Chapter 2 – Increasing productivity and Quality- MGTA04
- Productivity – is a measure of economic performance. It measures how much is produced
relative to the resources used to produce it.
- It considers both the amounts of and the quality of what is produced. By using materials
more efficiently, the quantity of output will be greater.
- Quality – a product’s finesses for use in terms of offering the features that consumer wants.
- Most countries use Labour Productivity to measure their level of productivity.
Labour productivity of a country = Gross domestic product / Total number of workers.
- Partial productivity ratio calculated by dividing the gross domestic product by total number
- The difference from productivity from nation to nation the answer lies in many factors:
technologies, human skills, economic policies, natural resources, and even in condition.
- Canada’s competitiveness is a concern because we have been living off our rich diet of
natural resources. Canada will have to start emphasizing innovation and develop a more
sophisticated mix of products if its hope to successful in international markets. Porter
- National must be concerned about domestic productivity regardless of their global standing.
- A country that improves its ability to make something out of its existing resource can
increase the wealth of all its inhabitants. Additional wealth from higher productivity can be
shared among workers, investors, and customers. That is the reason why investors,
manager, and workers are all concern about productivity of a company.
Manufacturing Vs Service productivity:
- Manufacturing productivity is higher than service productivity and it has been known for
- This is because “Baumol’s disease” he argued that since the service sector focused more on
hands-on activity machines couldn’t replace, it would be more difficult to increase
productivity in service.
- In present day, productivity gain are starting to appear among a wide array of service
producers such as airlines, pet stores, package delivery companies, providers of financial
services, and retail establishment.
- Technological advances have also given the computer industry a productivity edge in many
- One reason for the improvement is a new technology called continuous casting. New
processes have meant immense saving in both labour and energy. - The productivity of specific industries concerns many people for different reason. Labour
unions need to take it into account in negotiating contracts, since highly productive
industries can give raise more easily than can less productive industries.
- High productivity gives a company a competitive edge because it cost are lower. Lower
price, greater profit. Also give worker higher wages without raising prices.
- It also helps investors in buying and selling stocks from the company.
- Managers use information about productivity trends to plan for new products, factories, and
funds to stay competitive in the years ahead.
Total Quality Management:
- Companies have looked into not only in the quantity due to their productivity but also their
- Quality advocate such as Joseph Juran and Kaoru Ishikawa introduced methods and tools for
implementing quality Juran’s “quality trilogy”, quality planning, and quality control and
- They also developed quality tools for day-to-day works activities because they knew that
without employee participation, real quality improvement would never happen.
- Ishikawa developed so called “fishbone diagram” or “cause-and effect diagrams” or
“Ishikawa diagrams” that help teams for employee investigate and track down causes of
quality problems in their work area.
Manager for quality:
- Total quality Management (TQM) – a concept that emphasizes that no defects are tolerable
and that all employees are responsible for maintaining quality standards.