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Chapter 2

MGTA04 Chapter 2.docx

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Management (MGT)
H Laurence

MGTA04 Chapter 2: Increasing Productivity and Quality The Productivity Quality Connection  Productivity is a measure of economic performance  a measure of efficiency that compares how much is produced with the resources used to produce it  Quality: a products fitness for use in terms of offering the features that consumers want  Quality is defined in terms of value to the customer companies must design their marketing efforts to cultivate a more customer oriented focus  Improvement in quality= increase in payoffs for firms  Four factors are involved in this process: customers, quality, productivity, and profits  Measuring Productivity: countries use labor productivity to measure a countries productivity o Labor productivity: partial productivity ratio calculated by dividing GDP by total number of workers o =GDP/# Workers o Focuses more on labor rather than on other resources (accurate record on employment and hours worked kept)  Productivity Among Global competitors o Technology, human skills, economic policies, natural policies, and even tradition influence productivity in many countries  Domestic Productivity o Nations must be concerned about domestic productivity regardless of their global standing. A country that improves productivity can increase its wealth and GDP…decrease in productivity means a decrease in nations total wealth  Manufacturing Vs. Service Productivity o Manufacturing productivity is higher than service productivity o Harder to increase service productivity o Services can become more productive by becoming more like factories and they use modern information technology to eliminate inefficiencies i.e. automatic check in kiosks at airports  Industry Productivity o Industries within sectors also differ vastly in terms of productivity o Improvement via a new technology=casting  Company Productivity o High productivity gives a company a competitive advantage because its costs are lower and therefore offer products at lower prices also involves increased wages o Productivity if individual companies is also important to investors, workers, and managers i.e. shares, profit sharing, etc Total Quality Management  Total quality management: a concept that emphasizes that no defects are tolerable and that all employees are responsible for maintaining quality standards aka quality assurance includes all the activities necessary for getting high quality goods and services into the marketplace  Strategic approach to TQM begins with leadership and the desire for TQM  Successful use of TQM requires a high level of commitment from all members of the organization  Planning for quality o Planning for quality should begin long before products are designed or redesigned o Managers need to set goals for both quality levels and quality reliability in the beginning o Performance quality: the overall degree of quality, how well the features of a product meet consumers’
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