: fitness for use offering features that consumers want.
Four factors interact in the process: Customers, quality, productivity, profits.
To measure country productivity: labour productivity of a country = Gross Domestic Product
Total number of Workers
- Labour Productivity : partial productivity ratio calculated by dividing gross domestic product by
total number of workers
- Difference in productivity between nations:
human resources
economic policies
natural resources
- If productivity drops, wages can be increased only by reducing profits or by increasing prices.
(If you lose something, you must take others resources to make your own stable).
Total Quality Management (TQM): A concept that emphasizes that no defects are tolerable & that all
employees are responsible for maintaining quality standards
Performance Quality: the features of a product & how well it performs
Quality Reliability: the consistency of quality of the performance
if managers succeed in developing employees (training) employees will accept Quality Ownership: the
idea that quality belongs to each person who creates or destroys it while performing a job.
Business Process Re-engineering: redesigning of business processes to improve performance, quality &
1) Identify the business activity that will be changed
2) Evaluate information & human resources to see if they can meet the requirements for change
3) Diagnose the current process to identify its strengths & weaknesses
4) Create the new process design
5) Implement the new design
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